--- page 1 ---
Joint Sponsors
Joint Overall Coordinators,
Joint Bookrunners and Joint Lead Managers
Huajin Securities International
Huajin Securities International
Share
     Offer
Stock Code: 8629
(A joint stock company incorporated in the People's Republic of China with limited liability)
GUANGDONG SYNTRUST GK TESTING AND CERTIFICATION
TECH SERVICE CENTER CO., LTD.
廣東集信國控檢測認證
技術服務中心股份有限公司


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26 August 2024
IMPORTANT
If you are in any doubt about any contents of this prospectus, you should obtain independent professional advice.
GUANGDONG SYNTRUST GK TESTING AND CERTIFICATION
TECH SERVICE CENTER CO., LTD.
廣東集信國控檢測認證技術服務中心股份有限公司
(A joint stock company incorporated in the People’s Republic of China with limited liability)
LISTING ON GEM
OF THE STOCK EXCHANGE OF HONG KONG LIMITED
BY WAY OF SHARE OFFER
Number of Offer Shares : 10,179,000 H Shares (subject to Offer Size
Adjustment Option)
Number of Placing Shares : 9,161,000 H Shares (subject to reallocation and the
Offer Size Adjustment Option)
Number of Public Offer Shares : 1,018,000 H Shares (subject to reallocation)
Maximum Offer Price : HK$10.4 per Offer Share (plus brokerage fee of 1%,
SFC transaction levy of 0.0027%,  Stock Exchange
trading fee of 0.00565%  and AFRC transaction
levy of 0.00015% , payable in full upon application
and subject to refund)
Nominal Value : RMB1.00 per H share
Stock code : 8629
Joint Sponsors
Joint Overall Coordinators,
Joint Bookrunners and Joint Lead Managers
Huajin Securities International
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 “Documents Delivered to the Registrar of Companies in Hong Kong and Available on Display” in
Appendix VII  to this prospectus, has been registered by 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 Securities and Futures Commission and the Registrar of Companies in Hong Kong take no responsibility as
to the contents of this prospectus or any other documents referred to above.
The Offer Shares have not been and will not be registered under the U.S. Securities Act or any state securities laws of the U.S. and may not be offered, sold, pledged, or
transferred within the U.S., except pursuant to an exemption from, or in a traction not subject to, the registration requirements of the U.S. Securities Act and in accordance with
any applicable U.S. securities law.
Prior to making an investment decision, prospective investors should carefully consider all the information set out in this prospectus, including the risk factors set out in “Risk
Factors” in this prospectus.
The Offer Price is expected to be determined by agreement between the Joint Overall Coordinators (on behalf of the Underwriters) and us on the Price Determination Date. The
Price Determination Date is expected to be on or about Wednesday, 4 September 2024 and, in any event, not later than 12:00 noon on Wednesday, 4 September 2024. The Offer
Price will be not more than HK$10.4 per Offer Share and is currently expected to be not less than HK$8.6 per Offer Share. Applicants for Public Offer Shares are required to
pay, on application, the maximum Offer Price of HK$10.4 for each Public Offer Share together with brokerage of 1.0%, 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$10.4 per Offer Share. If, for any reason, the Joint
Overall Coordinators (for themselves and on behalf of the Underwriters) and us are unable to reach an agreement on the Offer Price by 12:00 noon on Wednesday, 4 September
2024, the Share Offer will not proceed and will lapse.
The Joint Overall Coordinators (for themselves and on behalf of the Underwriters) may, with our consent, reduce the number of Offer Shares and/or the indicative Offer Price
range stated in this prospectus at any time on or prior to the morning of the last day for lodging applications under the Public Offer. In such case, a notice of such reduction will
be published on the Stock Exchange’s website at www.hkexnews.hk  and our website at www.xyjiance.cn , not later than the morning of the last day for lodging applications
under the Public Offer. Further details are set out in “Structure and Conditions of the Share Offer” and “How to Apply for Public Offer Shares” in this prospectus.
Prospective investors of the Offer Shares should note that the Joint Overall Coordinators (for themselves and on behalf of the Underwriters) is entitled, in its absolute discretion,
to terminate the Underwriting Agreement with immediate effect by giving notice in writing to our Company if any of the events set forth under “Underwriting – Underwriting
arrangements and expenses – Grounds for termination” in this prospectus occurs at any time prior to 8:00 a.m. (Hong Kong time) on the Listing Date.
No action has been taken to permit an offering of the Offer Shares or the distribution of this prospectus in any jurisdiction other than in Hong Kong. Accordingly, this prospectus
may not be used for the purpose of, and does not (and is not intended to) constitute, an offer or invitation in any jurisdiction or in any circumstances in which such an offer or
invitation is not authorised or to any person to whom it is unlawful to make such an offer or invitation. The distribution of this prospectus and the offering of the Offer Shares in
other jurisdictions may be restricted by law and therefore persons who possess this prospectus should inform themselves about, and observe any such restrictions. Any failure to
comply with these restrictions may constitute a violation of applicable securities law.
ATTENTION
We have adopted a fully electronic application process for the Public Offer. We will not provide printed copies of this prospectus to the public in relation to the Public Offer.
This prospectus is available at the website of the Stock Exchange at www.hkexnews.hk  and our website at www.xyjiance.cn . If you require a printed copy of this prospectus,
you may download and print from the website addresses above.


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– i –
IMPORTANT
IMPORTANT NOTICE TO INVESTORS:
FULLY ELECTRONIC APPLICATION PROCESS
We have adopted a fully electronic application process for the Public Offer. We will not provide
printed copies of this prospectus to the public in relation to the Public Offer.
This prospectus  is available at the website of the Stock Exchange at www.hkexnews.hk , under
“HKEXnews > New Listings > New Listing Information”, and our website at www.xyjiance.cn . If you
require a printed copy of this prospectus, you may download and print from the website addresses above.
To apply for the Public Offer Shares, you may:
(a) apply online through the White Form eIPO service at www.eipo.com.hk ; or
(b)  apply electronically through the HKSCC EIPO  channel and cause HKSCC Nominees to
apply on your behalf by instructing your broker or custodian who is a HKSCC Participant to
give electronic application instructions via HKSCC’s FINI system to apply for the Public
Offer Shares on your behalf.
We will not provide any physical channels to accept any application for the Public Offer Shares by
the public. The contents of the electronic version of this prospectus are identical to the printed prospectus
as registered with the Registrar of Companies in Hong Kong pursuant to Section 342C of the Companies
(WUMP) 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.
See “How to Apply for Public Offer Shares” in this prospectus for further details of the procedures
through which you can apply for the Public Offer Shares electronically.


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– ii –
IMPORTANT
Your application through the White Form eIPO service or the HKSCC EIPO channel must be for
a minimum of 500 Public Offer Shares and in one of the numbers set out in the table. If you are applying
through the White Form eIPO 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 amount payable on application in full
upon application for Public Offer Shares.
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.
No. of
Public
Offer Shares
applied for
Amount
payable (2) on
application
No. of
Public
Offer Shares
applied for
Amount
payable (2) on
application
No. of
Public
Offer Shares
applied for
Amount
payable (2) on
application
No. of
Public
Offer Shares
applied for
Amount
payable (2) on
application
HK$ HK$ HK$ HK$
500 5,252.44 5,000 52,524.42 30,000 315,146.52 100,000 1,050,488.40
1,000 10,504.89 6,000 63,029.30 35,000 367,670.95 150,000 1,575,732.60
1,500 15,757.32 7,000 73,534.19 40,000 420,195.35 200,000 2,100,976.80
2,000 21,009.77 8,000 84,039.07 45,000 472,719.78 250,000 2,626,221.00
2,500 26,262.21 9,000 94,543.96 50,000 525,244.20 300,000 3,151,465.20
3,000 31,514.65 10,000 105,048.85 60,000 630,293.05 350,000 3,676,709.40
3,500 36,767.09 15,000 157,573.25 70,000 735,341.88 400,000 4,201,953.60
4,000 42,019.53 20,000 210,097.68 80,000 840,390.72 450,000 4,727,197.80
4,500 47,271.97 25,000 262,622.10 90,000 945,439.55 509,000 (1) 5,346,985.96
(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) and the SFC transaction levy, the Stock Exchange trading fee and AFRC transaction levy
are paid to the Stock Exchange (in the case of the SFC transaction levy, collected by the Stock Exchange on behalf
of the SFC; and in the case of the AFRC transaction levy, collected by the Stock Exchange on behalf of the AFRC).
No application for any other number of the Public  Offer Shares will be considered and any such
application is liable to be rejected.


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– iii –
CHARACTERISTICS OF GEM
GEM has been positioned as a market designed to accommodate 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. The greater risk
profile and other characteristics of GEM mean that it is a market more suited to professional and
other sophisticated investors.
Given the emerging nature of companies listed on GEM, there is a risk that securities
traded on GEM may be more susceptible to high market volatility than securities traded on the
Main Board and no assurance is given that there will be a liquid market in the securities traded
on GEM.
The principal means of information dissemination on GEM is publication on the internet
website operated by the Stock Exchange. Listed companies are not generally required to issue
paid announcements in gazetted newspaper. Accordingly, prospective investors should note that
they need to have access to the website of the Stock Exchange at www.hkexnews.hk  in order to
obtain up-to-date information on companies listed on GEM.


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– iv –
EXPECTED TIMETABLE
Date(Note 1)
Public Offer commences ..................................................... 9:00 a.m. on
Monday, 26 August 2024
Latest time to complete electronic applications under
 the White Form eIPO service through
 the designated website www.eipo.com.hk (Note 2)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11:30 a.m. on
Tuesday, 3 September 2024
Application lists open (Note 3)  .................................................. 11:45 a.m. on
Tuesday, 3 September 2024
Latest time to give electronic application instructions
 to HKSCC (Note 4)  ......................................................... 12:00 noon on
Tuesday, 3 September 2024
Latest time to complete payment of the White Form eIPO
 applications by effecting internet banking transfer(s) or
 PPS payment transfer(s) ................................................. 12:00 noon on
Tuesday, 3 September 2024
If you are instructing your broker  or custodian  who is a HKSCC Participant to give electronic
application instructions via HKSCC’s FINI system to apply for the Public Offer Shares on your behalf,
you are advised to contact your broker or custodian for the latest time for giving such instructions which
may be different from the latest time as stated above.
Application lists close ...................................................... 12:00 noon on
Tuesday, 3 September 2024
Expected Price Determination Date (Note 5)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . not later than 12:00 noon on
Wednesday, 4 September 2024
Announcement of:
• the final Offer Price;
• the level of indications of interest in the Placing;
• the level of applications in the Public Offer;
• the basis of allotment of the Public Offer Shares; and
• the number of Offer Shares reallocated, if any, between the Public Offer and the Placing,
will be published on our website at www.xyjiance.cn (Note 5)
and the website of the Stock Exchange at www.hkexnews.hk (Note 6)
on or before (Note 10)  .............................................. Thursday, 5 September 2024


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– v –
EXPECTED TIMETABLE
Results of allocations in the Public Offer (with successful
 applicants’ identification document numbers,
 where appropriate) will be available through a variety
 of channels as described in “ How to Apply for
 Public Offer Shares – B . Publication of Results”
 in this prospectus (Note 10)  ......................................... not later than 11:00 p.m. on
Thursday, 5 September 2024
Results of allocations in the Public Offer
 from the designated results of allocations
 website at www.iporesults.com.hk
 (alternatively: www.eipo.com.hk/eIPOAllotment )
 with a “search by ID” function from (Note 10) ............................. 11:00 p.m. on Thursday,
5 September 2024 to 12:00 midnight on
Wednesday, 11 September 2024
From the allocation results telephone enquiry
 by calling +852 2862 8555 between
 9:00 a.m. and 6:00 p.m. from .................................... Friday, 6 September 2024, to
Wednesday, 11 September 2024
(except for Saturday, Sunday and
public holidays in Hong Kong)
H Share certificates in respect of wholly or partially
 successful applications will be despatched or
 deposited into CCASS on or before (Notes 7 and 10)  ....................... Thursday, 5 September 2024
Refund cheques (if applicable) will be despatched
 on or before (Notes 7, 9 and 10)  .......................................... Friday, 6 September 2024
White Form e-Refund payment instructions
 will be despatched on or before (Notes 7, 9 and 10)  ........................... Friday, 6 September 2024
Dealings in H Shares on the Stock Exchange expected
 to commence at 9:00 a.m. on (Note 10) .................................. Friday, 6 September 2024
The application for the Public Offer Shares will commence on Monday, 26 August 2024 through
Tuesday, 3 September 2024, being longer than normal market practice of three and a half days.
Investors should be aware that the dealings in Shares on the Stock Exchange are expected to commence
on Friday, 6 September 2024.


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– vi –
EXPECTED TIMETABLE
Notes:
1. All dates and times refer to Hong Kong dates and local time unless otherwise stated. Details of the structure of the Share
Offer, including its conditions, are set out in “Structure and Conditions of the Share Offer” in this prospectus. If there is any
change in the above expected timetable, we will issue a separate announcement in Hong Kong to be published on our website
at www.xyjiance.cn  and the website of the Stock Exchange at www.hkexnews.hk .
2. You will not be permitted to submit your application through the designated website at www.eipo.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 application monies) until 12:00 noon on the last day for submitting applications, when the
application lists close.
3. If there is a “black” rainstorm warning, Extreme Conditions and/or a tropical cyclone warning signal number 8 or above
in force in Hong Kong at any time between 9:00 a.m. and 12:00 noon on Tuesday, 3 September 2024 , the application lists
will not open and close on that day. See “How to Apply for Public Offer Shares – E. Severe  weather arrangements” in this
prospectus.
4. Applicants who apply for the Offer Shares by giving electronic application instructions  to HKSCC via HKSCC’s FINI
system should refer to “How to Apply for Public Offer Shares – A. Application for public offer shares – 2. Application
channels” in this prospectus.
5. None of the website or any of the information contained on the website forms part of this prospectus.
6. The announcement will be available for viewing on the Stock Exchange’s website at www.hkexnews.hk .
7. Applicants who have applied for Offer Shares through the HKSCC EIPO channel should refer to “How to Apply for Public
Offer Shares – D. Despatch/Collection of H Share certificates and refund of application monies” in this prospectus for
details.
8. Applicants who apply through the White Form eIPO  service by paying the application monies through a single bank
account, may have White Form  e-Refund  payment instructions (if any) despatched to their application payment bank
account. Applicants who apply through the White Form eIPO  service by paying the application monies through multiple
bank accounts, may have refund cheques in favour of the applicant (or, in the case of joint applications, the first-named
applicant) sent to the address specified in their application instructions to the designated White Form eIPO Service Provider
by ordinary post and at their own risk.
9. White Form  e-Refund  payment instructions/refund cheques will be issued in respect of wholly or partially unsuccessful
applications.
10. If there is a tropical cyclone warning signal number 8 or above or a “black” rainstorm warning signal and/or Extreme
Conditions in force in Hong Kong at any days between Monday, 26 August 2024  and Friday, 6 September 2024, then the day
of (i) announcement of results of allocations in the Public Offer; (ii) despatch of H Share certificates and refund cheques/
White Form e-Refund payment instructions; and (iii) dealings in the H Shares on the Stock Exchange may be postponed and
an announcement may be made in such event.


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– vii –
EXPECTED TIMETABLE
The H Share certificates will only become valid evidence of title provided that the Share
Offer has become unconditional in all respects and the Underwriting Agreement is not terminated
in accordance with its respective terms prior to 8:00 a.m. on the Listing Date. The Listing Date is
expected to be on or about Friday, 6 September 2024 . Investors who trade the H Shares on the basis
of publicly available allocation details prior to the receipt of H Share certificates or prior to the H
Share certificates becoming valid evidence of title do so entirely at their own risk.
The above expected timetable is a summary only. You should read carefully the sections headed
“Underwriting”, “Structure and Conditions of the Share Offer” and “How to Apply for Public Offer
Shares” of this prospectus for details relating to the structure of the Share Offer, procedures on the
applications for Public Offer Shares and the expected timetable, including conditions, effect of bad
weather and the despatch of refund cheques and share certificates.


--- page 10 ---
– viii –
CONTENTS
IMPORTANT NOTICE TO INVESTORS
This prospectus is issued by our Company solely in connection with the Public Offer and
the Offer Shares and does not constitute an offer to sell or a solicitation of an offer to buy any
security other than the Offer Shares. This prospectus may not be used for the purpose of, and does
not constitute, an offer to sell or a solicitation of an offer to buy in any other jurisdiction or in any
other circumstances. No action has been taken to permit a public offering of the Offer Shares or
the distribution of this prospectus in any jurisdiction other than Hong Kong. The distribution of
this prospectus and the offering and sale of the Offer Shares in other jurisdictions are subject to
restrictions and may not be made except as permitted under the applicable securities laws of such
jurisdictions pursuant to registration with or authorisation by the relevant securities regulatory
authorities or an exemption therefrom. You should rely only on the information contained in this
prospectus to make your investment decision. We have not authorised anyone to provide you
with information that is different from what is contained in this prospectus. Any information or
representation not included in this prospectus must not be relied on by you as having been authorised
by us, the Joint Sponsors, the Joint Overall Coordinators, the Joint Bookrunners, the Joint Lead
Managers, the Underwriters, any of our or their respective directors or advisors, or any other
person or party involved in the Share Offer . Information contained on our website, located at
www.xyjiance.cn , does not form part of this prospectus.
Page
CHARACTERISTICS OF GEM ................................................ iii
EXPECTED TIMETABLE .................................................... iv
CONTENTS ................................................................ viii
SUMMARY  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
DEFINITIONS ............................................................. 22
GLOSSARY OF TECHNICAL TERMS ......................................... 33
FORWARD-LOOKING STATEMENTS ......................................... 36
RISK FACTORS ............................................................ 38
WAIVER FROM STRICT COMPLIANCE WITH THE GEM LISTING RULES ........ 61
INFORMATION ABOUT THIS PROSPECTUS AND
THE SHARE OFFER ....................................................... 64
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN
THE SHARE OFFER ....................................................... 68


--- page 11 ---
– ix –
CONTENTS
CORPORATE INFORMATION ............................................... 73
INDUSTRY OVERVIEW ..................................................... 75
REGULATORY OVERVIEW ................................................. 92
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE .................... 129
BUSINESS ................................................................. 141
RELATIONSHIP WITH THE CONTROLLING SHAREHOLDER
AND NON-COMPETITION UNDERTAKING .................................. 256
CONTINUING CONNECTED TRANSACTIONS .................................. 262
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT ...................... 266
SUBSTANTIAL SHAREHOLDERS ............................................ 285
SHARE CAPITAL ........................................................... 286
FINANCIAL INFORMATION ................................................. 290
FUTURE PLANS AND USE OF PROCEEDS ..................................... 348
UNDERWRITING ........................................................... 375
STRUCTURE AND CONDITIONS OF THE SHARE OFFER ........................ 386
HOW TO APPLY FOR PUBLIC OFFER SHARES ................................ 394
APPENDIX I  –  ACCOUNTANT’ S REPORT .................................. I-1
APPENDIX II  –  UNAUDITED PRO FORMA FINANCIAL INFORMATION ........ II-1
APPENDIX III  –  TAXATION AND FOREIGN EXCHANGE ...................... III-1
APPENDIX IV  –  SUMMARY OF PRINCIPAL PRC LEGAL AND
REGULATORY PROVISIONS ............................. IV-1
APPENDIX V  –  SUMMARY OF THE ARTICLES OF ASSOCIATION
OF OUR COMPANY ..................................... V-1
APPENDIX VI   –  STATUTORY AND GENERAL INFORMATION ................. VI-1
APPENDIX VII   –  DOCUMENTS DELIVERED TO THE
REGISTRAR OF COMPANIES IN
HONG KONG AND AVAILABLE ON DISPLAY ............... VII-1


--- page 12 ---
– 1 –
SUMMARY
This summary aims at giving you an overview of the information contained in this prospectus. As
this is a summary, it does not contain all the information that may be important to you. You should read
this prospectus in its entirety before you decide to invest in our Shares.
There are risks associated with any investment. Some of the particular risks in investing in our
Shares are set out in “Risk factors” in this prospectus. You should read that section carefully before
you decide to invest in our Shares.
Various expressions used in this summary are defined in “Definitions” in this prospectus.
OVERVIEW
Our Company is principally engaged in the provision of construction engineering testing and
inspection services, serving customers in Maoming, Guangdong Province of China. Founded in 2000 and
headquartered in Xinyi City, Maoming, we have grown throughout the years in terms of revenue generated
from construction engineering testing and inspection services. Our service offerings include a range  of
construction engineering testing and inspection services covering different types of testing and inspections
processes involved in the industry. We primarily offer construction engineering testing services including
foundation testing service, infrastructure and public roads testing service, construction material testing
service, as well as building structure testing service. Additionally, we provide construction engineering
inspection services including slope monitoring and foundation pit monitoring services.  Since May 2024,
as part of our expansion plan, while  remaining our primary business focus on construction engineering
testing and inspection services, we have  commenced to diversify our service offerings and provide food
testing services, which contributed 12.3% to our total revenue generated in 6M2024.
According to the CIC Report, the construction engineering testing and inspection services sector
emerged with significant potential. The total market size of the construction engineering testing and
inspection industry in Maoming  was RMB 389.8 million  in 2023  and is expected to reach RMB 614.6
million  in 2028 , representing a CAGR of 9 .5% from 2023  to 2028 . Over the years, the industry has
also demonstrated steady growth, mainly driven by the government’s initiative for rapid infrastructure
development. The construction engineering testing and inspection industry in Maoming showcased a
CAGR of 11.1 % from 2019  to 2023 .
Our customer base primarily consists of entities involved in the construction industry in China,
including private and public sector entities such as property developers and construction companies, state-
owned investment companies, relevant PRC government institutions and PRC government administrative
bureaus. These customers rely on our expertise to ensure the quality, safety and compliance at relevant
stages of their construction or infrastructure projects. The primary focus of our testing and inspection
services lies in private commercial and residential construction projects as well as public construction and
infrastructure projects. During FY2021, FY2022,  FY2023 and 6M2024, we had 268, 18 2, 279 and 196
customers, respectively.
As at the Latest Practicable Date, we maintain a team of 106 employees, holding a total of 179
testing qualifications issued and approved by the Guangdong Association for Quality and Safety Testing
and Appraisal of Construction Projects, enabling them to conduct proficient and reliable testing and
inspection processes. Among them, 5 5 are qualified engineers specialising in construction engineering


--- page 13 ---
– 2 –
SUMMARY
and three  are qualified engineers specialising in food and agriculture in China. Our Company has also
obtained accreditation in a total of 39 categories for testing and inspection services relating to construction
engineering, product and material testing , environmental testing , food testing and agricultural related
testing approved by the Guangdong AMR and we offer testing services with over 2,700 parameters under
the 39 categories.
We have obtained the Inspection and Testing Agency Qualification Certificate issued by the
Guangdong AMR. This certificate grants us permission to use the mark of the CMA (China Inspection
Body and Laboratory Mandatory Approval) when conducting our business. CMA is a certification and
evaluation of the testing capability and reliability of testing and inspection institutions, conducted by
quality inspection departments at the provincial level or above in accordance with the provisions of the
Metrology Law of China.  Additionally, we also hold the Construction Engineering Quality Inspection
Agency Qualification Certificate issued by the Guangdong Provincial Department of Housing and Urban-
Rural Development. As a testing and inspection company, we are required to obtain the Inspection and
Testing Agency Qualification Certificate. When carrying out testing and inspection activities relating to
construction engineering, we are also required to obtain the Construction Engineering Quality Inspection
Agency Qualification Certificate. These certificates are crucial for demonstrating our capability and
eligibility to provide reliable testing and inspection services. Our market reputation is largely established
on the foundation of delivering reliable services, and we maintain this standard through stringent quality
control measures. These measures are in place to ensure that we consistently uphold our service standards.
We operate our headquarters located in Xinyi City, Maoming, Guangdong Province, and provide
on-site or laboratory testing and inspection services to customers in Maoming. Leveraging on (i) our state-
owned background; (ii) our proven track records; (iii) our established market presence in Maoming; and (iv)
our experienced senior management supported by our skilled personnel, we have grown throughout the
years in terms of revenue generated from the testing and inspection services.
During the Track Record Period, our revenue was mainly derived from our foundation testing
service. Revenue from foundation testing service  accounted for 74.8%, 56.2%,  59.3% and 61.8% of our
total revenue for FY2021, FY2022, FY2023 and 6M2024, respectively.  The revenue generated from our
foundation testing service was RMB29.7 million, RMB11.2 million,  RMB 24.6  million  and R MB14.1
million for FY2021, FY2022,  FY2023 and 6M2024, respectively. The decrease in revenue generated from
foundation testing service in FY2022 was due to the impact of the COVID-19 pandemic, as a result, the
number of foundation service orders completed by us in FY2022 decreased. See “Effect of the COVID-19
pandemic” below for details. As the impact of the COVID-19 pandemic gradually eased in 2023  and
there is a growth in our foundation testing service provided to projects in public sector, our revenue from
foundation testing service increased in FY2023.
OUR BUSINESS MODEL
We offer a wide range of comprehensive construction engineering testing and inspection services to
customers in the construction industry. Our testing services primarily include foundation testing service,
infrastructure and public roads testing service, construction material testing service and building structure
testing service, and our inspection services include slope monitoring and foundation pit monitoring services.
Since May 2024, we have also c ommenced to provide food testing services. Our construction engineering
testing and inspection services cover the main stages of  private  commercial and residential construction


--- page 14 ---
– 3 –
SUMMARY
projects as well as public construction and infrastructure projects and our food testing services since May
2024 cover various types of food products such as fruits, vegetables, tea leaves and eggs where we conduct
testings to evaluate whether the products meet the relevant national legal quality and safety standards.
Since FY2022, we have shifted our focus towards providing more testing and inspection services
for customers involved in public sector projects. The following table sets forth a breakdown of our revenue
by public and private sector construction engineering projects/ by public sector customer demanding food
testing service and by customers type during the Track Record Period:
FY2021 FY2022 FY2023 6M2024
RMB’000 % RMB’000 % RMB’000 % RMB’000 %
Construction engineering testing
and inspection services
Private Sector
Property developers 22,112 55.6 5,583 28.0 13,098 31.6 9,118 40.0
Construction companies 6,604 16.6 3,900 19.5 4,251 10.2 626 2.7
PRC government institutions (1) –* 0 – – 85 0.2 45 0.2
PRC government administrative
bureaus (1) 1 0 – – 3 0 1 0
Others (2) 1,435 3.6 559 2.8 2,028 4.9 943 4.1

Sub-total of private sector 30,152 75.8 10,042 50.3 19,465 46.9 10,733 47.0

Public Sector
Property developers 1,484 3.7 581 2.9 1,756 4.2 73 0.3
Construction companies 1,955 4.9 1,448 7.3 4,135 10.0 217 1.0
State-owned investment companies 3,502 8.8 2,091 10.5 5,851 14.1 4,202 18.4
PRC government institutions 2,297 5.8 3,934 19.7 6,658 16.1 2,031 8.9
PRC government administrative
bureaus 307 0.8 1,807 9.1 3,128 7.5 1,634 7.1
Others 84 0.2 63 0.2 507 1.2 1,141 5.0

Sub-total of public sector 9,629 24.2 9,924 49.7 22,035 53.1 9,298 40.7

Sub-total of construction
engineering testing and
inspection services 39,781 100.0 19,966 100.0 41,500 100.0 20,031 87.7

Food testing services
Public Sector
PRC government administrative
bureaus – – – – – – 2,799 12.3

Sub-total of food testing services – – – – – – 2,799 12.3

Total 39,781 100.0 19,966 100.0 41,500 100.0 22,830 100.0

* represents that the amount is less than RMB1,000


--- page 15 ---
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SUMMARY
Notes :
1. Certain PRC government institutions and PRC government administrative bureaus conduct sampling quality
inspection on various aspect in a private construction project, such as the quality of the construction materials. As
part of this process, they engage us to provide relevant testing services to ensure the required quality standards set
by the government are met and maintained in the private construction projects.
2. Including individuals involving in private construction works which require our testing services.
To provide our testing and inspection services, we would rely on our qualified testing and
inspection personnel and technicians, our fleet of testing and inspection equipment sourced from relevant
companies and manufacturers, and testing consumables sourced for our day to day testing process.
The following diagram illustrates the business chain of our Company:
Our Company
Customers and subjects involved
Machinery and
equipment
Property developers
Construction
companies
State-owned investment
companies
Government
administrative bureaus
Government
institutions
Government
administrative bureau
Testing
consumables
Quali/f_ied engineers,
technicians
and others
Private commercial
and residential
construction projects
Public construction
and infrastructure
projects
Food products

 Elements and components for provision of our services
 (1)  Provision of construction engineering testing and inspection services to customers
(2)  Issuance of testing reports to customers to ensure the quality, safety and compliance of relevant standards and
regulations for materials or process involved in various stages of construction or infrastructure projects
 (1) Provision of food testing services to a customer in 6M2024
(2) Issuance of testing reports to a customer to ensure the compliance of relevant quality and safety standards for
the food products


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SUMMARY
As at the Latest Practicable Date, we had obtained accreditation in a total of 39 categories for
testing and inspection services relating to construction engineering, product and material testing,
environmental testing, food testing and agricultural related testing approved by the Guangdong AMR
under the Inspection and Testing Agency Qualification Certificate, and w e offer testing services with
over 2,700 parameters under the 39 categories. These parameters demonstrate the comprehensive range
of testing services that we can offer to support the construction and other industries . By obtaining
accreditation in multiple categories and covering a diverse set of parameters, we are able to conduct a
large number of testing types in relation to each of our services, each testing type provides the approach
or method used to perform the testing, while testing categories and parameters define the specific areas or
characteristics being assessed within those testing types.  As at the Latest Practicable Date, there were a
total of 140 categories governed and approved by the Guangdong AMR covering construction engineering,
product and material testing, environmental testing, food testing and agricultural related testing.
Our services are required at various stages throughout our customers’ construction or infrastructure
projects. We assist our customers engaging in construction or infrastructure projects in ensuring
compliance with regulatory standards, optimising performance, and enhancing the overall quality and
safety of buildings and infrastructure. By delivering reliable and accurate results, we help our customers
ensure compliance with contractual standards and confirm  the quality of the relevant parts or stages in
construction or infrastructure projects. Our testing and inspection services may be sought by our customers
either to comply with applicable regulatory requirements or for voluntary testing purposes. For FY2021,
FY2022,  FY2023 and 6M2024, 99.4%, 98.9%, 99.3% and 99.7%  of our revenue were derived from
testing reports produced to our customers due to regulatory requirements. For details, see “Business – Our
customers” on page 199 of this prospectus.
We are headquartered in Xinyi City, Maoming, Guangdong Province to provide construction
engineering  testing and inspection services through our professional teams in construction sites located
primarily in Maoming. To perform quality tests on construction material samples for our customers, we
also operate two in-house laboratory units  with various laboratorial function located in Xinyi City. Our
laboratories are equipped with advanced testing instrumentation and operated by skilled technicians. Our
food testing services provided since May 2024 were also mainly conducted in our laboratories by our
skilled technicians with relevant qualifications in food testing.  Our employees for our testing services
include field personnel that perform on-site testing at the designated construction sites and technicians
that perform analytical tests in our laboratories  or, for certain food testing, in designated locations.  Our
services are backed by stringent quality control measures to ensure the quality of testing and inspection
services delivered to our customers. For further details, see “Business – Quality control” on page 197 of
this prospectus.
Maoming represents our primary market and all of our revenue generated during the Track Record
Period are attributable to our services provided in Maoming.


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SUMMARY
OUR SERVICES
We provide a wide range of comprehensive construction engineering testing and inspection
services to our customers, where (1) our testing services consist of (i) foundation testing service, (ii)
infrastructure and public roads testing service, (iii) construction material testing service, and (iv) building
structure testing service, and (2) our inspection services consist of (v) slope monitoring and foundation
pit monitoring services. In addition, since May 2024, as part of our expansion plan, while remaining our
primary business focus on construction engineering testing and inspection services, we have commenced
to diversify our service offerings and provide food testing services, which contributed 12.3% to our total
revenue generated in 6M2024.
The following diagram illustrates our main service offerings:
Our services
Foundation testing
service
•  Low Strain
 Integrity Test
•  Acoustic Wave
 T ransmission Test
•  Standard
 Penetration Test
•  Core Drilling Method
•  Static Load Test
•  Plate Load Test
Infrastructure and
public road testing
service
Construction material
testing service
Building structure
testing service
Slope monitoring
and foundation pit
monitoring service
Construction engineering
testing services
Construction engineering
inspection services
Major types of tests: Major types of tests: Major types of tests: Major types of tests: Major types of
monitoring works:
•  Compaction Testing •  Specialised
 laboratory tests
 on construction
 material such as
 sand, stone, cement,
 steel, concrete,
 mineral powder,
 geosynthetics,
 asphalt and
 plastic pipes, etc
•  Concrete Strength
•  Full Water Test
 for Structures
•  Thickness of
 Protective layer
•  Reinforcement Bars
 Number and Spacing
•  Monitoring of an
 e xcavation pit in a
 b uilding project
 during the
 construction and
 usage phases
•  Monitoring of a
 b uilding slope during
 the construction,
 trial operation, and
 operational phases
•  Bending Test
•  Pipe Closure Test
•  CCTV Inspection
Construction Engineering
•  Quantitative testing
•  Rapid testing
Types of tests:
Food testing services

For details, see “Business – Our services” on page 170 of this prospectus.


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SUMMARY
OUR CUSTOMERS,  SUPPLIERS AND SUBCONTRACTORS
As at the Latest Practicable Date, we had business relationships with our five largest customers
during the Track Record Period from four months to s even years. For FY2021, FY2022,  FY2023 and
6M2024, the revenue generated from our five largest customers was RMB14.9 million, RMB8.9  million,
RMB15.9 million  and RMB 9.9 million , respectively, representing 37.6%, 44.4% , 38.3% and 43.6%  of
our revenue for the same periods, respectively, and the revenue generated from our largest customer for
respective year/period amounted to RMB 5.1 million, RMB 3.7 million,  RMB 4.5 million  and RMB 2.9
million, respectively, representing 12.8%, 18.4% , 10.8% and 12.6%  of our revenue for the same periods,
respectively. For details, see “Business – Our customers” on page 199 of this prospectus.
Our suppliers and subcontractors mainly include companies and manufacturers for testing
consumables for conducting our testing services, and also drilling companies that we subcontract certain
physically demanding  works during the course of provision of our foundation testing service. As at
the Latest Practicable Date, we had business relationships with our five largest suppliers, including
subcontractors, during the Track Record Period from five months to 15 years . For FY2021, FY2022,
FY2023 and 6M2024, the procurement from our five largest suppliers amounted to RMB 1.6 million,
RMB1.0 million,  RMB0.9  million and RMB0.9 million, respectively, representing 90.5%, 80.0%, 61.9%
and 78.1% of our total purchases  for the same periods respectively. For FY2021, FY2022 , FY2023 and
6M2024, the procurement from our largest supplier  or  subcontractor  amounted to RMB 0.7 million,
RMB0.5 million,  RMB0.4 million and RMB0.3 million, respectively, representing 37.6%, 41.0%, 31.8%
and 23.8%  of our total purchases  for the same periods respectively. For details, see “Business – Our
suppliers and subcontractors” on page 220 of this prospectus.
COMPETITIVE STRENGTHS
We believe that our competitive strengths are as follows, each of which is discussed in more detail
in “Business – Competitive strengths” on page 144 of this prospectus:
• We provide a wide spectrum and comprehensive construction engineering testing and
inspection services and food testing services, serving a diversified base of customers in both
private and public sectors
• We strategically targeting the market in the 3rd to 5th tiers cities in Maoming.
• We strategically positioned ourselves to harness the accelerating infrastructure development
in China driven by government policies in tier 3 or below cities.
• We implement quality control measures to maintain our service standards and ensure precise
testing outcomes.
• Our management team is recognised for their leadership and commitment.


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SUMMARY
BUSINESS STRATEGIES
We intend to implement a business strategy with the following key areas, the details of which will
be discussed in “Business – Business strategies” on page 148 of this prospectus:
• Expanding our construction engineering testing services to achieve Comprehensive
Qualification under the Qualification Standards of Construction Engineering Quality
Inspection Agencies and strengthen our existing construction engineering testing and
inspection services.
• Strengthening our existing market presence in Maoming and expanding our service footprint
into the 3rd to 5th tiers cities in Western Guangdong of China.
• Diversifying our testing and inspection services offering, and expanding into areas including
food and agricultural, transportation and fire protection.
INFORMATION OF OUR CONTROLLING SHAREHOLDER
As at the Latest Practicable Date, Xinyi City CEQS Center directly held approximately 80% of
our issued share capital, thus the Controlling Shareholder of our Company under the GEM Listing Rules.
Immediately following the completion of the Share Offer (assuming the Offer Size Adjustment Option is
not exercised), Xinyi City CEQS Center will hold 56% of our enlarged issued share capital. As such, Xinyi
City CEQS Center will continue to be the Controlling Shareholder immediately following the completion
of the Share Offer.
Each of our Directors and Controlling Shareholder has confirmed that none of them nor any of
their respective close associates has any interest in any business, apart from the business of our Company,
which competes with, or is likely to compete with our business, whether directly or indirectly, which
would otherwise require disclosure under Rules 11.04 of the GEM Listing Rules. See “Relationship with
the Controlling Shareholder and N on-competition Undertaking” on page 256 of this prospectus for further
information in relation to our Controlling Shareholder.
PRE-IPO INVESTMENT
On 27 July 2023, our Company entered into a capital injection agreement with Xinyi City CEQS
Center and Xinyi Xinhui, pursuant to which Xinyi Xinhui agreed to subscribe for an aggregate of 20% of
the enlarged registered capital of our Company at a total consideration of RMB20 million in two tranches.
The Pre-IPO investment was completed in November 2023 . For details, see “History, Development and
Corporate Structure – Pre-IPO Investment” on page 136 of this prospectus.


--- page 20 ---
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SUMMARY
SUMMARY OF FINANCIAL INFORMATION
Key financial information
The following table sets forth a summary of our statements of c omprehensive income  for the
periods indicated.
FY2021 FY2022 FY2023 6M2023 6M2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Revenue 39,781 19,966 41,500 16,329 22,830
Cost of sales (9,605) (8,472) (11,719) (5,494) (6,658)

Gross profit 30,176 11,494 29,781 10,835 16,172
General and administrative expenses (4,726) (6,383) (10,157) (3,703) (5,485)
Research and development expenses – – (113) – (280)
Net impairment losses on financial
assets (2,121) (1,380) (1,317) (1,589) (127)
Other income 548 417 620 317 60
Other losses – (13) (931) – (84)

Operating profit 23,877 4,135 17,883 5,860 10,256
Finance income 100 97 70 33 49
Finance costs (254) (281) (219) (142) (488)

Finance costs – net (154) (184) (149) (109) (439)

Profit before income tax 23,723 3,951 17,734 5,751 9,817
Income tax expense (5,986) (1,039) (4,480) (1,467) (2,474)

Net profit 17,737 2,912 13,254 4,284 7,343

Other comprehensive income,
net of tax – – – – –

Total comprehensive income 17,737 2,912 13,254 4,284 7,343


--- page 21 ---
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SUMMARY
Revenue
During the Track Record Period, we generated revenue primarily from our comprehensive
construction engineering testing and inspection services, including (i) testing services which primarily
include foundation testing service, construction material testing service, building structure testing service,
infrastructure and public roads testing service; and (ii) inspection services which primarily include slope
monitoring and foundation pit monitoring services. For FY2021, FY2022,  FY2023 and 6M2024, our total
revenue was RMB39.8 million, RMB20.0 million,  RMB41.5 million and RMB22.8 million, respectively.
The following table sets forth a breakdown of revenue generated by types of service during the
Track Record Period.
FY2021 FY2022 FY2023 6M2023 6M2024
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(Unaudited)
Construction engineering
Testing services
Foundation testing service 29,743 74.8 11,232 56.2 24,619 59.3 10,683 65.4 14,112 61.8
Construction material testing
service 5,185 13.0 2,955 14.8 3,888 9.4 1,831 11.2 2,409 10.5
Building structure testing service 2,649 6.7 759 3.8 1,682 4.0 657 4.0 810 3.5
Infrastructure and public roads
testing service 893 2.2 456 2.3 5,837 14.1 2,037 12.5 1,408 6.2
38,470 96.7 15,402 77.1 36,026 86.8 15,208 93.1 18,739 82.0
Inspection services
Slope monitoring and foundation
pit monitoring services 1,311 3.3 4,564 22.9 5,474 13.2 1,121 6.9 1,292 5.7
1,311 3.3 4,564 22.9 5,474 13.2 1,121 6.9 1,292 5.7

39,781 100.0 19,966 100.0 41,500 100.0 16,329 100.0 20,031 87.7

Food testing services – – – – – – – – 2,799 12.3

Total 39,781 100.0 19,966 100.0 41,500 100.0 16,329 100.0 22,830 100.0

Our revenue generated from the provision of construction engineering testing services decreased
from RMB38.5 million in FY2021 to RMB15.4 million in FY2022, mainly attributable to the overall
downturn in the real estate industry and the impact of the COVID-19 pandemic on real estate projects in
FY2022, which resulted in delays in the construction progress of foundations and building structures of
real estate projects. Our revenue from construction engineering testing services increased from RMB15.4
million in FY2022 to RMB36.0 million in FY2023, mainly attributable to (i) the lifting of COVID-19


--- page 22 ---
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SUMMARY
restrictions, such as lockdown and quarantine, as a result, the total number of service orders we completed
increased significantly in FY2023; and (ii) our increase in the number and scope of qualifications in
infrastructure and public roads testing from 20 parameters under eight categories as at 31 December
2022 to 586 parameters under 11 categories as at 31 December 2023.  Our revenue from construction
engineering testing services increased from RMB15.2 million in 6M2023 to RMB1 8.7 million i n 6M2024,
primarily benefiting from (i) the overall growth in the construction engineering T&I industry in Maoming
between 6M2023 and 6M2024 according to the CIC Report; and (ii) an increase in revenue generated from
foundation testing service by RMB3.4 million from RMB10.7 million in 6M2023 to RMB 14.1 million in
6M2024 primarily due to an increase in the average service order value for foundation testing service from
RMB25,993 per service order in 6M2023 to RMB32,516 per service order in 6M2024 mainly because we
had provided more foundation testing services with higher testing complexity to our customers in 6M2024.
Revenue from our construction engineering inspection services increased by 248.1% from RMB1.3
million in FY2021 to RMB4.6 million in FY2022, primarily due to the substantial monitoring service
work we provided to a sewage network reconstruction project in the fourth quarter of 2022, which resulted
in the recognition of revenue of RMB3.7 million. Despite there was some disruption on construction
progress of such project attributable to the COVID-19 pandemic, such sewage network reconstruction
project continued and we provided our construction engineering  inspection service as required by the
customer and recognised majority of the revenue attributable to this project in FY2022. Our revenue
from construction engineering  inspection services increased by 19.9% from RMB4.6 million in FY2022
to RMB5.5 million in FY2023, which was mainly driven by the increase in the number of service orders
completed from five in FY2022 to 10 in FY2023, particularly attributable to the services provided to
an urban renewal project in Gaozhou City, Maoming, which generated revenue of RMB3.2 million in
FY2023. Our revenue from construction engineering inspection services increased b y 15.3% from RMB1.1
million in 6M2023 to RMB1.3 million i n 6M2024, primarily due to an increase in revenue generated from
our slope monitoring and foundation pit monitoring services provided to p roperty developers for their
projects in private sector from RMB0.2 million in 6M2023 to RMB0.3 million in 6M2024.
Since May 2024, w e had commenced providing food testing services and generated revenue of
RMB2.8 million  in 6M2024. Our revenue generated fr om food testing services was attributable from
a PRC government administrative bureau customer who engaged us to conduct government- mandated
sampling tests on various types of food products such as fruits, vegetables, tea leaves and eggs in 6M2024.
Gross Profit
Our gross profit was RMB30.2 million, RMB11.5 million,  RMB29.8 million, RMB 10.8 million
and RMB 16.2 million  for FY2021, FY2022,  FY2023, 6M2023 and 6M2024, respectively. Our gross
profit decreased significantly from RMB30.2 million for FY2021 to RMB11.5 million for FY2022 and
increased significantly from RMB11.5 million for FY2022 to RMB29.8 million for FY2023. Our gross
profit increased from RMB 10.8 million in 6M2023 to RMB 16.2 million in 6M2024. The fluctuations in
our gross profit were generally affected by the fluctuations in our revenue during the same year.


--- page 23 ---
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SUMMARY
Profit for the Year/Period
Our profit for the year/period was RMB17.7 million, RMB2.9 million,  RMB13.3 million, RMB4.3
million and RMB 7.3 million  for FY2021, FY2022,  FY2023, 6M2023 and 6M2024, respectively.  Our
profit for the year decreased by 83.6% from RMB17.7 million in FY2021 to RMB2.9 million in FY2022
primarily due to (i) the decrease in our total revenue from RMB39.8 million in FY2021 to RMB20.0
million in FY2022; and (ii) the increase in our general and administrative expenses from RMB4.7
million in FY2021 to RMB6.4 million in FY2022 , mainly attributable to the increases in our  employee
remuneration  and professional fees. Our profit for the year substantially increased by 355.2% from
RMB2.9 million in FY2022 to RMB13.3 million in FY2023  primarily due to the increase in our total
revenue from RMB20.0 million in FY2022 to RMB41.5 million in FY2023, and  partially offset by the
increases  in (i) our general and administrative expenses from RMB6.4 million in FY2022 to RMB10.2
million in FY2023 , mainly attributable to the increases in our  employee remuneration,  professional fees
and occurrence of Listing expenses ; and (ii) our other losses from RMB13,000 in FY2022 to RMB0.9
million in FY2023.  Our profit for the period increased by 71.4% from RMB 4.3 million in 6M2023 to
RMB7.3 million in 6M2024 primarily due to the increase in our total revenue from RMB16.3 million in
6M2023 to RMB 22.8 million in 6M2024, which was partially offset by the increase in (i) our general
and administrative expenses from RMB 3.7 million in 6M2023 to RMB 5.5 million in 6M2024,  mainly
attributable to the increase in professional fees and occurrence  of Listing expenses; (ii) our research
and development expenses from nil in 6M2023 to RMB0.3 million in 6M2024; (iii) our net finance cost
from RMB0.1 million in 6M2023 to RMB0.4 million in 6M2024; and (iv) our income tax expenses from
RMB1.5 million in 6M2023 to RMB2.5 million in 6M2024.
Selected balance sheet data
The following table sets forth a summary of selected  items in our balance sheet a s at the dates
indicated.
As at 31 December
As at
30 June
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Trade receivables 44,479 44,983 41,165 44,842
Less: p rovision for credit loss of
trade receivables (9,068) (10,438) (11,840) (11,968)

35,411 34,545 29,325 32,874

Other receivables and prepayments 5,375 5,274 19,901 25,415
Total assets 85,734 84,410 118,830 160,331
Total liabilities 18,746 15,079 16,245 50,403
Net current assets 59,514 60,824 91,985 87,152
Net assets 66,988 69,331 102,585 109,928


--- page 24 ---
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SUMMARY
Net current assets
Our net current assets increased from RMB59.5 million as at 31 December 2021 to RMB60.8
million as at 31 December 2022, representing an increase of 2.2%. Such increase was primarily
attributable to (i) a decrease in current liabilities as a result of a decrease in current income tax liabilities
of RMB5.6 million; and (ii) an increase in contract fulfilment cost of RMB1.2 million, which was partially
offset by (i) a decrease in cash and cash equivalents of RMB3.6 million; and (ii) a decrease in trade and
other receivables and prepayments of RMB0.8 million during the year.
Our net current assets as at 31 December 2023 further increased to RMB92.0 million, representing
an increase of 51.2% or RMB31.2 million from RMB60.8 million as at 31 December 2022. Such increase
was mainly due to ( i) an increase in trade and other receivables and prepayments of RMB10.4 million; and
(ii) an increase in cash and cash equivalents of RMB 26.9 million  and partially offset by the increase in
other payables and accruals of RMB4.2 million.
Our net current assets as at 30 June 2024 decreased to RMB87.2 million was mainly attributable to
the combined effect of (i) the decrease in cash and cash equivalents of RMB16.7 million for the purpose of
purchasing property, plant and equipment and paying income tax in 6M2024; (ii) an increase in trade and
other receivables and prepayments of RMB9.1 million; and (iii) a decrease in current income tax liabilities
of RMB2.3 million.
Net assets
Our net assets increased from RMB67.0 million as at 31 December 2021 to RMB69.3 million as
at 31 December 2022, representing an increase of 3.5%, primarily due to (i) the profit for the year of
RMB2.9 million; (ii) the capital contribution from an equity holder of RMB1.3 million, and offset by (iii)
the dividends paid to shareholders of RMB1.9 million.
Net assets further increased to RMB102.6 million as at 31 December 2023 as compared to that of
RMB69.3 million as at 31 December 2022, mainly due to (i) the profit for the year of RMB13.3 million;
and (ii) the capital contributions  from Xinyi Xinhui to our Company of RMB2 0.0 million.
Our net assets further increased to RMB109.9 million as at 30 June 2024 primarily due to the profit
for the period of RMB7.3 million.


--- page 25 ---
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SUMMARY
Cash Flows
The following table sets forth a summary of our statements of cash flows for the periods indicated.
FY2021 FY2022 FY2023 6M2024
RMB’000 RMB’000 RMB’000 RMB’000
Net cash generated from/(used in) operating
activities 8,138 (1,848) 21,942 1,640
Net cash ( used in)  investing activities (882) (995) (4,592) (11,929)
Net cash ( used in) /generated from financing
activities (2,432) (782) 9,574 (6,397)

Net increase/(decrease) in cash and cash
equivalents 4,824 (3,625) 26,924 (16,686)
Cash and cash equivalents at beginning of the
year/ period 31,022 35,846 32,221 59,145

Cash and cash equivalents at end of the
year/period 35,846 32,221 59,145 42,459

Net operating cash flows
For FY2022, we had net cash used in operating activities of RMB1.8 million, primarily attributable
to cash generated from operations of RMB4.9 million and interest received of RMB0.1 million, fully
offset by the payment of income tax of RMB6.8 million. The decrease in cash generated from operations
compared with FY2021 was in line with the decrease in revenue and net profit for FY2022. The movement
in working capital was mainly attributable to (i) increase in contract fulfillment cost of RMB1.0 million
due to the increase in ongoing services provided by our Company as at 31 December 2022; (ii) increase
in prepayments and other receivables of RMB0.8 million; and (iii) increase in trade payables of RMB0.6
million mainly attributable to amount due to our subcontractors.
For FY2023, we had net cash generated from operating activities of RMB 21.9 million, primarily
attributable to cash generated from operations of RMB 25.4 million and interest received of RMB 0.3
million, and partially offset by the payment of income tax of RMB3.8 million. The movement in working
capital was mainly attributable to the decrease in trade receivables of RMB3.8 million mainly attributable
to the substantial settlement of our trade receivables during  FY2023 after  the lifting of the COVID-19
restrictions,  and partially offset by t he increase in trade receivable associated with our revenue growth in
FY2023.
For 6M2024, we had net cash generated from operating activities of RMB 1.6 million, primarily
attributable to cash generated from operations of RMB 6.6 million and interest received of RMB 49,000,
and partially offset by the payment of income tax of RMB5.0 million. The movement in working capital
was mainly attributable to (i) increase in contract fulfillment costs and inventory of RMB 1.2 million; and
(ii) increase in trade receivables of RMB3.7  million.


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SUMMARY
KEY FINANCIAL RATIO
FY2021 FY2022 FY2023 6M2024
Profitability ratios
Gross profit margin 75.9% 57.6% 71.8% 70.8%
Net profit margin 44.6% 14.6% 31.9% 32.2%
Return on equity 26.5% 4.2% 12.9% 13.4%
Return on total assets 20.7% 3.4% 11.2% 9.2%
Liquidity ratios
Current ratio 5.3 times 7.5 times 7.2 times 7.6 times
For more information on our key financial ratios, see “Financial information – Key financial ratios”
on page 341 of this prospectus.
STATISTICS OF THE SHARE OFFER AND USE OF PROCEEDS
Number of Offer Shares: 10,179,000 H Shares (subject to Offer Size Adjustment
Option)
Offer Size Adjustment Option: Up to an aggregate of 1,526,0 00 additional Offer Shares,
representing not more than 15% of the initial number of Offer
Shares
Offering structure: Public Offering: 1,018,000 H Shares,
representing approximately
10% of the Offer Shares
(subject to reallocation)
Placing: 9,161,000 H Shares,
representing approximately
90% of the Offer Shares
(subject to reallocation and
the Offer Size Adjustment
Option)
Offer Price range: HK$8.6 to HK$10.4 per Offer Share
Board lot: 500 H Shares
Based on minimum
indicative Offer Price of
HK$8.6 per Offer Share
Based on maximum
indicative Offer Price of
HK$10.4 p er Offer Share


--- page 27 ---
– 16 –
SUMMARY
Market capitalisation of our
Share(1):
HK$291.8 million HK$352.9 million
Unaudited pro forma adjusted net
tangible assets per Share: (2)
HK$4.95 HK$5.46
Use of proceeds: We estimate that we will receive net proceeds of HK$54.4
million  (equivalent to RMB 50.0 million)  from the
Share Offer, after deducting  the underwriting fees and
commissions and est imated expenses payab le by us in
connection with the Share Offer assuming the Offer Price
of HK$9.5 p er Offer Share (the mid-point of the proposed
range of the Offer Price). We intend to use the net proceeds
from the Share Offer for the following purposes.
• HK$15.0 million (equivalent to RMB13.7 million), representing 2 7.5% of the net proceeds,
will be used for expanding our construction engineering testing services to achieve
Comprehensive Qualification under the Qualification Standards of Construction Engineering
Quality Inspection Agencies and strengthen our existing construction engineering testing and
inspection services
• HK$15.1  million (equivalent to RMB13.9 million), representing 2 7.7% of the net proceeds,
will be used for strengthening our existing market presence in Maoming and expanding our
service footprint into the 3rd to 5th tiers cities in Western Guangdong
• HK$20.3  million (equivalent to RMB18.7 million), representing 3 7.4% of the net proceeds,
will be used for diversifying our testing and inspection services beyond construction
engineering and expanding into areas including food and agricultural, transportation and fire
protection
• HK$3.0  million (equivalent to RMB2.8 million), representing 5.5% of the net proceeds, will
be used for upgrading our ERP system
• the remaining balance of HK$ 1.0 million  (equivalent to RMB 0.9 million) , representing
approximately 1.9% of the net proceeds, will be used for general working capital
Notes:
1. The calculation of market capitalis ation is based on 33,929,000 Shares being the total of 23,750,000 Unlisted Shares
and 10,179,000 H Shares expected to be issued immediately upon completion of the Share Offer assuming that the
Offer Size Adjustment Option is not exercised.
2. The unaudited pro forma adjusted net tangible assets per share is arrived at after the adjustment referred to in
“Appendix II  – Unaudited Pro Forma Financial Information” and on the basis that 33,929,000 Shares are in issue
assuming the Share Offer had been completed on 30 June 2024 without taking into account of any Shares which may
be issued upon the exercise of the Offer Size Adjustment Option.


--- page 28 ---
– 17 –
SUMMARY
DIVIDEND AND DIVIDEND POLICY
Dividend distribution to our shareholders is recognised as a liability in our financial statements in
the period in which the dividends are approved by our shareholders and/or directors, where appropriate. In
May 2021 and September 2021, cash dividends of RMB1,900,000 in total were declared and paid for the
year ended 31 December 2020. In March 2022, a cash dividend of RMB1,900,000 was declared and paid
for the year ended 31 December 2021.
According to our dividend policy adopted in A ugust 2024, distribution of dividends shall be
formulated by our Board and will be subject to shareholders’ approval. A decision to declare or to pay any
dividends will be made when our Company achieves annual profit and at the discretion of our Directors
and will depend upon, among others, our business conditions and strategies, capital requirements and
expenditure plans, financial results, future operations and earnings, characteristics of the industry, the
stage of development, and any restrictions on payment of dividends, and other factors that our Directors
may consider relevant. Provided that the working capital of our Company can be healthily maintained, the
general principle shall be to distribute profits to our shareholders on an annual basis, wherein the payout
ratio shall be no less than 20% of the current year’s after-tax profits.  We will continue to evaluate our
dividend policy in light of our financial condition and the prevailing economic environment.  Our future
declarations of dividends may or may not reflect our historical declarations of dividends and will be at the
absolute discretion of the Board.
EFFECT OF THE COVID-19 PANDEMIC
The initial outbreak of COVID-19 in China during the first quarter of 2020, followed by subsequent
resurgences of the virus in certain major cities throughout 2022, has resulted in the implementation of several
measures to mitigate the spread of the pandemic. These measures include imposing lockdowns, suspending
construction activities, implementing travel restrictions, and enforcing strict social distancing and quarantine
protocols. In particular, the construction personnel in Maoming have faced the challenges of intermittent
isolation periods throughout the pandemic. Various companies in Guangdong Province including Maoming
periodically required employees to undergo nucleic acid testing for COVID-19 and employees infected or
identified as close contacts shall be isolated, which affected their normal work operations. Both our Company
and our customers experienced increased abnormal working hours and reduced normal working hours due to
the aforementioned reasons. For instance, our Company had arranged several rounds of collective nucleic acid
tests for our employee in FY2022, and the total number of days off due to the pandemic was 206 person-day,
as compared to nil in FY2021. These necessary precautions have disrupted the regular workflow and caused
delays in the progress of various construction and infrastructure projects, which led to a direct impact on
our testing and inspection operations.
With the construction schedules being pushed back, our custome rs’ demand on our construction
engineering testing and inspection services had been postponed. As a result, the revenue for FY2022 has
experienced a decline compared to FY2021. The reduced revenue has put additional strain on our net profit
as a result of the presence of fixed costs and expenses, such as direct labour costs and depreciation of fixed
assets, which remain relatively inflexible.


--- page 29 ---
– 18 –
SUMMARY
Meanwhile, measures imposed by the PRC Government in relation to the pandemic had also affected our
customers’ settlement progress. As a result, the trade receivables turnover day of our Company has increased
significantly from 271 days in FY2021 to 639 days in FY2022. Attributable to the prolonged settlement cycle
due to the pandemic, c ombined with the decrease in net profit, our Company recorded negative cash flows
from operating activities for FY2022.
Overall, the combination of the slow settlement from customers , reduced revenue, and fixed costs and
expenses has led to a challenging financial situation for our Company in FY2022, impacting various vital
financial metrics and requiring prudent management and adaptation in response to the circumstances. As of
the Latest Practicable Date, the impact of the COVID-19 pandemic on our operation has diminished and our
Company’s operation has already resumed to normal level. Our Directors are of the view that the COVID-19
pandemic will not cause material adverse impact on our financial performance and its business operation.
RECENT DEVELOPMENTS AND NO MATERIAL ADVERSE CHANGE
There had been no material adverse change in our financial and trading position since the end of
the Track Record Period, and there is no event since 30 June 2024 up to the date of this prospectus which
would materially affect the information shown in the Accountant’s Report set out in Appendix I to this
prospectus.
Nonetheless, our Company expects a decrease in forecast  profit  for the year ending 31 December
2024 mainly due to  (i) the increases in depreciation of fixed assets and right-of-use assets and interest
expenses of lease liabilities in connection with our relocation plan (as detailed in “Business – Properties
– Relocation plan”); (ii) the decrease in our gross profit margin in the year primarily attributable to the
anticipated increases in direct labour costs and depreciation in connection with our staff recruitment
and purchases of machineries in 2024 according to our business strategies and future plans (as set out in
detail in “Future Plans and Use of Proceeds”) while we anticipate on a conservative basis to only generate
stable revenue streams from our plans in later financial periods; and (iii) the increase in our general
and administrative expenses in connection with the Listing as well as professional fees and expenses
anticipated to be incurred after the Listing.
REGULATORY FRAMEWORK
Regulatory Framework Relating to Qualification Requirements of the Testing and Inspection of
Construction Engineering
The Administrative Measures for the Quality Inspection of Construction Engineering (ண
) promulgated by the Ministry of Construction on 28 September 2005 which
was re-promulgated  by the Housing and Urban-Rural Development (the “MOHURD”) on 29 December
2022 and became effective on 1 March 2023, and the Notice on Issuance of Qualification Standards of
Construction Engineering Quality Inspection Agencies (ணʈ೻ሯඎᏨ
) issued and implemented by the MOHURD on 31 March 2023, stipulate the
construction engineering quality inspection agencies are required to obtain the appropriate qualification
certificates to engage in the quality inspection business under the regulations and set out the qualifications


--- page 30 ---
– 19 –
SUMMARY
requirements of the inspection agencies and personnel, as well as the functions and scope of supervision
of the relevant regulatory authorities. Inspection agencies that have obtained qualification certificates in
Guangdong province under previous qualification standards shall apply for re-assessment in accordance
with the Qualification Standards of Construction Engineering Quality Inspection Agencies (ணʈ೻
ሯඎᏨ಻ዚ࿴༟ሯᅺ๟) prior to 31 October  2024 pursuant to  the Notice of the General Office of the
MOHURD on the Implementation of the “The Administrative Measures for the Quality Inspection of
Construction Engineering” and “Qualification Standards of  Construction Engineering Quality Inspection
Agencies”  (ணʈ೻ሯඎᏨ಻ዚ࿴
) issued on 26  July 2024. Neither our Directors nor our PRC Legal Advisers
foresaw difficulties in obtaining six out of the nine Specialised Qualifications as described in “Business –
Business Strategies – Expanding our construction engineering testing services to achieve Comprehensive
Qualification under the Qualification Standards of Construction Engineering Quality Inspection Agencies
and strengthen our existing construction engineering testing and inspection services.” in this prospectus,
fulfilling the application requirements and meeting the aforementioned transition deadline, and the Joint
Sponsors concur, after having considered the following factors: (a) our Company has reviewed and
examined the relevant qualification requirements for the six Specialised Qualifications under the 2023
Administrative Measures and the Qualification Standards of Construction Engineering Quality Inspection
Agencies, and found that save for the shortage of a small number of required testing equipment, we have
fulfilled all other requirements (including personnel) of the six Specialised Qualifications; and (b) during
an interview conducted by our PRC Legal Advisers and the PRC legal advisers of the Joint Sponsors on
12 April 2024 with an officer of Maoming City Bureau of Housing and Urban-Rural Development, the
responsible officer of the bureau is of the view that there is no impediment for our Company to acquire
the six Specialised Qualifications having considered the requirements of the new qualification standards
and the shortage of a small number of testing equipment that we will acquire. For further details, see
“Regulatory Overview – Laws and Regulations Relating to the Testing and Inspection of Construction
Engineering – Qualifications” in this prospectus.
Regulatory Framework Relating to Overseas Listing
On 17 February 2023, with the approval of the State Council, the CSRC promulgated the Trial
Measures and relevant guidelines, which came into force on 31 March 2023. The Trial Measures
comprehensively improved and reformed the existing regulatory regime for overseas offering and listing
of PRC domestic companies’ securities. According to the Trial Measures, PRC domestic enterprises that
seek to offer and list securities in overseas markets, both directly and indirectly, are required to fulfill the
filing procedure and submit relevant information to the CSRC.
For more details, see “Regulatory Overview –  Regulations Relating to Overseas Offering and
Listing” in this prospectus.
Our PRC Legal Advisers are of the view that the Share Offer shall be deemed as an overseas
offering and listing under the Trial Measures. Therefore, we are required to make the filing with the CSRC
with respect to the Share Offer within the specified time limit.  We had completed the filing procedures
with the CSRC for the Share Offer on 7 March 2024.


--- page 31 ---
– 20 –
SUMMARY
LISTING EXPENSES
The listing expenses in connection with the Share Offer are expected to be HK$ 42.3 million
(equivalent to RMB3 8.8 million), representing 43.7% of the gross proceeds from the Share Offer (based
on the mid-point of the indicative Offer Price range of HK$ 9.5 per Share Offer and assuming the Offer
Size Adjustment Option is not exercised). During the Track Record Period, we incurred listing expenses
of RMB24.0 million, of which RMB2 .7 million was charged to our statements of comprehensive income
during the Track Record Period, while the remaining amount of RMB21.3 million directly attributable to
the issuance of H Shares will be deducted from our equity upon the completion of the Share Offer. We
expect to further incur listing expenses of RMB14.8 million upon the completion of the Share Offer, out of
which RMB1.9 million will be charged to the statements of comprehensive income, and R MB12.9  million,
that is directly attributable to the issuance of H Shares, will be deducted from our equity.
The total listing expenses consist primarily of professional fees paid or payable to the professional
parties for their services rendered in relation to the Listing  and the Share Offer which are non-
underwriting related expenses, including (i) fees and expenses of legal advisers and accountants of
HK$17.1 million (equivalent to RMB15.7 million); (ii) fee and expenses of HK$4.7  million (equivalent to
RMB4.3 million) for engaging IPO Consultant  to provide support services,  see “Financial information –
Listing expense” in this prospectus for further information in relation to the IPO Consultant; and (iii) the
other fees and expenses of HK$ 14.4 million (equivalent  to RMB13.2 million), and underwriting related
expenses (including SFC transaction levy, Stock Exchange trading fee and AFRC transaction levy) of
HK$6.1 million (equivalent  to RMB5.6 million), mainly payable to the Underwriters in connection with
the offering of H Shares under the Share Offer.
MATERIAL RISK FACTORS
Our business and industry is subject to a number of risks and uncertainties. Some highlighted risks
are as follows:
•  Our business is subject to compliance with regulatory and industrial requirements, which
may interfere with the way we conduct our business and may adversely affect our business
and results of operations.
• Our business may be affected by the development of China’s property development,
construction and infrastructure sectors, which are beyond our control.
• Our business operation is concentrated in Maoming,  Guangdong Province, and our business,
financial position and result of operation is affected by the status of development in
economic conditions, government policies or business environment in this region.
• We may be unable to obtain, retain or renew required permits, licences, registrations or
certificates for our business operations.


--- page 32 ---
– 21 –
SUMMARY
• We may be unable to maintain or recruit qualified professionals for our business operations.
• We are exposed to credit risks of our customers and our outstanding trade receivables.
• We operate in a highly competitive industry.
• Pricing of our services is subject to certain key factors,  failure to control costs may adversely
affect our profitability.
• We face the risk of capacity constraints, which could have a material adverse effect on our
business, results of operations and financial condition.
• Failure of or non-compliance with our quality control measures may result in unreliable or
inaccurate test results, which may in turn damage our reputation and affect the demand for
our services.
• Our business may suffer if we fail to respond to changes in technical requirements under
regulatory and industry standards.
As different investors may have different interpretations and standards for determining the
materiality of a risk, you should carefully consider all of the information set out in this prospectus,
including the risks and uncertainties described in “Risk Factors” on page 38 of  this prospectus, before
making an investment in the Offer Shares.


--- page 33 ---
– 22 –
DEFINITIONS
In this prospectus, unless the context otherwise requires, the following expressions shall have the
following meanings.
“Accountant’ s Report” the accountant’ s report from PricewaterhouseCoopers , the text of
which is set out in Appendix I to this prospectus
“AFRC” the Accounting and Financial Reporting Council of Hong Kong
“Articles of Association” or
“Articles”
the amended and restated articles of association of our Company
conditionally adopted on 28 November 2023  which will come
into effect upon Listing, as amended, supplemented or otherwise
modified from time to time, a summary of which is set out in
Appendix V to this prospectus
“associate(s)” has the meaning ascribed to it under the GEM Listing Rules
“Board” or “Board of Directors” the board of Directors
“Business Day” or “business day” any day (other than a Saturday, Sunday or public holiday) on
which banks in Hong Kong are generally open for business
“CAGR” compound annual growth rate
“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
“CATL” the China Agri-product Testing Laboratory (ሯඎτΌᏨ಻
ࣣissued by the Department of Agriculture and
Rural Affairs of Guangdong Province (ุ༵༵Ӏᝂ)
“CCASS” the Central Clearing and Settlement System established and
operated by HKSCC
“China” or “PRC” the People’s Republic of China, but for the purpose of this
prospectus only and except where the context requires, references
in this prospectus to “China” and “the PRC” do not include Hong
Kong, the Macau Special Administrative Region and Taiwan
“CIC” or “Industry Consultant” or
“China Insights Consultancy”
China Insights Industry Consultancy Limited


--- page 34 ---
– 23 –
DEFINITIONS
“CIC Report” an independent industry report commissioned by us and prepared
by CIC for the purpose of this prospectus
“close associate(s)” has the meaning ascribed to it under the GEM Listing Rules
“Companies Ordinance” the Companies Ordinance (Chapter 622 of the Laws of Hong
Kong), as amended, supplemented or otherwise modified from
time to time
“Companies (WUMP) 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”,
“we” or “us”
Guangdong Syntrust GK Testing and Certification Tech Service
Center Co., Ltd.* (΅Ϟ
ʮ̡) (formerly known as Xinyi Xince Testing and Certification
Technical Service Center Co., Ltd.* (ਕ
ʮ̡)), a joint-stock cooperative enterprise established
on 28 March 2000, converted into a limited liability company
on 12 July 2023 and converted into a joint stock company with
limited liability on 31 October 2023
“Company Law” or
“PRC Company Law”
the Company Law of the PRC ( ), as
amended, supplemented and otherwise modified from time to time
“connected person(s)” has the meaning ascribed to it under the GEM Listing Rules
“Controlling Shareholder” has the meaning ascribed to it under the GEM Listing Rules, and
unless the context requires otherwise, refers to Xinyi City CEQS
Center
“core connected person(s)” has the meaning ascribed to it under the GEM Listing Rules
“CSRC” the China Securities Regulatory Commission ( ʕ਷ᗇՎ္ຖ
ึ), a regulatory body responsible for the supervision
and regulation of the PRC national securities markets  and other
securities matters
“Deed of Indemnity” the deed of indemnity dated 13 August  2024  and entered into by
our Controlling Shareholder w ith and in favour our Company,
details of which are set out in “Statutory and General Information
– D. Other Information – 1. Tax and other indemnities ” in
Appendix VI  to this prospectus


--- page 35 ---
– 24 –
DEFINITIONS
“Deed of Non-competition” the deed of non-competition dated 13 August  2024  and entered
into by our Controlling Shareholder and our Company, details
of which are set out in “Relationship with t he Controlling
Shareholder and Non-competition Undertaking – Non-competition
Undertakings” in this prospectus
“Director(s)” or “our Director(s)” the director(s) of our Company
“EIT” the PRC enterprise income tax
“EIT Law” the Enterprise Income Tax Law of the PRC ( ʕശɛ͏΍ձ਷Ά
), as amended, supplemented or otherwise modified
from time to time
“electronic application
instruction(s)”
instruction(s) given by a HKSCC Participant electronically via
HKSCC’s FINI system to HKSCC, being one of the methods to
apply for the Offer Shares
“ESG” environmental, social and governance
“Exchange Participant” has the meaning ascribed to it under the GEM Listing Rules
“Extreme Conditions” extreme conditions caused by a super typhoon as announced by
the Government of Hong Kong
“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
“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 Committee” the GEM Listing Committee of 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


--- page 36 ---
– 25 –
DEFINITIONS
“General Rules of HKSCC” the terms and conditions regulating the use of CCASS as may be
amended or modified from time to time and where the context so
permits, shall include the HKSCC Operational Procedures

“Guangdong AMR” Guangdong Administration for Market Regulation (̹ఙ္
ຖ၍ଣ҅)
“Guide” the Guide for New Listing Applicants published by the Stock
Exchange on 29 November 2023, which consolidated and
enhanced all effective guidance letters and listing decisions related
to New Listing (as defined under Chapter 1.01 of the GEM Listing
Rules), as amended from time to time
“HKFRS” Hong Kong Financial Reporting Standards
“HKSCC” Hong Kong Securities Clearing Company Limited, a wholly-
owned subsidiary of Hong Kong Exchanges and Clearing Limited
“HKSCC EIPO” the application for the Offer Shares to be issued in the name
of HKSCC Nominees and deposited directly into CCASS to be
credited to your designated HKSCC Participant’s stock account
through causing HKSCC Nominees to apply on your behalf,
including by instructing your broker or custodian who is a
HKSCC Participant to give electronic application instructions
via HKSCC’s FINI system to apply for the Offer Shares on your
behalf
“HKSCC Nominees” HKSCC Nominees Limited, a wholly-owned subsidiary of HKSCC
“HKSCC Operational Procedures” the operational procedures of HKSCC, containing the practices,
procedures and administrative or other requirements relating to
HKSCC’s services and the operations and functions of CCASS,
FINI or any other platform, facility or system established, operated
and/or otherwise provided by or through HKSCC, as from time to
time in force
“HKSCC Participant” a participant admitted to participate in CCASS as a direct clearing
participant, a general clearing participant or a custodian participant
“Hong Kong” or “HK” the Hong Kong Special Administrative Region of the PRC
“Hong Kong dollars” or “HK$” Hong Kong dollars, the lawful currency of Hong Kong


--- page 37 ---
– 26 –
DEFINITIONS
“H Share(s)” ordinary  shares in the share capital of our Company with a
nominal value of RMB 1.00, which are to be subscribed for and
traded in HK dollars and are to be listed on the Stock Exchange
“H Share Registrar” Computershare Hong Kong Investor Services Limited
“Huajin Corporate Finance” Huajin Corporate Finance (International) Limited, a licensed
corporation under the SFO permitted to carry out Type 4 (advising
on securities) and Type 6 (advising on corporate finance) regulated
activities (as defined under the SFO)
“Huajin Securities” Huajin Securities (International) Limited, a licensed corporation
under the SFO permitted to carry out Type 1 (dealing in securities)
regulated activities (as defined under the SFO)
“Independent Third Party(ies)” an individual(s) or a company(ies) who or which to the best of our
Directors’ knowledge, information and belief, having made all
reasonable enquiries, is/are not connected with our Company or
our connected persons as defined under the GEM Listing Rules
“Joint Bookrunners” Huajin Securities, Yue Xiu Securities, Eddid Securities and
Futures Limited, GLAM Capital Limited, Livermore Holdings
Limited and Orient Securities (Hong Kong) Limited
“Joint Lead Managers” Huajin Securities, Yue Xiu Securities, Eddid Securities and
Futures Limited, GLAM Capital Limited, Livermore Holdings
Limited and Orient Securities (Hong Kong) Limited
“Joint Overall Coordinators” Huajin Securities and Yue Xiu Securities
“Joint Sponsors” Huajin Corporate Finance and Yue Xiu Capital
“Latest Practicable Date” 16 August  2024, being the latest practicable date for the purpose
of ascertaining certain information in this prospectus prior to its
publication
“Listing” the listing of our H Shares on GEM of the Stock Exchange
“Listing Date” the date on which dealings in the H Shares first commence on
GEM of the Stock Exchange
“Main Board” the stock exchange (excluding the option market) operated by
the Stock Exchange which is independent from and operates in
parallel with GEM of the Stock Exchange


--- page 38 ---
– 27 –
DEFINITIONS
“Maoming” a prefecture-level city located in Western Guangdong , China. It
administers five county-level cities and districts, including Xinyi
City, Gaozhou City, Huazhou City, Dianbai District and Maonan
District
“MOHURD” Ministry of Housing and Urban-Rural Development of the PRC (ʕ
ண௅ )
“MOF” the Ministry of Finance of the PRC (௅)
“MOFCOM” the Ministry of Commerce of the PRC (ʕശɛ͏΍ձ਷ਠਕ௅)
“NBS” the National Bureau of Statistics of China (҅)
“NDRC” the National Development and Reform Commission of the PRC ( ʕ
ึ)
“NPC” the National People’s Congress of the PRC (ʕശɛ͏΍ձ਷Ό਷
ɽึ)
“Offer Price” the Hong Kong dollar offer price per Offer Share (exclusive
of brokerage of 1.0%, SFC transaction levy of 0.0027%, Stock
Exchange trading fee of 0.00565% and A FRC transaction levy of
0.00015%) at which the Offer Shares are to be subscribed pursuant
to the Share Offer
“Offer Share(s)” the Public Offer Shares and the Placing Shares
“Offer Size Adjustment Option” the option expected to be granted by our Company to the
Underwriters under the Underwriting Agreement, exercisable
by the Joint Overall Coordinators  (for itself and on behalf of
Underwriters), pursuant to which our Company may be required
to issue and allot up to an aggregate of 1,526,0 00 additional
Offer Shares, representing not more than 15% of the Offer Shares
initially being offered under the Share Offer, at the Offer Price
to cover over-allocations (if any) in the Placing, as described in
“Structure and Conditions of the Share Offer” in this prospectus
“PBOC” the People’s Bank of China ( ʕ਷ɛ͏ვБ), the central bank of
the PRC


--- page 39 ---
– 28 –
DEFINITIONS
“Placing” the conditional placing of the Placing Shares by the Placing
Underwriters on behalf of our Company for cash at the Offer
Price with professional, institutional and/or other investors in
Hong Kong as described in “Structure and Conditions of the Share
Offer” in this prospectus
“Placing Shares” the 9,161,000 H Shares being initially offered by our Company for
subscription pursuant to the Placing, subject to reallocation  and
the Offer Size Adjustment Option  as described in “Structure and
Conditions of the Share Offer” in this prospectus
“Placing Underwriters” the underwriters of the Placing who are expected to enter into the
Placing Underwriting Agreement
“Placing Underwriting Agreement” the underwriting agreement relating to the Placing, which is
expected to be  entered into by our Company, our Controlling
Shareholder, Mr. Lai Feng, Mr. Huang Fei, Ms. Mai Jiayu, Mr.
Zhang Xihua, the Joint Sponsors, the Joint Overall Coordinators,
the Joint Bookrunners, the Joint Lead Managers and the Placing
Underwriters  on or around the Price Determination Date, as further
described in “Underwriting – Placing – Placing Underwriting
Agreement” in this prospectus
“PRC GAAP” generally accepted accounting principles in the PRC
“PRC Government” the central government of the PRC and all governmental
subdivisions (including provincial, municipal and other regional or
local government entities) and organis ations of such government
or, as the context requires, any of them
“PRC Legal Advisors” Jingtian & Gongcheng, the legal advisers  to our Company as to
PRC law in connection with the Share Offer
“Price Determination Date” the date, expected to be on or around Wednesday, 4 September
2024 but in any event not later than 12:00 noon on Wednesday, 4
September  2024, on which the Offer Price will be determined by
our Company and the Joint Overall Coordinators (for itself and on
behalf of the Underwriters) for the purposes of the Share Offer
“Pre-IPO Investment” the pre-IPO investment  in our  Company undertaken by Xinyi
Xinhui, details of which are set out in “History, Development and
Corporate Structure – Pre-IPO Investment” in this prospectus


--- page 40 ---
– 29 –
DEFINITIONS
“Public Offer” the issue and offer of the Public Offer Shares for subscription by
the public in Hong Kong for cash at the Offer Price on and subject
to the terms and conditions stated in this prospectus as further
described in “Structure and Conditions of the Share Offer” in this
prospectus
“Public Offer Shares” the 1,018,000 H Shares being initially offered by our Company for
subscription pursuant to the Public Offer, subject to reallocation as
described in “Structure and Conditions of the Share Offer” in this
prospectus
“Public Offer Underwriters” the underwriters of the Public Offer Shares whose names are
set out in “Underwriting – Public Offer Underwriters” in this
prospectus
“Public Offer Underwriting
Agreement”
the underwriting agreement dated 23 August 2024 relating to the
Public Offer and entered into by our Company, our Controlling
Shareholder, Mr. Lai Feng, Mr. Huang Fei, Ms. Mai Jiayu, Mr.
Zhang Xihua, the Joint Sponsors, the Joint Overall Coordinators,
the Joint Bookrunners, the Joint Lead Managers and the Public
Offer Underwriters, as further described in “Underwriting –
Underwriting Arrangements and Expenses – The Public Offer
Underwriting Agreement” in this prospectus
“Renminbi” or “RMB” the lawful currency of the PRC
“SAFE” the State Administration of Foreign Exchange of the PRC (ʕശɛ
̮ි၍ଣ҅)
“SAMR” the State Administration for Market Regulation of the PRC (ʕശ
̹ఙ္ຖ၍ଣᐼ҅) or its predecessor the State
Administration for Industry and Commerce of the PRC (ʕശɛ͏
၍ଣᐼ҅)
“SCNPC” the Standing Committee of the National People’s Congress (Ό਷
ึ)
“SFC” the Securities and Futures Commission of Hong Kong
“SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of
Hong Kong), as amended, supplemented or otherwise modified
from time to time


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DEFINITIONS
“Share(s)” ordinary shares in the share capital of our Company, with a
nominal value of RMB 1.00 each, comprising the unlisted  Shares
and the H Shares
“Share Offer” the Public Offer and the Placing
“Shareholder(s)” holder(s) of the Share(s)
“STA” the State Taxation Administration of the PRC (ʕശɛ͏΍ձ਷਷
೼ਕᐼ҅)
“State Council” the State Council of the PRC (ʕശɛ͏΍ձ਷਷ਕ৫)
“Stock Exchange” The Stock Exchange of Hong Kong Limited
“substantial shareholder(s)” has the meaning ascribed to it under the GEM Listing Rules
“Supervisor(s)” Supervisor(s) of our Company
“Track Record Period” the period comprising FY2021, FY2022,  FY2023 and 6M2024
“Trial Measures” the Trial Administrative Measures of Overseas Securities Offering
and Listing by Domestic Companies ( ྤʫΆุྤ̮೯БᗇՎձ
جissued by the CSRC on 17 February 2023,
effective from 31 March 2023
“U.S. Securities Act” the United States Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder
“Underwriters” the Public Offer Underwriters and the Placing Underwriters
“Underwriting Agreements” the Public Offer Underwriting Agreement and the Placing
Underwriting Agreement
“United States”, “USA” or “U.S.” the United States of America, its territories, its possessions and all
areas subject to its jurisdiction
“Unlisted Share(s)” ordinary share(s) in  the share capital of our Company with a
nominal rate of RMB1.00, which are not listed on any stock
exchange
“VAT” the PRC value-added tax


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DEFINITIONS
“Western Guangdong” the western region of Guangdong Province of China comprising
four cities, Maoming, Yangjiang, Yunfu and Zhanjiang
“White Form eIPO” the application for Public Offer Shares to be issued in the
applicant’s own name by submitting applications online through
the designated website of the White Form eIPO Service Provider
at www.eipo.com.hk
“White Form eIPO Service
Provider”
Computershare Hong Kong Investor Services Limited
“Xinyi City Bureau of Finance” Xinyi City Bureau of Finance (҅)
“Xinyi City Bureau of Housing and
Urban-Rural Development”
the Xinyi City Bureau of Housing and Urban-Rural Development
(ண҅)
“Xinyi City CEQS Center” Xinyi City Construction Engineering Quality and Safety Affairs
Center (ணʈ೻ሯ ඎτΌԫਕʕː) (its predecessors
were  Xinyi City CEQS Station  and Xinyi City CESS Station ),
a public institution ( ԫุఊЗ) of the Xinyi City People’s
Government under the Xinyi City Bureau of Housing and Urban-
Rural Development and our Controlling Shareholder  established
on 2 March 2021
“Xinyi City CEQS Station” Xinyi City Construction Engineering Quality Supervision Station
(ணʈ೻ሯඎ္ຖ१), one of the predecessors  of Xinyi
City CEQS Center
“Xinyi City CESS Station” Xinyi City Construction Engineering Safety Supervision Station
(ணʈ೻τΌ္ຖ१), one of the predecessors of Xinyi
City CEQS Center
“Xinyi City People’s Government” Xinyi City People’s Government (ִ݁)
Xinyi Xinhui” Xinyi City Xinhui State-owned Capital Investment Group
Co., Ltd. (ʮ̡), a limited
liability company established in the PRC on 24 August 2022
which is wholly-owned by Xinyi City Bureau of Finance and our
substantial shareholder
“Xinyi Xinye” Xinyi Xinye Industry and Industrial Park Investment Co., Ltd.
(ʮ̡), a wholly-owned
subsidiary and thus an associate of Xinyi Xinhui


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DEFINITIONS
“Yue Xiu Capital” Yue Xiu Capital Limited, a licensed corporation under the SFO
permitted to carry out Type 6 (advising on corporate finance)
regulated activities (as defined under the SFO)
“Yue Xiu Securities” Yue Xiu Securities Company Limited, a licensed corporation
under the SFO permitted to carry out Type 1 (dealing in
securities), Type 2 (dealing in future contracts), Type 4 (advising
on securities) and Type 5 (advising on future contracts) regulated
activities (as defined under the SFO)
“1H2025” the six months ending 30 June 2025
“1H2026” the six months ending 30 June 2026
“2H2024” the six months ending 31 December 2024
“2H2025” the six months ending 31 December 2025
“2H2026” the six months ending 31 December 2026
“6M2023” the six months period ended 30 June 2023
“6M2024” the six months period ended 30 June 2024
* For identification purpose only
Certain amounts and percentage figures included in this prospectus were subjected to rounding
adjustments. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation
of the figures preceding them.
For ease of reference, the names of the PRC established companies or entities, laws or regulations,
governmental authorities, institutions, natural persons or other entities have been included in this
prospectus in both the Chinese and English languages and in the event of any inconsistency, the Chinese
versions shall prevail.


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GLOSSARY OF TECHNICAL TERMS
This glossary contains explanations of certain technical terms used in this prospectus in
connection with our Company and our business. Such terminology and meanings may not correspond to
standard industry meanings or usages of those terms.
“bearing capacity” the maximum load that a soil or foundation material can support
without causing excessive settlement or failure
“categories” the testing categories formulated and governed by the Guangdong
AMR  as regulated under the Inspection and Testing Agency
Qualification Certificate (ࣣwhere the
testing parameters can be classified to different testing categories
“China Inspection Body and
Laboratory Mandatory Approval
(CMA) (֛”)
a certification and regulatory program in China that ensures
the competence and reliability of inspection bodies and testing
laboratories. CMA is administered by the Certification and
Accreditation Administration of the People’s Republic of China
(ึ)
“Comprehensive Qualification
(ၝΥ༟ሯ)”
a new qualification standard for the Construction Engineering
Quality Inspection Agency Qualification Certificate as governed
under the Qualification Standards of Construction Engineering
Quality Inspection Agencies, existing construction engineering
quality inspection agency is granted a transition period till 31
October 2024 to apply for a new qualification certificate according
to such standard. Comprehensive Qualification indicates that
the institution holding the Construction Engineering Quality
Inspection Agency Qualification Certificate is permitted to
conduct testing and inspection service on all nine categories under
the Specialised Qualifications
“Construction Engineering Quality
Inspection Agency Qualification
Certificate (ணʈ೻ሯඎᏨ಻
ࣣ”)
an administrative certificate issued by the Guangdong Provincial
Department of Housing and Urban-Rural Development (؇
ணᝂ), under which an institution is permitted
to conduct testing and inspection for construction engineering
projects
“deformation” any changes in the shape or size of an object due to an applied
force or a change in temperature


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GLOSSARY OF TECHNICAL TERMS
“International Roughness Index” a standardised measurement used to assess the roughness or
unevenness of a road surface. The index is calculated by measuring
the vertical displacement of a road surface from a reference line
over a specified distance and averaging these measurements
“plate load” a test conducted using a large steel plate to determine the bearing
capacity and deformation parameters of the test subject
“Qualification Standards of
Construction Engineering Quality
Inspection Agencies (ணʈ೻
ሯඎᏨ಻ዚ࿴༟ሯᅺ๟)”
a new guideline  outlining the criteria and requirements that
an institution must meet in order to obtain the Construction
Engineering Quality Inspection Agency Qualification Certificate,
and existing construction engineering quality inspection agency is
granted a transition period till 31 October 2024 to apply for a new
qualification certificate according to the new guideline.
“static load” a constant or unchanging force applied to a structure or an object
“kN” kilonewtons
“parameters” the specific industry characteristics, properties, or criteria that are
assessed or measured during testing processes, under different
categories
“Inspection and Testing Agency
Qualification Certificate
(ࣣ”)
an administrative certificate issued by the Guangdong AMR, under
which an institution is permitted to use the mark of the China
Inspection Body and Laboratory Mandatory Approval (CMA)
when conducting its business
“Rural Revitalisation Initiative
(ጳ)”
a comprehensive development strategy implemented by the PRC
Government to improve the overall development of rural areas,
centering on rural economic growth, encompassing aspects such as
rural culture, governance, livelihood, and ecological environment.
The improvement of rural infrastructure, such as roads and
power grids, serves as the material foundation for rural economic
development, which is the primary goal of the Rural Revitalisation
Initiative


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– 35 –
GLOSSARY OF TECHNICAL TERMS
“Specialised Qualifications
(ਖ਼ධ༟ሯ)”
a new qualification standard for the Construction Engineering
Quality Inspection Agency Qualification Certificate as governed
under the Qualification Standards of Construction Engineering
Quality Inspection Agencies, existing construction engineering
quality inspection agency is granted a transition period till 31
October 2024 to apply for a new qualification certificate according
to such standard. There are nine Specialised Qualifications,
including (i)  building materials and components, (ii) main
structure  and decoration, (iii) steel structure, (iv) foundation,
(v) building energy-saving, (vi) building  curtain walls, (vii)
municipal engineering materials, (viii) road works, (ix) bridge and
underground works
“Project for the High-Quality
Development of Hundreds of
Counties, Thousands of Towns
and Tens of Thousands of Villages
(ʈ೻)”
a large-scale strategic initiative implemented by the Guangdong
Provincial Development and Reform Commission in December
2022 to further expand the space and smooth the economic cycle
and promote the development of new industries, informatisation,
urbanisation and agricultural modernis ation in rural areas


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FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements. When used in this prospectus, the words
“aim”, “anticipate”, “believe”, “could”, “estimate”, “expect”, “going forward”, “intend”, “may”, “might”,
“plan”, “project”, “propose”, “seek”, “should”, “target”, “will”, “would” and the negative of these words
and other similar expressions, as they relate to our Company or our management, are intended to identify
forward-looking statements. These forward-looking statements include, without limitation, statements
relating to:
• our business strategies and our operating and expansion plans;
• our objectives and expectations regarding our future operations, profitability, liquidity and
capital resources;
• future events and developments, trends and conditions in the industry and markets in which
we operate or plan to operate;
• our ability to control costs;
• our ability to identify and successfully take advantage of new business development
opportunities; and
• all other risks and uncertainties described in “Risk Factors” in this prospectus.
Such statements reflect the current views of our management with respect to future events,
operations, profitability, liquidity and capital resources, some of which may not materialise or
may change. Actual results may differ materially from information, implied or expressed, in the
forward-looking statements as a result of a number of factors, including, without limitation, the risk
factors set out in “Risk Factors” in this prospectus and the following:
• changes in the laws, rules and regulations applicable to us;
• general economic, market and business conditions in the PRC;
• changes or volatility in interest rates, foreign exchange rates, equity prices or other rates or
prices;
• business opportunities and expansion that we may pursue;
• our ability to identify, measure, monitor and control risks in our business, including our
ability to improve our overall risk profile and risk management practices; and
• other factors beyond our control.


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FORWARD-LOOKING STATEMENTS
By their nature, certain disclosures relating to these and other risks are only estimates and should
one or more of these uncertainties or risks, among others, materialize, actual results may vary materially
from those estimated, anticipated or projected, as well as from historical results. Specifically but without
limitation, sales could decrease, costs could increase, capital costs could increase, capital investment could
be delayed and anticipated improvements in performance might not be fully realized.
Subject to the requirements of applicable laws, rules and regulations, we do not have any obligation
to update or otherwise revise the forward-looking statements in this prospectus, whether as a result of new
information, future events or otherwise. As a result of these and other risks, uncertainties and assumptions,
the forward-looking events and circumstances discussed in this prospectus might not occur in the way we
expect, or at all. Accordingly, you should not place undue reliance on any forward-looking information.
All forward-looking statements contained in this prospectus are qualified by reference to the cautionary
statements set forth in this section as well as the risk factors set out in “Risk Factors” in this prospectus.
In this prospectus, statements of or references to our intentions or those of any of our Directors are
made as at the date of this prospectus. Any such intentions may change in light of future developments.


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RISK FACTORS
An investment in our Shares involves various risks. You should carefully consider the following
information about risks, together with the other information contained in this p rospectus, including
our financial statement and related notes, before you decide to purchase our Shares. If any of the
circumstances or events described below actually arises or occurs, our business, results of operations,
financial conditions and prospects would likely suffer. In any such case, the market price of our Shares
could decline, and you may lose all or part of your investment.
This Prospectus also contains forward-looking information that involves risks and uncertainties.
Our actual results could differ materially from those anticipated in the forward-looking statements as a
result of many factors, including the risks described below and elsewhere in this p rospectus.
Our business and operations involve certain risks and uncertainties, many of which are beyond our
control. These risks can be broadly categorised as (1) risks relating to our business operation and industry;
and (2) risks relating to the Share Offer and our H Shares.
RISKS RELATING TO OUR BUSINESS OPERATION AND INDUSTRY
Our business is subject to compliance with regulatory and industrial requirements, which may
interfere with the way we conduct our business and may adversely affect our business and results of
operations.
Our business is subject to compliance with regulatory and industrial requirements. Both regulatory
authorities and industry associations in the construction engineering testing and inspection industry
have the power to issue and implement laws, regulations, policies or industrial standards governing,
among others, our laboratory operations, testing and inspection procedures, service quality and pricing.
In addition, local authorities in regions where our service centers located  have the power to implement
and enforce local laws and regulations that may affect our business operation. In addition, we are subject
to the supervision by relevant regulatory authorities or industry associations, and could be subject to
administrative or regulatory penalties or restrictions on our business activities if we are deemed to be non-
compliant with applicable regulatory or industrial standards.
Furthermore, most of our revenue are generated from customers requesting for our services due to
relevant regulatory requirements. For instance, at various stages in construction or infrastructure projects,
it is essential to conduct targeted monitoring and testing for different aspects such as foundation, building
structure, slope, and material quality as the projects can only proceed to the next stage if the results of
these tests meet the required construction standards and regulations. For FY2021, FY2022,  FY2023 and
6M2024, 99.4%, 98.9%, 99.3% and 99.7%  of our revenue were derived from testing reports produced
to our customers due to regulatory requirements. For details, see “Business – Our customers”  in this
prospectus. If there are significant changes in the regulatory and industrial requirements pertaining to
various construction or infrastructure projects, it could impede our ability to deliver appropriate testing


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RISK FACTORS
and inspection services to our customers. Consequently, the demand for our services from customers
seeking compliance with relevant regulations may fluctuate, potentially adversely impacting our business
operations. Given the complexity and changes in the applicable regulatory and industrial standards, our
business, results of operations and future growth may be adversely affected if we do not respond to the
changes in a timely manner or fail to fully comply with any relevant regulatory or industrial standards.
Our business may be affected by the development of China’s property development, construction
and infrastructure sectors, which are beyond our control.
We provide our construction engineering testing and inspection services  mainly  to property
developers and construction companies, state-owned investment companies, relevant PRC government
institutions and PRC government administrative bureaus. The number of projects of our customers are
subject to the macroeconomic conditions and fixed asset investment. In particular, 59.3% , 30.9%, 35.8%
and 40.3% of our revenue for FY2021, FY2022,  FY2023 and 6M2024 were generated from the property
developers. We expect the property developers continue to be one of our customers type. As a result, our
financial performance is correlated to the performance of the PRC real estate market, which is sensitive to
economic fluctuations and relevant regulatory rules and policies. The liquidity crisis at some of the largest
PRC real estate developers in recent years may also affect the growth of the real estate market. In 2022,
the national real estate development investment has experienced a slowdown, with a 10% year-on-year
decrease from RMB14.8 trillion in 2021 to RMB13.3 trillion in 2022. The adverse effect on the business
and financial position of our customers in turn could have an adverse effect on our business, financial
conditions and results of operations. We cannot guarantee that the construction and infrastructure markets
in our current or future service locations can continue to grow or that market downturn will not occur.
Our business operation is concentrated in Maoming, Guangdong Province, and our business,
financial position and result of operation is affected by the status of development in economic
conditions, government policies or business environment in this region.
Our business operation is predominantly concentrated in Maoming, Guangdong Province. During
the Track Record Period, m ajority of our revenue was generated from our testing and inspection services
relating to construction and infrastructure works in Maoming. We expect that Western Guangdong, in
particular Maoming, will remain to account for a significant portion of our operations in the near future.
Due to such concentration, and due to the fact that the provision of construction engineering testing
and inspection services is an regulated industry in the PRC, our business,  financial position and result
of operation is affected by the status of  development in government policies or business environment
in Maoming or in Western Guangdong  (such as any change in the economic conditions, development
prospect and pace of urbanisation, and any shift in government policies and regulations regarding the
property development, construction and testing and inspection industries).


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RISK FACTORS
We may be unable to obtain, retain or renew required permits, licences, registrations or certificates
for our business operations.
We are required to maintain certain permits, licences, registrations and certificates issued by
relevant PRC government agencies, such as Construction Engineering Quality Inspection Agency
Qualification Certificate and the Inspection and Testing Agency Qualification Certificate. Under the 2023
Administrative Measures and the Qualification Standards of Construction Engineering Quality Inspection
Agencies, a new qualification standard for the Construction Engineering Quality Inspection Agency
Qualification Certificate will be introduced comprising the Comprehensive Qualification and Specialised
Qualifications. Existing construction engineering quality inspection agency is granted a transition period
till 31 October 2024 to apply for a new qualification certificate according to such standard. See “Regulatory
Overview  – Laws and regulations relating to the testing and inspection of construction engineering –
Qualifications – The Construction Engineering Quality Inspection Agency Qualification Certificate (ܔ
ࣣin this prospectus for details.  In the event that our Company fails to
meet the above-mentioned transition deadline (and any extension thereof by the relevant administrative
authority) and does not obtain the Specialised Qualifications timely, the current Construction Engineering
Quality Inspection Agency Qualification Certificate held by our Company will become invalid after the
transition period, and our Company will not be allowed to engage in construction engineering quality
inspection operation  until we successfully obtain  relevant Specialised Qualifications thereafter  and we
will not be able to provide any construction engineering testing and inspection services to our customers
and generate any revenue following the transition period until the Specialised Qualifications are obtained,
which will materially and adversely affect our business operations. We cannot assure you that we will
be able to renew our existing approvals, permits, licences, registrations or certificates when they expire,
or that we will be able to successfully obtain, retain or renew future permits, licences, registrations or
certificates in a timely manner, or at all. We cannot assure you that we will be able to adapt to any change
in the  regulatory and licensing regime. In addition, we cannot assure you that such permits, licences,
registrations or certificates will not be revoked by the relevant authorities in the future. Failure to obtain
or renew such permits, licences, registrations and certificates as planned or any inability to  adopt to
regulatory changes may result in our inability to provide relevant services and thereby materially and
adversely affecting our business, results of operations and financial condition.
We may be unable to maintain or recruit qualified professionals for our business operations.
Our business relies on the expertise of our qualified professionals. As of the Latest Practicable
Date, we have maintained a team of 106 employees  who hold a total of 179 testing qualifications
issued and approved by the Guangdong Association for Quality and Safety Testing and Appraisal of
Construction Projects,  enabling them to conduct proficient and reliable testing and inspection processes.
Among them, 55 are qualified engineers specialising in construction engineering and three  are qualified
engineers specialising in food and agriculture in China, demonstrating their commitment to providing
comprehensive and dependable testing and inspection services to our valued customers. These engineers
possess the necessary qualifications and certifications in their respective fields, ensuring their proficiency
and capability in delivering testing services of the highest quality. With their combined knowledge and
experience, we are able to meet the diverse testing and inspection needs of our customers in a professional
and efficient manner. In order to implement our future plans and business strategies, we also plan to hire a


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RISK FACTORS
number of additional qualified engineers and technicians with relevant required professional qualifications.
In particular, we would expand our workforce of technical personnel in order to fulfill or comply with the
regulatory requirements associated with obtaining or renewing the relevant qualifications for our provision
of services relating to construction engineering testing and inspection, food and agricultural products
testing, transportation construction testing and fire protection testing and inspection under our future
plans.  See “Business – Business strategies” and “Future Plans and Use of Proceeds” in this prospectus for
details.
However, we cannot guarantee that all our testing and inspection personnel and technicians will be
able to maintain the Detection and Appraisal Training Certificates , nor can we guarantee the continued
presence of a specific number of qualified engineers on our team. We also cannot assure you that we
can recruit sufficient number of qualified professi onal s to support our future growth  and successfully
implement our future plans and strategies.  If we are unable to do so, our business, results of operations
and financial condition could be materially and adversely affected.
We are exposed to credit risks of our customers and our outstanding trade receivables.
Our credit risks primarily arise from trade receivables. We do not have  standardised credit period
for our customers prior to December 2023  and may grant  credit period to customers on a case-by-case
basis. Since December 2023, we have established credit term policy in order to standardise the procedures
for granting credit period to our customers  and we have implemented such policy since  January 2024 .
As at the end of FY2021, FY2022,  FY2023 and 6M2024, the trade receivables due from our customers
amounted to RMB 35.4 million, RMB34.5 million,  RMB29.3 million  and RMB 32.9 million  respectively
representing 41.3%, 40.9%, 24.7%  and 20.5%  of our total assets, respectively. As at the end of FY2021,
FY2022,  FY2023 and 6M2024, the impairment  loss of trade receivables amounted to RMB 9.1 million,
RMB10.4 million,  RMB11.8 million and RMB12.0 million respectively.
Our top five trade receivables amounted to RMB22.2 million, RMB24.4 million,  RMB 14.1
million  and RMB 14.7 million  as at 31 December 2021, 2022 and 2023 and 30 June 2024, respectively,
representing 49.9%, 54.2%,  34.3%  and 32.7%  of our total trade receivables before any provision of credit
loss.
The turnover days of our trade receivables were  271 days, 639 days , 281 days  and 248 days  in
FY2021, FY2022, FY 2023 and 6M2024, respectively. In view of (i) the increasing proportion of the
customers with longer settlement cycle; (ii) the impact of COVID-19 pandemic in FY2022 and (iii)
the impact of the PRC property market downturn, these resulted in our prolonged trade receivables
settlement cycle, particularly in FY2022. According to the CIC Report, prolonged payment cycle is a
common phenomenon throughout the entire construction engineering testing and inspection industry.  As
our cash outflow from operating activities mainly consists of payments for labour costs, direct material,
subcontracting fee and other operating expenses which are normally settled in a relatively shorter period,
this creates cash flow mismatch which in turn may have an adverse impact on our liquidity position. See
“Financial information – Discussion of certain items from the statements of financial position – Trade
receivables” in this prospectus for further details about our trade receivables.


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RISK FACTORS
Our management regularly reviews the recoverability of overdue balances for trade receivables, and
may provide for impairment when appropriate. As at 31 December 2021, 2022 and 2023 and 30 June 2024,
RMB21.9 million, RMB30.8 million , RMB13.2 million  and RMB13.5 million , representing 49.3%, 68.6% ,
32.1% a nd 30.2%  of our total trade receivables respectively, were aged over one year. As different types
of customers would have different settlement cycles, for property developers and construction companies,
their settlement cycle typically depends on the progress of their construction projects, while for state-
owned investment companies, PRC government institutions and PRC government administrative bureaus,
their settlement cycle is generally subject to the length of approval process required by government
financial departments, therefore we mainly consider, among others, (i) the nature and background of the
customer’s business including its shareholders and sources of funding of these customers; (ii) whether
there are any negative news or lawsuits of these customers that we would cast doubt on their repayment
capability; and (iii) the result of our comprehensive assessment performed on these customers after
considering their historical repayment records, whether there are any existing settlement plans of such
customers and their construction progress based on observation from on-site visits to these customers’
projects which may indicate their liquidity and repayment capability, in order to assess the financial
standings and measure the credit risks of such customers.
We are exposed to credit risk in relation to the outstanding trade  receivables.  There can be no
assurance that our trade receivables can be recovered and will be remitted by our customers to us on
a timely basis and in full. If any late payment occurs, whether arising from payment practice of our
customers or delay in completion of the project or default payment by our customers, we will have to
make provision or write off the relevant trade receivables, which in turn may adversely affect our financial
position and profitability.
Our business may suffer if our labour costs increase significantly.
Direct labour costs made up a significant portion of our cost of sales, accounting for 58.2%, 66.3% ,
65.5% and 61.5% , of our total cost of sales for FY2021, FY2022,  FY2023 and 6M2024, respectively. The
increase in our direct labour costs reflected an increase in headcounts as a result of our business expansion.
During the course of provision of our foundation testing service, we would also outsource certain
physically demanding  works such as extracting core samples during the foundation and geotechnical
drilling process to third party drilling companies, and such subcontracting fee  accounted for 14.4%,
6.8%, 6.5% and 5.7%  of our total cost of sales for FY2021, FY2022,  FY2023 a nd 6M2024, respectively.
Besides, our ability to attract and retain key personnel, in particular qualified testing and inspection
professionals, is critical to our competitiveness. Competition for these individuals could require us to offer
higher compensation and other benefits in order to attract and retain them. We cannot guarantee that our
profit margin will not decrease as a result of disproportionate growth in labour costs. As we expect our
labour costs to continue to grow along with the general rise in the cost of living in China, our profitability
may be adversely affected if we cannot pass on the increased cost to our customers. If we are compelled to
increase our service fees, it may compromise our competitiveness in the market.


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RISK FACTORS
We operate in a highly competitive industry.
According to the CIC Report, there are currently more than 100 construction engineering testing
and inspection companies in Western Guangdong. A majority of these construction engineering testing and
inspection companies are local companies. Some of our competitors may have services that are superior to
ours or achieve greater market acceptance than ours. Some of our competitors may have better or longer
operating track records, larger operations, more well-known brand names and industry reputation or
greater financial resources than we do. Our competitors may also be less leveraged and may be willing to
reduce profits for market share and revenues. As a result of the foregoing, our competitors may be more
competitive, have better financing and be able to offer lower prices and more favorable payment terms
than we can. If we cannot compete effectively with existing or future competitors, our business, results of
operations and financial condition could be materially and adversely affected.
We depend on a limited number of customers for a substantial portion of our revenue and may not
be able to successfully maintain or develop our business relationship with these customers or new
customers.
During the Track Record Period, we derived a substantial portion of our revenue from a limited
number of customers. Our top five customers accounted for  37.6%, 44.4% , 38.3%  and 43.6%  of our
revenue for FY2021, FY2022,  FY2023 a nd 6M2024, respectively.
Our customers will enter into service agreements with us as and when specific inspection or testing
services are required. We cannot assure you, however, that we will be able to maintain our business
relationship with our major customers on commercially reasonable terms, or at all. If for any reason
our major customers cease to acquire our services, we may be unable to find alternative customers for
our testing and inspection services within a reasonable period of time, or at all, which could result in
a significant decrease in our service volume and could materially and adversely affect our results of
operations and financial condition. If for any reason our major customers were to become unwilling or
unable to make payments for our services rendered, we may be unable to recover significant amounts
of receivables and our cash flows and financial position could be adversely affected. Therefore, we are
indirectly subject to the operational risks of our major customers to the extent those risks could cause them
to breach their contractual obligations with us or discontinue to acquire our services.
During the Track Record Period, the percentage of our total revenue attributable to revenue
generated from infrastructure and public road testing service increased from 2.2% to 2.3% from FY2021 to
FY2022, increased from 2.3% to 14.1 % from FY2022 to FY2023, and decreased from 12.5% to 6.2% from
6M2023 to 6M2024. Despite our efforts to expand our service offerings into customers involving in public
projects, there is no guarantee of future success. If we fail to maintain or grow our revenue from existing
customers or establish new customer relationships, it could have a significant and negative impact on our
business, financial condition, and results of operations.


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Pricing of our  services is subject  to certain key factors , and  failure to control costs may adversely
affect our profitability.
In FY2021, FY2022 , FY2023  and 6M2024 , our overall gross profit margin was  75.9 %, 57.6 %,
71.8% and 70.8% , respectively. We have to maintain the competitiveness of our pricing and at the same
time maximise our profit margin. When determining the pricing for our services, we also take into account
several key factors, including among others, the expected costs including our estimation of time cost
and labour costs involved for such services. In order  to achieve our target profitability on our service
or to generate profit at all with our price set within the designated price range, we are, to a large extent,
dependent on our ability to accurately estimate and control these costs. However, the actual time taken and
costs incurred in completing our service process may be adversely affected by many factors which may be
beyond our control such as delay in the construction phases or stages that require our testing or inspection
services, changes in service scope or conditions, unforeseen technical constraints or circumstances and
change in our customers’ requests. Any of these can result in delays in completion of our service process
or unexpected extra costs. There is no assurance that the actual amount of time and costs would not exceed
our estimation. Any material inaccurate estimation in the time and costs involved in for our services may
cause the gross profit realised from a contract to be lower than our originally estimated amounts, and in
turn adversely affect our profit margin and results of operations.
In addition, in order to acquire and uphold the necessary qualifications for our Company  to offer
various types of testing services, we may be obligated by the relevant authorities to employ and retain a
specific number of employees or testing personnel as a prerequisite for maintaining those qualifications.
This requirement could potentially impact our profitability, especially if our current workload does not
necessitate the required workforce size. In particular, we recorded negative gross profit margin of -53.3%
for our infrastructure and public roads testing services in FY2022 due to the employment of additional
testing personnel in order for our Company  to enhance  the relevant qualifications. In 2021, we began
offering infrastructure and public roads testing services with limited qualifications, as we were in the early
stages of expanding our capabilities in such testing services. The negative gross profit margin generated
during that period was a result of our ongoing efforts to obtain additional qualifications and expand our
service offerings in the infrastructure and public roads testing sector. Our historical gross  profit margin
may not be entirely indicative of our future profitability or financial performance.
Our revenue is generated from non-recurring orders, and the amount of revenue derived from such
orders depends on the type and volume of service orders we can secure from our customers, which
may vary from period to period.
Our revenue is primarily derived from non-recurring orders. The provision of relevant testing and
inspection services by our Company encompasses different stages of a construction or infrastructure
project. The stages and testing or inspection subject that we are involved in are typically not recurring
in nature, unless additional testing or inspection is required on the same subject based on the testing or
inspection results. Therefore, we typically engage  with our customers  on an order-by-order basis, which
means there is no guarantee of securing new business from our existing customers. The type and number
of orders we can secure may vary substantially from period to period. Failure to secure service orders from
existing customers  or establish relationships with new customers  could have a negative impact on our
business, financial condition, and operating results.


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RISK FACTORS
We recorded negative cash flows from operating activities during the Track Record Period, which
may have an adverse effect on our business, financial condition, results of operations and prospects.
We recorded net cash used in operating activities of RMB1.8 million for FY2022, primarily
attributable to cash generated from operations of RMB4.9 million and interest received of RMB0.1
million, fully offset by the payment of income tax of RMB6.8 million. For further details, see “Financial
Information – Liquidity and capital resources – Cash flows” in this prospectus. Net operating cash outflow
could impair our ability to make necessary capital expenditures and constrain our operational flexibility as
well as adversely affect our ability to meet our liquidity requirements. While we believe we have sufficient
working capital to fund our current operations, we may, however, experience net cash outflows from our
operating activities in the future. If we are unable to maintain adequate working capital, we may default in
our payment obligations and may not be able to meet our capital expenditure commitments or pursue our
growth strategies, which may have a material adverse effect on our business, financial condition, results of
operations and prospects.
We face the risk of capacity constraints, which could have a material adverse effect on our business,
results of operations and financial condition.
We compete primarily on our ability to provide accurate and timely test results and reliable
monitoring services. We typically agree to complete preparation of the testing reports  within 10 days
upon completion of our testing or inspection process under normal circumstances. Any unforeseen
increase in the volume of customers could pose challenges  on  our employees and systems, as they may
face difficulties in handling the higher workload and demands, leading to unacceptable turn-around times.
In addition, as the number of our customers and samples increases, our services and system may not be
able to scale accordingly. We may also not be able to hire additional qualified laboratorial technicians to
handle increased volumes. Any failure to handle higher volume of requests and maintain the quality of our
services could lead to the loss of customers and have a material adverse effect on our business, results of
operations and financial condition.
We are dependent on third-party suppliers for testing consumables and subcontractors for
outsourcing physically demanding  works during the course of provision of our foundation testing
service. This reliance exposes us to the risk of concentration due to our heavy dependence on our
major suppliers or subcontractors.
Our suppliers mainly include companies and manufacturers for provision of testing consumables for
conducting our testing services. During the course of provision of our foundation testing service, we also
outsource certain physically demanding works such as extracting core samples during the foundation and
geotechnical drilling process for the core drilling and standard penetration testing method to third party
drilling companies as our subcontractors specialising in these types of labour works.


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RISK FACTORS
Our suppliers may not be able to continue to provide testing consumables in sufficient quantities,
of suitable quality or at an acceptable price to satisfy our operation needs. Any interruptions to or decline
in the quantity or quality of our supply of testing consumables could materially disrupt our provision of
services and adversely affect our business. Subcontracting costs may also be subject to fluctuations which
are attributable to a number of factors such as labour cost, number of subcontractors available in the
market, and events beyond our control, such as natural disasters, infectious diseases and other inclement
factors.
For FY2021, FY2022,  FY 2023 and 6M2024 , our purchases from our top five suppliers or
subcontractors accounted for 90.5%, 80.0% , 61.9% and 78.1% of our total purchases, respectively. We
cannot assure you that these suppliers or subcontractors will continue to supply testing consumables or
provide subcontracting services at prices and on terms and conditions acceptable to us. Our reliance on
our top five suppliers or subcontractors may also expose us to the risk of unexpected price increases for
purchases, or shortage in supply. We cannot assure that we will be able to pass on our purchase costs to
our customers in the future, which may have a material adverse effect on our profitability and results of
our operations.
Failure of or non-compliance with our quality control measures may result in unreliable or
inaccurate test results, which may in turn damage our reputation and affect the demand for our
services.
Quality control is one of our core values and vital to our success and reputation. We have established
stringent quality control measures to ensure that our test or inspection results are reliable and accurate. We
require our operational staff to strictly comply with requisite regulatory or industrial standards, and adhere
to internal technical standards that provide detailed guidance to our day-to-day business practice. Failure
of our quality control system may result in unreliable or inaccurate test or inspection results. For example,
the use of incorrect inspection methodology, the occurrence of human errors due to time constraint or
otherwise, or the loss or mix-up of testing samples may cause inaccurate and unreliable test results.
In addition, adulteration of samples may result in false results. The occurrence of these incidents may
seriously damage our reputation, lead to the loss of business, and made us liable for the economic loss that
our customers may suffer.
Producing test results which are inaccurate may expose us to contractual or legal liabilities.
The accuracy and reliability of our test results as a construction engineering testing and inspection
company are critical for ensuring the safety, quality, and compliance of construction and infrastructure
projects. Inaccurate or unreliable test results can have detrimental effects on us, our customers, relevant
contractors, and end-users involved in these projects.
If we produce inaccurate test results, it would constitute a failure to fulfill our contractual
obligations to provide satisfactory and accurate test results to our customers. This could result in potential
breach of contract claims and we may be liable for any economic losses suffered by our customers. As
holders of the Inspection and Testing Agency Qualification Certificate issued by the Guangdong AMR


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and the Construction Engineering Quality Inspection Agency Qualification Certificate issued by the
Guangdong Provincial Department of Housing and Urban-Rural Development, we are expected to perform
testing and inspection services with a high level of expertise and care. Failure to adhere to industry
standards and deliver accurate test results could lead to potential liability for professional negligence and
the risk of certificate revocation.
In addition, construction and infrastructure projects are subject to various regulatory requirements
and standards. If our test result is inaccurate and lead to non-compliance with these regulations, we may
face legal consequences and be held liable for any resulting liabilities.
As at 31 December 2021, 2022,  2023 and 30 June 2024, there were no provision nor conting ent
liabilities recognis ed related to our testing services. The occurrence of such liabilities could adversely
impact our reputation, business operations, and financial results.
Unsatisfactory performance and/or unavailability of our subcontractors may adversely affect our
operations and profitability
During the Track Record Period, we engaged a number of subcontractors to carry out the drilling
process for certain foundation testing services, the subcontracting fee account for 14.4%, 6.8%, 6.5% and
5.7% of our total cost of sales for FY 2021, FY2022,  FY2023 and 6M2024, respectively. See “Business –
Our suppliers and subcontractors – Subcontractors” in this prospectus for details of subcontracting. While
we will closely monitor the works of our subcontractors, there could be no assurance that we will be able
to control the quality, safety and environmental protection standards of the works to be performed by our
subcontractors to the same extent as the works are performed by our own employees at all times. Any under-
performance or non-performance of our subcontractors could lead to failure by the subcontractors to meet
our quality, safety and environmental protection standards, which, in turn, may result in our liability to third
parties and will have a material adverse effect on our business, results of operations, financial condition and
reputation. Meanwhile, we may not be able to find replacement of the under-performing subcontractors on
terms acceptable to us and are able to perform. Any failure to retain suitable subcontractor at reasonable
cost or seek replacements of our existing subcontractors on favourable terms, or at all, may have a material
adverse effect on our business, financial condition, results of operations and prospects.
We may fail to protect our facilities, which could have a material adverse effect on our business,
results of operations and financial condition.
Our key assets are our laboratories and our testing equipment. Our operations are therefore
dependent in part upon our ability to protect the laboratorial operations against physical damage from
explosions, fire, floods, hurricanes, earthquakes, power loss, telecommunications failures, break-ins and
similar events. The occurrence of any of these events could result loss of properties and interruptions,
delays or cessations in service to customers, which could have a material adverse effect on our business,
results of operations and financial condition.


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RISK FACTORS
Our business may suffer if we fail to respond to changes in technical requirements under regulatory
and industrial standards.
Our industry is subject to changes in technical requirements under regulatory and industrial standards.
Our success will depend, among other things, on our ability to acquire or license new and improved testing
equipment. We will need to purchase qualified equipment in order to keep ourselves abreast with technological
advances or regulatory or industrial developments in the construction engineering testing and inspection
industry. We may not be able to negotiate acceptable terms with suppliers of new or updated technologies
and equipment for construction engineering testing and inspection. In such event, we may lose business to
our competitors who are able to offer them more reliable and advanced testing and inspection services, and
our business and financial positions will be materially and adversely affected.
Our reputation may be adversely affected by forged certificates.
We have included anti-counterfeiting features (such as QR codes which link to our online platform)
to help recipients of our reports to ascertain their authenticity. However, we cannot assure you that we can
successfully prevent third parties from forging test or inspection reports that were alleged to be issued by
us. The use of such forged test or inspection reports in construction works may create disputes and even
liabilities, which could lead to unsatisfactory experience of the parties concerned, damage our reputation,
and may in turn cause a loss of business and additional cost to combat such malpractice (including
legal cost to protect our brand name and defend ourselves in any third party claims). If we fail to detect
any potential forgery practice in a timely manner, or if our preventive measures are not as effective as
expected, our operations may be disrupted, our reputation may be harmed, and our business may be
materially and adversely affected.
Any adverse publicity in the market may materially and adversely affect our business.
Our continued success is dependent upon our ability to maintain our credibility and reputation in
the market as an independent and trustworthy provider of construction engineering testing and inspection
services. We cannot guarantee that we will be free from adverse publicity which could have a negative
effect upon our credibility and reputation among our customers. For instance, any alleged error or mistake
in our testing and inspection works may damage our reputation. We cannot guarantee that our association
with any potential adverse publicity events will not have an adverse effect upon public opinion and a
consequential impact on our business.
Our business depends on the continued service of our senior executives, and our business may be
severely disrupted if we lose their services.
Our business success and future development are attributable to the expertise and experience of
our senior management team. In particular, Mr. Lai Feng, our chairman and general manager  is critical
to our business with his leadership, expertise and industry experience and have been instrumental in the
development of our business operations. We cannot assure you that we will be able to continue retain the
service of the senior executives,  and particularly,  Mr. Lai. If we lose our senior executives, we might not
be able to replace them in a timely manner or at all. In addition, we cannot assure you that they will not


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RISK FACTORS
join a competitor or form a competing business. If any of our senior executives joins a competitor or forms
a competing company, our business may be adversely affected. We may be unable to attract or retain
replacement personnel required to achieve our business objectives, and failure to do so could severely
disrupt our business and prospects.
Failure to comply with China’s anti-bribery laws may damage our reputation and materially and
adversely affect our business, financial conditions and results of operations.
We cannot assure you that our internal policies and procedures will detect or prevent all anti-bribery
violations, if any were  committed by our employees,  in a timely manner, or that the implementation
of these policies and procedures will be correctly followed by our employees, which may significantly
undercut the effectiveness of our anti-bribery measures. Further, as the PRC Government continues to
increase its enforcement efforts to crack down bribery and corruption, our continuing compliance with
anti-bribery laws may increase our compliance costs and expose us to potential criminal or administrative
sanction  risks  for any of  such non-compliance. If our internal measures are proved to be inadequate,
we may be held liable for the anti-bribery violations committed by our employees, and be subject to
investigations, sanctions or fines, damage. Our business, financial condition and results of operations
could be adversely affected as a result.
Our expansion plans or future acquisitions may entail certain risks and challenges.
As at the Latest Practicable Date, we were moving our operations  into a new headquarters in
the New Building under our relocation plan in Xinyi City, Maoming to support our business growth.
We expect that all of our operations shall be transited to the New Building and the relocation shall be
completed in the third quarter of 2024 . For details, see “Business – Properties – Relocation plan ” in
this prospectus. We may also expand into businesses and services which are complementary to our
construction engineering testing and inspection business and expand into other areas of the testing and
inspection industry, such as food and agricultural products testing, transportation construction testing and
fire protection. For details, see “Business – Business strategies” in this prospectus. Our expansion plans or
future acquisitions may expose us to potential risks and challenges, including:
• requisite government approval procedures;
• the availability of skilled labour and service orders to support the expansion;
• our potential inability to maintain quality control in our new facilities or acquired targets;
• the integration of new operations, services and personnel;
• unforeseen or hidden liabilities, including the target’s indebtedness and financial condition;
• the diversion of resources and management’s attention from our existing business and
technologies;


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RISK FACTORS
• our potential inability to generate sufficient revenue to offset new costs;
• our potential liability to our landlords for terminating the leases without consent;
• the potential loss of or harm to relationships with both employees and customers resulting
from our integration of new businesses; or
• an increase in depreciation charges as a result of our significant investment in machinery and
equipment.
As a result of the foregoing risks and challenges, we may not be able to complete the relocation of
our entire operations into our new headquarters in the New Building under our relocation plan as expected,
and we may be forced to seek alternative sites for our expansion. Our new service facilities, if completed,
or our acquired targets may not fully integrate with our existing facilities and generate sufficient revenue.
The occurrence of any of the foregoing could have a material adverse effect on our business, results of
operations and financial condition.
We may encounter difficulties in managing our growth or developing appropriate internal
organisational structures, internal control environment and risk monitoring and management
systems in line with our growth, which could negatively affect our business, results of operations,
and financial condition.
Our growth has placed, and is expected to place, a significant strain on our managerial, operational
and financial resources. Accordingly, we are required to develop and implement appropriate structures for
internal organisation and information flow, an effective internal control environment and risk monitoring
and management systems in line with our growth, as well as to hire and integrate qualified employees
into our organisation, which will cost significant management resources. We may incur substantial costs
and expend substantial resources in connection with any such growth or in order to respond to more
challenging market conditions due to, among other things, changing regulatory and industrial standards.
We also will need to continue to expand, train, manage and motivate our workforce as well as manage
our relationships with existing customers. All of these endeavours will require substantial management
resources and the incurrence of additional costs and expenditures. We cannot assure you that we will be
able to effectively manage our growth.
In addition, the disclosure and other ongoing obligations associated with becoming a public
company will increase the challenges to our finance and accounting team. We cannot assure you that our
existing internal control and risk monitoring and management systems will be adequate. Therefore, if we
fail to appropriately develop and implement structures for internal organisation and information flow,
an effective environment and a risk monitoring and management system, we may not be able to identify
unfavourable business trends, administrative oversights or other risks that could materially and adversely
affect our business, results of operations and financial condition.


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RISK FACTORS
We are subject to certain operational risks and hazards such as natural disasters, industrial
accidents and occupational hazards, as well as other safety-related incidents.
We are subject to numerous operational risks and hazards beyond our control that may cause
significant business interruptions, personal injuries, property or environmental damage. W e are exposed to
common operational risks including natural disasters and severe weather conditions such as earthquakes
and storms, industrial accidents such as vehicle collisions, explosions and fires, unexpected maintenance
or technical problems and key equipment malfunction, and occupational hazards to our employees.
Such incidents may interrupt our operations and cause damage and injuries to our properties and staff.
Should any of these risks occurs and we fail to take necessary responsive measures in a timely manner,
our business may be temporarily interrupted or suspended, which could lead to increased labour costs,
reputational damage and financial losses. Furthermore, any mismanagement, improper handling or
violation of our operational procedure in the course of our service could result in accidents involving
serious damage to our employees and property. If we fail to exercise sufficient caution on safety matters,
our business operations and financial positions will be materially and adversely affected.
Our insurance coverage may not be sufficient to cover all losses and we may incur substantial costs as
a result of a severe business liability or disruption or other unexpected events.
We maintain automobile insurance and personal injury insurance for our operations.  We do not
maintain insurance coverage for non-performance of contracts for our services and other risks associated
with our business, including business disruption, business liability or similar business insurance products,
which our Directors believe is consistent with the industry practice in China. We have determined that
the risks of disruption or liability from our business, the cost of obtaining insurance coverage for these
risks and the difficulties associated with obtaining such insurance on commercially reasonable terms make
it impractical for us to have such insurance. Therefore, our insurance may not cover all potential risks
associated with our operations. In particular, we do not maintain insurance coverage for any business
liability, disruption, litigation or property insurance coverage for our operations in China and would have
to bear the costs and expenses associated with any such events out of our own resources  if any of that
occurs. Nor do we maintain insurance coverage for any professional liability that arises from inaccurate or
unreliable test results. Should a customer claim damages due to our acts of negligence arising out of our
provision of services, we would have to bear the full cost of defense and potentially the resulting damages
under the claim. If such costs and expenses exceed the levels which we expect, there could be a material
adverse effect on our business, results of operations and financial condition.
Failure in our information technology systems could significantly increase testing turn-around time
and disrupt our operations.
Our testing and inspection operations depend, in part, on the continued performance of our
information technology systems that connect our on-site testing and inspection equipment and computers
to the system in our headquarters. Our information technology systems are potentially vulnerable to
physical or electronic break-ins, computer viruses and similar disruptions. Sustained system failures
or interruption of our systems in one or more of our service centers could disrupt our ability to process


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RISK FACTORS
laboratorial requisitions, perform testing, and provide test results in a timely manner. In addition, tracking
devices and monitors powered by our information technology systems play an indispensable part in our
quality control procedures. Therefore, failure of our information technology systems could adversely
affect our business, results of operations and financial condition.
We may not be able to obtain additional capital at acceptable terms or at all.
We believe our current cash, cash equivalents and cash flow from operations will be sufficient to
meet our anticipated cash needs including for working capital and capital expenditures. However, we may
require additional cash resources due to evolved business conditions or other future developments. If our
current cash resources are insufficient to satisfy our cash requirements, we may seek to sell additional
equity, equity-linked or debt securities or obtain a credit facility. The sale of additional equity or equity-
linked securities could result in additional dilution to our Shareholders. The incurrence of indebtedness
would result in increased debt service obligations and may result in operating and financing covenants
that would restrict our operations and liquidity. We may also fail to obtain sufficient credit facility, or at
all, since our asset-light business model to a large extent limits the value of collateral we can offer to a
creditor.
In addition, our ability to obtain additional capital on acceptable terms is subject to a variety of
uncertainties, including:
• investors’ perception of, and demand for, securities of companies like us;
• conditions of the capital markets in which we may seek to raise funds;
• our future results of operations, financial condition and cash flows;
• regulatory rules and policies on the construction engineering testing and inspection industry
in China;
• economic, social and other conditions in China; and
• regulatory rules and policies relating to foreign currency borrowings.
We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at
all. Any failure to raise additional funds on commercially reasonable terms could have a material adverse
effect on our liquidity and financial condition.


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RISK FACTORS
Our operations and business plans may be adversely affected by health crisis and other outbreak
Our business could be affected by force majeure events, outbreaks of epidemics and contagious
diseases, including avian influenza, severe acute respiratory syndrome, swine influenza caused by the
H1N1 virus, or H1N1 influenza, the Ebola virus and COVID-19 and its variants, or other events, such
as wars, acts of terrorism, environmental accidents, power shortage or communication interruptions.
Moreover, the world has experienced more frequent natural disasters such as earthquakes, floods and
droughts in the past few years.
Any occurrence of natural disasters, epidemics and other outbreaks that are beyond our control may
be expected to affect the economy, restrict the level of business activities in the affected areas, directly
impact our operations, including straining facilities and employees, exposing employees to personal risks,
temporarily closing office spaces, imposing additional health or safety measures upon office spaces,
or exposure to potential liabilities for actions taken or not taken. Any such future occurrences, or the
measures taken by the relevant government authorities in response, may adversely affect the economy and
our business.
We face risks relating to negotiation of new lease term for the properties we lease and potential
procedural and documentary defect concerning Dabei Line Land.
As at the Latest Practicable Date, we were moving into a new headquarters in the New Building
under our relocation plan in Xinyi City, Maoming to support our business growth. For details, see “Business
– Properties – Relocation plan”  in this prospectus. At the end of each lease term of the New Building, we
may not be able to negotiate an extension of the lease and may therefore be forced to relocate to a different
location, or the landlords may significantly increase the rent if we continue to utilise the leased premises.
These risks and limitations could disrupt our operations and adversely affect our profitability. W e may not
be able to obtain new leases at desirable locations on acceptable terms to accommodate our future growth,
which could materially and adversely affect our business.
In addition, we have potential procedural and documentary defect concerning Dabei Line Land and
the buildings thereon,  which we lease d and used  as our laboratory unit prior to the relocation to the New
Building.  The lessor of Dabei Line Land had not provided us with evidence of their valid and enforceable
land use rights, and the relevant title documents or evidence of their relevant rights or authority to
lease such properties as at the Latest Practicable Date.  Our Company has constructed certain temporary
constructions on the Dabei Line Land primarily used for testing laboratories and warehouses. On 11
July 2014, our Company obtained the Construction Project Planning Permit (Permit No. Jianzi [2014]
Lin 006) for part of the temporary constructions of a floor area of 306 m 2. The permit was valid for two
years and our Company did not apply for an extension. For the building of the remaining portions of the
temporary constructions, including laboratories and warehouses, our Company did not obtain the relevant
Construction Project Planning Permit. The temporary constructions have remained in place without being
dismantled since their initial construction up to the Latest Practicable Date.  Although we have  already
relocated the operations of our laboratory units on the Dabei Line Land to the New Building , should
disputes arise relating to the title encumbrances and the non-compliance issue regarding the temporary


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RISK FACTORS
constructions to Dabei Line Land, we may be subject to the risks of administrative penalties and may
encounter disruption  in continuing to use the Dabei Line Land before we move into the New Building
under the relocation plan.
For details of these leased properties, see “Business – Properties – Potential procedural and
documentary defect relating to Dabei Line Land” in this prospectus.
We may not be able to protect our intellectual property rights and expenses incurred in protecting
our intellectual property rights may adversely affect our business.
We regard our brand, trade names, trademarks, proprietary technology, know-how and other
intellectual property as critical to our success. The success of our business depends substantially upon
our continued ability to use our brand, trade names, trademarks, proprietary technology and know-how to
increase brand awareness and to further develop our brand. We cannot assure you that third parties will
not gain unauthorised access to our proprietary technology or know-how. The unauthorised use of any of
the foregoing intellectual property used in our business operations could diminish the value of our brand
and its market acceptance, competitive advantages or goodwill.
We are subject to changes in economic  and social conditions and government policies in the PRC,
which may have an effect on our business, financial condition, results of operations and prospect.
Our major businesses, assets, operations are located in the PRC. Accordingly, our financial
condition, results of operations and prospects are, to a significant degree, subject to the economic, social
and legal conditions in the PRC. The PRC governmental authorities regulates the economy and industries
by imposing industrial policies and regulating the PRC’s macro economy through fiscal and monetary
policies.
The overall growth of the PRC economy has been significant over the past few decades, and the
PRC governmental authorities has implemented various measures to encourage economic growth and
guide the allocation of resources. The changes in macroeconomic measures and monetary policies may
affect demand for our services and therefore materially affect our business, financial position and results
of operations.
Payment of dividend is subject to requirements under applicable PRC laws.
Under PRC law, dividend can only be paid out of allocable profit of a PRC company. Allocable
profit is our profit as determined under PRC GAAP, less any recovery of accumulated losses and
appropriations to statutory and other statutory funds we are required to make. As a result, we may not
have sufficient or any allocable profit that allows us to make dividend distributions to the Shareholders,
especially during the periods for which our financial statements indicate that our operations have been
unprofitable. Any allocable profit not distributed in a given year is retained and available for distribution
in subsequent years.


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Renewal of and changes in the PRC legal system could adversely affect us.
As we conduct all of our business operations in the PRC, we are principally governed by PRC
laws, rules and regulations. The PRC legal system is based on written statutes, and prior court decisions
can only be cited as reference. Interpretation and enforcement of the PRC laws and regulations, including
those regulating our industry and foreign investment, may be subject to changes in policies and economic
and social environment. Our Company has to meet the policies requirements issued by relevant regulatory
authorities from time to time, and obtain approvals and complete filings in accordance with the relevant
regulatory authorities’ interpretation and enforcement of such policies. If there are any future changes
in applicable laws, regulations, administrative interpretations or regulatory documents, more stringent
requirements could be imposed on the industries we are currently engaged in. Compliance with such
new requirements could impose additional costs or otherwise have an adverse effect on our industry. In
addition, if we fail to meet such new rules and requirements, we may be ordered by the relevant PRC
regulatory authorities to suspend or terminate relevant businesses, or pay fines. Alternatively, these
changes may also relax some requirements, which could be beneficial to our competitors or could lower
market entry barriers and increase competition. As a result, our business, financial conditions and results
of operations could be adversely affected.
You may have limited resources in effecting service of legal process and enforcing judgments against
us and our management.
We are a company incorporated under the laws of the PRC and all of our business, assets and
operations are located in China. In addition, the majority of our Directors, Supervisors and executive
officers reside in China, and substantially all of the assets of such Directors, Supervisors and executive
officers are located in China. As a result, it may not be feasible for investors to effect services of process
upon us, or our Directors, supervisors or senior management who reside in China. Judgments obtained in
a Hong Kong court may be enforced in the PRC, provided that certain conditions are satisfied. But China
has not entered into treaties or arrangements providing for the recognition and enforcement of judgments
made by courts of some other jurisdictions  such as the United States,  the United Kingdom, Japan and
Australia. As a result, investors may have limited resources when they seek recognition and enforcement
of foreign judgments in the PRC.
Non-PRC Resident Holders of H Shares may be subject to PRC taxations.
Non-PRC resident individual holders of H Shares whose names appear on the register of members
of our H Shares are subject to PRC individual income tax on dividends received from us.
Pursuant to the Notice on Questions Concerning the Collection of Individual Income Tax following
the repeal of Guo Shui Fa [1993] No. 045 (Guo Shui Han [2011] No. 348) (਷೼೯
[1993]045ٝissued by the SAT on 28 June 2011, non-PRC
resident individual shareholders of a domestic non-foreign-invested enterprise whose shares are listed
in Hong Kong may be entitled to preferential tax treatments in accordance with applicable tax treaties
between the countries in which they are tax resident and the PRC as well as the tax arrangements between


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RISK FACTORS
Mainland China and Hong Kong (Macau). Dividend income of individual shareholders who are residents
of countries that have not entered into taxation treaties with the PRC is generally subject to income tax
at the rate of 20%. However, domestic non-foreign-invested enterprises whose shares are listed in Hong
Kong generally may withhold individual income tax at the rate of 10% when distributing dividends with
respect to such listed shares without prior application to the PRC tax authorities. In addition, according
to the Individual Income Tax Law of the PRC (جand the Implementation
Provisions of the Individual Income Tax Law of the PRC (ૢԷ), non-
PRC resident individuals are subject to individual income tax at a rate of 20% on gains realised upon sale
of equity interests of a PRC resident enterprise. There are no specific PRC laws or regulations imposing
individual income tax on non-PRC resident individuals of gains realised upon sale of shares of a PRC
resident enterprise listed on an overseas stock exchange. To our knowledge, in practice the PRC tax
authorities have not sought to collect individual income tax from non-PRC resident individuals for gains
realised upon sale of equity interests of a PRC resident enterprise listed on an overseas stock exchange.
If such tax is collected in the future, the investment value of such H Shares held by the individual holders
may be materially and adversely affected.
In addition, pursuant to the EIT Law and its implementation rules, income generated from the
PRC (including gains derived from the disposal of equity interests in PRC resident enterprise and PRC
sourced dividends) by non-PRC resident enterprises is generally subject to EIT at a rate of 10%, subject
to the provisions of any applicable special arrangements or treaties. Pursuant to the Notice on the Issues
Concerning Withholding Enterprise Income Tax on the Dividends Payable by PRC Resident Enterprises to
Overseas Non-PRC Resident Enterprise H Share Holders (͏ΆุΣྤ̮H؇ٰ
ٝpromulgated by the SAT on 6 November 2008, dividends
paid to non-PRC resident enterprise H Shareholders that are derived from profits generated since 1 January
2008 are subject to the withholding of EIT at a rate of 10%. Non-PRC resident enterprise H Shareholders
that are entitled to preferential tax treatments pursuant to any tax treaty or arrangement may apply to the
relevant tax authorities for refund of the excess amount withheld. See “Taxation and Foreign Exchange –
The PRC Taxation” in Appendix III to this prospectus for further details.
RISKS RELATING TO THE SHARE OFFER AND OUR H SHARES
There is no existing public market for our H Shares and their liquidity and market price may
fluctuate.
Prior to the Share Offer, there has not been a public market for our H Shares. We have applied for
the listing of and dealing in our H Shares on GEM. However, even if approved, we cannot assure you that
an active and liquid public trading market for our H Shares will develop following the Share Offer, or, if
it does develop, it will be sustained. The financial market in Hong Kong and other countries have in the
past experienced significant price and volume fluctuations. Volatility in the price of our H Shares may be
caused by factors beyond our control and may be unrelated or disproportionate to our operating results.
Accordingly, we cannot assure you that the liquidity and market price of our H Shares will not fluctuate.


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RISK FACTORS
The Offer Price was the result of negotiations among us and the Joint Overall Coordinators  (for
themselves and on behalf of the other Underwriters) and may not be indicative of prices that will prevail
in the trading market after the Share Offer. Therefore, our Shareholders may not be able to sell their H
Shares at prices equal to or greater than the price paid for their H Shares purchased in the Share Offer.
Our Controlling Shareholder may exert substantial influence over our operation and may not act in
the best interests of our public Shareholders.
Immediately following completion of the Share Offer (and assuming that the Offer Size Adjustment
Option is not exercised at all), Xinyi City CEQS Center will control approximately 56% of the total share
capital of our Company. Accordingly, Xinyi City CEQS Center will remain as our Controlling Shareholder
after the completion of the Share Offer. Therefore, they will be able to exercise significant influence
over all matters of our Company requiring shareholders’ approval, including the election of directors and
the approval of significant corporate transactions. They will also have veto power with respect to any
shareholder action or approval requiring a majority vote except where they are required by relevant rules
to abstain from voting. Such concentration of ownership also may have the effect of delaying, preventing
or deterring a change in control of our  Company that would otherwise benefit our Shareholders. The
interests of the Controlling Shareholder may not always align with the other Shareholders. If the interests
of the Controlling Shareholder conflict with the interests of our Company or the other Shareholders, or
if the Controlling Shareholder chooses to cause our business to pursue strategic objectives that conflict
with the interests of our Company or the other Shareholders, our Company or those other Shareholders,
including you, may be disadvantaged as a result.
In addition, Xinyi City CEQS Center is a public institution under the Xinyi City Bureau of Housing
and Urban-Rural Development, which is principally responsible for the supervision and management of
building construction and infrastructure projects, supervision and inspection of the quality of construction
works and construction safety, issuance of project quality supervision report, safety evaluation letter
and safety supervision report; educating and provision of training to parties involved in the construction
projects to establish and improve the construction safety system. As such, Xinyi City CEQS Center
constitutes a PRC Governmental Body under the GEM Listing Rules. As a result, our Board’s decision
making process and our business and operation decisions may be subject to governmental review, approval
or other governmental procedures, which could be time-consuming and make our business decisions
inefficient or hysteretic. Any future changes in regulations and policies for construction industry may
adversely affect our business operation and results of operation and may not be in line with the interests
of our other Shareholders and our Company  as a whole. As a result, the interests of our Controlling
Shareholder may not be in line with the interests of our other Shareholders and our Company as a whole.


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RISK FACTORS
Future sales or issuances or perceived sales or issuances of our Shares or conversion of our Unlisted
Shares into H Shares could have a material adverse effect on the prevailing market price of our H
Shares and our ability to raise additional capital.
The market price of our H Shares could decline as a result of future sales or issuances of a
substantial number of our H Shares or other securities in the public market, or the perception that such
sales or issuances may occur. Moreover, such future sales or issuances or perceived sales or issuances
may also adversely affect the prevailing market price of our H Shares and our ability to raise capital in the
future at a favorable time and price.
The PRC Company Law provides that the Shares issued by our Company prior to the Listing
Date shall not be transferred within a period of one year from the date on which trading in our H Shares
commences on GEM. We cannot assure you that the current Shareholders will not be in breach of such
statutory restriction and dispose of any Shares they own now or may own in the future.
Our Unlisted Shares can be converted into H Shares, provided that such conversion and the trading
of H Shares so converted have been duly completed pursuant to our requisite internal approval process and
the approval from the relevant PRC regulatory authorities. In addition, such conversion and trading must,
in all aspects, comply with the regulations promulgated by the securities regulatory authority under the
State Council, as well as the regulations, requirements and procedures of GEM. If a significant number of
our Unlisted Shares are converted into H Shares, the supply of H Shares may be substantially increased,
which could materially and adversely affect the prevailing market price of our H Shares.
There can be no assurance if and when we will pay dividends in the future.
Distribution of dividends shall be formulated by our Board and will be subject to shareholders’
approval. A decision to declare or to pay any dividends and the amount of any dividends will depend
on various factors, including but not limited to our distributable profits, business conditions and
strategies, capital requirements and expenditure plans, financial results, future operations and earnings,
characteristics of the industry, the stage of development, and any restrictions on payment of dividends,
and any other factors determined by our Board from time to time to be relevant to the declaration or
suspension of dividend payments. As a result, there can be no assurance whether, when and in what form
we will pay dividends in the future. See “Financial Information – Dividend  and dividend policy” in this
prospectus for further details.
The trading price and volume of our H Shares may be volatile, which could result in substantial loss
to our investors
The trading price of our H Shares may be volatile and could fluctuate widely in response to factors
beyond our control, including variations in the level of liquidity of our H Shares, changes in securities
analysts’ (if any) estimates of our financial performance, investors’ perceptions of our Company and the
general investment environment, developments in laws, regulations and taxation systems which affect
our operations, and general market conditions of the securities markets in Hong Kong. In particular, the


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RISK FACTORS
trading price performance of our competitors whose securities are listed on the Stock Exchange may affect
trading price of our H Shares. These broad market and industry factors may significantly affect the market
price and volatility of our H Shares, regardless of our actual operating performance.
In addition to market and industry factors, the price and trading volume for our H Shares may be
highly volatile for specific business reasons. In particular, factors such as variations in our revenue, net
income and cash flow, success or failure of our efforts in implementing business and growth strategies and
involvement in material litigation as well as recruitment or departure of key personnel, could cause the
market price of our H Shares to change unexpectedly. Any of these factors may result in large and sudden
changes in the volume and trading price of our H Shares.
Should the Offer Price be higher than the net tangible book value per Share, subject to pricing, you
may experience an immediate dilution in the book value of the Offer Shares you purchased in the
Share Offer and may experience further dilution if we issue additional Shares in the future.
The Offer Price of the Offer Shares may be higher than the net tangible book value per Share
immediately prior to the Share Offer. As a result, you and other purchasers of the Offer Shares in the
Share Offer may experience an immediate dilution to a pro forma net tangible asset value of HK$5.4 6 per
Share, based on the maximum Offer Price of HK$10.4 per H Share.
Forward-looking statements contained in this prospectus are subject to risks and uncertainties.
This prospectus contains certain statements and information that are forward-looking and uses
forward-looking terminology such as “believe,” “expect,” “estimate,” “predict,” “aim,” “intend,” “will,”
“may,” “plan,” “consider,” “anticipate,” “seek,” “should”, “could,” “would,” “continue,” and other
similar expressions. You are cautioned that reliance on any forward-looking statement involves risks
and uncertainties and that any or all of those assumptions could prove to be inaccurate and, as a result,
the forward-looking statements based on those assumptions could also be incorrect. In light of these and
other risks and uncertainties, the inclusion of forward-looking statements in this prospectus should not
be regarded a representations or warranties by us that our plans and objectives will be achieved and these
forward-looking statements should be considered in light of various important factors, including those set
forth in this section. Subject to the requirements of the GEM Listing Rules, we do not intend publicly to
update or otherwise revise the forward-looking statements in this prospectus, whether as a result of new
information, future events or otherwise. Accordingly, you should not place undue reliance on any forward-
looking information. All forward-looking statements in this prospectus are qualified by reference to this
cautionary statement.


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RISK FACTORS
We cannot guarantee the accuracy of certain facts and statistics contained in this prospectus.
Certain facts and statistics in this prospectus have been derived from various official government
and other publications generally believed to be reliable. We believe that the sources of such 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 in any
material respect or that any fact has been omitted that would render such information false or misleading
in any material respect. Information from official government sources has not been independently verified
by us or any of the Joint Sponsors, the Joint Overall Coordinators , the Underwriters or any of our or
their respective directors, officers or representatives or any other person involved in the Share Offer and
no representation is given as to its accuracy. Due to possibly flawed or ineffective collection methods
or discrepancies between published information and market practice, the facts and statistics in this
prospectus may be inaccurate or may not be comparable to facts and statistics produced with respect to
other economies. Further, we cannot assure you that they are stated or compiled on the same basis or with
the same degree of accuracy (as the case may be) in other jurisdictions. As a result, you should not unduly
rely upon such facts and statistics contained in this prospectus.
You should read the entire prospectus and we strongly caution you not to place any reliance on any
information contained in the press articles, other media and/or research analyst reports regarding us,
our business, our industry and the Share Offer.
There has been, prior to the publication of this prospectus, and there may be subsequent to the date
of this prospectus but prior to the completion of the Share Offer, press, media, and/or research analyst
coverage regarding us, our business, our industry and the Share Offer. You should rely solely upon the
information contained in this prospectus in making your investment decisions regarding our H Shares
and we do not accept any responsibility for the accuracy or completeness of the information contained in
such press articles, other media and/or research analyst reports nor the fairness or the appropriateness of
any forecasts, views or opinions expressed by the press, other media and/or research analyst regarding
the H Shares, the Share Offer, our business, our industry or us. We make no representation as to the
appropriateness, accuracy, completeness or reliability of any such information, forecasts, views or
opinions expressed or any such publications. To the extent that such statements, forecasts, views or
opinions are inconsistent or conflict with the information contained in this prospectus, we disclaim them.
Accordingly, prospective investors are cautioned to make their investment decisions on the basis of
information contained in this prospectus only and should not rely on any other information.
There is no assurance that the H Shares will remain listed on GEM
Although it is currently intended that the H Shares will remain listed on GEM, there is no guarantee
of the continued listing of the H Shares. Among other factors, our Company may not continue to satisfy
the listing requirements of GEM. Holders of H Shares would not be able to sell their H Shares through
trading on GEM if the H Shares are no longer listed on GEM.


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WAIVER FROM STRICT COMPLIANCE WITH THE GEM LISTING RULES
In preparation for the Listing, we have sought the following waivers from strict compliance with the
relevant provisions of the GEM Listing Rules:
JOINT COMPANY SECRETARIES
Rule 11.07(2) of the GEM Listing Rules provides that an issuer must appoint a company secretary
who satisfies Rule 5.14 of the GEM Listing Rules. Rule 5.14 of the GEM Listing Rules provides that
an issuer must appoint as its company secretary an individual who, by virtue of his/her academic or
professional qualifications or relevant experience, is, in the opinion of the Stock Exchange, capable of
discharging the functions of company secretary.  The Stock Exchange considers the following academic
or professional qualifications to be acceptable: (i) a member of The Hong Kong Chartered Governance
Institute; (ii) a solicitor or barrister (as defined in the Legal Practitioners Ordinance (Chapter 159 of the
Laws of Hong Kong)); and (iii) a certified public accountant (as defined in the Professional Accountants
Ordinance (Chapter 50 of the Laws of Hong Kong)).
In assessing “relevant experience”, the Stock Exchange will consider the individual’s: (i) length
of employment with the issuer and other listed companies and the roles he or she played;  (ii) familiarity
with the GEM Listing Rules and other relevant law and regulations including the SFO, the Companies
Ordinance, the Companies (WUMP) Ordinance and the Takeovers Code ; (iii) relevant training taken
and/or to be taken in addition to the minimum requirement of taking not less than 15 hours of relevant
professional training in each financial year under Rule 5.15 of the GEM Listing Rules;  and (iv)
professional qualifications in other jurisdictions.
We have appointed Ms. Cheung Lai Ha and Mr. Liu Dongxue, our chief financial officer,  as joint
company secretaries to jointly discharge the duties and responsibilities as our joint company secretaries
with reference to their past experience, qualifications and working experience.
Mr. Liu joined our Company in November 2023 and has gained a good understanding of the internal
administration and business operation of our Company. By virtue of Mr. Liu’s past work experience and
understanding of our Company, our Company believes that Mr. Liu is capable of discharging his duties as
a joint company secretary of our Company and is a suitable person to act as a joint company secretary of
our Company.
However, Mr. Liu does not possess full qualifications as required under Rule 5.14 of the GEM
Listing Rules. As such, we have appointed Ms. Cheung  as one of our joint company secretaries and to
provide joint company secretary support and assistance to Mr. Liu to enable Mr. Liu to acquire the relevant
experience as required under Rule 5.14 of the GEM Listing Rules and to duly discharge the functions of a
company secretary. Mr. Liu will be assisted and will enjoy the resources and expertise of Ms. Cheung as a
joint company secretary.


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WAIVER FROM STRICT COMPLIANCE WITH THE GEM LISTING RULES
Ms. Cheung , being an associate member of The Hong Kong Chartered Governance Institute
(formerly known as The Hong Kong Institute of Chartered Secretaries)  and The Chartered Governance
Institute (formerly known as The Institute of Chartered Secretaries and Administrators) in the United
Kingdom, satisfies the requirements under Rules 5.14 and 11.07(2) of the GEM Listing Rules. Further
biographical details of Ms. Cheung are set out in “Directors, Supervisors and Senior Management” in this
prospectus.
Therefore, we have applied for, and the Stock Exchange has granted, a waiver from strict
compliance with the requirements of Rules 5.14 and 11.07(2) of the GEM Listing Rules and the following
arrangements have been made to satisfy those requirements:
(a) we will continue to engage Ms. Cheung as a joint company secretary for a minimum period
of three years commencing from the Listing Date. We believe that Mr. Liu will acquire the
relevant qualifications or experience required under Rules 5.14 and 11.07(2) of the GEM
Listing Rules to act as our secretary with the guidance and assistance of Ms. Cheung. During
her  engagement period, Ms. Cheung  will work closely with Mr. Liu  and ensure that she
will be available at all times to provide assistance to Mr. Liu  for discharging his duty as a
company secretary, including but not limited to communicating regularly with Mr. Liu  on
matters relating to corporate governance, the GEM Listing Rules, as well as the applicable
Hong Kong laws and regulations which are relevant to us. We will further ensure that Mr.
Liu will receive the relevant trainings and support to enable him to be familiar with the GEM
Listing Rules and the responsibilities of a company secretary as required under the GEM
Listing Rules;
(b) pursuant to Rule 5.15 of the GEM Listing Rules, each of Ms. Cheung and Mr. Liu will attend
in each financial year no less than 15 hours of relevant professional training courses to
familiarise themselves with the requirements of the GEM Listing Rules and other Hong Kong
regulatory requirements;
(c) we will also appoint Yue Xiu Capital Limited as compliance adviser pursuant to Rule 6A.19
of the GEM Listing Rules, which will act as our additional channel of communication
with the Stock Exchange, and provide professional guidance and advice to us and our joint
company secretaries as to compliance with the GEM Listing Rules and all other applicable
laws and regulations;
(d) before expiry of the three-year period, we will re-evaluate Mr. Liu’s experience in order to
determine whether he satisfies the requirements as stipulated under Rules 5.14 and 11.07(2)
of the GEM Listing Rules;
(e) if Ms. Cheung  ceases to provide assistance to Mr. Liu, the waiver will be revoked by the
Stock Exchange with immediate effect;


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WAIVER FROM STRICT COMPLIANCE WITH THE GEM LISTING RULES
(f) before the end of the three-year period as mentioned above, w e shall demonstrate and
seek the confirmation from the Stock Exchange  that Mr. Liu, having had the benefit of the
assistance of Ms. Cheung for three years, would have acquired the relevant experience within
the meaning of Rule 5.14 of the GEM Listing Rules so that a further waiver would not be
necessary; and
(g) the waiver will be revoked if there are material breaches of the GEM Listing Rules by our
Company.
CONTINUING CONNECTED TRANSACTIONS
We have entered into certain transactions , which would constitute continuing connected
transactions subject to reporting, annual review, and announcement  requirements (i.e. partially exempt
continuing connected transactions under Chapter 20 of the GEM Listing Rules)  after the Listing. Details
about such transactions together with the application for a waiver from strict compliance with the relevant
announcement  requirement  under Chapter 20 of the GEM Listing Rules are set out in “Continuing
Connected Transactions” in this prospectus.


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INFORMATION ABOUT THIS PROSPECTUS AND THE SHARE OFFER
DIRECTORS’ RESPONSIBILITY FOR THE CONTENTS OF THIS PROSPECTUS
This prospectus includes particulars given in compliance with the Companies (WUMP) Ordinance,
the Securities and Futures (Stock Market Listing) Rules (Chapter 571V of the Laws of Hong Kong) and
the Listing Rules for the purpose of giving information to the public with regard to our Company. Our
Directors (including any proposed director who is named as such in this prospectus) collectively and
individually accept full responsibility for the accuracy of the information contained in this prospectus
and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief,
the information contained in this prospectus is accurate and complete in all material respects and not
misleading or deceptive, and there are no other matters the omission of which would make this prospectus
or any statement herein misleading.
CSRC FILING
Our filing procedures with the CSRC for the submission of the application to list our H Shares
on GEM and for the Share Offer were completed on 7 March 2024. In completing such filing, the CSRC
accepts no responsibility for the value of or income from the investment in our H Shares, nor for the
authenticity, accuracy or completeness of any content in this prospectus or in other filing materials.  No
other approvals from the CSRC are required to be obtained for the listing of the H Shares on the Stock
Exchange.
THIS PUBLIC OFFER AND THE PROSPECTUS
This prospectus is published solely in connection with the Public Offer, which forms part of the
Share Offer. For applicants under the Public Offer, this prospectus contains the terms and conditions of the
Public Offer. See “How to Apply for Public Offer Shares” in this prospectus for details of the procedures
for applying for the Offer Shares.
The Offer Shares are offered solely on the basis of the information contained and representations
made in this prospectus and on the terms and conditions set out herein and therein. No person has
been authorised to give any information or make any representations other than those contained in this
prospectus and, if given or made, such information or representations must not be relied on as having been
authorised by us, the Joint Sponsors, the Joint Overall Coordinators, the Joint Bookrunners, the Joint Lead
Managers, the Underwriters, any of our or their affiliates or any of their respective directors, officers,
employees or agents or any other person or party involved in the Share Offer. Neither the delivery of
this prospectus nor any offering, sale or delivery made in connection with our H Shares shall, under any
circumstances, constitute a representation that there has been no change or development reasonably likely
to involve a change in our affairs since the date of this prospectus or imply that the information in this
prospectus is correct as of any subsequent time.
STRUCTURE OF THE SHARE OFFER AND UNDERWRITING
See “Structure and Conditions of the Share Offer” in this prospectus for details of the structure
and conditions of the Share Offer, including its conditions and the arrangements relating to the Offer Size
Adjustment Option.


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INFORMATION ABOUT THIS PROSPECTUS AND THE SHARE OFFER
This prospectus is published solely in connection with the Share Offer which is sponsored by the
Joint Sponsors and managed by the Joint Overall Coordinators. The Offer Shares will be fully underwritten
by the Underwriters subject to the terms and conditions of the Underwriting Agreements (including but
not limited to the Joint Overall Coordinators (for themselves and on behalf of the Underwriters) and our
Company agreeing on the Offer Price). For further information about the Underwriters and underwriting
arrangements, see “Underwriting” in this prospectus.
RESTRICTIONS ON OFFER AND SALE OF THE OFFER SHARES
Each person acquiring the Offer Shares under the Public Offer will be required to confirm, and is
deemed by his acquisition of 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.
No action has been taken to permit a public offering of the Offer Shares or the distribution of this
prospectus in any jurisdiction other than Hong Kong. Accordingly, without limitation to the following,
this prospectus may not be used for the purpose of, and does not constitute, an offer or invitation in any
jurisdiction or in any circumstances in which such an offer or invitation is not authorised or to any person
to whom it is unlawful to make such an offer or invitation. The distribution of this prospectus and the
offering of the Offer Shares in other jurisdictions are subject to restrictions and may not be made except
as permitted under the securities laws of such jurisdiction pursuant to registration with or an authorisation
by the relevant securities regulatory authorities or an exemption therefrom. In particular, the Offer Shares
have not been publicly offered and sold, and will not be offered or sold, directly or indirectly in the PRC
or the United States.
APPLICATION FOR LISTING OF THE H SHARE ON THE STOCK EXCHANGE
Our Company has applied to the GEM Listing Committee for the granting of the listing of and
permission to deal in the H Shares to be issued pursuant to the Share Offer (including the additional H
Shares which may be issued pursuant to the exercise of the Offer Size Adjustment Option). Dealings in the
H Shares on the Stock Exchange are expected to commence on Friday, 6 September 2024.
Save as disclosed in “Share Capital” in this prospectus, no part of our share capital or loan capital
is listed on or dealt in on any other stock exchange and no such listing or permission to list is being or
proposed to be sought in the near future.
H SHARES WILL BE ELIGIBLE FOR ADMISSION INTO CCASS
Subject to the Stock Exchange granting the listing of, and permission to deal in, our H Shares on the
Stock Exchange and we complying with the stock admission requirements of HKSCC, our H 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.


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INFORMATION ABOUT THIS PROSPECTUS AND THE SHARE OFFER
Settlement of transactions between participants of the Stock Exchange is required to take place in
CCASS on the second settlement day after any trading day. All necessary arrangements have been made
for the H Shares to be admitted into CCASS. All activities under CCASS are subject to the G eneral Rules
of HKSCC and HKSCC Operational Procedures in effect from time to time. You should seek the advice
of your stockbroker or other professional adviser for details of those settlement arrangements as such
arrangements will affect your rights and interests.
PROCEDURES FOR APPLICATION FOR PUBLIC OFFER SHARES
The procedures for applying for Public Offer Shares are set out in “How to Apply for Public Offer
Shares” in this prospectus.
H SHARE REGISTER AND STAMP DUTY
All H Shares issued by us pursuant to applications made in the Public Offer will be registered on
our H Share register to be maintained by our H Share Registrar, Computershare Hong Kong Investor
Services Limited, in Hong Kong. Our principal register of members will be maintained by us at our head
office in the PRC.
Dealings in the H Shares registered on our H Share register in Hong Kong will be subject to Hong
Kong stamp duty. See Appendix III to this prospectus for further details.
PROFESSIONAL TAX ADVICE RECOMMENDED
Potential investors in the Share Offer are recommended to consult their professional advisers if
they are in any doubt as to the taxation implications of subscribing for, purchasing, holding, disposing of,
dealing in or exercising any rights in relation to, the H Shares. None of us, the Joint Sponsors, the Joint
Overall Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Underwriters, any of our or
their affiliates or any of their respective directors, officers, employees or agents or any other person or
party involved in the Share Offer accepts responsibility for any tax effects on, or liabilities of, any person
resulting from the subscription for, purchase, holding, disposition of, dealing in, or exercising any rights
in relation to, the H Shares.
REGISTRATION OF SUBSCRIPTION, PURCHASE AND TRANSFER OF H SHARES
We have instructed Computershare Hong Kong Investor Services Limited, our H Share Registrar,
and it has agreed, not to register the subscription, purchase or transfer of any H Shares in the name of any
particular holder unless and until the holder delivers a signed form to our H Share Registrar in respect of
those H Shares bearing statements to the effect that the holder:
(i) agrees with us, for ourselves and for the benefit of each Shareholder, and we agree with each
Shareholder, to observe and comply with the Company Law and the Articles of Association;


--- page 78 ---
– 67 –
INFORMATION ABOUT THIS PROSPECTUS AND THE SHARE OFFER
(ii) agrees with us, for ourselves and for the benefit of each Shareholder and each of our
Directors, Supervisors, managers and other senior officers, and we, acting for ourselves
and on behalf of each Shareholder and each of our Directors, Supervisors, managers and
senior officers, agree with each Shareholder to refer all differences and claims arising
from the Articles of Association or any rights or obligations conferred or imposed by the
Company Law or other relevant laws and administrative regulations concerning the affairs
of our Company to arbitration in accordance with the Articles of Association, and that the
arbitration tribunal may conduct hearings in open sessions and to publish its award, which
shall be final and conclusive. See Appendix V to this prospectus for further details;
(iii)  agrees with us, for ourselves and for the benefit of each Shareholder that the H Shares are
freely transferable by their holders; and
(iv) authorises us to enter into a contract on his behalf with each of our Directors and officers
whereby each such Director and officer undertakes to observe and comply with his
obligations to our Shareholders as stipulated in the Articles of Association.
LANGUAGE
If there is any inconsistency between this prospectus and its Chinese translation, this prospectus
shall prevail. For ease of reference, the names of Chinese laws and regulations, government authorities,
institutions, natural persons or other entities have been included in this prospectus in both the Chinese and
English languages, and in the event of any inconsistency, the Chinese versions shall prevail.
CONVERSION AND EXCHANGE RATE
For illustration purpose only, this prospectus contains translations of certain RMB amounts into
Hong Kong dollars at a specified rate. Unless we indicate otherwise, the translations of RMB into Hong
Kong dollars and vice versa have been made at the rate of RMB1.00 to HK$1.08897 in this prospectus.
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.
ROUNDING
Certain amounts and percentage figures included in this prospectus have been subject to rounding
adjustments. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of
the figures preceding them.


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– 68 –
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE SHARE OFFER
For further information on our Directors, Supervisors and s enior management, see “Directors,
Supervisors and Senior Management” of this prospectus.
DIRECTORS
Executive Directors
Name Residential Address Nationality
Lai Feng (፠ቜ) 1204 Kunhe Pavilion
Block H, Yucheng Mingyuan
6 Huanshan Road
Xinyi City, Maoming
Guangdong Province, China
Chinese
Huang Fei (࠭Room A1502
Tenglong Pavilion
Qinghua Park
Xinyi City, Maoming
Guangdong Province, China
Chinese
Mai Jiayu (ຄ) Room A1701
Block 8 Tianyu Shijia
Xinyi City, Maoming
Guangdong Province, China
Chinese
Zhang Xihua (ੵఃശ) 36 Meinan East Road
Dongzhen Street
Xinyi City, Maoming
Guangdong Province, China
Chinese
Non-executive Directors
Name Residential Address Nationality
Zou Chan (ཅᄬ) 22 Chengnan Science Park
Second Street
Dongzhen Street
Xinyi City, Maoming
Guangdong Province, China
Chinese
Chen Guangfu (௓Έబ) Room 1101, Unit 1
Block 11 North District
Tianyu Flower City
Xinyi City, Maoming
Guangdong Province, China
Chinese


--- page 80 ---
– 69 –
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE SHARE OFFER
Independent non-executive Directors
Name Residential Address Nationality
Liu Hongge (᱌) Room 1402, Unit 2, Block 17
Phase I, Zhonghai Wanjin Xian
5 Xianghe Street, Huayang Street
Shuangliu District, Chengdu
Sichuan, China
Chinese
Deng Dian ( ቎ᓃ) Flat C, 56/F, Block 1
The Merton
38 New Praya Kennedy Town
Kennedy Town, Hong Kong
Chinese
Luo Qiling (ᖯ઼ᜳ) Flat 3AC, Block A5
Phase II, New World
Yishan Garden
1968 Wutong Road
Tiandong Community
Haishan Street, Yantian
District, Shenzhen
Guangdong Province, China
Chinese
SUPERVISORS
Name Residential Address Nationality
Wu Weiyuan (๕) Room 401, Block 3B
39 Renmin Road
Xinyi City, Maoming
Guangdong Province, China
Chinese
Chen Shende (௓ଉᅃ) Room 1101
Block 1, Yudu Villa
Xinyi City, Maoming
Guangdong Province, China
Chinese
Chen Haibin (௓ऎᏵ) Room 501, Block 7
Yudu New Town
North Yingbin Avenue
Xinyi City, Maoming
Guangdong Province, China
Chinese


--- page 81 ---
– 70 –
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE SHARE OFFER
Name Residential Address Nationality
Zhou Kelin (ᎌ) Room 703, Block 14
Xingda Yujingcheng
District Dongzhen Street
Xinyi City, Maoming
Guangdong Province, China
Chinese
Zhang Zhihang (ੵқঘ) Room 2002, Block 18
Xingda Yujingcheng
District Dongzhen Street
Xinyi City, Maoming
Guangdong Province, China
Chinese
For details with respect to our Directors and Supervisors, see “Directors, Supervisors and Senior
Management” in this prospectus.
PARTIES INVOLVED IN THE SHARE OFFER
Joint Sponsors Huajin Corporate Finance (International) Limited
Suite 1101, 11/F
Champion Tower
3 Garden Road
Central, Hong Kong
Yue Xiu Capital Limited
Rooms Nos. 4917–4937
49/F, Sun Hung Kai Centre
30 Harbour Road
Wanchai, Hong Kong
Joint Overall Coordinators Huajin Securities (International) Limited
Suite 1101, 11/F
Champion Tower
3 Garden Road
Central, Hong Kong
Yue Xiu Securities Company Limited
Rooms Nos. 4917–4937
49/F, Sun Hung Kai Centre
No. 30 Harbour Road
Wanchai, Hong Kong


--- page 82 ---
– 71 –
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE SHARE OFFER
Joint Bookrunners and Joint Lead
Managers
Huajin Securities (International) Limited
Suite 1101, 11/F
Champion Tower
3 Garden Road
Central, Hong Kong
Yue Xiu Securities Company Limited
Rooms Nos. 4917–4937
49/F, Sun Hung Kai Centre
No. 30 Harbour Road
Wanchai, Hong Kong
Eddid Securities and Futures Limited
21/F, CITIC Tower
1 Tim Mei Avenue
Central
Hong Kong
GLAM Capital Limited
13/F, Wing Sing Commercial Centre
12–16 Wing Lok Street
Sheung Wan
Hong Kong
Livermore Holdings Limited
Unit 1214A, 12/F
Tower II Cheung Sha Wan Plaza
833 Cheung Sha Wan Road
Kowloon
Hong Kong
Orient Securities (Hong Kong) Limited
28th and 29th Floor
100 Queen’s Road Central
Hong Kong
Legal Advisers to our Company As to Hong Kong law
Loeb & Loeb LLP
2206–19, Jardine House
1 Connaught Place
Central, Hong Kong


--- page 83 ---
– 72 –
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE SHARE OFFER
As to PRC law
Jingtian & Gongcheng
34th Floor, Tower 3
China Central Place
77 Jianguo Road
Chaoyang District
Beijing, China
Legal Advisers to the Joint Sponsors
and the Underwriters
As to Hong Kong law
Eric Chow & Co.
in Association with Commerce & Finance Law Offices
3401, Alexandra House
18 Chater Road, Central
Hong Kong
As to PRC law
Commerce & Finance Law Offices
12–14th Floor
China World Office 2
No. 1 Jianguomenwai Avenue
Beijing, China
Auditor and Reporting Accountant PricewaterhouseCoopers
Certified Public Accountants
Registered Public Interest Entity Auditor
22/F, Prince’s Building
Central, Hong Kong
Industry Consultant China Insights Industry Consultancy Limited
10/F, Tower B
Jing’an International Center
No. 88 Puji Road, Jing’an District
Shanghai, China
Receiving Bank China Construction Bank (Asia) Corporation Limited
26th Floor, China Construction Bank Tower
3 Connaught Road Central
Central, Hong Kong


--- page 84 ---
– 73 –
CORPORATE INFORMATION
Registered office and headquarters 1/F, Building A
Construction Bureau Compound
Xinyi City, Maoming
Guangdong Province, China
Principal place of business in Hong Kong
under Part 16 of the Companies
Ordinance
46/F, Hopewell Centre
183 Queen’s Road East
Wan Chai, Hong Kong
Company’s website www.xyjiance.cn
(information contained in this website does not form part of
this prospectus)
Joint company secretaries Cheung Lai Ha ( ੵᘆᒳ)
(an associate member of both the Hong Kong Chartered
Governance Institute  and the Chartered Governance
Institute)
46F, Hopewell Centre
183 Queen’s Road East
Wan Chai
Hong Kong
Liu Dongxue (ᄎ̆௛)
Room 906, Block B
Haolaiwu Building
78, Xinliwu Road
Maoming
Guangdong Province, China
Authoris ed representatives Lai Feng ( ፠ቜ)
1204 Kunhe Pavilion
Block H, Yucheng Mingyuan
6 Huanshan Road
Xinyi City, Maoming
Guangdong Province, China
Cheung Lai Ha (ੵᘆᒳ)
(an associate member of both the Hong Kong
Chartered Governance Institute and the Chartered
Governance Institute)
46F, Hopewell Centre
183 Queen’ Road East
Wan Chai
Hong Kong


--- page 85 ---
– 74 –
CORPORATE INFORMATION
Compliance adviser Yue Xiu Capital Limited
Rooms Nos. 4917–4937
49/F, Sun Hung Kai Centre
30 Harbour Road
Wanchai, Hong Kong
Audit committee Liu Hongge (᱌) (Chairlady)
Luo Qiling ( ᖯ઼ᜳ)
Deng Dian (቎ᓃ)
Remuneration committee Liu Hongge (᱌) (Chairlady)
Luo Qiling ( ᖯ઼ᜳ)
Deng Dian (቎ᓃ)
Nomination committee Lai Feng ( ፠ቜ) (Chairman)
Luo Qiling ( ᖯ઼ᜳ)
Liu Hongge (᱌)
H Share Registrar Computershare Hong Kong Investor Services Limited
Shops 1712–1716, 17th Floor
Hopewell Centre
183 Queen’s Road East
Wan Chai, Hong Kong
Principal bankers China Construction Bank Corporation
(Maoming Xinyi Branch)
No. 2 Xinshang Road
Xinyi City, Maoming
Guangdong Province, China


--- page 86 ---
– 75 –
INDUSTRY OVERVIEW
The information and statistics regarding the testing and inspection industry contained in this
section and others in this prospectus  have been extracted from the CIC Report prepared by CIC, an
independent third-party industry consultancy firm commissioned by us. We believe that the sources of
such information are appropriate, and reasonable care has been taken in extracting and reproducing
the 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 Directors believe
that there has been no adverse change in the market since the completion of the CIC Report that may
qualify, contradict, or impact the information set out in this section. Unless otherwise indicated, the
market and industry information and data in this section have been extracted from the CIC Report.
OVERVIEW OF THE INDEPENDENT TESTING AND INSPECTION INDUSTRY IN
CHINA
Overview of the independent T&I industry in China
The testing and inspection (T&I) industry provides services related to testing and inspecting
products, systems, and processes to ensure they meet baseline quality, safety, regulatory, and performance
standards. The T&I industry includes 1) in-house laboratories, which mainly meet a corporation’s internal
quality control needs, and 2) independent T&I service providers, which provide external T&I services.
Therefore, from the narrow perspective of revenue, China’s T&I industry and China’s independent
T&I industry constitute the same market. China’s independent T&I industry includes service providers
providing external services in different sectors, including construction engineering T&I, motor vehicle
inspection and equipment T&I, environmental T&I, industrial T&I, life science T&I, food and agriculture
T&I, fire protection T&I and other T&I. According to State Administration for Market Regulation
(“SAMR”), independent T&I service providers can be divided into government-affiliated T&I institutions,
state-owned T&I companies, privately-owned T&I companies, and foreign T&I companies.
These historical developments reflect the evolving regulatory landscape and the expansion
of China’s T&I market, led by government authorities and private sector growth. After the issue of
Implementation Opinions on the Integration of Inspection, Testing, and Certification Institutions (዆
จԈ) in 2014 and Strengthening Quality Certification System Construction
to Promote Comprehensive Quality Management (จԈ)
in 2018, China’s independent T&I industry has entered into a sustainable development stage, during which
integration efforts were pursued in three main directions: reforming government-affiliated T&I institutions
into state-owned T&I companies; detaching T&I service providers  from administrative departments; and
promoting cross-departmental, cross-industry, and cross-level integration. In recent years, supervisory
departments, such as SAMR, Ministry of Commerce of the People’s Republic of China , and the State
Council of the People’s Republic of China, have issued favorable policies and regulations, such as
breaking government monopolies and industry barriers, promoting market-oriented development of the
industry, enhancing the industry oversight and governance, along with planning the 14th Five-Year Plan
for the future development of China’s independent T&I industry.


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INDUSTRY OVERVIEW
The flow chart below illustrates the industry chain of the independent T&I industry in China.
Industrial chain of the independent T&I industry in China
Upstream Midstream Downstream
Testing
equipment and
instrument
suppliers
Testing
consumable
suppliers
Governments
Enterprises
/g57Clients of tested products
/g57Sellers of tested products
Individuals
Comprehensive T&I services
providers
Exclusive T&I services providers
/g132By business scope
/g132By ownership
Government-af/f_iliated T&I
institutions
State-owned T&I companies
Private-owned T&I companies
Foreign T&I companies

Source: SAMR, China Insights Consultancy
Notes:
(1) Government-affiliated T&I institutions are established by the government, which are in charge of T&I for the government
and the market on a national or regional level. Their primary role is regulatory and supervisory, focusing on ensuring that
products, services, and processes meet established safety, quality, and environmental standards. While they may conduct
T&I activities, their main purpose is to uphold regulations and standards rather than to make a profit.
(2) State-owned T&I companies are companies that provide T&I services that are fully or partially controlled by the state, most
of which are conversions from government-affiliated T &I institutions after corporate restructuring. The primary objective of
these companies is more commercially driven.
(3) Comprehensive T&I service providers provide T&I services to a wide range of industries; while e xclusive T&I service
providers specialize in specific sectors, e.g. construction engineering or motor vehicle inspection.
The market size of the independent T&I industry in China
The total market size of the independent T&I industry in China is expected to increase from
RMB468.2 billion in 2023 to RMB720.4 billion in 2028, at a CAGR of 9.0%.  The overall economic
development trend in China, and frequency and intensity of T&I service are the leading drivers of
developing the independent T&I industry. Environmental T&I, industrial T&I, food and agriculture
T&I, and life science T&I are industrial sectors with the highest growth potential within the market.
The development of these subdivisions is primarily due to more pronounced government supervision
of environment protection, food safety, and the healthcare industry.  Enhanced regulatory compliance
requirements, necessitate the need for independent T&I services to help businesses in meeting evolving
standards and avoiding penalties and providing comprehensive assessments in order to meet the changing
legal and regulatory standards.


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INDUSTRY OVERVIEW
Market size of the independent T&I industry in China, by industry sector, 2019–2028E
6.4%9.6%
6.5%9.5%
9.1%11.7%
13.4%11.3%
13.5%10.3%
10.1%9.7%
3.3%5.3%
8.5%8.4%
9.0%9.8%Total
Motor vehicle inspection and equipment T&I
Industrial T&I
Construction engineering T&I
Environmental T&I
Life science T&I
Food and agriculture T&I
Fire protection T&I
Other T&I
0
100
200
300
400
500
600
700
800
2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E
83.7 87.9 101.3 108.8 115.4 127.2 141.2 148.0 161.3 173.421.1
46.6
36.9
15.0
3.4
35.7
80.1
322.5
23.2
51.1
44.7
16.0
4.2
40.1
91.5
358.6
25.4
59.5
48.3
18.9
4.1
43.5
108.0
409.0
27.7
63.5
50.6
19.6
3.5
48.9
104.9
427.6
30.5
71.6
57.3
22.3
4.2
51.2
115.6
468.2
34.1
82.1
25.2
63.0
4.4
55.7
124.3
516.1
37.3
93.4
29.0
68.3
4.5
58.8
131.4
564.0
40.4
105.0
74.6
4.7
63.0
139.5
607.9
44.9
37.032.7
119.0
81.8
4.9
66.3
149.3
664.5
49.2
42.0
134.5
88.7
70.3
157.4
720.4
5.0
CAGR (2019–2023) CAGR (2023–2028E)
RMB billion

Source: National Bureau of Statistics of China, SAMR, China Insights Consultancy
The major cost components of China’ s independent T&I industry are labor costs, and equipment
and instrument costs, which represented 40% and 30%, respectively, in 2023. Due to the overall T&I
market development and increasing living costs in China, the labor costs have increased over the past five
years. The average monthly salary of key employees in China’ s independent T&I industry has consistently
increased, reaching RMB8.1 thousand in 2023, representing a CAGR of 5.6% from 2019 to 2023.
Cost analysis of China’s independent
T&I industry, 2023
The average monthly salary of a key employee in the
China’s independent T&I industry, 2019–2023
40.0%
30.0%
15.0%
15.0%
Labor costs
Equipment and instrument costs
Experimental consumables & auxiliary materials costs
Others

0
3
6
9
RMB thousand 5.6%
2019
6.5
7.0 7.3 7.7 8.1
2020 2021 2022 2023
Average monthly salary
CAGR (2019–2023)

Source: NBS, China Insights Consultancy


--- page 89 ---
– 78 –
INDUSTRY OVERVIEW
Market drivers of the independent T&I industry in China
• Construction potential in lower tier cities:  Construction potential remains largely untapped in
Tier 3 and below cities, as urban areas have not yet reached a saturation point. The demand for
T&I services generated by government-led construction projects, such as municipal services, water
conservancy projects, tourism projects, etc., in lower-tier cities and rural areas is expected to
primarily flow into Tier 3 and below cities due to their larger geographical distribution.
• Increased investment in infrastructure: Considering the downturn in commercial real estate amid
China’s economic landscape, private building T&I is expected to underperform, with a projected
CAGR of -1.1% over the next five years. Meanwhile, during the 14th Five-Year Plan, China
intensified infrastructure investments. This strategic move aims at enhancing urban development,
supporting local economies, and fostering a positive economic trajectory. The increased investment
in infrastructure will propel the development of municipal facility T&I, transportation T&I, water
conservancy T&I, and public building T&I, with forecasted CAGRs of 10.6%, 10.1%, 9.6%, and
7.9% from 2023 to 2028, respectively.
• Transformation and upgrades of the downstream industry: The independent T&I industry
in China is seeing robust growth due to the ongoing transformation and upgrades in downstream
industries. As downstream sectors, such as manufacturing, food, agriculture production, and mining,
adopt advanced technologies, the need for updated T&I services develops in tandem. This growth
ensures that newly developed products, materials, and processes meet stringent quality, safety,
and regulatory standards. Downstream companies are increasingly using independent T&I service
providers  to validate the integrity of their innovations, maintain product quality, and enhance
competitiveness in both domestic and international markets.
• The emergence of new markets and industrial sectors:  China’s economic growth and
urbanization have led to the emergence of new markets and industrial sectors, each with unique
demands for T&I services. For example, industries such as renewable energy, electric vehicles,
and biotechnology are experiencing rapid expansion. These sectors introduce novel technologies,
materials, and products that require thorough evaluation and certification. Independent T&I service
providers are well-positioned to capitalize on these opportunities, offering specialized expertise to
support the growth of these emerging markets while ensuring compliance with evolving regulations.
• Increasing concerns about product quality and safety:  Rising concerns about food safety,
environmental pollution, and substandard products have heightened public awareness and
government scrutiny, driving the demand for independent T&I services in China. According to
SAMR, by the end of 2023, 7,034.9 thousand batches of food and food-related products were
sampled and inspected nationwide, by national and local level SAMR, increased by 22.7%
compared to that of 2019,  displaying a marked improvement in volume of food inspection.
According to the Ministry of Ecology and Environment, during the 14th Five-Year Plan period, the
number of national air quality monitoring sites will increase from 1,436 to approximately 2,000,
while the number of national surface water monitoring sites will increase from 2,050 to around 4,000.
As such, businesses are under increased pressure to demonstrate their offerings’ quality, safety, and
compliance.


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INDUSTRY OVERVIEW
• Higher regulatory compliance in downstream business:  The Chinese government has
implemented more stringent policies and regulations across various industries. These regulations
have led to rising demand for independent T&I services. Businesses are now mandated to meet
stricter compliance requirements, which can result in severe penalties. Independent T&I agencies
fill a vital role in helping enterprises navigate this complex regulatory landscape by providing
comprehensive assessments meeting the evolving legal and regulatory standards, which, in turn,
fuels the industry’s growth.
OVERVIEW OF THE INDEPENDENT TESTING AND INSPECTION INDUSTRY IN
WESTERN GUANGDONG
Overview of the independent T&I industry in Western Guangdong
Guangdong Province is divided into four regions – Western Guangdong, Eastern Guangdong,
Northern Guangdong, and the Pearl River Delta – based on economic, cultural, and population factors.
Guangdong province boasts the largest number of independent T&I service providers, and its overall
revenue ranks first nationwide, making it the foremost province in China’s T&I industry.
The city scope is determined by service range and project requirements, covering Western
Guangdong, including four cities – Yunfu, Yangjiang, Maoming, and Zhanjiang. These cities are classified
as tier 3 and below cities by the National Bureau of Statistics. In the T&I industry, timely service
provision and the need for proximity in service distance are crucial, especially in tier 3 and below cities
with a strong demand for same-day sample transportation. For example, in food and agricultural product
T&I, explicit requirements exist for well-timed sample submission. In construction engineering T&I,
service providers  need to factor in transportation costs for equipment. Generally, the service radius is
approximately 200 kilometers. For independent T&I service providers in Xinyi, the Western Guangdong
region thus falls within a reasonable service range.
Western Guangdong demonstrates consistent GDP growth, rising from RMB853.1 billion in 2019
to RMB1,057.0 billion in 2023, with a CAGR of 5.5%. Projections indicate that the GDP of these cities
in Western Guangdong will achieve RMB1,347.7 billion in 2028, with a CAGR of 5.0%. As the industrial
structure in this region undergoes transformation, the share of the secondary industry in the GDP of cities
in this region is predicted to increase from 35.9% to 39.7% from 2023 to 2028. The secondary industry in
China refers to mining (excluding auxiliary mining activities), manufacturing (excluding metal product
manufacturing and machinery and equipment repair), electricity, heat, gas, and water production and
supply, as well as construction. The secondary  industry in the Western Guangdong region is expected
to achieve a CAGR of 7.1% from 2023 to 2028, significantly surpassing the 6.0% growth rate of the
secondary industry in the Guangdong during the same period. As the economic structure in the Western
Guangdong region undergoes transformation, the growth of the secondary  industry, represented by mining,
manufacturing  and construction, has brought about increased demand and market opportunities for the
T&I industry.


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INDUSTRY OVERVIEW
The market size of the independent T&I industry in Western Guangdong
The independent T&I industry in Western Guangdong has maintained a steady growth trajectory,
from RMB2.3 billion in 2019 to RMB3.6 billion in 2023, with a CAGR of 11.3 %. The independent T&I
industry in this region is anticipated to reach RMB6.5 billion by 2028, with a CAGR of 12.7%. The
development of the T&I industry in tier 3 and below cities has consequently led to the discovery of new
sectors within the T&I industry domain, in addition to the continuous growth of existing industries such as
industrial T&I, food and agricultural product T&I, as well as environmental T&I.
Market size of the independent T&I industry in Western Guangdong,
by industry sector, 2019–2028E
Construction engineering T&I
Motor vehicle inspection and equipment T&I
Food and agricultural product T&I
Environmental T&I
Industrial T&I
Fire protection T&I
Other T&I
8.8%10.1%
6.5%10.2%
13.0%8.2%
14.4%10.7%
16.9%14.5%
5.4%7.6%
13.9%11.6%
12.7%11.3%Total
0
1
2
3
4
5
6
7
CAGR (2019–2023) CAGR (2023–2028E)
2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E
0.7
0.0 0.0
0.1 0.10.0
0.1
0.1 0.1
0.1
0.1
0.7 0.9 1.0 1.0 1.2 1.4 1.5 1.7 1.90.4
0.2
0.2
0.3
0.6
2.3
0.5
0.2
0.2
0.3
0.6
2.6
0.6
0.2
0.7
0.2
0.8
0.2
0.9
0.3
1.1
0.3
1.3
0.4
1.5
1.7
0.4
0.5
0.3
0.3
0.7
0.8
0.4
0.3
0.4
0.3
0.4
0.4
0.4
0.4
0.5
0.4
0.5
0.5
0.5
0.5
0.8
0.9
1.0
1.0
1.1
1.2
3.1
3.3
3.6
4.2
4.7
5.1
5.8
6.5
RMB billion

Source: NBS, China Insights Consultancy


--- page 92 ---
– 81 –
INDUSTRY OVERVIEW
The independent T&I industry in Maoming has demonstrated sustained growth, rising from RMB0.9
billion in 2019 to RMB1.4 billion in 2023, achieving a CAGR of 11.3%. This positive trend is expected to
persist, with the industry projected to reach RMB2.6 billion by 2028, maintaining a CAGR of 12.4%. This
development aligns with the overall trend in the T&I market in Western Guangdong.
Market size of independent T&I industry in Maoming,
in terms of revenue, 2019– 2028E
Construction engineering T&I
Motor vehicle inspection and equipment T&I
Food and agricultural product T&I
Environmental T&I
Industrial T&I
Fire protection T&I
Other T&I
9.5%11.1%
6.5%10.0%
12.8%7.9%
14.0%10.4%
16.5%14.2%
5.1%7.3%
13.5%11.3%
12.4%11.3%Total
0.0
0.5
1.0
1.5
2.0
2.5
3.0
CAGR (2019–2023) CAGR (2023–2028E)
2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E
0.3
0.0 0.0 0.0 0.00.0
0.0 0.0
0.0 0.0
0.0
0.3 0.3 0.4 0.4 0.5 0.5 0.6 0.6 0.70.2
0.10.10.1
0.3
0.9
0.2
0.10.1
0.1
0.3
1.0
0.2
0.1
0.3
0.1
0.3
0.1 0.4
0.1
0.4
0.1
0.5
0.1
0.5
0.6
0.2
0.2
0.1
0.1
0.3
0.4
0.1
0.1
0.1
0.1
0.2
0.1
0.2
0.1
0.2
0.2
0.2
0.2
0.2
0.2
0.4
0.4
0.5
0.5
0.6
0.6
1.2
1.3
1.4
1.6
1.8
2.0
2.3
2.6
RMB billion

Source: NBS, China Insights Consultancy
The construction engineering T&I  industry hold the largest share in the T&I industry in Western
Guangdong. In 2023, the construction engineering T&I  activities in W estern Guangdong reached
RMB813.7 million and are anticipated to reach RMB1,239.1 million by 2028, exhibiting a CAGR of 8.8%
from 2023 to 2028. This underscores the significant and growing importance of construction engineering
T&I in the T&I industry of W estern Guangdong.


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INDUSTRY OVERVIEW
Considering the current challenges facing China’s commercial construction sector, the Western
Guangdong region is expected to undergo a significant impact. The market share of private building T&I is
projected to decline gradually from 34.2% in 2019 to 20.2% by 2028, reflecting an anticipated reduction in
investment to RMB250.0 million by 2028. Concurrently, a sustained focus on infrastructure development
in Western Guangdong is expected to drive growth in public building construction, municipal facility
construction, transportation construction and water conservancy construction. Forecasted CAGRs for these
sectors are 10.3%, 13.1%, 12.6%, and 9.8%, respectively, from 2023 to 2028.
Market size of the construction engineering T&I industry in Western Guangdong,
by industry sector, 2019–2028E
0
100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
1,300
2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E
145.0
85.0
188.9
552.9
68.2
65.8
159.9
94.6
199.9
603.1
74.8
73.9
189.5
113.3
227.8
708.4
88.4
89.4
202.0
122.4
241.0
765.1
100.2
99.5
228.2
138.1
236.0
813.7
101.9
109.5
256.2
156.4
239.0
886.1
111.1
123.4
282.6
175.6
240.0
956.7
120.6
137.9
307.8
196.3
239.9
1,028.3
130.9
153.4
340.8
224.7
245.6
1,131.9
146.0
174.8
372.6
255.9
250.0
1,239.1
162.6
198.0
CAGR (2019–2023) CAGR (2023–2028E)
Total
Private building construction T&I
Public building construction T&I
Municipal facility construction T&I
Transportation construction T&I
Water conservancy construction T&I
1.2%5.7%
10.3%12.0%
13.1%12.9%
12.6%13.6%
9.8%10.6%
8.8%10.1%
RMB million

Source: NBS, China Insights Consultancy
Notes :
(1)  Private building construction T&I refers to testing and inspection of structures intended for either private or commercial use.
(2)  Public building construction T&I refers to testing and inspection of government-owned or publicly used structures, including
schools and hospitals.
(3)  Municipal facility construction T&I refers to testing and inspection of urban infrastructure projects, including  city roads,
water supply and drainage pipelines.
(4)  Transportation construction T&I refers to testing and inspection of road infrastructure and construction structures, including
expressways, national and provincial roads.
(5)  Water conservancy construction T&I refers to testing and inspection of water conservancy projects such as reservoirs and
irrigation systems.


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INDUSTRY OVERVIEW
Among the above five  segments of independent construction engineering T&I industry, our
Company’ s testing and inspection services during the T rack Record Period covers private building
construction T&I, public building construction T&I, and municipal facility construction T&I.
Construction engineering T&I is a crucial component of Maoming T&I industry. In 2023, the
market size of construction engineering T&I in Maoming amounted to RMB389.8 million and is projected
to reach RMB614.6 million by 2028, demonstrating a CAGR of 9.5% from 2023 to 2028. Among these,
private building T&I holds the largest share  in 2023, but it is expected to experience a decline with a
CAGR of 1.9% from 2023 to 2028. On the other hand, municipal facility T&I is poised for the fastest
growth over the next five years, reaching an impressive growth rate of 13.9%.
Market size of construction engineering T&I industry in Maoming,
in terms of revenue, 2019– 2028E
10.6%11.5%
13.4%14.5%
13.9%13.8%
11.1%12.9%
1.9%6.6%
9.5%11.1%
0
100
200
300
400
500
600
700
2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E
67.2
39.4
256.2
87.5
31.630.5
74.0
43.7
278.9
92.4
34.634.2
86.7
51.9
324.2
104.2
40.4
40.9
93.5
56.7
354.1
111.5
46.4
46.0
109.3
66.2
389.8
113.0
48.8
52.4
121.2
74.0
419.4
113.1
52.6
58.4
135.4
84.2
458.2
115.0
57.8
66.1
148.6
94.8
496.6
115.8
63.2
74.1
166.7
110.0
553.8
120.1
71.5
85.5
184.8
126.9
614.6
124.0
80.6
98.2
RMB million
CAGR (2019–2023) CAGR (2023–2028E)
Total
Private building T&I
Public building T&I
Municipal facility T&I
Transportation construction T&I
Water conservancy construction T&I

Source: NBS, China Insights Consultancy
Market drivers of the independent T&I industry in Western Guangdong
• Development of sustained economy and infrastructure:  The sustained economic growth and
significant infrastructure development in the Western Guangdong regions have created robust
demand for independent T&I services. This demand stems from key regional industries, including
manufacturing, construction, energy, and fire protection. As these industries continue to evolve,
and with the potential for the emergence of new sectors in the future, the need for reliable and
impartial testing services becomes increasingly vital to ensure quality, safety, and compliance with
regulations. The growth of these core industries and the potential development of new T&I sectors
drive the consistent demand for independent T&I services, making them a principal component of
the regional economic ecosystem.


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INDUSTRY OVERVIEW
• Expanding the service radius: Expanding the service radius is a pivotal driver behind the growth
of the independent T&I industry in Western Guangdong. As the region experiences substantial
economic development and industrial diversification, T&I services demands have outgrown
localized boundaries. This expansion enables them to provide timely and efficient services to clients
operating in various locations within Western Guangdong. By broadening their service radius, these
service providers  serve the burgeoning regional industries and help elevate the overall quality,
safety, and compliance standards across the expanded geographic footprint. This service, in turn,
fosters economic growth and development in the region.
• Enhancing service standards and technological capabilities: The ongoing improvement in testing
service standards and technical capabilities of local independent T&I service providers is a critical
driver in the T&I industry. Continuous upgrades in service standards allow local T&I service
providers  to provide more accurate, reliable services, fostering client trust. Additionally, adopting
advanced technological capabilities, such as sophisticated instrumentation and data analytics,
elevates overall service quality and increases competitiveness. Actively upgrading professional
expertise enables these service providers to swiftly adapt to industry changes, staying responsive to
emerging trends and providing solutions.
Government policies and regulations supporting development of the T&I industry in China, Western
Guangdong and Maoming
Government policies play a pivotal role in propelling the development of the T&I industry. The
emphasis on regulatory compliance, achieved through the formulation, enforcement, and adherence to
regulations governing safety and quality standards, fosters industry trust, elevates service standards, and
ensures consumer protection.
Release Date Issuing Department Policy Name Main Content
July 2022 SAMR Circular on Issuing the Plan for
the Development of Certification,
Accreditation, Inspection and Testing
during the 14th Five-Year Plan Period
(Ι೯¨ɤ̬ʞ©Ⴉᗇ
)
Aims to developing goals, tasks and safeguard
measures for the certification, accreditation,
inspection and testing industry during the 14th
Five-Year Plan Period (2021–2025), among
others, promoting the inspection, testing and
accreditation capacities.
May 2022 General Office of the
CPC Central Committee,
General Office of
the State Council
“Opinions on Promoting Urbanisation with
County Seats as Important Carriers”
(ᕄʷ
จԈ)
Aims to enhance the quality and efficiency of
county-level urban infrastructure.
December
2013
Ministry of Housing and
Urban-Rural
Development
Regulations on Completion Acceptance
Inspection of Building and Municipal
Infrastructure Projects (݁
)
Specifies the conditions for the completion
acceptance of projects, including the entry
test reports for the main building materials,
architectural components, and equipment used
in the project, as well as data on engineering
quality inspections and functional tests.


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INDUSTRY OVERVIEW
Release Date Issuing Department Policy Name Main Content
December
2022
Guangdong Provincial
Party Committee
The “Project for the High-Quality
Development of Hundreds of Counties,
Thousands of Towns and Tens of
Thousands of Villages”
(ʈ೻)
Aims at promoting urbanization in counties as a
key focal point. This includes the development
of municipal public facilities in counties, as
well as improvements to rural infrastructures
such as rural roads and water supply systems.
September
2021
General Office of the
People’s Government of
Guangdong Province
Notice on issuing the 14th Five-Year Plan
for Water Conservancy Development of
Guangdong Province
(޲؇
)
Investing significantly in Guangdong Province
with a budget of RMB405 billion, to vigorously
advance water network construction spanning
across four cities – Yunfu, Yangjiang,
Maoming, and Zhanjiang.
February 2022 General Office of the
People’s Government of
Maoming City
Notice from the Office of the Maoming
Municipal People’s Government on the
Issuance of the “14th Five-Year Plan for
Market Supervision Modernization in
Maoming” (Ι
Τ̹̹ఙ္၍ତ˾ʷ¨ɤ̬ʞ©஝ྌ
)
Main tasks include building a new market
supervision mechanism adapting to high-
quality development and establishing a strict
and efficient safety supervision system in the
field of people’s livelihood.
Market threats and challenges of the independent T&I industry in Western Guangdong
• Substantial investments for testing equipment and capital:  The T&I industry in Western
Guangdong faces financial challenges, particularly for smaller service providers, due to the
financial burden associated with acquiring and maintaining advanced testing equipment. This
industry demands substantial upfront investments  for testing equipment and capital, leading to
significant financial pressure on businesses.
• Challenges in nurturing specialized talent:  The T&I industry in Western Guangdong faces
challenges in addressing a potential skills gap, leading to difficulties in finding and retaining
specialized talents . To overcome this, service providers may need to make significant investments
in training programs aimed at developing and retaining skilled professionals. However, such
training initiatives contribute to overall operational costs.
• Competition from leading enterprises: Industry leaders in the T&I industry may hold a dominant
position, posing challenges for smaller or newer players to establish themselves. Large enterprises
in the T&I industry in first-and second-tier cities will exert significant competitive pressure on the
development of T&I industry in third-tier and below cities.


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INDUSTRY OVERVIEW
COMPETITIVE LANDSCAPE ANALYSIS OF THE INDEPENDENT TESTING AND
INSPECTION INDUSTRY IN CHINA
Competitive landscape of the Independent T&I industry in China
The independent T&I service providers in China are categorized as follows:
• Government-affiliated T&I institutions.
• State-owned T&I companies.
• Privately-owned T&I companies.
• Foreign T&I companies.
Our Company is recognized as a state-owned T&I company among  the independent T&I service
providers in China.
All the independent T&I service providers  offer similar services and target the same market
segments, they might compete against each other. This competition is typically due to overlaps in the
types of services provided, target customers , or operational scopes.  Among all independent T&I service
providers, the state-owned T&I companies are typically formed through the transformation of government-
affiliated T&I institutions and inherent competitive advantages such as strong credit endorsements,
localized T&I capabilities, and diversified T&I services. Consequently, the state- owned T&I companies
maintain a competitive market position in the independent T&I market, especially in the independent
construction engineering T&I market.
As of the end of 2023, China had over fifty thousand independent T&I service providers, with o ver
70% of them exclusively providing services within their respective provinces or regions, demonstrating
a strong emphasis on localization. Meanwhile, China’s independent T&I industry market is characterized
by high fragmentation and a significant long-tail effect, as the top ten independent T&I service providers
occupied below 10% of the market share in 2023. A substantial contingent of the independent T&I service
providers  in China are classified as small and micro-sized enterprises, employing less than one hundred
people, comprising over 95% of the total independent T&I service providers.


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INDUSTRY OVERVIEW
Competitive landscape of the independent T&I industry in Western Guangdong
The independent T&I service providers are mainly localized small and micro-sized enterprises
operating within limited geographic areas, contributing to a distinct fragmentation trend. The top five
independent T&I service providers in Western Guangdong held a 9.4% market share of revenue in 2023. As
of 31 December 2023, our Company ranked as the fifth largest player among the independent T&I service
providers in Western Guangdong in terms of revenue, with a market share of 1.2%.
Ranking of the top five independent T&I service providers in Western Guangdong
in terms of revenue, 2023
Market
share (%)
Revenue
(RMB million)Company nameRank
Company A1
Company B2
Company C3
Company D4
92.4
74.2
66.7
60.0
41.5
334.8
3,562.6
Our Company
Top /f_ive
Total
5
2.6%
2.1%
1.9%
1.7%
1.2%
100.0%
9.4%

Notes:
(1) Company A is a government-affiliated T&I institution founded in 2005 and has four directly affiliated T&I
institutes in Western Guangdong. It is responsible for the T&I services of various special equipment in the Western
Guangdong region, including pressure vessels, boilers, lifting machinery, passenger ropeways, and amusement rides.
(2) Company B is a government-affiliated T&I institution founded in 2003. It provides T&I services for a variety of
products, including food and agricultural products, light industry, machinery, chemical industry, environment, and
building materials.
(3) Company C is a government-affiliated T&I institution founded in 2003. It provides T&I services for a variety of
products, including food, chemicals, electrical, and building materials.
(4) Company D is a government-affiliated T&I institution founded in 1983. It provides T&I services for foundation
construction, main construction, indoor environment, municipal roads, lightning protection detection, etc.
(5) Any discrepancies in any table or chart between the total shown and the sum of the amounts listed are due to
rounding. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures
preceding them.
Source: Government Public Information Platform, China Insights Consultancy


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INDUSTRY OVERVIEW
In Western Guangdong, the five leading independent T&I service providers in the construction
engineering sector collectively secured a 24.1% revenue market share in 2023. Among these, our Company
achieved the second-highest ranking, with a market share of 5.1%.
Ranking of the top five independent T&I service providers of construction engineering
in Western Guangdong in terms of revenue, 2023
Market
share (%)
Revenue
(RMB million)Company nameRank
Company D1
Our Company2
Company E3
Company F4
60.0
41.5
34.6
33.0
27.0
196.1
813.7
Company G
Top /f_ive
Total
5
7.4%
5.1%
4.3%
4.1%
3.3%
100.0%
24.1%

Notes:
(1) Company E is a private company founded in 2017, it primarily conducts T&I services in areas related to foundation
engineering, main structural engineering, road and bridge engineering, building energy-saving engineering, indoor
environmental quality, and building settlement observation.
(2) Company F is a private company founded in 2017, it primarily conducts T&I services for foundation engineering,
architectural structures, roads and bridges, rail transit, building materials, building physics, building equipment,
building energy saving, building diagnostics, building environment, and fire protection in construction.
(3) Company G is a private company founded in 2017, it primarily conducts T&I services for housing construction,
public municipal, highway bridges, railway light rail, water conservancy ports, hydropower heating and ventilation.
(4) Any discrepancies in any table or chart between the total shown and the sum of the amounts listed are due to
rounding. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures
preceding them.
Source: Government Public Information Platform, China Insights Consultancy


--- page 100 ---
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INDUSTRY OVERVIEW
In Maoming , the top five service providers  collectively held a 40.8% market share of revenue
generated from independent construction engineering T&I  services in 2023. As a state-owned T&I
company, our  Company ranked second  among all independent T&I service providers  of construction
engineering in Maoming, with a market share of 10.6% in 2023.
Ranking of the top five independent T&I service providers of construction engineering
in Maoming in terms of revenue, 2023
Market
share (%)
Revenue
(RMB million)Company nameRank
Company D1
Our Company2
Company F3
Company H4
60.0
41.5
25.6
17.0
15.0
159.1
389.8
Company I
Top /f_ive
Total
5
15.4%
10.6%
6.6%
4.4%
3.8%
100.0%
40.8%

Notes:
(1) Company H is a private company founded in 2017, it primarily undertakes T&I services related to public highways,
public bridges, traffic facilities, hydraulic engineering, municipal facility construction, and residential construction.
(2) Company I is a private company founded in 2012, it primarily undertakes T&I services related to public highways,
public bridges, municipal projects, and housing construction engineering.
(3) Any discrepancies in any table or chart between the total shown and the sum of the amounts listed are due to
rounding. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures
preceding them.
Source: Government Public Information Platform, China Insights Consultancy
Key success factors of the independent T&I service providers in Western Guangdong
• Regional advantages under the limitation of service radius:  The independent T&I industry is
characterized by its regional nature, with clients typically choosing nearby service providers. Under
the limitation of service radius, independent T&I service providers  that deploy locally can form
close relationships with local enterprises and government departments and integrate local resources,
demonstrating a pronounced regional advantage.
• Excellent institutional credibility and service capabilities: The credibility and service quality of
an independent T&I service provider directly determine its market acceptance. Clients often source
service providers with high local brand recognition and strong service capabilities. Only by gaining
widespread recognition from all sectors of society can independent T&I service providers  attract
and retain clients, thereby achieving sustained and stable growth.


--- page 101 ---
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INDUSTRY OVERVIEW
• Instantaneous response time to client needs: Infrastructure construction plays a pivotal role as a
key pillar industry in tier 3 and below cities. Typically, the timelines for infrastructure construction
engineering are tight, making the response speed of independent T&I service providers important,
as it directly impacts the efficiency of the engineering works. When clients select T&I service
providers, they often consider their geographical location for quicker access to services.
• Diversified product and service offerings:  Western Guangdong has a diversified industrial
landscape, with some cities excelling in infrastructure construction and others having a developed
agricultural product industry. This variety has led to demands for diverse T&I services, such as
construction engineering and construction materials T&I, food T&I, and environmental T&I. Thus,
the ability to offer a more varied range of products and services becomes one of the key success
factors.
Entry barriers of the independent T&I service providers in Western Guangdong
• Qualification barriers: An independent T&I service provider must first undergo an evaluation by a
quality and technical supervision department at or above the provincial level and be approved by the
China Inspection Body and Laboratory Mandatory Approval (CMA) (֛To
engage in construction engineering T&I, it is also necessary to obtain the Construction Engineering
Quality Inspection Agency Qualification Certificate (ࣣThe
laboratory must also comply with relevant standards to receive accreditation from China National
Accreditation Service for Conformity Assessment (CNAS). Besides, independent T&I service
providers in Western Guangdong are also required to be accredited by the Guangdong Certification
and Accreditation Association Membership (ఊЗ). Additionally, local
governments have formulated detailed market access rules based on specific circumstances.
• Difficulty in establishing brand and credibility: Brand influence and market credibility are
paramount for developing independent T&I service providers. Independent T&I service providers
have cultivated the local market over the years, creating a particular brand reliance among clients.
Establishing a solid brand image and market trustworthiness is unfeasible in the short term, and
existing service providers in Western Guangdong have already accumulated substantial experience.
New entrants thus face significant competitive pressures.
• Required testing equipment and capital investment:  Considering that specific test samples
have timeliness requirements, independent T&I service providers  must establish their laboratories
in Western Guangdong equipped with the necessary testing equipment and instruments to ensure
their service. Building a comprehensive laboratory, procuring the requisite instrumentation, and
expanding operations across regions all necessitate significant capital investment.
• Demand for specialized talent reservoir: Being a technology-intensive industry, the independent
T&I industry integrates numerous disciplines and spans various specialties, requiring many high-
quality professional technical talents. Compared with Tier 1 cities like Beijing and Shanghai,
Western Guangdong still suffers from a skills gap in talent reserves. For independent T&I service
providers, especially new entrants, attracting and retaining these scarce professional talents poses a
significant challenge.


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INDUSTRY OVERVIEW
SOURCES OF INFORMATION
This section contains information extracted from the CIC Report, independently prepared by CIC,
which we have commissioned for this prospectus. We expect to pay CIC a total of RMB400,000 for the
CIC Report and our use thereof. CIC is a consulting company established in Hong Kong that provides
industry consulting services, commercial due diligence, and strategic consulting services for various
industries.
CIC undertook primary and secondary research using various resources to construct this report.
Primary research involved interviewing key industry experts and leading industry participants. Secondary
research involved analyzing data from publicly available sources, including the National Bureau of
Statistics, Administration of Quality Supervision, Inspection and Quarantine of the PRC, and the China
National Accreditation Service for Conformity Assessment. The information and data collected by CIC
have been analyzed, assessed, and validated using CIC’s in-house analysis models and techniques. The
methodology used by CIC is based on information gathered from multiple levels, which allows for such
information to be cross-referenced for reliability and accuracy.
CIC prepared its report on the following basis and assumptions for historical data and projections:
(i) The overall social, economic, and political environment globally will remain stable during
the forecast period;
(ii)  Related key industry drivers stated in the CIC Report are likely to propel continued growth
in the independent testing and inspection industry throughout the forecast period; and
(iii)  There will be no extreme force majeure or unforeseen industry regulations in which the
market may be affected in either a dramatic or fundamental way.


--- page 103 ---
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REGULATORY OVERVIEW
This section summarises the most significant laws, regulations, and rules that affect and govern our
current major business activities and operation in the PRC.
LAWS AND REGULATIONS RELATING TO THE TESTING AND INSPECTION OF
CONSTRUCTION ENGINEERING
Administration of Construction Engineering Quality
According to the Construction Law  of the People’s Republic of China (ጘ
) (the “Construction Law” ) and the Administrative Regulations on Construction Project Quality
(ணʈ೻ሯඎ၍ଣૢԷ) promulgated by the State Council on 30 January 2000 and last amended
on 23 April 2019, the owners of construction engineering, survey contractors, design contractors,
construction contractors and project supervision contractors shall be responsible for the quality of such
construction engineering. Where, under the contractual stipulations, the construction project owner is
required to purchase building materials, components, fittings and equipment, it shall ensure that such
building materials, components, fittings and equipment conform to the design documents and contractual
requirements. The specifications, models, performance and other technical indicators of building
materials, components, fittings and equipment chosen by any design contractor shall be indicated in
design documents and quality requirements therefor shall conform to standards specified by the State. A
construction contractor shall, according to project design requirements, construction technical standards
and contractual stipulations, check building materials, components, fittings, equipment and commodity
concrete and shall make a written record for such check, which shall be signed by a person specially
designated for the task. Any building materials, components, fittings, equipment or commodity concrete
that have not been checked or fail to pass such check shall not be used. For test-blocks, test-pieces and
other materials related to structural safety, construction personnel shall take samples on the site and have
them tested by a quality testing entity with the appropriate qualification grade.
Under the Construction Law promulgated by the SCNPC  on 1 November 1997 and last amended
on 23 April 2019, no construction unit shall, with whatever reasons, ask the building design unit or
building construction enterprise to lower the project quality in project design or construction operations in
violation of the laws, administrative regulations and quality and safety standards of construction projects.
The survey and design units of a construction project shall be responsible for the quality of their survey
and design. Such technical indexes as the specifications, types and characteristics of building materials,
building structural pieces and parts and equipment selected in the design documents shall be annotated
and their quality requirements shall conform to the standards prescribed by the state. The building
construction enterprise must proceed with the construction in accordance with the project design drawings
and construction technical standards and shall not do shoddy work and use inferior materials. The building
construction enterprise must carry out inspections over the building materials, building structural pieces
and parts and equipment in accordance with the requirements of the project design, construction technical
standards and agreement in the contract and shall not use those that fail to pass the inspection.


--- page 104 ---
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REGULATORY OVERVIEW
Pursuant to the Regulations on the Implementation of Witness Sampling and Submission for
Inspection for the House Building Engineering and the Engineering of the Municipal Infrastructure
Engineering () promulgated by the
Ministry of Construction on 26 September 2000 and effective on the same date, the total percentage of
test-blocks, test-pieces and other materials related to structural safety subject to witness sampling and
submission for inspection shall be no less than 30% of the required sampling quantity under relevant
technical standards. Certain test-blocks, test-pieces and materials must follow the witness sampling and
submission for inspection procedures which include, among others, concrete test-blocks used for load-
bearing structures, masonry mortar test-blocks used for load-bearing walls, rebar and connector test-
pieces used for load-bearing structures, brick and concrete small blocks used for used for load-bearing
walls, cement used for producing concrete and masonry mortar, admixture used in concrete for load-
bearing structures, and waterproof materials used for roof, bathroom and underground. In the process of
construction, the witnessing personnel should witness the sampling and submission for inspection on the
construction site according to the plan thereof. The sampling personnel should mark and seal the samples
or their packaging. The marking and sealing should indicate the project name, sampling location, sampling
date, sample name and sample quantity, and be signed by the witnessing personnel and the sampling
personnel. The witnessing personnel should create witnessing records and include them in the construction
technical files. The witnessing personnel and the sampling personnel shall be responsible for the
representativeness and authenticity of the samples. When submitting witness sampling test-blocks, test-
pieces and other materials for inspection, the submitting entity shall fill out an entrustment form, which
shall be signed by the witnessing personnel and the submitting personnel. The inspection entity shall
check the identification and sealing of the entrustment form and samples, and confirm that everything is in
order before proceeding with the inspection.
Qualifications
As an inspection and testing agency, we are generally required to obtain an Inspection and Testing
Agency Qualification Certificate, which is issued and supervised by relevant department for market
regulation. Apart from the Inspection and Testing Agency Qualification Certificate, when carrying out
inspection activities on quality of construction engineering, which include inspection on items involving
the structural safety and main function of construction engineering, construction materials, structures
and fixtures, and equipment at the construction site, the quality of the engineering substantive body and
etc., we are also required to obtain a Construction Engineering Quality Inspection Agency Qualification
Certificate that is issued and supervised by relevant department of housing and urban-rural development.
Additional certificates may be required for us in the event that we intend to engage in inspection activities
for other specific fields that are stipulated by relevant PRC laws and regulations.


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REGULATORY OVERVIEW
Inspection and Testing Agency Qualification Certificate ( 檢驗檢測機構資質認定證書 )
The Metrology Law of the PRC () promulgated by the SCNPC on 6
September 1985 which came into effect on 1 July 1986 and last amended on 26 October 2018, stipulate
that a product quality inspection agency which is to provide notarial data on the quality of products for the
society must have passed the examination of its capability and reliability of metrological verification and
testing conducted by the metrological administrative department of the people's government at or above
the provincial level.
Under the Administrative Measures for the Qualification Accreditation of Inspection and Testing
Agencies () promulgated by the General Administration of Quality
Supervision, Inspection and Quarantine on 9 April 2015 and amended on 2 April 2021  by the SAMR,
inspection and testing agencies refer to the professional technical organi sations established by law that
conduct inspection and testing on products or specific objects as prescribed by laws and regulations with
instruments and equipment, environmental facilities and other technical conditions and professional skills
in accordance with the relevant standards or technical specifications. The SAMR shall be responsible for
the qualification accreditation of inspection and testing agencies nationwide and the unified management,
organis ation, implementation as well as comprehensive coordination relating to qualification accreditation
of inspection and testing agencies. The provincial-level departments for market regulation shall be
responsible for the qualification accreditation of inspection and testing agencies within their respective
jurisdictions. For the qualification accreditation of the inspection and testing agencies established by the
relevant departments of the State Council and the relevant industrial authorities in accordance with the law,
the SAMR shall be responsible for the organis ation and implementation; for the qualification accreditation
of other inspection and testing agencies, the provincial-level departments for market regulation within the
relevant administrative regions shall be responsible for the organis ation and implementation. An inspection
and testing agency applying for qualification accreditation shall meet the following conditions: (a) being a
legal person or other organis ation legally established and able to bear corresponding legal responsibilities;
(b) having inspection and testing technical personnel and managerial personnel suitable for its engagement
in inspection and testing activities; (c) having fixed work places, with working environment meeting
the requirements of inspection and testing; (d) having inspection and testing equipment and facilities
necessary for the inspection and testing activities; (e) having the management system which is under
effective operation to ensure that the inspection and testing activities are conducted in an independent,
fair, scientific, and honest manner; and (f) meeting the special requirements as stipulated by the relevant
laws, regulations, standards and technical specifications. The qualification accreditation certification shall
be valid for six years. Where it is necessary to renew the term of validity of qualification accreditation
certificate, the relevant holder shall file an application three months before the expiration of the said term.


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REGULATORY OVERVIEW
Criteria for Qualification Accreditation of Inspection and Testing Agencies
The Rules for the Review of the Qualification Accreditation of Inspection and Testing Agencies ( Ꮸ
) promulgated and implemented by the Certification and Accreditation
Administration of the People’s Republic of China on 31 May 2016, further clarify the contents,
requirements, methods and procedures of the technical review of qualification accreditation. On 30 May
2023, the SAMR published the new Rules for the Review of the Qualification Accreditation of Inspection
and Testing Agencies, which came into force as of 1 December 2023 and replaced  the current rules.  The
new Rules for the Review of the Qualification Accreditation of Inspection and Testing Agencies apply to
new initial application, expansion application and renewal application for Inspection and Testing Agency
Qualification Certificates as from its effective date, and do not affect the validity of existing certificates
held by inspection and testing agencies. According to the new Rules for the Review of the Qualification
Accreditation of Inspection and Testing Agencies, three technical review methods apply to the qualification
accreditation of inspection and testing agencies, namely on-site review, written review, and remote review,
depending on the specific conditions of the qualification accreditation application. The on-site review
method is applicable to the initial review, expansion review, re-examination, renewal review (in the case
of a change in actual capacity), and the change review that affects its compliance with the qualification
conditions and requirements. The written review method is applicable to the reexamination and renewal
review of inspection and testing agencies that have obtained the license on expansion or change of a small
number of parameters within the technical capacity of qualification accreditation (without affecting their
compliance with the qualification accreditation conditions and requirements) and that have not committed
any illegal acts in the previous licensing period, are not included in the list of dishonest agencies and have
no substantial changes in the application items. Remote review is optional in cases, among others, where the
on-site review becomes impossible due to force majeure (epidemic situation, safety or travel restrictions,
etc.); or where the inspection and testing agency has multiple locations for the same testing activities, all of
which operate the same management system, and the electronic records and data of all other locations can
be checked at any one location. The technical review of qualification accreditation of inspection and testing
agencies evaluates various aspects of the agencies to determine whether they conform to the qualification
accreditation requirements, which principally include the following:
Items Qualification Accreditation Requirements
The subject An inspection and testing agency shall be a legal person or another organization that is formed according
to the law and is able to assume corresponding legal liability, specific requirements including: (a) an
inspection and testing agency or its organization shall have a clear legal status, and assume legal liability
for the inspection and testing data and results issued by it. An inspection and testing agency that does not
have the status of an independent legal person shall be authorized by its legal entity; (b) an inspection and
testing agency shall, in a public manner, make a self-commitment to its compliance with legal requirements,
independent and impartial employment, fulfillment of social responsibilities, and strict adherence to good
faith;  (c) an inspection and testing agency shall be independent of the relevant stakeholders involved in
inspection and testing data and results issued by it, and be free from impact of any factor that may interfere
with its technical judgment, to ensure that the inspection and testing data and results are fair, accurate
and traceable;  (d) an inspection and testing agency and its staff members shall have the obligation to keep
confidential the state secrets and trade secrets known in the course of inspection and testing activities, and
develop and implement corresponding confidentiality measures.


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Items Qualification Accreditation Requirements
Personnel An inspection and testing agency shall have inspection and testing technicians and management personnel
suitable for its inspection and testing activities, including: (a) the establishment of labor relations between
an inspection and testing agency and its employees shall comply with the relevant provisions of the Labor
Law of the PRC and the Labor Contract Law of the PRC. Where there are separate provisions in laws
and administrative regulations on the practicing qualification of inspection and testing personnel or job
forbidden, such provisions shall apply; (b) the educational level, professional and technical background and
work experience, qualifications and technical capabilities of employees of an inspection and testing agency
shall meet the work needs; and (c) the authorized signatory of an inspection and testing report shall have a
relevant intermediate professional and technical title or above or equivalent ability, and satisfy the relevant
requirements for technical capacity.
Site Environment An inspection and testing agency shall have a fixed workplace, and its working environment shall satisfy the
inspection and testing requirements, including: (a) an inspection and testing agency has inspection and testing
premises that satisfy the requirements of standards or technical specifications, including fixed, temporary,
movable or multiple premises; and (b) the inspection and testing work environment and safety conditions
satisfy the requirements for inspection and testing activities.
Equipment and
Facilities
An inspection and testing agency shall have necessary inspection and testing equipment and facilities
for carrying out inspection and testing activities, including: (a) an inspection and testing agency shall be
equipped with equipment and facilities with independent use rights and performance satisfying the work
requirements; (b) an inspection and testing agency shall verify, calibrate or inspect the equipment that has
an impact on the accuracy or validity of the inspection and testing data and results (including auxiliary
measuring equipment used for measuring environmental conditions) to ensure that the data and results satisfy
the requirements for metrological traceability; and (c) if an inspection and testing agency uses standard
substances, the requirements for metrological traceability shall be satisfied.


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REGULATORY OVERVIEW
Items Qualification Accreditation Requirements
Management System An inspection and testing agency shall establish a management system to ensure the independence, fairness,
science and integrity of its inspection and testing activities, and ensure that the management system may
be effectively, controllably and stably implemented, and continuously meet the qualification accreditation
conditions and satisfy the relevant requirements for inspection and testing  agencies, including: (a) an
inspection and testing agency shall develop sound management system documents, including policies,
systems, plans, procedures and operation instructions, among others, in accordance with the provisions of
laws, regulations and standards (including but not limited to national standards, industrial standards and
international standards). The management system established by an inspection and testing agency shall
be adaptable to its actual circumstances and be operated effectively; (b) an inspection and testing agency
shall carry out effective contract review according to the law. Any deviation from or change in the relevant
requirements, tenders or contracts shall be agreed upon by the clients and the relevant personnel shall be
notified; (c) the services and supplies selected and purchased by an inspection and testing agency shall meet
the needs of the inspection and testing work; (d) an inspection and testing agency may correctly use effective
methods to carry out inspection and testing activities. Inspection and testing methods include standard
methods and non-standard methods, and the standard methods shall be used in priority. Verification shall
be used before standard methods are used; and before non-standard methods are used, the method shall be
verified after confirmation; (e) when there is a measurement uncertainty requirement for the compliance of
the inspection and testing standards, technical specifications or declarations with the prescribed requirements,
an inspection and testing agency shall report the measurement uncertainty; (f) an inspection and testing
report issued by an inspection and testing agency shall be objective and true, effective in methods, complete
in data, complete in information, clear in conclusions, clear in statements and use legal measurement units; (g)
an inspection and testing agency shall set forth provisions on management of quality records and technical
records, including identification, storage, protection, archiving, retention and disposal of records. The
recorded information shall be sufficient, clear and complete. The retention period of original inspection and
testing records and reports shall not be less than six years; (h) an inspection and testing agency shall, when
using computer information systems to carry out inspection and testing, data transmission or management
of inspection and testing data and relevant information, have measures to ensure safety, integrity and
correctness; and (i) an inspection and testing agency shall carry out effective data and results quality
control activities, and quality control activities are compatible with the inspection and testing work. Data
and result quality control activities include internal quality control activities and external quality control
activities. Internal quality control activities include, but are not limited to personnel comparison, equipment
comparison, sample re-testing, blind sample assessment, etc. External quality control activities include, but
are not limited to, capability verification, inter-laboratory comparison, etc.


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REGULATORY OVERVIEW
Pursuant to the Administrative Measures for the Qualification Accreditation of Inspection and
Testing Agencies and the new Rules for the Review of the Qualification Accreditation of Inspection and
Testing Agencies, to renew its Inspection and Testing Agency Qualification Certificate, an inspection and
testing agency shall submit a renewal application at least three months before its expiry. The accreditation
department shall, on the basis of the application matter, credit information, classified supervision, and
other situations of the inspection and testing agency, conduct technical review by written review or on-
site review (or remote review) and make a decision on whether to grant renewal or not. For inspection
and testing agencies that have no acts in violation of the laws, regulations, and rules on market regulation
during the previous licensing period, the accreditation department may adopt the written review method,
and extend the validity period of the qualification certificates of agencies that satisfy the requirements.
During the review of the renewal application, the accreditation department will review and determine
whether the specific aspects of the agencies conform to the qualification accreditation requirements with
reference to the qualification accreditation requirements as set out above.
The Construction Engineering Quality Inspection Agency Qualification Certificate ( 建設工程質量檢
測機構資質證書 )
The Administrative Measures for the Quality Inspection of Construction Engineering (ணʈ೻ሯ
) (the “2005 Administrative Measures”) promulgated by the Ministry of Construction
on 28 September 2005 which was re-promulgated by the Housing and Urban-Rural Development (the
“MOHURD”) on 29 December 2022 and became effective on 1 March 2023 (the “2023 Administrative
Measures”), and the Notice on Issuance of Qualification Standards of Construction Engineering Quality
Inspection Agencies () issued
and implemented by the MOHURD  on 31 March 2023, stipulate the construction engineering quality
inspection agencies are required to obtain the appropriate qualification certificates to engage in the quality
inspection business under the regulations and set out qualification requirements of the inspection agencies,
as well as the functions and scope of supervision of the relevant regulatory authorities.
2005 Administrative Measures
Prior to 31 March 2023, inspection  and testing agencies should  comply with the aforesaid
regulations and apply for relevant qualifications to engage in the quality inspection of construction
engineering. Under the 2005 Administrative Measures, inspection institutions must obtain the relevant
qualification certificate in accordance with the measures before engaging in any of the following quality
inspection activities: (a) special inspection, which include the inspection of foundation engineering
projects, the on-the-spot inspection of main  structure projects,  the inspection for building curtain wall
projects, and the inspection of steel structure projects; (b) evidential inspection, which include the
examination of the physical mechanics performance of cement, the examination of the mechanics property
of the concrete steel (including the welding and mechanical connection), the routine examination of sand
and stone, the examination of the strength of the concrete and mortar, the simple earthwork inspection,
the examination of the concrete adulterating agent, the examination of the pre-stressed steel strand and
the anchor fixture, and the examination of the pitch and pitch mixture. The qualifications of inspection
institutions are classified into the qualification of special inspection agencies  and the qualification of
evidential inspection agencies according to the content of the quality inspection activities as undertaken.


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REGULATORY OVERVIEW
2023 Administrative Measures
According to the 2023 Administrative Measures, qualifications for construction engineering quality
inspection agencies are categoris ed into two groups, namely, comprehensive qualification and specialis ed
qualification. The Qualification Standards of Construction Engineering Quality Inspection Agencies (ܔ
ணʈ೻ሯඎᏨ಻ዚ࿴༟ሯᅺ๟) set forth detailed provisions on the application requirements for the
above-mentioned qualifications. The comprehensive qualification refers to the qualification consisting of
all specialis ed qualifications. Construction engineering quality inspection agencies with the comprehensive
qualification are permitted to engage in quality inspection services under all nine specialised
qualifications with those testing  parameters they obtained. There are nine specialis ed qualifications,
including (i) building materials and components,  (ii) main structure and decoration, (iii) steel structure,
(iv) foundation, (v) building energy-saving, (vi) building curtain wall, (vii) municipal engineering
materials, (viii) road works, (ix) bridge and underground works. The qualifications of testing agencies
are regardless of grade. Construction engineering quality inspection agencies shall obtain qualifications
and may carry out corresponding business in accordance with the scope of their qualification, namely
comprehensive qualification or specialised qualifications. Specific requirements in relation to standards
for the two categories have been made in the Qualification Standards of the Construction Engineering
Quality Inspection Agencies. Requirements in relation to reputation, key personnel, testing equipment
and premises, and/or management ability of the applicant may be fulfilled in order to apply for certain
qualification category.  The validity period of the qualification certificate (including both comprehensive
qualification and specialised qualification) for construction engineering quality inspection agencies shall
be five years. In the event that an inspection agency needs to extend the validity period of its qualification
certificate, it shall file an application for the extension of the validity period with the qualification
granting authority 30 working days before the expiry of the validity period. If the inspection agency meets
the relevant qualification standards and has not committed any of the following act within the validity
period of its qualification certificate, the validity period may be extended for another five years: (a)
carrying out quality inspection of a construction project beyond the scope licensed by its qualification;
(b) transferring or illegally subcontracting its construction engineering  quality inspection services; (c)
altering, reselling, leasing, lending, or otherwise illegally transferring its qualification certificate; (d)
carrying out an inspection in violation of the compulsory standards for project construction; (e) using
the testing personnel, instruments, or equipment that fails to satisfy the requirements for conducting the
quality inspection of the construction project; or (f) issuing any false inspection data or inspection report.


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REGULATORY OVERVIEW
A summary of relevant qualification requirements for the comprehensive qualification, the
specialised qualifications and the existing qualification of construction engineering quality inspection
agency are set out as follows:
The Qualification of Construction
Engineering Quality
Inspection Agency under the
2005 Administrative Measures
The Specialised Qualifications
under the 2023 Administrative
Measures and the Qualification
Standards of Construction
Engineering Quality
Inspection Agencies
The Comprehensive Qualifications
under the 2023 Administrative
Measures and the Qualification
Standards of Construction
Engineering Quality
Inspection Agencies
Qualification
Categories
The qualification of construction
engineering quality inspection agency is
classified into the qualification of special
inspection agencies and the qualification
of evidential inspection agencies. Special
inspection agencies may carry out special
inspection activities such as inspection of
foundation engineering projects, the on-the-
spot inspection of main structure projects,
inspection for building curtain wall projects
and inspection of steel structure projects.
By contrast, evidential inspection agencies
may carry out evidential inspection activities
such as examination of physical mechanics
performance of cement, examination
of the mechanics property of concrete
steel (including welding and mechanical
connection), routine examination of sand and
stone, examination of strength of concrete
and mortar, simple earthwork inspection,
examination of concrete adulterating agent,
examination of pre-stressed steel strand and
anchor fixture, and examination of pitch and
pitch mixture.  As at the Latest Practicable
Date, our Company has obtained both the
qualification of special inspection agency
for inspection of foundation engineering
projects, the on-the-spot inspection of main
structure projects, and the qualification of
evidential inspection agency for the above-
mentioned evidential inspection activities
except for examination of pre-stressed steel
strand and anchor fixture.  Our Directors
believe the scope of construction engineering
quality inspection services provided by us
will not be subject to any material change
under the 2023 Administrative Measures
because the services covered by our current
qualifications, including the qualification of
special inspection agency for inspection of
foundation engineering projects, the on-the-
spot inspection of main structure projects,
and the qualification of evidential inspection,
are substantially covered by the specialised
qualification of foundation, main structure
and decoration, building materials and
components, and municipal engineering
materials.
The qualification of construction engineering quality inspection agency
is divided into two categories which are comprehensive qualification and
specialised qualification. Comprehensive qualification refers to the qualification
of the inspection agencies that includes all specialised qualifications.
Specialised qualifications comprise nine specialised qualifications of inspection
agencies include ( i) building materials and components, (ii) main structure and
decoration, (iii) steel structure, (iv) foundation, (v) building energy-saving, (vi)
building curtain wall, (vii) municipal engineering materials, (viii) road works,
(ix) bridges and underground works.  While certain specialised qualifications
could be deemed as reclassification of qualification of construction engineering
quality inspection agency under the 2005 Administrative Measures including
building materials, main structure, steel structure, foundation and building
curtain wall, the 2023 Administrative Measures and the Qualification Standards
of Construction Engineering Quality Inspection Agencies introduce in some
new specialised qualifications, for instances, building energy-saving, municipal
engineering materials, road works, bridges and underground works.


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REGULATORY OVERVIEW
The Qualification of Construction
Engineering Quality
Inspection Agency under the
2005 Administrative Measures
The Specialised Qualifications
under the 2023 Administrative
Measures and the Qualification
Standards of Construction
Engineering Quality
Inspection Agencies
The Comprehensive Qualifications
under the 2023 Administrative
Measures and the Qualification
Standards of Construction
Engineering Quality
Inspection Agencies
Requirements
on Registered
Capital
The registered capital of a special
inspection agency shall be no less than
RMB1 million and the registered capital
of an evidential sample inspection agency
shall be no less than RMB0.8 million.
N/A N/A
Requirements on
Metrological
Accreditation
The relevant item corresponding to the
inspection qualification as applied shall
pass the metrological accreditation.
N/A N/A
Requirements on
Experiences and
Reputation
The inspection agency shall have
experiences in quality inspection,
construction, supervision or design.
(a) The inspection agency shall be an
enterprise, or a public institution with
independent legal personality, or a
partnership established in accordance
with the law; (b) the agency shall
have not less than three years of
experience in quality inspection if it
applies for each of the following  six
specialised qualifications including
the main structure and decoration,
steel structure, foundation, building
curtain wall, road works, bridges
and underground works, and there
is no requirement as to the quality
inspection experience for the
application of the remaining three
specialised qualifications including
building materials and components,
building energy-saving and municipal
engineering materials; (c) the agency
shall have all the necessary inspection
parameters for the specialised
qualification applied for; and (d) the
agency shall have a good reputation
in society, and did not involve in any
general engineering quality and safety
accident or accident of higher degree
in the past three years.
(a) The inspection agency shall be an
enterprise, or a public institution with
independent legal personality, or a
partnership established in accordance
with the law, which has not less than
15 years of experience in quality
inspection; (b) the agency shall
possess five specialised qualifications
including building materials and
components (or municipal engineering
materials), main structure and
decoration, building energy-saving,
steel structure and foundation, and
any other two out of the remaining
four  specialised qualifications;
(c) the agency shall have all the
necessary testing  parameters of the
nine specialised qualifications,  which
means an  agency may apply for the
comprehensive qualification even if
it only possesses seven specialised
qualification certificates as mentioned
above as long as it meets all the
necessary testing  parameters of the
nine specialised qualifications; and
(d) the agency shall have a good
reputation in society, and did not
involve in any general engineering
quality and safety accident or accident
of higher degree in the past three
years.


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REGULATORY OVERVIEW
The Qualification of Construction
Engineering Quality
Inspection Agency under the
2005 Administrative Measures
The Specialised Qualifications
under the 2023 Administrative
Measures and the Qualification
Standards of Construction
Engineering Quality
Inspection Agencies
The Comprehensive Qualifications
under the 2023 Administrative
Measures and the Qualification
Standards of Construction
Engineering Quality
Inspection Agencies
Requirements on
Personnel
The inspection agency shall have no
less than 10 technical professionals who
have received the relevant trainings
for inspection techniques or have no
fewer than six  technical professionals if
located in a remote county (or district).
In fact, an employee may apply for
and hold different types of inspection
qualifications.
A special inspection agency shall also
meet the following requirements:
(a)  for category of the inspection of
foundation engineering projects,
it shall have no less than four
technical professionals with senior
or intermediate professional title
who have engaged in the inspection
of engineering piles for more than
three  years, and one of them shall
have the qualification of a certified
geotechnical engineer;
(b)  for category of the inspection of
main  structure projects, it shall
have no less than four  technical
professionals with senior or
intermediate professional title who
have engaged in the inspection of
structure projects for more than three
years, and one of them shall have the
qualification of certified structural
engineer Grade II; and
(a) The technical person in charge
shall have senior or above technical
title in engineering, the person
in charge of quality shall have
intermediate or above technical title in
engineering, and both shall have more
than five  years of quality inspection
experience; and (b) the number of
principal personnel shall satisfy the
specified requirements listed in the
manning table for principal personnel
in the appendix of the Qualification
Standards of Construction Engineering
Quality Inspection Agencies.  In
fact, an employee may apply for and
hold different types of inspection
qualifications. The specific
requirements for each specialised
qualification are set out as follows:
(i) for the specialised qualification
of the building materials and
components, the agency shall
have no less than 20 technicians,
among which four  or more shall
have intermediate and above
technical titles in engineering with
more than three years’ experience
in quality inspection;
(ii) for the specialised qualification of
the main structure and decoration,
the agency shall have no less
than one registered structural
engineer Grade II with more than
two years’ experience in quality
inspection and shall have no
less than 15 technicians, among
which four  or more shall have
intermediate and above technical
titles in engineering and two or
more shall have senior and above
technical titles in  engineering ,
who shall have more than three
years’ experience in quality
inspection;
(a) The technical person in charge shall
have a senior technical title ( ͍৷ॴҦ
ஔᔖ၈) in engineering, the person in
charge of quality shall have a senior
technical title in engineering and
above, and both shall have more than 8
years of quality inspection experience;
(b) the inspection agency shall have
no less than four  registered structural
engineers (of which, no less than two
registered structural engineers Grade
I), and no less than two registered civil
engineers (geotechnical), both shall
have more than two  years of quality
inspection experience; and (c) the
agency shall have no less than 150
technicians, among which 60 or more
shall have intermediate and above
technical titles in  engineering with
more than three  years’ experience in
quality inspection and 30 or more shall
have senior and above technical titles
in engineering.  In fact, an employee
may apply for and hold different types
of inspection qualifications.


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REGULATORY OVERVIEW
The Qualification of Construction
Engineering Quality
Inspection Agency under the
2005 Administrative Measures
The Specialised Qualifications
under the 2023 Administrative
Measures and the Qualification
Standards of Construction
Engineering Quality
Inspection Agencies
The Comprehensive Qualifications
under the 2023 Administrative
Measures and the Qualification
Standards of Construction
Engineering Quality
Inspection Agencies
(c) for category of the inspection of
building curtain wall projects, it
shall have no less than four technical
professionals with senior or
intermediate professional title who
have engaged in the inspection of
building curtain walls for more than
three years;
(d) for category of the inspection of steel
structure projects, it shall have no
less than four technical professionals
with senior or intermediate
professional title who have engaged
in the inspection of mechanical
connection of steel structure as well
as of deformation of steel net rack
for more than three years, and one of
them shall have the qualification of
a certified structural engineer Grade
II; and
(e) An evidential sample inspection
agency shall also have no less than
three technical professionals with
senior or intermediate professional
title who have engaged in the
practice of inspection for more than
three  years, or no less than two
professionals if it is located in a
remote county (or district).
(iii) for the specialised qualification
of the steel structure, the agency
shall have no less than one
registered structural engineer
Grade  II with more than two
years’ experience in quality
inspection and shall have no
less than 15 technicians, among
which four  or more shall have
intermediate and above technical
titles in engineering and two or
more shall have senior and above
technical titles in  engineering ,
who shall have more than three
years’ experience in quality
inspection;
(iv) for the specialised qualification of
the foundation, the agency shall
have no less than one registered
civil engineer (geotechnical) with
more than two years’ experience
in quality inspection, and shall
have no less than 15 technicians,
among which four  or more shall
have intermediate and above
technical titles in engineering and
two or more shall have senior
and above technical titles in
engineering, who shall have more
than three years’ experience in
quality inspection;


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REGULATORY OVERVIEW
The Qualification of Construction
Engineering Quality
Inspection Agency under the
2005 Administrative Measures
The Specialised Qualifications
under the 2023 Administrative
Measures and the Qualification
Standards of Construction
Engineering Quality
Inspection Agencies
The Comprehensive Qualifications
under the 2023 Administrative
Measures and the Qualification
Standards of Construction
Engineering Quality
Inspection Agencies
(v) for the specialised qualification
of the building energy-saving, the
agency shall have no less than 20
technicians, among which four
or more shall have intermediate
and above technical titles in
engineering with more than three
years’ experience in quality
inspection;
(vi) for the specialised qualification
of the building curtain wall, the
agency shall have no less than 15
technicians, among which four
or more shall have intermediate
and above technical titles in
engineering and two or more shall
have senior and above technical
titles in engineering , who shall
have more than three years’
experience in quality inspection;
(vii) for the specialised qualification of
municipal engineering materials,
the agency shall have no less than
20 technicians, among which four
or more shall have intermediate
and above technical titles in
engineering with more than three
years’ experience in quality
inspection;
(viii)  for the specialised qualification of
the road works, the agency shall
have no less than 15 technicians,
among which four  or more shall
have intermediate and above
technical titles in engineering and
two or more shall have senior
and above technical titles in
engineering, who shall have more
than three years’ experience in
quality inspection;


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The Qualification of Construction
Engineering Quality
Inspection Agency under the
2005 Administrative Measures
The Specialised Qualifications
under the 2023 Administrative
Measures and the Qualification
Standards of Construction
Engineering Quality
Inspection Agencies
The Comprehensive Qualifications
under the 2023 Administrative
Measures and the Qualification
Standards of Construction
Engineering Quality
Inspection Agencies
(ix) for the specialised qualification
of the bridges and underground
works, the agency shall have
no less than one registered
structural engineer Grade I and
one registered civil engineer
(geotechnical) with more than
two years’ experience in quality
inspection, and shall have no
less than 15 technicians, among
which four  or more shall have
intermediate and above technical
titles in engineering and two or
more shall have senior and above
technical titles in  engineering ,
who shall have more than three
years’ experience in quality
inspection.
In order to fulfill the above-mentioned
personnel requirements, we plan
to recruit additional inspection
personnel and registered engineers,
see “Future Plans and Use of Proceeds
– Implementation Plans” in this
prospectus for details.
Requirements
on Inspection
Equipment and
Place
The inspection agency shall have the
apparatus, equipment and working
place that meet the requirements
for undertaking inspection practice;
in particular, in case of the use of
metrological instruments that are subject
to the compulsory inspection, the said
metrological instruments shall have
passed the compulsory inspection before
any application.
(a) The quality inspection equipment
and facilities of the inspection agency
shall be basically complete, and the
function, range, and accuracy of
inspection instruments and equipment,
supporting equipment and facilities
shall meet all the necessary testing
parameters requirements for the
specialised qualification applied for;
and (b) the agency shall have fixed
workplace and quality inspection sites
that meet the needs of work.
(a) The inspection agency shall have
complete quality inspection equipment
and facilities, and the function,
range, and accuracy of inspection
instruments and equipment, supporting
equipment and facilities shall meet
all the necessary testing  parameters
requirements of the nine specialised
qualification; and (b) the agency shall
have fixed workplace and quality
inspection sites that meet the needs of
work.


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The Qualification of Construction
Engineering Quality
Inspection Agency under the
2005 Administrative Measures
The Specialised Qualifications
under the 2023 Administrative
Measures and the Qualification
Standards of Construction
Engineering Quality
Inspection Agencies
The Comprehensive Qualifications
under the 2023 Administrative
Measures and the Qualification
Standards of Construction
Engineering Quality
Inspection Agencies
Requirements on
Management
Standard
The inspection agency shall have a sound
system of technical administration and
quality guaranty.
(a) The inspection agency shall have
a sound organizational structure
and quality management system,
and sound technical, archival and
other management systems; and (b)
the agency shall have information
management system, and the whole
process of quality inspection activities
can be traced.
(a) The inspection agency shall have
a sound organizational structure
and quality management system,
and meet the General Requirements
for the Competence of Inspection
and Calibration Laboratories (GB/T
27025-2019); and (b) the agency shall
have a sound information management
system, and the whole process of
quality inspection activities such
as inspection business acceptance,
inspection data collection, inspection
information uploading, inspection
report issuance, inspection archive
management can be traced.
Validity and
Renewal
The valid term of the qualification
certificate is three  years. Upon the
expiration of the valid term of the
qualification certificate, where any
renewal is required, the relevant
inspection agency shall, within 30
working days before the expiration of
the qualification certificate, apply for
handling the formalities for renewal.
Where an inspection agency has none
of the following illegal acts within the
valid term of its qualification certificate,
upon the expiration of the qualification
certificate, an examination may be
exempted upon the agreement of the
original examination and approval organ:
(a)  engaging in any inspection activity
beyond the scope of its qualification
certificate;
The valid term of the qualification certificate is five years. Upon the expiration
of the valid term of the qualification certificate, where any renewal is required,
the relevant inspection agency shall, within 30 working days before the
expiration of the qualification certificate, apply to the qualification licensing
authority for handling the formalities for renewal.
For inspection agencies that meet the qualification standards and do not have the
following behaviors during the validity period of the qualification certificate, the
validity period of the qualification can be extended for five years upon approval
of the qualification licensing authority:
(a)  engaging in construction quality inspection activities beyond the scope of
the qualification certificate;


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The Qualification of Construction
Engineering Quality
Inspection Agency under the
2005 Administrative Measures
The Specialised Qualifications
under the 2023 Administrative
Measures and the Qualification
Standards of Construction
Engineering Quality
Inspection Agencies
The Comprehensive Qualifications
under the 2023 Administrative
Measures and the Qualification
Standards of Construction
Engineering Quality
Inspection Agencies
(b)  contract transfer of any inspection
business;
(c)  altering, reselling, renting,
lending its qualification certificate
or unlawfully transferring its
qualification certificate by any other
means;
(d)  failing to carry out a testing
according to the relevant compulsory
standards of the state for project
construction, and causing any quality
safety accident or augmentation
of any loss as incurred from an
accident; or
(e)  forging any inspection data, or
producing any fraud inspection
report or drawing any fraud expert
conclusion.
In the event of renewal, the valid term
of the qualification certificate shall
be extended for three  years. Where an
inspection agency has conducted relevant
illegal acts within the valid term of its
qualification certificate, the original
examination and approval organ shall not
approve its renewal.
(b)  contract transfer of or illegal subcontracting construction engineering
quality inspection business;
(c)  altering, reselling, renting, lending its qualification certificate or unlawfully
transferring its qualification certificate by any other means;
(d)  violating the mandatory standards for engineering construction to carry out
inspection;
(e)  using inspectors or instruments and equipment that cannot meet the
requirements of the construction engineering  quality inspection activities
carried out; or
(f)  issuing false inspection data or inspection reports.
Pursuant to the Notice on the Transition of New and Old Qualification Standards of Construction
Engineering Quality Inspection Agencies (ணʈ೻ሯඎᏨ಻ዚ࿴อ
) issued by the General Office of the MOHURD on 18 April 2023 and the
Notice on Clarifying Matters Relating to the Qualification Approval of Construction Engineering Quality
Inspection Agencies (ٙ
) issued by the Guangdong Provincial Department of Housing and Urban-Rural Development on
19 May 2023 where the validity period of the qualification certificate of construction engineering quality
inspection institutions issued by Guangdong province under previous qualification standards expires
during the period from 1 March 2023 to 31 July 2024, it shall be uniformly extended to 3 1 July 2024.
Inspection agencies that have obtained qualification certificates in Guangdong province under previous
qualification standards shall apply for re-assessment in accordance with the above-mentioned Qualification
Standards of Construction Engineering Quality Inspection Agencies prior to 31 July 2024, and new


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qualification certificates obtained upon assessment shall be valid for five years. Where an inspection
institution fails to go through the formalities for re-assessment within the prescribed time limit, its original
qualification certificate shall become invalid. On 12 August 2024, the Guangdong Provincial Department
of Housing and Urban-Rural Development issued the Notice on Further Clarifying Matters Relating to the
Qualification Approval of Construction Engineering Quality Inspection Agencies (ணʈ
 ), pursuant to which if the validity period of the qualification
certificate of construction engineering quality inspection institutions issued by Guangdong province under
previous qualification standards expires on or after 31 July 2024, it shall be uniformly extended to 31
October 2024. Pursuant to the Notice of the General Office of the MOHURD on the Implementation of “ the
Administrative Measures for the Quality Inspection of Construction Engineering”  and “the Qualification
Standards of Construction Engineering Quality Inspection Agencies”  (׵
) issued on 2 6
July 2024, to ensure a smooth transition of new and old qualifications for construction engineering quality
inspection, the transition period between old and new qualifications has been extended to 31 October
2024. Provincial housing and urban-rural development authorities shall formulate local implementation
rules based on local conditions.
As of the Latest Practicable Date, the implementation rules in Guangdong Province regarding the
new qualification standards of construction engineering quality inspection agencies published by the
MOHURD in 2023 (the “Implementation Rules”), which are expected to set out detailed application and
review procedures, documentation requirements and other detailed guidance on the assessment of the new
qualification, has not been officially released, and therefore the application process for obtaining the new
qualification under the 2023 Administrative Measures and the new qualification standards of construction
engineering quality inspection agencies published by the MOHURD has not yet been made available in
Guangdong Province.
In view of the following factors, neither our Directors nor our PRC Legal Advisers foresaw
difficulties in obtaining six out of the nine specialised qualifications as described in “Business –
Business Strategies – Expanding our construction engineering testing services to achieve Comprehensive
Qualification under the Qualification Standards of Construction Engineering Quality Inspection Agencies
and strengthen our existing construction engineering testing and inspection services.” in this prospectus,
fulfilling the application requirements and meeting the above-mentioned transition deadline, (a) o ur
Company has reviewed and examined the relevant qualification requirements for the six specialised
qualifications under the 2023 Administrative Measures and the Qualification Standards of Construction
Engineering Quality Inspection Agencies, and found that save for the shortage of a small number of
required testing equipment that are readily available in the market,  we have fulfilled all other requirements
(including personnel) of the six specialised qualifications; and (b) during an interview conducted by
our PRC Legal Advisers and the PRC legal advisers of the Joint Sponsors on 12 April 2024 with  an
officer of  Maoming City Bureau of Housing and Urban-Rural Development, which, according to our
PRC Legal Advisers, is a competent officer of the competent  administrative governmental authority
entrusted to approve the construction engineering quality inspection agency qualifications in Maoming
and responsible for the qualification application review work for specialised qualifications of our
Company under the draft implementation rules of Guangdong Province regarding the new qualification


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standards of construction engineering quality inspection agencies circulated in December 2023 for public
comment and not yet promulgated, after reviewing our Company’ s evaluation of the fulfilment of relevant
qualification requirements for the six specialised qualifications and in consideration of the relevant
qualification standards, the responsible officer of the bureau is of the view that there is no impediment
for our Company to acquire the six specialised qualifications  having considered the requirements of
the new qualification standards and the shortage of a small number of testing equipment that we will
acquire. Further, during an interview with two officers of Guangdong Provincial Department of Housing
and Urban-Rural Development, which are competent officers of the superior administrative authority
of construction engineering quality inspection agencies in Guangdong Province according to our PRC
Legal Advisers, conducted by our PRC Legal Advisers, the PRC legal advisers of the Joint Sponsors,
and Maoming City Bureau of Housing and Urban-Rural Development, on 28 May  2024, the officers
interviewed confirmed that according to the Circular of Guangdong Provincial Department of Housing
and Urban-Rural Development on Issuing the Work Plan on Entrusting the Implementation of Review and
Approval of Construction Engineering Quality Inspection Agency Qualifications (ܔ
 ) and other relevant laws and
regulations, Guangdong Provincial Department of Housing and Urban-Rural Development has entrusted
the housing and urban-rural development department of prefecture-level city or above, including Maoming
City Bureau of Housing and Urban-Rural Development, to be responsible for the review and approval of
the licensing of construction engineering quality inspection agency qualifications, unless the MOHURD
promulgates rules to disallow such entrustment in the future; and the housing and urban-rural development
department of prefecture-level city or above is entitled to approve and grant the qualifications without
further consent from Guangdong Provincial Department of Housing and Urban-Rural Development.
Moreover, it was advised that since the MOHURD has not released relevant implementation regulation,
the Implementation Rules in Guangdong Province has not been finalised. As advised by the interviewed
officers of Guangdong Provincial Department of Housing and Urban-Rural Development, given  that the
Implementation Rules have not been released,  the current qualification certificate held by our Company
will remain valid after 31  July 2024 and our Company is allowed to carry out construction engineering
quality inspection businesses in its current way, and Guangdong Provincial Department of Housing and
Urban-Rural Development will formulate relevant policies to address the situation , so as to ensure that
there would be sufficient time for enterprises to apply for new qualification certificates and administrative
authorities to review the application under the new qualification standard.  Based on the foregoing, our
PRC Legal Advisers are of the view that the above confirmation given by the officer of Maoming City
Bureau of Housing and Urban-Rural Development is unlikely to be challenged or revoked by the superior
administrative authority of housing and urban-rural development.
In the event that our Company fails to meet the above-mentioned transition deadline and does not
obtain the specialised qualifications timely, the current Construction Engineering Quality Inspection
Agency Qualification Certificate held by our Company will become invalid after the transition period, then
our Company will not be allowed to engage in construction engineering quality inspection operation until
it successfully obtains relevant specialised qualifications thereafter, which could cause material adverse
impact on our financial performance and business operation.


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Administration of Construction Engineering Quality Inspection
Under the Administrative Measures for the Qualification Accreditation of Inspection and Testing
Agencies, the inspection and testing agencies shall, within the scope of inspection and testing capabilities
as specified in the qualification accreditation certificates, issue inspection and testing data or results
in accordance with the procedures and requirements as specified in the relevant standards or technical
specifications.
The Opinions of the State Council on Strengthening the Development of the Quality Certification
System and Promoting All-round Quality Management (ࠦ
จԈ) issued and implemented by the State Council on 17 January 2018, proposes a whole-
process accountability mechanism for inspection practitioners, the implementation of public commitments
and information disclosure system for inspection institutions, the establishment of integrity files of
practitioners, and the improvement of the system of imposing punishments against acts in bad faith, such as
permanent exit and lifetime ban mechanisms.
The Measures for the Supervision and Administration of Inspection and Testing Institutions ( Ꮸ᜕
) promulgated by the SAMR on 8 April 2021 which came into effect on 1 June
2021, puts forward more stringent requirements for the primary responsibilities, code of conduct, and legal
liability of inspection and testing institutions.
Pursuant to the Construction Law and the Administrative Regulations on Construction Engineering
Quality of Guangdong Province (ணʈ೻ሯඎ၍ଣૢԷ ) promulgated by the Standing
Committee of Guangdong Provincial People's Congress on 11 November 1996 which came into effect on
1 January 1997 and last amended on 23 November 2023, inspection institutions shall carry out inspections
on construction engineering  quality in accordance with the law and undertake the corresponding quality
obligations.
Pursuant to the Administrative Measures for the Quality Inspection of Construction Engineering,
inspection institutions shall conduct construction engineering quality inspection in accordance with laws,
regulations, and standards, and shall be responsible for the authenticity and accuracy of the inspection
data and inspection reports. Relevant personnel shall possess the appropriate knowledge and professional
ability in the quality inspection of construction engineering. In addition, inspection institutions shall
not:(i) engage in any inspection activity beyond the qualified scope; (ii) recontract or illegally subcontract
any construction engineering quality inspection business; (iii) alter, scalp, lease, or lend the qualification
certificate or illegally transfer the qualification certificate by any other means; (iv) fail to carry out
inspection according to the relevant compulsory standards of construction engineering; (v) use inspection
personnel or equipment that cannot meet the requirements of the quality inspection of construction
engineering; (vi) issue any false inspection data or report.


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On 29 July 2022, the SAMR issued the Circular on Issuing the Plan for the Development of
Certification, Accreditation, Inspection and Testing during the 14th Five-Year Plan Period ( ̹ఙ္
Ι ೯“ɤ̬ʞ”), which set outs the development
goals, tasks and safeguard measures for the certification, accreditation, inspection and testing industry
during the 14th Five-Year Plan Period (2021–2025), among others, promoting the inspection, testing
and accreditation capacities in the field of fundamental raw materials including steel, non-ferrous
metals, petrochemicals, light industry, textiles, and building materials, accelerating the construction
of a certification, accreditation, inspection and testing system which is uniformly managed, jointly
implemented, authoritative, credible and universally recognized, encouraging regional cooperation for the
provision of inspection, testing and accreditation services, improving the food and agricultural products
accreditation, inspection and testing system, advancing the market reform for inspection, testing and
accreditation institutions and encouraging the introduction of foreign entities into domestic inspection,
testing and accreditation market.
LAWS AND REGULATIONS GOVERNING THE FOOD TESTING
According to the Food Safety Law of the PRC () (the “Food
Safety Law”) promulgated by the SCNPC on 28 February 2009 and last amended on 29 April 2021,
food production and trading enterprises shall establish and improve the food safety management system,
conduct inspections on food. Meanwhile, food production enterprises shall establish an inspection
recording system for outgoing food, inspect the product certificates and safety conditions of outgoing food,
and honestly record the names, specifications, and other contents related to the food and keep relevant
certificates. Producers of food, food additives and food-related products shall inspect self-produced food,
food additives and food-related products in accordance with food safety standards and shall only deliver or
sell those that pass the inspection. In the course of purchasing food, food traders shall examine suppliers’
licenses, inspection certificates of outgoing products or other certificates.
Food production enterprises may either conduct inspection on self-produced food on their own or
engage food inspection agencies that conform to relevant laws and regulations to conduct such inspection.
Food industry associations, consumers’ associations and other organizations as well as consumers
shall engage food inspection agencies conforming to relevant laws and regulations to conduct food
inspection when necessary. In the course of food safety supervision and administration, the food safety
administrations of the people’s governments at the county level or above may adopt the rapid testing
method provided by the State to conduct random testing on the food.
According to the Food Safety Law and the Administrative Measures for the Qualification
Accreditation of Inspection and Testing Agencies () promulgated
by the General Administration of Quality Supervision, Inspection and Quarantine on 9 April 2015 and
amended on 2 April 2021 by the SAMR, unless otherwise provided in the law, food inspection agencies
shall engage in food inspection activities only after being qualified in accordance with national provisions
on certification and accreditation. For the qualification accreditation of the inspection and testing agencies
established by the relevant departments of the State Council and the relevant industrial authorities in
accordance with the law, the SAMR shall be responsible for the organization and implementation; for


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the qualification accreditation of other inspection and testing agencies, the provincial-level departments
for market regulation within the relevant administrative regions shall be responsible for the organization
and implementation. An inspection and testing agency applying for qualification accreditation shall
meet the following conditions: (a) being a legal person or other organization legally established and able
to bear corresponding legal responsibilities; (b) having inspection and testing technical personnel and
managerial personnel suitable for its engagement in inspection and testing activities; (c) having fixed
work places, with working environment meeting the requirements of inspection and testing; (d) having
inspection and testing equipment and facilities necessary for the inspection and testing activities; (e)
having the management system which is under effective operation to ensure that the inspection and testing
activities are conducted in an independent, fair, scientific, and honest manner; and (f) meeting the special
requirements as stipulated by the relevant laws, regulations, standards and technical specifications. The
qualification accreditation certification shall be valid for six years. Where it is necessary to renew the
term of validity of qualification accreditation certificate, the relevant holder shall file an application three
months before the expiration of the said term.
Pursuant to the Administrative Measures for Food Safety Sampling Inspections (ᅵᏨ
جpromulgated by the SAMR on 8 August 2019 and amended on 29 September 2022 which
became effective on 1 November 2022, Administrations for market regulation shall enter into entrustment
agreements with the technical agencies that undertake the food safety sampling and inspection tasks
(the “Inspection Agencies”) to clarify the rights and obligations of both parties. Inspection Agencies
can be engaged in inspections only after obtaining qualifications in accordance with the relevant laws
and regulations. The inspection shall respect science and be carried out in accordance with professional
ethnics to ensure the objectivity and impartiality of inspection data and conclusions provided, no false
inspection reports are allowed. Samples involved in food safety sampling inspections shall be preserved
by Inspection Agencies. When receiving samples, Inspection Agencies shall check and record whether
the appearance, state and seals of the samples are damaged and whether there are other conditions that
may affect the inspection conclusion, verify the samples against the sampling documents, and store the
labeled samples for inspection and backup samples for re-inspection separately as required. For samples
that do not meet the sampling standard, Inspection Agencies shall refuse to accept such samples and
explain the reasons in writing, and report the situation to the administrations for market regulation that
organize or implement the food safety sampling inspections in a timely manner. In food safety supervisory
sampling inspections, inspection items and inspection methods stipulated by food safety standards shall
be adopted. Where there are no such standards, temporary limited values, temporary inspection methods
or supplementary inspection methods prescribed in laws and regulations shall be adopted. The food safety
sampling inspection is subject to the inspection agency and inspector responsibility system. A food safety
inspection report issued by an Inspection Agency shall bear the official seal of the agency and be signed
or sealed by the inspector. The Inspection Agency and the inspector are responsible for the food safety
inspection report they issue. An Inspection Agency shall issue an inspection report within 20 working
days upon receipt of the samples. Where the administration of market regulation and the inspection
agency reach an agreement, such agreement shall apply. Where the conclusion of food safety supervisory
sampling inspection is qualified, the relevant Inspection Agency shall properly keep the backup samples
for re-inspection for three months as of the date on which the inspection conclusion was made. If the


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remaining shelf life of the backup samples for re-inspection is less than three months, such samples shall
be kept until the end of their shelf life. Where the conclusion of the inspection is unqualified, the relevant
Inspection Agency shall properly keep the backup samples for re-inspection for six months as of the date
on which the inspection conclusion was made. If the remaining shelf life of the backup samples for re-
inspection is less than six months, such samples shall be kept until the end of their shelf life. Where the
conclusion of food safety supervisory sampling inspection is qualified, the inspection agency shall, within
seven working days from the date on which the inspection conclusion was made, submit the inspection
conclusion to the administration for market regulation that carried out or commissioned the agency to
carry out the sampling inspection. Where the conclusion of the sampling inspection is unqualified, the
inspection agency shall, within two working days from the date on which the inspection conclusion was
made, report the conclusion to the administration for market regulation that carried out or commissioned
the agency to carry out the sampling inspection.
On 30 December 2016, the State Food and Drug Administration published the Circular on Issuing
the Notice of Working Rules on Food Inspection (ٝwhich sets out
detailed work requirements on food inspection for inspection agencies, including, among others, detailed
requirements on sampling, sample management, testing, reports, quality management, and supervision.
LAWS AND REGULATIONS GOVERNING THE AGRICULTURAL TESTING,
TRANSPORTATION CONSTRUCTION TESTING AND FIRE PROTECTION TESTING
As part of our business strategy, we plan to expand our testing and inspection service offerings
into new areas including agricultural products testing, transportation construction testing and fire
protection testing and inspection. When stepping into these new areas in the future, our Company will be
subject to regulatory laws and regulations regarding testing services in relation to agricultural products,
transportation construction and fire protection. Below are some key framework regulatory rules and
licensing requirements in respect of agricultural testing, transportation construction testing and fire
protection testing.
Agricultural Testing
The Law of the PRC on Agricultural Product Quality and Safety (ሯඎ
) (the “Agricultural Product Quality and Safety Law”) promulgated by the SCNPC on 29
April 2006 which came into effect on 1 November 2006 and last amended on 2 September 2022, stipulate
that the agricultural products sold shall meet the quality and safety standards of agricultural products.
Enterprises engaged in the production of agricultural products and specialized farmers’ cooperatives
shall, according to the requirements of quality and safety control, conduct testing on the quality and
safety of agricultural products by themselves or by entrusting testing agencies to do so; and upon testing,
the agricultural products failing to meet the quality and safety standards of agricultural products shall be
subject to control measures timely and shall not be sold. Agricultural technology promotion institutions
and other institutions shall provide agricultural product testing technical services for farmers and other
agricultural product producers and distributors.


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According to the Agricultural Product Quality and Safety Law, an agricultural product wholesale
market shall establish or entrust a n inspection agency for agricultural product quality and safety, to
conduct a random check and test on the quality and safety of the agricultural products to be sold in the
market. Upon detection of any inconformity with the agricultural product quality and safety standards,
the seller(s) concerned shall be required to immediately stop the sale, and report to the local department
for market regulation, department for agriculture and rural affairs and other departments. The competent
departments for agriculture and rural affairs of the people’s governments at or above the county level shall
conduct regular or random inspection on agricultural product, and may engage an inspection agency for
agricultural product quality and safety that meet the requirements of relevant regulations.
Under the Agricultural Product Quality and Safety Law and the Assessment Measures for
Agricultural Product Quality and Safety Testing Agencies () (the
“Assessment Measures ”) issued by the Ministry of Agriculture of the PRC on 12 December 2007 and
last revised on 30 November 2017, agencies engaged in the testing of agricultural product quality and
safety shall possess the appropriate conditions and competencies for performing tests, and be qualified if
they pass the examination by the competent departments for agriculture and rural affairs of the people’s
governments at or above the provincial level or by the departments authorized by them. Agencies engaged
in the testing of agricultural product quality and safety shall be accredited according to law and meet the
relevant laws and regulations on management and technical personnel, testing facilities and equipment,
quality management and assurance system, work funds stability and other requirements. Agencies engaged
in the testing of agricultural product quality and safety shall be staffed with appropriate management
and technical personnel for its testing activities. Technicians engaged in agricultural product quality and
safety testing shall possess a secondary school degree or above in relevant majors, pass the examination
of their agencies, and hold relevant certificates before starting work. Agencies engaged in the testing of
agricultural product quality and safety shall have no less than 5 technicians, at least 40% of which shall
have intermediate or higher technical titles or equivalent abilities. The technical person in charge, the
person in charge of quality and the authorized signatory shall have intermediate or higher technical titles
or equivalent abilities and have engaged in relevant work in relation to agricultural product quality and
safety for more than 5 years. If they are doctoral graduates, they shall have engaged in inspection and
testing work in relevant major for at least one year; if they are graduated postgraduates, they shall have
engaged in inspection and testing work in relevant major for at least three years; if they are university
graduates, they shall have engaged in inspection and testing work in relevant major for at least five
years; if they are college graduates, they are deemed to have equivalent abilities if they have engaged in
inspection and testing work in relevant major for at least eight years. Agencies engaged in the testing of
agricultural product quality and safety shall be equipped with appropriate instruments and equipment for
their agricultural product quality and safety testing activities with an instrument and equipment possession
rate of 98% and all instrument and equipment well functioned. The agencies shall also establish quality
management and guarantee system and have relatively stable funding sources.


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Where an agency engaged in the testing of agricultural product quality and safety pass the
examination, assessment authorities shall issue the Certificate of Qualification for Agricultural Product
Quality and Safety Testing Agencies of the PRC. The aforesaid qualification certification shall be valid
for six years. Those who continue to engage in the quality and safety testing of agricultural products after
the expiration of the certificate shall apply for a new qualification certification three months before the
expiration of the validity period.
Transportation Construction Testing
Pursuant to the Provisions on Quality Supervision and Administration of Highway and Waterway
Engineering () promulgated by the Ministry of Transport of the
PRC (the “MOT”) on 4 September 2017 which came into effect on 1 December 2017, construction and
supervision units shall set up temporary testing laboratories on site in accordance with the contract,
carry out testing activities within the approved test and inspection parameters in strict accordance with
engineering and technical standards, testing norms and procedures, and shall be responsible for the
authenticity, objectivity and accuracy of the test, the test data and the test reports issued by the temporary
testing laboratories set up by themselves. Before the handover and acceptance of a highway or waterway
transport project, the construction unit shall organize the inspection of the quality of the project, issue a
quality inspection report on the handover and acceptance, and submit it to the construction engineering
quality supervision institutions entrusted by the transport authorities. Such institutions shall review the
materials submitted by the construction unit, carry out confirmatory testing of the project quality, and
issue the project handover quality verification opinions which shall include the rectification of quality
problems found in the supervision and management process and the results of project quality verification
testing. If the construction engineering quality supervision institution entrusted by the transport authorities
has the corresponding testing capacity, it may test the project quality by itself, otherwise, a third-party
testing and inspection institution with the corresponding qualification shall be entrusted. Where a testing
and inspection institution is entrusted to conduct the inspection, the requirements of relevant laws and
regulations on government procurement shall be complied with.
Under the Administrative Measures for the Quality Inspection of Highway and Waterway
Engineering () promulgated by the MOT on 22 August 2023 which
came into effect on 1 October 2023, highway and waterway engineering quality inspection agencies shall
engage in business activities within the scope permitted by their respective qualifications as approved
by the competent regulatory authorities. Qualifications for inspection agencies are divided into two
groups namely highway engineering qualification and waterway engineering qualification. The highway
engineering qualification comprises Class A qualification, Class B qualification, Class C qualification,
specialized qualification for traffic engineering, and specialized qualification for bridge and tunnel
engineering. The waterway engineering qualification is divided into two categories, namely material
qualification and structural qualification. The material qualification is further divided into three classes,
namely, Class A, Class B, and Class C, while the structural qualification is further divided into Class
A and Class B. An inspection and testing agency applying for qualification shall meet the following
conditions: (a) being a legal person legally established; (b) having a certain number of personnel with


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professional technical capabilities of highway and waterway engineering testing and inspection; (c) having
inspection and testing equipment and facilities necessary for the inspection and testing activities; (d)
having fixed workplaces, with working environment meeting the requirements of inspection and testing;
(e) having a quality assurance system in effective operation. The qualification certificate of the inspection
institution shall be valid for five years. Where it is necessary to renew the term of validity of the
qualification certificate, the relevant holder shall file an application 90 working days before the expiration
of the said term. The Qualification and Grade Conditions for Highway and Waterway Engineering Quality
Inspection Agencies ʮ༩˥༶ʈ೻ሯඎᏨ಻ዚ࿴༟ሯഃॴૢ΁ and the Procedures for Technical
Review by Experts on Qualification Approval for Highway and Waterway Engineering Quality Inspection
AgenciesҦஔ൙ᄲʈЪ೻ҏ promulgated by the MOT on
7 October 2023 set out detailed licensing requirements and approval procedures for highway and waterway
engineering quality inspection agencies.
The Administrative Measures for the Qualification of Quality Inspection agencies for Highway
and Waterway Engineering (Draft for Comments) (ج(ᅄӋ
จԈᇃ) ) and its supporting documents promulgated by the MOT on 13 September 2022, which have
not come into force yet, propose to set out requirements and procedures for the licensing of quality
inspection agencies for highway and waterway engineering, including without limitation to, stipulate that
the provincial-level departments for transport shall be responsible for the administrative licensing of the
specialized qualification for bridge and tunnel engineering and require that key personnel of the inspection
institution (such as technical director, quality director, and personnel responsible for reviewing and
approving test reports, etc.) should hold the professional qualification certificate of highway and waterway
engineering testing and inspecting engineer.
Fire Protection Testing
Pursuant to the Fire Protection Law of the PRC () (the “Fire Protection
Law”), promulgated by the SCNPC on 29 April 1998 and last amended on 29 April 2021, entities such as
government departments, public organizations, enterprises and institutions shall conduct a comprehensive
inspection of fire prevention facilities in buildings at least once a year to ensure that such facilities remain
in good condition and functional. Relevant inspection records shall be complete and accurate and shall be
kept for future reference.
According to the Fire Protection Law and the Measures for the Implementation of the Fire
Protection Law of the PRC in Guangdong Province () (the
“Measures in Guangdong”) promulgated by the Standing Committee of the Guangdong Provincial
People’s Congress on 22 December 1999 and last amended on 29 March 2022, agencies providing fire
protection technical services, such as maintenance and testing of fire protection facilities and fire safety
evaluation shall pursuant to laws, administrative regulations, national standards, industrial standards and
practice codes, accept entrusted assignments to provide technical services for fire protection and shall be
responsible for the quality of such services, and shall be subject to the supervision and management of the
department of fire protection of the public security organ.


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Pursuant to the Fire Protection Law and the Measures in Guangdong, agencies providing fire
protection technical services and relevant practitioners shall obtain corresponding qualifications in
accordance with the law.
Pursuant to the Conditions of Practice and the Administrative Regulations on Fire Protection
Technical Services () issued by the Ministry of Emergency Management
of the PRC (the “MEM ”) on 13 September 2021 which came into effect on 9 November 2021, and the
Conditions of Practice for Fire Protection Technical Service Agencies (ਕዚ࿴੽ุૢ΁)
(the “Conditions of Practice”) issued by the MEM on 29 August 2019, agencies providing fire protection
technical services engaged in maintenance and testing of fire protection facilities services shall meet the
following conditions: (a) being a legal person; (b) the construction area of the workplace shall not be less
than 200 square meters; (c) the basic equipment for fire protection technical services and the equipment
for maintenance and testing of fire protection facilities services are equipped in accordance with relevant
regulations and requirements; (d) there shall be no less than two registered fire engineers, of which
no less than one Level 1 certified fire engineer; (e) there shall be no less than six personnel who have
obtained the national vocational qualification certificate for fire protection facility operators, of which no
less than two are above the intermediate skill level; and (f) having a sound quality management system.
Agencies providing fire protection technical services shall input the basic information of themselves and
their employees, as well as the situation of fire protection technical service projects, into the social fire
protection technical service information system.
As of the Latest Practicable Date, our Company has not yet applied for  or acquire  relevant
qualification certificates or governmental approval in respect of agricultural products  testing,
transportation construction testing or fire protection testing. However, our Company has started to make
preparations for the future application of qualifications in those areas, for example hiring some required
employees, purchasing relevant equipment, and we plan to use part of the proceeds from the Share Offer
to acquire additional equipment, technicians or acquire a  testing and inspection company in order to
acquire relevant qualifications for the above-mentioned areas, see  “Future Plans and Use of Proceeds
– Implementation Plans – (3) Diversifying our testing and inspection services offering expanding into
areas including food and agricultural, transportation, and fire protection.” in this prospectus for details.
By leveraging on our existing management experiences in construction engineering quality inspection,
detailed plans for recruiting required technicians, purchasing relevant equipment, acquiring the relevant
testing and  inspection company and satisfying other qualification requirements, and advices of our legal
advisers, our Directors believe our Company will be able to meet the above-mentioned qualification
requirements and carry out our expansion plan into those areas gradually.


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LAWS AND REGULATIONS RELATING TO PRODUCTION SAFETY
Work Safety
The Work Safety Law of the PRC () (the “Work Safety Law”) which
was issued on 29 June 2002, last amended on 10 June 2021 and came into effect on 1 September 2021,
provides that a production and operation enterprise must meet the national standards or industry standards
on work safety and provide the required work conditions as set out in the relevant laws, administrative
rules and national or industry standards. An entity that cannot provide required conditions for work safety
shall not engage in production and business operation activities. A production and operation enterprise
must present prominent warning signs at relevant dangerous operation sites, facilities and equipment.
Pursuant to the Work Safety Law, the person-in-charge of an enterprise shall be fully responsible
for the safety of production of the enterprise. With regard to enterprises that do not involve in special
industry such as mine, metal smelting, construction, transport or the production, sales, storage, loading
and unloading of hazardous substances, an  enterprise having more than 100 employees shall establish a
department or engage in personnel managing production safety specifically. If an enterprise has no more
than 100 employees, it shall engage in full-time or part-time personnel managing production safety.
Personnel who is responsible for managing production safety shall inspect the safety of production
regularly based on the characteristics of production of the enterprise and shall deal with any safety
issue identified during the inspection in a timely manner. Any unsolved issue shall be reported to the
person-in-charge in a timely manner and the person-in-charge shall solve such issue immediately. The
inspection and measures taken shall be duly recorded. Enterprises shall provide their employees with
training on production safety and shall truthfully inform their employees of any potential risks in relation
to the workplace and duties, preventive measures and emergency measures. In addition, an enterprise
shall provide its employees with protective equipment that meets the national or industry standards and
supervise and train them to use such equipment.
Safety Training and Labour Protection
Pursuant to the Labor Law of the PRC () (the “Labor Law”), issued by
the SCNPC on 5 July 1994 and last amended and effective on 29 December 2018, the employing unit must
establish a sound labour safety and hygiene system and shall strictly implement state rules and standards
of labour safety and hygiene, provide laborers with occupational safety and health conditions conforming
to the provisions of the State and necessary articles of labor protection, conduct labour safety and hygiene
education among its employees to prevent accidents and reduce occupational hazards. An employee must
strictly observe operational safety procedures.


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LAWS AND REGULATIONS RELATING TO ENVIRONMENTAL PROTECTION
In accordance with the Environmental Protection Law of the PRC (ᚐ
) promulgated on 26 December 1989 and last amended on 24 April 2014 by the SCNPC and effective
on 1 January 2015 , the Law on the Prevention and Control of Environmental Pollution by Solid Waste
() promulgated on 30 October 1995 and last amended on 29
April 2020 by the SCNPC and effective on 1 September 2020, and the Law on the Prevention and Control
of Environmental Noise Pollution () promulgated by the SCNPC
on 24 December 2021 and came into effect on 5 June 2022, enterprises, public institutions and other
producers and operators that discharge pollutants shall adopt measures to control environmental pollution
and harm resulting from dust, solid waste materials, noise and vibration at construction sites. The State
Environmental Protection Administration and local governmental authorities in charge of environmental
protection are responsible for the supervision and administration of environmental protection during the
course of construction.
Entities may be subject to various regulatory measures or penalties for  breach of environmental
protection laws in accordance with the extent of the pollution and the circumstances of the breach, which
include warnings, fines, and remedial actions within prescribed timelines, suspension or cessation of
operations. Entities in breach will also be liable to indemnify entities who have suffered losses as a result
of the pollution.
COMPANY LAW AND LAWS AND REGULATIONS RELATING TO FOREIGN
INVESTMENT
Companies established and operating in the PRC shall be subject to Company Law, which was
promulgated by the SCNPC on 29 December 1993 , came into effect on 1 July 1994, revised on 25
December 1999, 28 August 2004, 27 October 2005, 28 December 2013 and 26 October 2018 respectively,
and was latest revised on 29 December 2023 and came  into effect on 1 July 2024 . The Company Law
provides for the establishment, corporate structure and corporate management of companies, which
also applies to foreign-invested enterprises in the PRC. Unless otherwise provided in the PRC foreign
investment laws, the provisions in the Company Law shall prevail. The Company Law stipulates that
a limited company shall prepare a shareholders’ register, which shall record the following matters: (1)
The name and address of each shareholder; (2) The capital contribution subscribed and paid up  by each
shareholder, contribution method, contribution date; and (3) The serial number of each capital contribution
certificate; (4) Date of receipt or loss of shareholder status for each shareholder.  The shareholders recorded
in the shareholders’ register may, pursuant to the shareholders’ register, claim and exercise shareholders’
rights. A company shall register each shareholder’s name for a limited liability company or the name of
promoters for a joint stock limited company  at the company registration authority. The company shall
carry out the amendment of the registration in the event of any change in the registered details. Any
registration detail that fails to be amended or registered shall not be valid against any third-party.


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On 15 March 2019, the NPC approved the PRC Foreign Investment Law ( ʕശɛ͏΍ձ਷̮ਠҳ
) (the “FIL”), which came into effect on 1 January 2020 and replaced three existing laws on foreign
investments in the PRC, namely, the PRC Equity Joint Venture Law ( ʕശɛ͏΍ձ਷ʕ̮ Υ༟຾ᐄΆ
), the PRC Cooperative Joint Venture Law () and the Law
of the PRC on Wholly Foreign-owned Enterprises (). On 26 December
2019, the State Council issued the Regulations on Implementing the Foreign Investment Law of the PRC
(ૢԷ), which came into effect on 1 January 2020 and replaced the
Regulations on Implementing the Sino-Foreign Equity Joint Venture Enterprise Law ( ʕശɛ͏΍ձ਷
ૢԷ), Provisional Regulations on the Duration of Sino-Foreign Equity Joint
Venture Enterprise Law (), the Regulations on Implementing the
Wholly Foreign-Owned Enterprise Law () and the Regulations
on Implementing the Sino-Foreign Cooperative Joint Venture Enterprise Law ( ʕശɛ͏΍ձ਷ʕ̮ ΥЪ
). The FIL embodies a predictable PRC regulatory trend to rationalis e its foreign
investment regulatory regime in line with prevailing international practice and the legislative efforts to
unify the PRC’s corporate legal requirements for both foreign and domestic invested enterprises. The FIL
establishes the basic framework for the access to, and the promotion, protection and administration of
foreign investments in view of investment protection and fair competition.
On 30 December 2019, the MOFCOM  and the SAMR  issued the Measures on Reporting of
Foreign Investment Information () which became effective on 1 January 2020.
According to the Measures on Reporting of Foreign Investment Information, foreign investors or foreign
investment enterprises shall submit investment information to the commerce administrative authorities
through the Enterprise Registration System and the National Enterprise Credit Information Publicity
System. Foreign investment enterprises shall also submit the annual report for the preceding year during 1
January to 30 June annually through the National Enterprise Credit Information Publicity System.
The Catalogue of Industries for Encouraged Foreign Investment (2022 Edition) ( ོᎸ̮ਠҳ༟
ପุͦ፽(2022و)) (the “Encouraging Catalogue”) was jointly promulgated by the NDRC and the
MOFCOM on 26 October 2022. And it came into effect on 1 January 2023. The Encouraging Catalogue
and the Special Administrative Measures for Access of Foreign Investment (Negative List) (2021 Edition)
(݄( ૶ఊ)(2021و)) (the “ 2021 Negative List”)  categoris es the
industries into three categories, including “encouraged”, “restricted”, and “prohibited”.  Foreign investment
in areas not listed in the 2021 Negative List is permitted and treated equally with domestic investment.
The Encouraging Catalogue and the 2021 Negative List is subject to review and update by the Chinese
government from time to time.


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LAWS AND REGULATIONS RELATING TO DIVIDEND DISTRIBUTIONS
Pursuant to the FIL, foreign investors, according to the present PRC Law, may freely remit into or
out of the PRC, in RMB or any other foreign currency, their capital contributions, profits, capital gains,
income from asset disposal, intellectual property royalties, lawfully acquired compensation, indemnity or
liquidation income and so on within the territory of PRC. In addition, pursuant to the Company Law, a
company established in PRC must set aside at least 10% of its after-tax profit based on PRC accounting
standards each year to its general reserves until its cumulative total reserve funds reach 50% of its
registered capital. These reserve funds, however, may not be distributed as cash dividends.
Pursuant 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 (τર )
signed by the Central People’s Government of Mainland of China and the Government of the Hong Kong
Special Administrative Region on 21 August 2006, the PRC Government may impose tax on dividends
paid by a PRC company to a Hong Kong resident (including natural person and legal entity), but such tax
shall not exceed 10% of the total amount of dividends payable. If a Hong Kong resident directly holds
25% or more of the equity interests in a PRC company and the Hong Kong resident is the beneficial owner
of the dividends and meets other conditions, such tax shall not exceed 5% of the total amount of dividends
payable by the PRC company. 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 (࿁
) issued by the STA and effective on 6 December
2019 provides that such provisions shall not apply to arrangements or transactions made for one of the
primary purposes of obtaining such tax benefits.
Pursuant to the Administrative Measures on Entitlement of Non-resident Taxpayers to Preferential
Treatment under Tax Treaties (), which was promulgated by the
STA on 14 October 2019 and became effective on 1 January 2020, non-resident taxpayers are entitled
to preferential treatment under the tax treaties through self-determination, self-declaration and keeping
and documenting relevant information for inspection. Where a non-resident taxpayer self-assesses and
concludes that it satisfies the criteria for claiming treaty benefits, it may enjoy treaty benefits at the time
of tax declaration or at the time of withholding declaration through a withholding agent, simultaneously
gather and retain the relevant materials pursuant to the regulations for future inspection, and be subject to
subsequent administration by tax authorities.


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LAWS AND REGULATIONS RELATING TO TAXATION
EIT
In accordance with the EIT Law  (promulgated on 16 March 2007 and became effective from 1
January 2008 and newly amended on 29 December 2018) and the Regulation on the Implementation of
Enterprise Income Tax Law of the PRC (ૢԷ) (promulgated on 6
December 2007 and became effective from 1 January 2008, and revised on 23 April 2019), enterprises
are classified as either “resident enterprises” or “non-resident enterprises”. The “resident enterprises” are
defined as enterprises set up in the PRC under the PRC laws or set up according to the foreign country/
region’s law whereas whose actual or de facto control is administered from within the PRC. Enterprises
established under the foreign country/region’s law with “de facto management bodies” outside the PRC,
but have set up institutions or establishments in the PRC or, without institutions or establishments set up
in the PRC, have income originating from the PRC, shall be considered as “non-resident enterprises”. A
resident enterprise shall pay EIT on its income originating from both inside and outside the PRC at an
EIT rate of 25%. A non-resident enterprise that has establishments or places of business in the PRC shall
pay EIT on its income originating from the PRC obtained by such establishments or places of business,
and on its income which deriving outside PRC but has an actual connection with such establishments or
places of business, at the EIT rate of 25%. A non-resident enterprise that does not have an establishment
or place of business in the PRC, or it has an establishment or place of business in the PRC but the income
has no actual connection with such establishment or place of business, shall pay EIT on its passive income
derived from the PRC at a reduced rate EIT of 10%.
VAT
According to Provisional Regulations on Value-added Tax of the PRC (೼
ᅲБૢԷ) (the “VAT Regulations”) (promulgated by the State Council on 13 December 1993, came
into effect on 1 January 1994, newly amended on 19 November 2017), and The Detailed Rules for the
Implementation of the Provisional Regulations of the People’s Republic of China on Value-added Tax
(Revised in 2011) (ۆ2011ࠈࡌ)) (promulgated by the MOF
and was last amended on 28 October 2011 and came into effect on 1 November 2011), organis ations and
individuals engaging in the sale of goods or processing, repair and assembly services, the sale of services,
intangible assets, immovables and importation of goods in the PRC shall be taxpayers of VAT, and shall
pay VAT pursuant to these Regulations. The amount of VAT payable is calculated as “output VAT” minus
“input VAT”. Pursuant to the VAT Regulations, the rate of VAT is 17% for those engaging in the sale of
goods or labour services or tangible personal property leasing services or importation of goods except as
otherwise provided by the VAT Regulations. The tax rate of VAT is 11% for the sales of the service of
transportation, posting, basic telecommunications, construction and leasing real estate, the sale of real estate
and the transfer of land use right, or sell or import the goods listed in the VAT Regulations. The tax rate of
VAT is 6% for the sales of services or intangible assets other than the foregoing and those specified in the
VAT Regulations.


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LAWS AND REGULATIONS RELATING TO FOREIGN EXCHANGE
Under the Administrative Regulations of the PRC on Foreign Exchange ( ʕശɛ͏΍ձ਷̮ි
၍ଣૢԷ) (the “Foreign Exchange Administrative Regulations”) (promulgated by the State Council
on 29 January 1996, newly amended on 5 August 2008), Renminbi is generally freely convertible for
payments of current account items, such as trade and service-related foreign exchange transactions and
dividend payments, but is not freely convertible for capital account items, such as direct investment or
engaging in the issuance or trading of negotiable securities or derivatives unless the prior approval by
the competent authorities for the administration of foreign exchange is obtained. In accordance with the
Foreign Exchange Administrative Regulations, foreign-invested enterprises in the PRC may purchase
foreign exchange without the approval of the SAFE for paying dividends by providing certain evidencing
documents (board resolutions, tax certificates, etc.), or for trade and service-related foreign exchange
transactions by providing commercial documents evidencing such transactions. They are also allowed to
retain foreign currency (subject to a cap approval by the SAFE) to satisfy foreign exchange liabilities. In
addition, foreign exchange transactions involving overseas direct investment or investment and trading
in securities, derivative products abroad are subject to registration with the competent authorities for the
administration of foreign exchange and approval or filings with the relevant government authorities (if
necessary).
According to the Notice of the SAFE on Further Simplifying and Improving the Foreign Exchange
Management Policies for Direct Investment (Hui Fa [2015] No.13) (ආɓӉᔊʷձ
) (ි೯[2015]13໮ ) (the “Circular 13 ”), which was promulgated by
the SAFE on 13 February 2015 and came into effect on 1 June 2015, and was amended on 30 December
2019, the foreign exchange registration under domestic direct investment and the foreign exchange
registration under overseas direct investment are directly reviewed and handled by banks in accordance
with the Circular 13. The SAFE and its branches shall perform indirect regulation over the foreign
exchange registration via banks.
According to the Circular on Reforming the Management Approach regarding the Settlement of
Foreign Exchange Capital of Foreign-invested Enterprises (ഐි၍ଣ
) (the “Circular 19”) (promulgated by SAFE on 30 March 2015, and became effective on 1
June 2015,  partially repealed on 30 December 2019 and amended on 23 March 2023), the foreign exchange
capital of foreign-invested enterprises shall be subject to the Discretional Foreign Exchange Settlement (the
“Discretional Foreign Exchange Settlement”). The Discretional Foreign Exchange Settlement refers to
the foreign exchange capital in the capital account of a foreign-invested enterprise for which the rights and
interests of monetary contribution has been confirmed by the local foreign exchange bureau (or the book-
entry registration of monetary contribution by the banks) can be settled at the banks based on the actual
operational needs of the foreign-invested enterprise. The proportion of Discretional Foreign Exchange
Settlement of the foreign exchange capital of a foreign-invested enterprise is temporarily determined as
100%. The Renminbi converted from the foreign exchange capital will be kept in a designated account. If
a foreign-invested enterprise needs to make a further payment from such assigned accounts, it still needs
to provide supporting documents and go through the banks’ review process.


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Pursuant to the Circular on Reforming and Regulating Policies on the Control over Foreign
Exchange Settlement of Capital Accounts ( ) (the
“Circular 16 ”) (Hui fa [2016] No.16) (promulgated by SAFE on 9 June 2016, which became effective
simultaneously  and amended on 23 March 2023 ), enterprises registered in the PRC (including Chinese-
funded enterprises and foreign-invested enterprises, excluding financial institutions) may also convert
their foreign debts from foreign currency to Renminbi on a self-discretionary basis. The Circular 16
provides an integrated standard for converting foreign exchange under capital account items (including
but not limited to foreign exchange capital and foreign debts) on a discretionary basis which applies to all
enterprises registered in the PRC. The 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, and such converted Renminbi shall
not be provided as loans to its non-affiliated entities, except where it is expressly permitted in the business
licence.
In accordance with the Circular on Further Promoting Cross-border Trade and Investment
Facilitation (Hui Fa [2019] No. 28) ( )
(ි೯[2019]28໮ ), which was issued and came into effect on 23 October 2019 by the SAFE and amended
on 4 December 2023 , foreign-invested enterprise engaged in non-investment business are permitted to
settle foreign exchange capital in RMB and make domestic equity investments with such RMB funds
according to laws and regulations under the condition that the current Special Administrative Measures
(Negative List) for Foreign Investment Access are not violated and the relevant domestic investment
projects are true and compliant.
LAWS AND REGULATIONS RELATING TO LABOR AND SOCIAL WELFARE
Labour Protection
According to the Labour Law of the PRC () (promulgated by the
SCNPC on 5 July 1994, became effective as at 1 January 1995, and as amended on 27 August 2009 and
29 December 2018), enterprises and institutions shall establish and improve their system of workplace
safety and sanitation, strictly abide by State rules and standards on workplace safety, educate employee in
labour safety and sanitation in the PRC. Labour safety and sanitation facilities shall comply with national
standards. The enterprises and institutions shall provide employees with workplace safety and sanitation
conditions, which comply with State stipulations and relevant labour protection articles.
According to the Labour Contract Law of the PRC (), which was
promulgated on 29 June 2007 and came into effect on 1 January 2008, and was amended on 28 December
2012 and came into effect on 1 July 2013, and the Regulation on the Implementation of the Labour
Contract Law of the PRC (No. 535 Order of the State Council) (ૢԷ),
which was promulgated and came into effect on 18 September 2008, labour contracts must be concluded
in written form. Upon reaching an agreement after due negotiation, an employer and an employee may
conclude a fixed-term labour contract, a non-fixed-term labour contract, or a labour contract that concludes


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upon the completion of certain work assignments. Upon reaching an agreement after due negotiation with
employees or under other circumstances in line with legal conditions, an employer may terminate a labour
contract and dismiss its employees in accordance with the PRC laws. Labour contracts concluded before
the issuance of Labour Law and existing during its effective term shall continue to be acknowledged.
Social Insurance and Housing Fund
As required under the Regulation of Insurance for Labour Injury (ᎈૢԷ) implemented
on 1 January 2004 and amended in 20 December 2010, the Provisional Measures for Maternity Insurance
of Employees of Corporations () implemented on 1 January 1995, the
Decisions on the Establishment of a Unified Program for Basic Old-Aged Pension Insurance of the
State Council ( ) issued on 16 July 1997,
the Decisions on the Establishment of the Medical Insurance Program for Urban Workers of the State
Council ( ) promulgated on 14 December 1998,
The Unemployment Insurance Measures (ᎈૢԷ) promulgated on 22 January 1999, the Interim
Regulations Concerning the Collection and Payment of Social Insurance Premiums (ᎈ൬ᅄᖮ
ᅲБૢԷ) implemented on 22 January 1999 and amended on 24 March 2019 and the Social Insurance
Law of the People’s Republic of China () promulgated on 28 October 2010
and amended on 29 December 2018, enterprises are obliged to provide their employees in mainland China
with welfare schemes covering pension insurance, unemployment insurance, maternity insurance, labour
injury insurance and medical insurance. These payments are made to local administrative authorities and
any employer that fails to contribute may be fined and ordered to make up within a prescribed time limit.
Employers who failed to promptly contribute social security premiums in full amount shall be ordered by
the social security premium collection agency to make or supplement contributions within a stipulated
period, and shall be subject to a late payment fine computed from the due date at the rate of 0.05% per
day; where payment is not made within the stipulated period, the relevant administrative authorities shall
impose a fine ranging from one to three times the amount of the amount in arrears.
In accordance with the Regulations on the Administration of Housing Provident Fund of the PRC
(၍ଣૢԷ) (promulgated by the State Council on 3 April 1999 and was amended on 24
March 2002 and 24 March 2019), enterprises must register at the competent managing centre for housing
funds and upon the examination by such managing centre of housing funds, these enterprises shall
complete procedures for opening an account for the deposit of employees’ housing funds. Enterprises are
also required to pay and deposit housing funds on behalf of their employees in full and in a timely manner.
In violation of the provisions of Administration of Housing Provident Fund, an employer is overdue
in the payment and deposit of, or underpays, the housing provident fund, the housing provident fund
management centre shall order it to make the payment and deposit within a prescribed time limit; where
the payment and deposit have not been made after the expiration of the time limit, an application may be
made to a people’s court for compulsory enforcement.


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LAWS AND REGULATIONS RELATING TO INTELLECTUAL PROPERTY RIGHTS
Copyright
China is a signatory to some major international conventions on the protection of copyright and
became a member of the Berne Convention for the Protection of Literary and Artistic Works in October
1992, the Universal Copyright Convention in October 1992, and the Agreement on Trade-Related Aspects
of Intellectual Property Rights upon its accession to the World Trade Organization in December 2001.
Furthermore, China has enacted various laws and regulations relating to the protection of copyright. The
Copyright Law of the PRC () (the “Copyright Law”)  was promulgated on
7 September 1990 and newly revised on 11 November 2020 and became effective from 1 June 2021. The
Implementation of the Copyright Law of the PRC (ૢԷ) (the “Copyright
Implementation”) was promulgated on 30 May 1991 and newly revised on 30 January 2013 and became
effective from 1 March 2013 . Under the Copyright Law, works of citizens, legal persons or unincorporated
organis ations of China, whether published or not, shall enjoy copyright. The natural person, legal person
or unincorporated organis ation named on a work as its author shall be the author of the work and have the
corresponding rights to the said work, unless proven to the contrary. Authors and other copyright owners
may complete the registration of their works with a registration agency recognis ed by the State copyright
authority.
The Regulations on the Protection of Computer Software (ᚐૢԷ) promulgated
by the State Council on 4 June 1991, and most recently amended on 30 January 2013 and took into effect
on 1 March 2013, and the Measures for Registration of Computer Software Copyright (ၑዚழ΁ഹ
) issued by the Ministry of Machine Building and Electronics Industry on 6 April 1992
(amended on 20 February 2002), apply to software copyright registration, licence contract registration and
transfer contract registration. The National Copyright Administration of the PRC shall be the competent
authority for the nationwide administration of software copyright registration and the Copyright Protection
Centre of China (the “CPCC”), is designated as the software registration authority. The CPCC shall grant
registration certificates to the Computer Software Copyrights applicants which conforms to the provisions
of both the Computer Software Copyright Registration Procedures and the Computer Software Protection
Regulations (Revised in 2013).
Patent
According to the Patent Law of the People’s Republic of China () revised
by the SCNPC on 17 October 2020 and came to effect on 1 June 2021, and the Implementing Regulations
of the Patent Law of the People’s Republic of China () revised by
the State Council on 11 December 2023  and took  effect on 20 January 2024, the patent administration
department under the State Council is responsible for the patent work throughout the country. It receives
and examines patent applications and grants patent rights for inventions-creations in accordance with law.
The patent administration departments of the people’s governments of provinces, autonomous regions
and municipalities directly under the central government are responsible for the administration of patents
within their respective administrative regions. An invention or utility model for which a patent is granted


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REGULATORY OVERVIEW
shall be novel, inventive and practically applicable. Any design for which patent right may be granted
shall not be an existing design, nor has any entity or individual filed before the date of filing with the
patent administration department under the State Council an application relating to the identical design
disclosed in patent documents announced after the date of filing. The protection period is 20 years for an
invention patent 10 years for a utility model patent and 15 years for design patent, commencing from their
respective application dates. Any entity or individual that uses a patent of another party shall enter into a
licensing contract with the patent owner and pay patent royalties to the patent owner. Any use of a patent
without the permission of the patent owner constitutes an infringement of the patent right.
Trademark
Trademarks are protected by the Trademark Law of the PRC ()
(promulgated by the SCNPC on 23 August 1982, came into effect on 1 March 1983 and revised on 22
February 1993, 27 October 2001, 30 August 2013 and 23 April 2019) and the PRC Trademark Law
Implementing Regulations (ૢԷ) (last amended by the State Council on 29
April 2014 and came into effect on 1 May 2014). The trademark bureaus under the General Administration
for Industry and Commerce are responsible for trademark registration and authoris ing registered
trademarks for a validity period of 10 years. Trademark registrants may apply for renewal of registration,
and the validity of a renewed registered trademark is the following 10 years. Trademark registrants may,
by signing a trademark licence contract, authoris e others to use their registered trademark. The trademark
licence  contract shall be submitted to the trademark office for filing. For trademarks, trademark law
adopts the principle of “prior application” while handling trademark registration. Where a trademark under
registration application is identical with or similar to the trademark of another party that has, in respect of
the same or similar goods or services, been registered or, after examination, preliminarily approved, the
application for trademark registration shall be rejected. Anyone who applies for trademark registration
shall not impair any existing prior right of anyone else, or forestall others in registering a trademark which
others have already begun to use and which has “some influence”.
Domain names
The MIIT promulgated the Administrative Measures for Internet Domain Names ( ʝᑌၣਹΤ၍
) (the “Domain Name Measures”) on 16 August 2017 and came into force on 1 November 2017.
According to the Domain Name Measures, domain name owners are required to register their domain
names and the MIIT is in charge of the administration of PRC internet domain names. The domain name
services follow a “first come, first file” principle. Applicants for registration of domain names shall
provide their true, accurate and complete information of such domain names to and enter into registration
agreements with domain name registration service institutions. The applicants will become the holders
of such domain names upon the completion of the registration procedure. The Notice of the Ministry of
Industry and Information Technology on Regulating the Use of Domain Names in Internet Information
Services () promulgated by the MIIT on
27 November 2017 and effective on 1 January 2018 provides for the obligations of internet information
service providers and other entities to fight terrorism and maintain network security.


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REGULATORY OVERVIEW
REGULATIONS RELATING TO OVERSEAS OFFERING AND LISTING
On 17 February 2023, with the approval of the State Council, the CSRC promulgated the Trial
Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies ( ྤʫΆ
) (the “Trial Measures”) and relevant five guidelines, which came
into force on 31 March 2023.
According to the Trial Measures, (i) PRC domestic companies that seek to offer or list securities
overseas, both directly and indirectly, should fulfill the filing procedure and submit relevant information
to the CSRC; if a domestic company fails to complete the filing procedure or conceals any material
fact or falsifies any major content in its filing documents, such domestic company may be subject to
administrative penalties, such as order to rectify, warnings, fines, and its controlling shareholders,
actual controllers, the person directly in charge and other directly liable persons may also be subject to
administrative penalties, such as warnings and fines; (ii) domestic companies that seek to offer or list
securities overseas directly means that PRC companies limited by shares offer or list securities in overseas
securities markets; and (iii) any PRC company limited by shares are required to file with the CSRC within
three business days after its application for overseas listing is submitted. Failure to complete the filing
under the Trial Measures may subject a PRC domestic company to rectification ordered by the CSRC,
warning, and fine of RMB1 million to RMB10 million.
Besides, PRC domestic companies seeking to Overseas Offering and Listing shall strictly comply
with the laws, administrative regulations and relevant provisions of the PRC G overnment on foreign
investment, State-owned assets, industry regulation, overseas investment, etc., shall not disrupt domestic
market order, and shall not harm national interests, public interest and the legitimate rights and interests of
domestic investors. The Trial Measures also provides the circumstances where the Overseas Offering and
Listing is explicitly prohibited, including: (i) such securities offering and listing is explicitly prohibited by
specific PRC laws and regulations; (ii) that constitute threat to or endanger national security; (iii) the PRC
domestic company, or its controlling shareholder(s) and the actual controller, have committed relevant
crimes such as corruption, bribery, embezzlement, misappropriation of property or undermining the order
of the socialist market economy during the latest three years; (iv) the PRC domestic company is currently
under investigations for suspicion of criminal offenses or major violations of laws and regulations, and no
conclusion has yet been made thereof; or (v) there are material ownership disputes over equity held by the
controlling shareholder(s) or by other shareholder(s) that controlled by the controlling shareholder(s) and/
or the actual controller.
On 24 February 2023, the CSRC and other relevant government authorities promulgated the
Provisions on Strengthening the Confidentiality and Archives Administration of Overseas Securities
Issuance and Listing by Domestic Companies (੗ձ
) (the “Provision on Confidentiality”), which came into force on 31 March
2023. According to the Provision on Confidentiality, where any PRC domestic company provides or
publicly discloses to the relevant securities companies, securities service institutions, overseas regulatory
authorities and other entities and individuals, or provides or publicly discloses through its overseas listing
subjects, documents and materials involving state secrets and working secrets of state organs, it shall
report the same to the competent department with the examination and approval authority for approval in
accordance with the law, and submit the same to the secrecy administration department of the same level
for filing.


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HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
OVERVIEW
Our history dates back to 2000 when our Company was established as a joint -stock cooperative
enterprise  in the name of “Xinyi City Construction Engineering Quality Inspection Station (ܔ
ணʈ೻ሯඎᏨ಻१)” to assume the operation of our predecessor “Xinyi County Construction Materials
Laboratory (܃“( ”)Xinyi County CM Laboratory”), which was a department
of a public institution “Xinyi City CEQS Station” , and to provide construction engineering testing and
inspection services  in Xinyi City, Maoming. Since then, we have been accredited to perform various
compliance testing of construction materials and equipment, and begun to carry out monitoring of building
excavation since 2017. In 2019, we expanded our operations and tapped into some of the 3rd to 5th tiers
cities and districts in Maoming, including Gaozhou City and Huazhou City. In July 2023, our Company
was converted into a limited liability company wholly owned by Xinyi City CEQS Center  and renamed
as Xinyi Xince Testing and Certification Technology Service Center Co., Ltd. (಻Ꮸ಻ႩᗇҦ
ʮ̡) . Subsequently, in October  2023, in contemplation of the Listing, our Company
was converted into a joint stock company with limited liability and renamed as Guangdong Syntrust GK
Testing and Certification Tech Service Center Co., Ltd. (ࠢ
ʮ̡). Our Company received two tranches of Pre-IPO Investment from Xinyi Xinhui. Upon completion
of the Pre-IPO Investment in November 2023, our Company was owned as to 80% by Xinyi City CEQS
Center and 20% by Xinyi Xinhui.
KEY MILESTONES
The following events set forth the key corporate and business development milestones of our
Company:
Year Milestone
2000 Our Company was established as a joint-stock cooperative enterprise
and assumed the operations of our predecessor, Xinyi County CM
Laboratory, which was a department of a public institution “Xinyi City
CEQS Station”, and to provide construction engineering testing and
inspection services, in Xinyi City, Maoming.
2013 Qualified to determine the length of piles by way of core drilling (ڃ
Ꮸ಻) and conduct cone light dynamic penetration test (ਗɢ
ᙃઞᏨ಻) in China.
2015 Accredited to carry out concrete permeability (ঐ༊᜕) in
China.


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HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
2016 Accredited to carry out foundation pit  monitoring  ( ਿѦ္಻) and
conduct inspections on construction machinery and safety protection
supplies  (ۜand energy efficient building
construction (ጘືঐʈ೻) in China.
Qualified to conduct single pile horizontal static load test ( ఊᅸ˥̻᎑༱
༊᜕), supporting bolt uplift test (༊᜕), basic bolt uplift
test (༊᜕) and single pile vertical resistance static load
test (᎑༱༊᜕) on foundation ( ήਿਿᓾ) in China.
Qualified maximum test load for single pile vertical static load test
increased up to 20,000kN.
2017 Began to implement monitoring of excavation pit (ਿѦ္಻).
2019 Expanded our operations and tapped into some of the 3rd to 5th tiers
cities and districts in Maoming, including Gaozhou City and Huazhou
City.
2020 Accredited to conduct inspection on:
(a)  residual current protective devices (ᚐཥኜ) ,
electric wires and electric cables ( ཥᇞཥ᝙) in the electrical and
electronic category;
(b)  waterproof membranes  ( ԣ˥՜ҿ) , waterproof coating  ( ԣ˥
ࣘcurbs  ( ༩ᇝͩ), cement and admixtures  (ࣘ ,)
pipes ( ၍ҿ) and pipe fittings (၍΁) in the construction materials
category;
(c)  electrical engineering ( ཥंʈ೻) in the engineering  equipment
category;
(d)  roadbed and pavement (ࠦin the pavement engineering
category; and
(e)  building doors and windows (೿) in the curtain wall, door,
window and roof system category in China.
Qualified to conduct foundation pile hole imaging (ਿᅸˆʫᙲ྅) in the
foundations category in China.


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HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
2023 Accredited to carry out:
(a)  inspection on asphalt (ڡcoarse aggregate concrete (ࣘ ,)
well lids (ʜႊ), materials stabilised with inorganic binders ( ೌዚ
ࣘgeosynthetics (ࣘin the highway
traffic engineering materials category;
(b)  in-tube closed circuit television (CCTV) inspection (၍༸ʫ
ጕཥൖᙲ྅Ꮸ಻) and water retaining tests ( တ˥༊᜕) in the
engineering equipment category;
(c)  foundation construction inspections (ήਿʿ ਿᓾʈ೻Ꮸ಻) in the
water conversancy and hydropower engineering category; and
(d) earthwork tests (ɺʈ༊᜕) on roadbed and payment in China.
Qualified maximum test load for single pile vertical static load test  has
increased up to 35,000kN.
Our Company was converted into a limited liability company and
renamed as Xinyi Xince Testing and Certification Technology Service
Center Co., Ltd. (ʮ̡)  in July
2023. Xinyi City CEQS Center became the sole registered shareholder of
our Company.
Our Company was subsequently converted into a joint stock company
with limited  liability  and renamed as Guangdong Syntrust GK Testing
and Certification Tech Service Center Co., Ltd. (਷છᏨ಻Ⴉᗇ
ʮ̡) in October 2023.
We received investment  from Xinyi Xinhui for an aggregate amount
of RMB 20,000,000. Upon completion of the Pre-IPO Investment, our
Company was owned as to 80% by Xinyi City CEQS Center and 20% by
Xinyi Xinhui in November 2023.
2024 We obtained the qualification certificate issued by the Guangdong AMR
for carrying out certain food and agricultural product testing  in April
2024 and have commenced to provide food testing services since May
2024.


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HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
MAJOR CORPORATE DEVELOPMENT AND SHAREHOLDING CHANGES
Establishment of our Company as a Joint-Stock Cooperative Enterprise on 28 March 2000
On 28 March 2000, our Company was established as a joint-stock cooperative enterprise  with a
registered capital of RMB190,000 and assumed the operations of Xinyi County CM Laboratory,  which
was a department of a public institution “ Xinyi City CEQS Station ”. Our Company has been principally
engaged in the provision of construction engineering testing and inspection services in the PRC since our
establishment.
Xinyi City CEQS Station was the then ultimate beneficial owner of our Company. However, in
consideration of the then shareholder and capital contribution requirement of a joint-stock cooperative
enterprise  and the enterprise’s then working capital needs , 19 then staff  of our Company and/or Xinyi
City CEQS Station subscribed for and held the registered capital of our Company on behalf of Xinyi City
CEQS Station in cash in equal shares.
Each of the then shareholders or his/her successors, Xinyi City CEQS Center (being the successor
of Xinyi City CEQS Station) and our Company had acknowledged the said shareholding arrangements,
and confirmed that each party has fulfilled their respective obligations and such shareholding arrangement
had been terminated.
Xinyi City CEQS Station Becoming a Direct Shareholder of our Company on 31 March 2000
Xinyi City CEQS Station decided to adjust the shareholding structure and capital contributions of
our Company with a view to (i) officially recognising Xinyi City CEQS Station as a registered shareholder
of our Company; and (ii) allowing some of the then shareholders of our Company to withdraw or reduce
their capital contributions while keeping the total amount of registered capital unchanged.
Against this background, on 31 March 2000:
(a) Xinyi City CEQS Station subscribed for the registered capital of our Company in the
amount of RMB173,000, representing approximately 91.05% of the registered capital of our
Company by way of contribution of equipment; and
(b) of the then  19 individual shareholders of our Company, (i) two shareholders withdrew
from our Company and the registered capital in an aggregate amount of RMB20,000 was
returned to the relevant shareholder; and (ii) the registered capital in an aggregate amount of
RMB170,000 was returned to the other 17 individual shareholders who each subsequently
subscribed for the registered capital in the amount of RMB1,000, representing approximately
0.53% of the registered capital of our Company, in cash  on behalf of Xinyi City CEQS
Station.


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HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
After the said shareholding changes, our Company was owned as to approximately 91.05% by
Xinyi City CEQS Station and as to approximately 8.95% by 17 then staff  of our Company and/or Xinyi
City CEQS Station in equal shares. The 17 individual shareholders subscribed for and held the registered
capital of our Company on behalf of Xinyi City CEQS Station in consideration of the then shareholder and
capital contribution requirement of a joint-stock cooperative enterprise and the enterprise’s then working
capital needs.
Each of the then shareholders or his/her successors, Xinyi City CEQS Center (being the successor
of Xinyi City CEQS Station) and our Company had acknowledged the said shareholding arrangements,
and confirmed that each party has fulfilled their respective obligations and such shareholding arrangement
had been terminated.
Increase in Registered Capital on 30 July 2009
Pursuant to the Announcement of the Guangdong Provincial Construction Department on the
Implementation of Administrative Licensing on Construction Engineering Quality Inspection Agencies ( ᄿ
ʮѓ) issued in April 2009, the registered capital
of our Company shall be not less than RMB1,800,000. To comply with such requirements, it was decided
that our Company’s registered capital be increased to RMB1,820,000, of which RMB 1,767,220 was
contributed by Xinyi City CEQS Station (as to RMB1,314,000 by asset contribution (including building
and equipment) and as to RMB453,220 in cash) and the remaining RMB52,780 was contributed in cash by
the 29 then staff of our Company and/or Xinyi City CEQS Station on behalf of Xinyi City CEQS Station
in equal shares in consideration of the then shareholder requirement of a joint-stock cooperative enterprise
and enhancement of the ties between our Company and the then staff of our Company by the shareholding
arrangement.
After the aforesaid increase in registered capital, our Company was owned as to 97.1% by Xinyi
City CEQS Station and 2.9% by 29 then staff of our Company and/or Xinyi City CEQS Station in equal
shares on behalf of Xinyi City CEQS Station.
Each of the then shareholders or his/her successors, Xinyi City CEQS Center (being the successor
of Xinyi City CEQS Station) and our Company has acknowledged the said shareholding arrangements, and
confirmed that each party had fulfilled their respective obligations and such shareholding arrangements
had been terminated.
Xinyi City CEQS Center Becoming a Registered Shareholder of our Company on 29 December 2022
Pursuant to Xinyi City Institutional Reform Plan (ࣩXinyi City Public
Institution Reform Plan (ࣩand the Notice issued by the Institutional
Establishment Committee of the Xinyi City Committee of the Communist Party of China (On Promoting
the Reform Plan for the Third Category Public Welfare and Public Institutions Engaged in Production and
Business Activities in Xinyi City) (ึΙ೯(̹ʮूɧᗳʿ੽ԫ
ࣩ)ٝXinyi City Bureau of Housing and Urban-Rural Development


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HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
decided to integrate Xinyi City CEQS Station and Xinyi City Construction Engineering Safety Supervision
Station to form Xinyi City CEQS Center, which was subsequently approved by Xinyi City Committee
Organisation Establ ishment Committee Office of the Communist Part of China (̹։ዚ࿴ᇜՓ։
܃in accordance with the Approval of “Implementation Plan for Adjustment and Optimisation
of the Institutions Affiliated to the Xinyi City Bureau of Housing and Urban – Rural Development” (׵
ҭᔧ) issued on 25 August 2020.
Xinyi City CEQS Center was established on 2 March 2021 to assume the operations of Xinyi City
CEQS Station and Xinyi City CESS Station and become a shareholder of our Company. Xinyi City CEQS
Center, a public institution under the Xinyi City Bureau of Housing and Urban-Rural Development, is
primarily responsible for the supervision and management of building construction and infrastructure
projects, supervision and inspection of the quality of construction works and construction safety, issuance
of project quality supervision report, safety evaluation letter and safety supervision report; educating
and provision of training to parties involved in the construction projects to establish and improve the
construction safety system  in Xinyi City.  The registration for change in name of shareholder of our
Company from Xinyi City CEQS Station to Xinyi City CEQS Center was completed on 29 December
2022.
Return of Registered Capital to Xinyi City CEQS Center and Conversion into a Limited Liability
Company on 12 July 2023
Xinyi City CEQS Center made requests for change in corporate form and return of registered capital
from the then staff of our Company to the Xinyi City Bureau of Housing and Urban-Rural Development
and Xinyi State-owned Assets Supervision and Administration Bureau (̹਷Ϟ༟ପ္ຖ၍ଣ҅) to
seek for approval to convert our Company into a limited liability company and collect the staff’ s registered
capital in our Company. Such requests were approved by the Xinyi City Bureau of Housing and Urban-
Rural Development, Xinyi State-owned Assets Supervision and Administration Bureau and Xinyi City
People’s Government on 7 July 2023.
On 7 July 2023, each of the 29 then individual shareholders of our Company entered into an
agreement with Xinyi City CEQS Center, pursuant to which each of the then individual shareholders
agreed to return  all their equity interest in our Company to Xinyi City CEQS Center at the original
subscription price of  RMB1,820. Such transfers were completed on 12 July 2023 and our Company was
converted into a limited liability company on the same day  and renamed as Xinyi Xince Testing and
Certification Technology Service Center Co., Ltd. (ʮ̡) .
Upon completion of the transfers, Xinyi City CEQS Center became the sole registered shareholder
of our Company and the then individual shareholders ceased to hold the registered capital of our Company
on behalf of Xinyi City CEQS Center.


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HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
First Tranche of Pre-IPO Investment and Increase in Registered Capital on 27 July 2023
On 27 July 2023, our Company entered into a capital injection agreement with Xinyi City CEQS
Center and Xinyi Xinhui, pursuant to which Xinyi Xinhui agreed to subscribe for an aggregate of 20% of
the enlarged registered capital of our Company at a total consideration of RMB20 million in two tranches
(the “Pre-IPO Investment”).
On 27  July 2023, our  Company increased its registered capital from RMB1,820,000 to
RMB5,000,000. Of the additional registered capital of RMB3,180,000, RMB2,930,000 was contributed by
Xinyi City CEQS Center by way of capitalization of capital reserves of our Company and RMB250,000
was contributed by Xinyi Xinhui at a consideration of RMB5,000,000 in cash (RMB250,000 of such
capital injection was credited to the registered capital of our Company and the remaining RMB4,750,000
was credited to capital reserve of our Company). Such additional registered capital contribution was
completed by Xinyi City CEQS Center and Xinyi Xinhui by 28 July 2023, and the registration procedures
with the relevant industrial and commercial administration authority were completed on 31 July 2023.
Upon completion of such capital injection, our Company was owned as to 95% by Xinyi City CEQS
Center and 5% by Xinyi Xinhui.
See “– Pre-IPO Investment” below for further details.
Conversion into a Joint Stock Company with L imited Liability on 31 October 2023
On 31 October 2023, in contemplation of the Listing, our Company was converted from a limited
liability company into a joint stock company with limited liability  and renamed as Guangdong Syntrust
GK Testing and Certification Tech Service Center Co., Ltd.  (΅
ʮ̡) . Upon completion of the conversion on 31 October 2023, the share capital of our Company was
RMB20,000,000 divided into 20,000,000 Shares with a nominal value of RMB1.00 each, of which Xinyi
City CEQS Center and Xinyi Xinhui held 19,000,000 Shares and 1,000,000 Shares, representing 95% and
5% of our share capital, respectively.
Our PRC Legal Advisers have confirmed that with respect to the conversion of our Company
into a joint stock company with limited liability, we have completed all the necessary registration filing
procedures in compliance with the relevant PRC laws and regulations, and such conversion was properly
and legally completed.
Second Tranche of Pre-IPO Investment on 3  November 2023
On 3 November 2023 , our  Company increased its share capital from RMB 20,000,000 to
RMB23,750,000. The additional share capital of RMB 3,750,000 was contributed by Xinyi Xinhui at a
consideration of RMB 15,000,000 in cash (RMB3,750,000 of such capital injection was credited to the
registered capital of our Company and the remaining RMB11,250,000 was credited to capital reserve
of our Company). Such additional registered capital contribution was completed by Xinyi Xinhui on 3
November 2023 , and the registration procedures with the relevant administration authority for market
regulation were completed on 6 November 2023.


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HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
Upon completion of such capital injection in November 2023, our Company was owned as to 80%
by Xinyi City CEQS Center and 20% by Xinyi Xinhui.
See “– Pre-IPO Investment” below for further details.
Issue of H shares
Immediately after the Share Offer, our issued share capital shall comprise a total of 23,750,000
Unlisted Shares and 10,179,000 H Shares (assuming the Offer Size Adjustment Option is not exercised).
PRE-IPO INVESTMENT
On 27 July 2023, our Company entered into a capital injection agreement with Xinyi City CEQS
Center and Xinyi Xinhui, pursuant to which Xinyi Xinhui agreed to subscribe for an aggregate of 20% of
the enlarged registered capital of our Company at a total consideration of RMB20 million in two tranches.
The table below summarizes the principal terms of the Pre-IPO Investment from Xinyi Xinhui:
First Tranche of the
Pre-IPO Investment
Second Tranche of the
Pre-IPO Investment
Registered capital increased : RMB250,000 RMB3,750,000
Amount of consideration paid : RMB5,000,000 RMB15,000,000
Basis of consideration : The consideration was determined after arm’s length negotiations with
reference to the valuation of our Company as of 31 January 2023.
Date on which the Pre-IPO
Investment was settled
: 31 July 2023 3 November 2023
Average investment
cost per Share 1
: RMB4.21 (or approximately HK$4.59)
Discount to the Offer Price 2 : Approximately 48.3%
Shareholding in our Company
after completion of the Pre-IPO
Investment and immediately
before the Share Offer
: 20%
1 Calculated based on the total amount contributed by Xinyi Xinhui divided by the number of Shares to be held by it
upon Listing (assuming the Offer Size Adjustment Option is not exercised).
2 Calculated on the basis of the Offer Price of HK$9.50, the mid-point of the proposed range of the Offer Price.


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HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
First Tranche of the
Pre-IPO Investment
Second Tranche of the
Pre-IPO Investment
Approximate shareholding in our
Company after completion of
the Pre-IPO Investment and
immediately after the Share
Offer
: 14%
Use of proceeds : We plan to allocate:
(i) 17.0% of the proceeds  for acquisition of concrete testing
equipment by end of 2024;
(ii) 18.1% of the proceeds  for acquisition of food and agricultural
testing equipment by end of 2024;
(iii) 31.6% of the proceeds for renovation of the food and agricultural
testing laboratory by end of 2024; and
(iv) 33.3% of the proceeds for general working capital purpose.
As at the Latest Practicable Date, our Company has u tilised a total
amount of RMB 16.7 million  of the proceeds from the Pre-IPO
Investment  for acquisition of concrete testing equipment and food
and agricultural testing equipment  and renovation of the food and
agricultural testing laboratory and general working capital purpose.
Strategic benefit to our
Company
: Our Directors were of the view that the additional capital provided by
Xinyi Xinhui will support our  Company’s future development.  The
Pre-IPO Investment also demonstrated Xinyi Xinhui’s confidence
in our operations and served as an endorsement of our Company’s
performance, strengths and prospects. In particular, it also enhanced
our cooperation relationship with Xinyi Xinhui. See  “Continuing
Connected Transactions” in this prospectus  for further details of our
cooperation relationship with Xinyi Xinhui.
Lock-up period : No specific lock-up period has been agreed in the capital injection
agreement. However, pursuant to the applicable PRC law, within 12
months following the Listing Date, holders of any Share issued prior to
the Share Offer (including Xinyi Xinhui) cannot transfer such Share.
Special right : No special right has been granted to Xinyi Xinhui.


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HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
Information about Xinyi Xinhui
Xinyi Xinhui is a limited liability company established in the PRC on 24 August 2022 that is
principally engaged in corporate management, property management, provision of engineering project
management services. As at the Latest Practicable Date, Xinyi Xinhui is wholly owned by Xinyi City
Bureau of Finance. Prior to the Pre-IPO Investment, our Company entered  into (i) the engagements  for
provision of construction engineering testing and inspection services with Xinyi Xinye, a wholly owned
subsidiary of Xinyi Xinhui,  in 2021 and 2023;  and (ii) two 1-year term loan agreements with Xinyi Xinye,
as the borrower,  dated 29 January 2023 and 3 March 2023 with principal amount of RMB3,750,000 and
RMB4,100,000 respectively  and a fixed interest rate of 4.35% per annum and such loans  had  been fully
settled in December 2023.  To the best knowledge, information and belief of the Directors having made all
reasonable enquiries, proceeds from the loans were used as general working capital.  Save for the Pre-IPO
Investment and the aforesaid transactions, Xinyi Xinhui did not have any business relationship with our
Company.
The Directors confirm that our Company will not provide any  loans to any connected/related
parties  in the future.  Our Company  has adopted the internal control policy on connected transactions
(including any loans), pursuant to which, among others, our Company shall regularly update a control list
of connected parties of our Company to identify all potential connected transactions of our Company. We
have also adopted the contract management policy, pursuant to which the contract management department
will monitor/approve all material contracts (including any loan agreement) before entering  into by our
Company. We believe that by implementing these two policies, our management will be able to prevent
offering any loan to connected/related parties in the future.
PUBLIC FLOAT
As at the Latest Practicable Date, t he 23,750,000 Shares held by Xinyi City CEQS Center and
Xinyi Xinhui, representing 100% of our total issued Shares of our Company before the Share Offer,
or approximately 7 0% of our total issued Shares upon Listing (assuming the Offer Size Adjustment
Option  is not exercised), or approximately 6 7% of our total issued Shares upon exercise of the Offer
Size Adjustment Option in full, will not be considered as part of the public float for the purpose of Rule
11.23(7) of the GEM Listing Rules as these Shareholders will constitute core connected persons of our
Company upon Listing, the Shares held by them will not be counted towards the public float for the
purpose of Rule 11.23(7) of the GEM Listing Rules after Listing.
Based on the above, it is expected that immediately following completion of the Share Offer  and
assuming the Offer Size Adjustment Option  is not exercised , the total number of 10,179,000 H Shares
of our Company held by the public represents approximately 30% of our  issued Shares. Therefore, our
Company will be able to meet the minimum public float requirement under Rule 11.23(7) of the GEM
Listing Rules.


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HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
Compliance with the Guide
On the basis that (i) the consideration under the Pre-IPO Investment was fully settled and received
by our Company on or before 3 November 2023, which was more than 28 clear days before the date of
our Company’s first submission of the listing application to the Stock Exchange in relation to the Listing;
and (ii) no special right has been granted to the Xinyi Xinhui pursuant to the capital injection agreement
entered among Xinyi City CE QS Center , Xinyi Xinhui and our Company, the Joint Sponsors are of  the
view that and that the Pre-IPO Investment is in compliance with the Chapter 4.2 of the Guide issued by the
Stock Exchange.
OUR SHAREHOLDING AND CORPORATE STRUCTURE
Shareholding Structure Immediately before the Share Offer
The chart below sets out our shareholding structure as at the Latest Practicable Date:
80% 20%
100%
Our Company
(PRC)
Xinyi City Bureau of Finance
(PRC)(2)
Xinyi City CEQS Center
(PRC)(1)
Xinyi Xinhui
(PRC)(2)
Xinyi City Bureau of Housing
and Urban-Rural Development
(PRC)(1)
Xinyi City People’s
Government
(PRC)(1)(2)

Notes:
1. Xinyi City CEQS Center (formerly known as Xinyi City CEQS Station ) is a public institution of the Xinyi City
People’s Government under the Xinyi City Bureau of Housing and Urban-Rural Development.  As advised by
our PRC Legal Advisers, there is no shareholding relationship among Xinyi CEQS Center, Xinyi City Bureau of
Housing and Urban-Rural Development and Xinyi City People’s Government.
2. Xinyi Xinhui is a limited liability company incorporated in the PRC on 24 August 2022. Xinyi Xinhui is wholly
owned by Xinyi City Bureau of Finance (҅), a department of the Xinyi City People’s Government.  To
the best knowledge, information and belief of the Directors,  having made all reasonable enquiries, Xinyi Xinhui
does not have any relationship with Xinyi City CEQS Center.


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HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
Shareholding Structure Immediately after Completion of the Share Offer
The chart below sets out our simplified shareholding structure immediately after completion of the
Share Offer (assuming Offer Size Adjustment Option is not exercised ):
56% 30%14%
100%
Our Company
(PRC)
Xinyi City Bureau of Finance
(PRC)(2)
Xinyi City CEQS Center
(PRC)(1)
Xinyi Xinhui
(PRC)(2)
Public Shareholders
Xinyi City Bureau of Housing
and Urban-Rural Development
(PRC)(1)
Xinyi City People’s
Government
(PRC)(1)(2)

Notes:
1. Xinyi City CEQS Center (formerly known as Xinyi City CEQS Station ) is a public institution of the Xinyi City
People’s Government under the Xinyi City Bureau of Housing and Urban-Rural Development.  As advised by
our PRC Legal Advisers, there is no shareholding relationship among Xinyi CEQS Center, Xinyi City Bureau of
Housing and Urban-Rural Development and Xinyi City People’s Government.
2. Xinyi Xinhui is a limited liability company incorporated in the PRC on 24 August 2022. Xinyi Xinhui is wholly
owned by Xinyi City Bureau of Finance (҅), a department of the Xinyi City People’s Government.  To
the best knowledge, information and belief of the Directors having made all reasonable enquiries, Xinyi Xinhui does
not have any relationship with Xinyi City CEQS Center.


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BUSINESS
OVERVIEW
Our Company  is principally engaged in the provision of construction engineering testing and
inspection services, serving customers in Maoming,  Guangdong Province of China. Founded in 2000 and
headquartered in Xinyi City, Maoming, we have grown throughout the years in terms of revenue generated
from construction engineering testing and inspection services. Our service offerings include  a range  of
construction engineering testing and inspection services covering different types of testing and inspections
processes involved in the industry. We primarily offer construction engineering testing services including
foundation testing service, infrastructure and public roads testing service, construction material testing
service, as well as building structure testing service. Additionally, we provide construction engineering
inspection services including slope monitoring and foundation pit monitoring services.  Since May 2024 ,
as part of our expansion plan, while remaining our primary business focus on construction engineering
testing and inspection services, we have commenced to diversify our service offerings and provide food
testing services, which contributed 12.3% to our total revenue generated in 6M2024.
According to  the CIC Report, the construction engineering testing and inspection services  sector
emerged with significant potential. The total market size of the construction engineering testing and
inspection industry in Maoming  was RMB 389.8 million  in 2023  and is expected to reach RMB 614.6
million  in 2028 , representing a CAGR of 9 .5% from 2023  to 2028 . Over the years, the industry has
also demonstrated steady growth, mainly driven by the government’s initiative for rapid  infrastructure
development. The construction engineering testing and inspection industry in Maoming showcased a
CAGR of 11.1 % from 2019  to 2023 .
Our customer base primarily consists of entities involved in the construction industry in China,
including private and public sector entities such as property developers and construction companies, state-
owned investment companies, relevant PRC government institutions and PRC government administrative
bureaus. These customers rely on our expertise to ensure the quality, safety and compliance at relevant
stages of their construction or infrastructure projects. The primary focus of our testing and inspection
services lies in private commercial and residential construction projects as well as public construction and
infrastructure projects. During FY2021, FY2022,  FY2023 and 6M2024, we had 268, 182, 279 and 196
customers, respectively. We are committed to delivering high quality testing and inspection services to our
customers. Our reputation among our current and potential customers has been pivotal in expanding and
diversifying our customer base.
As at the Latest Practicable Date, we maintain a team of 1 06 employees, holding a total of 179
testing qualifications issued and approved by the Guangdong Association for Quality and Safety Testing
and Appraisal of Construction Projects,  enabling them to conduct proficient and reliable testing and
inspection processes. Among them, 5 5 are qualified engineers specialising in construction engineering
and three  are qualified engineers specialising in food and agriculture in China. Our Company  has also
obtained accreditation in a total of 39 categories for testing and inspection services relating to construction
engineering, product and material testing , environmental testing , food testing and agricultural related
testing approved by the Guangdong AMR and we offer testing services with over 2,700 parameters under
the 39 categories.


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BUSINESS
We have obtained the Inspection and Testing Agency Qualification Certificate issued by the
Guangdong AMR. This certificate grants us permission to use the mark of the CMA (China Inspection
Body and Laboratory Mandatory Approval) when conducting our business. CMA is a certification
and evaluation of the testing capability  and reliability of inspection institutions, conducted by quality
inspection departments at the provincial level or above in accordance with the provisions of the Metrology
Law of China.  Additionally, we also hold the Construction Engineering Quality Inspection Agency
Qualification Certificate issued by the Guangdong Provincial Department of Housing and Urban-
Rural Development. As a testing and inspection company, we are required to obtain the Inspection and
Testing Agency Qualification Certificate. When carrying out testing and inspection activities relating to
construction engineering, we are also required to obtain the Construction Engineering Quality Inspection
Agency Qualification Certificate.  These certificates are crucial for demonstrating our capability and
eligibility to provide reliable testing and inspection services. Our market reputation is largely established
on the foundation of delivering reliable services, and we maintain this standard through stringent quality
control measures. These measures are in place to ensure that we consistently uphold our service standards.
We operate our headquarters located in Xinyi City, Maoming, Guangdong Province, and provide
on-site or laboratory testing and inspection services to customers in Maoming. Leveraging on (i) our state-
owned background; (ii) our proven track records ; (iii) our established market presence in Maoming; and (iv)
our experienced senior management supported by our skilled personnel, we have grown throughout the
years in terms of revenue generated from the testing and inspection services.
During the Track Record Period, our revenue was mainly derived from our foundation testing
service. Revenue from foundation testing service  accounted for 74.8%, 56.2%, 59.3% and  61.8% of our
total revenue for FY2021, FY2022, FY2023 and 6M2024, respectively.  The revenue generated from our
foundation testing service was RMB29.7 million, RMB 11.2 million,  RMB 24.6  million  and RMB 14.1
million for FY2021, FY2022,  FY2023 and 6M2024, respectively. The decrease in revenue generated from
foundation testing service in FY2022 was due to the impact of the COVID-19 pandemic, as a result, the
number of foundation service orders completed by us in FY2022 decreased. See “Effect of the COVID-19
pandemic” below for details. As the impact of the COVID-19 pandemic gradually eased in 2023 and
there is a growth in our foundation testing service provided to projects in public sector, our revenue from
foundation testing service increased in FY2023.


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BUSINESS
The following table sets forth a breakdown of revenue generated by types of service during the
Track Record Period.
FY2021 FY2022 FY2023 6M2024
RMB’000 % RMB’000 % RMB’000 % RMB’000 %
Construction engineering
Testing services
Foundation testing service 29,743 74.8 11,232 56.2 24,619 59.3 14,112 61.8
Infrastructure and public roads
testing service 893 2.2 456 2.3 5,837 14.1 1,408 6.2
Construction material testing
service 5,185 13.0 2,955 14.8 3,888 9.4 2,409 10.5
Building structure testing service 2,649 6.7 759 3.8 1,682 4.0 810 3.5
Inspection services
Slope monitoring and foundation
pit monitoring services 1,311 3.3 4,564 22.9 5,474 13.2 1,292 5.7
Food testing services – – – – – – 2,799 12.3


Total 39,781 100.0 19,966 100.0 41,500 100.0 22,830 100.0


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BUSINESS
COMPETITIVE STRENGTHS
We believe that we possess several key strengths that set us apart from our competitors and enable us
to compete effectively in the industry.
We provide a wide spectrum and comprehensive construction engineering testing and inspection
services and food testing services, serving a diversified base of customers in both private and public
sectors.
Throughout the years, our Company has been providing a range of construction engineering testing
and inspection services. Our offerings include foundation testing, infrastructure and public roads testing,
construction material testing, building structure testing, as well as slope monitoring and foundation pit
monitoring services. Our diversified range of services has allowed us to cater to a wide range of customers,
including private and public sector entities such as property developers, construction companies, state-
owned investment companies, relevant PRC government institutions and PRC government administrative
bureaus. Accreditation in 36 categories for different  construction engineering testing and inspection
services also signifies our expertise and credibility. We offer construction engineering testing and
inspection  services encompassing over 2 ,500 parameters  as at the Latest Practicable Date. This
comprehensive  coverage demonstrates our ability to deliver thorough and precise assessments, meeting
the varied requirements of our clients and ensuring compliance with industry standards. In particular,
our static load testing capacity for our foundation testing services has reached 35,000 kN. According to
the CIC Report, among the top five construction engineering testing and inspection services providers
in Maoming, only  two  of them, including our Company, has obtained the necessary qualification to
conduct static load testing with capacity reaching 35,000 kN  o r more. We are also one of a few testing
and inspection institutions capable of implementing fully automated process in our slope monitoring
and foundation.  With our capability of providing a wide spectrum of services, we were able to serve
targeted customers involving in both private commercial and residential construction projects and public
construction and infrastructure projects during the Track Record Period, solidifying our market presence
and diversifying revenue streams.
Our reputation and credibility as a state-owned enterprise instill a sense of trust and reliability
among our customers. Our reputation and credibility make us a preferred choice for crucial testing and
inspection services. We believe our customers often prioritise partnering with state-owned companies
due to the perceived stability, accountability, and adherence to strict quality standards. Our state-owned
status reinforces these expectations, providing assurance to our customers that we possess the necessary
resources, expertise, and commitment to deliver reliable and accurate testing and inspection services.
In 6M2024, we commenced to provide food testing services and generated revenue of approximately
RMB2.8 million. We believe that the reputation and reliability of our Company are the critical factors
for the success of our expansion in the 6M2024, as well as for the future growth and expansion of our
business.


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BUSINESS
For FY2021, FY2022,  FY2023 and 6M2024, we had 268, 182, 279 and 196 customers, respectively.
Our revenue generated from state-owned investment companies, relevant PRC government institutions
and PRC government administrative bureaus a ccounted for 15.4%, 39.3%, 37.9% and 46.9%  of our total
revenue in FY2021, FY2022,  FY2023 and 6M2024, respectively.
These strengths position us as a trusted and sought-after provider of construction engineering
testing and inspection services within the industry. With our diverse service offerings and extensive
parameters coverage, we are well-equipped to meet the evolving needs of our customers and maintain a
leading position in the market.
We strategically targeting the market in the 3rd to 5th tiers cities in Maoming.
Founded in 2000 and headquartered in Xinyi City, Maoming, we have grown in terms of revenue
generated from testing and inspection services.
Being headquartered in Xinyi City, Maoming provides us with a strategic advantage. We are
geographically close to the cities in Western Guangdong, allowing us to easily reach our customers and
provide prompt services. Our local presence enables us to understand the unique needs and dynamics of
these cities. Operating in the region also enables us to provide our professional services at a relatively
lower overhead costs, including lower transportation and labor expenses. This can positively impact our
profitability and financial performance, allowing us to offer competitive pricing while maintaining quality
service delivery. Over the years, we have built an extensive network of contacts and partnerships in the
region. This network strengthens our ability to serve our customers effectively. We have established
relationships with local government agencies, construction companies, and other key stakeholders,
enabling us to navigate the local business environment and collaborate closely with our clients.
During the Track Record Period, we successfully tapped into some of the 3rd to 5th tiers cities in
Maoming including Gaozhou City and Huazhou City. These cities are undergoing rapid urbanisation and
infrastructure development. As these cities expand, new construction projects emerge, including residential
complexes, commercial buildings, industrial facilities, and transportation infrastructure. The need for
testing and inspection services arises to ensure the quality, safety, and compliance of these projects. With
the implementation of stricter regulations and building codes, these cities are placing greater emphasis on
compliance and quality control. Local authorities are enforcing higher standards for construction projects
to meet safety and environmental requirements, which also drive  the demand for testing and inspection
services.
The increasing demand for construction engineering testing and inspection services in 3rd to 5th
tiers cities is driven by urbanisation, regulatory compliance, quality assurance needs and government
support. As these cities continue to grow and develop, the demand for reliable and comprehensive testing
and inspection services is expected to further increase. We believe our past operation as well as our
strategic location of services have laid a solid foundation for steady future growth. In addition, leveraging
our stable customer base and stringent quality controls, we are able to continue to provide reliable testing
and inspection services chosen by our customers.


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BUSINESS
We strategically positioned ourselves to harness the accelerating  infrastructure development in
China driven by government policies in tier 3 or below cities.
According to the CIC Report, lower tiers cities in China are experiencing growth in public
infrastructure development. In May 2022, the State Council issued the “Opinions on Promoting
Urbanisation  with County Seats as Important Carriers” (ண
จԈ), this policy aims to enhance the quality and efficiency of county-level urban infrastructure.
In addition, the “Rural Revitalisation Initiative”  (ጳ) implemented by the PRC Government
and the “Project for the High-Quality Development of Hundreds of Counties, Thousands of Towns
and Tens of Thousands of Villages ” (ʈ೻ ) promoted by the Guangdong
Provincial Development and Reform Commission  also have encouraged the  infrastructure development
in tier 3 or  below  cities in China.  These initiatives have led to substantial investments in upgrading
roads, bridges, water supply systems, public transportation networks, hospitals and schools, improving
connectivity and living conditions. The focus on affordable housing and economic growth has attracted
investment and created job opportunities  and  fostered the overall development. The initiatives have
also facilitated urban-rural integration, reduced  disparities and promoted  balanced regional growth. As
a result, residents have experienced improved quality of life, better access to essential services, and
increased tourism opportunities, contributing to the prosperity and cultural preservation of these cities.
Therefore, infrastructure construction plays a pivotal role as a key pillar industry in 3rd or lower  tier
cities. In particular, the sustained economic growth and significant infrastructure development in Western
Guangdong  including Maoming have led to an ongoing and robust demand for independent testing and
inspection services.
Throughout the years, we successfully expanded our service offerings to cater for the diverse needs
of our customers, allowing us to serve customers involving in both  private commercial and residential
construction projects and  public construction and infrastructure projects. Together with our strategic
approach to target the market in the 3rd to 5th tiers cities in W estern Guangdong, we are able to capitalise
on the surge in infrastructure development in developing cities in China. These cities are experiencing
significant investment and support from the government, as the government aims  at promoting a balanced
regional development and unlocking the economic potential of developing cities.
Our expertise and capabilities enable us to play a crucial role in verifying the quality of construction
materials, conducting structural assessments, performing safety inspections, and ensuring adherence to
regulatory standards and specifications for the customers in lower tier cities.  As these cities continue to
progress and attract further investment, our presence and reputation as a reliable testing and inspection
services provider will become more valuable. Our Directors believe that we can anticipate a steady flow of
projects, consistent revenue streams, and the potential for expansion into new markets as these cities grow
and evolve due to our familiarity with the operation process of the government in lower tier cities.


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BUSINESS
We implement quality control measures to maintain our service standards and ensure precise testing
outcomes.
Throughout the years, our Company has obtained the Construction Engineering Quality Inspection
Agency Qualification Certificate and the Inspection and Testing Agency Qualification Certificate in
China, which are required by the PRC Government for institutions engaged in construction engineering
testing and inspection services.
As of the Latest Practicable Date, we maintained a team of 106 employees, holding a total of 179
testing qualifications issued and approved by the Guangdong Association for Quality and Safety Testing
and Appraisal of Construction Projects, for conducting different types of testing and inspection processes,
with 55 of them being qualified engineers specialising in construction engineering and three  of them
being qualified engineers specialising in food and agriculture in China who are committed to providing
comprehensive and reliable testing and inspection services to our customers. These engineers possess
the necessary qualifications and certifications in their respective fields, ensuring their expertise and
competence in delivering high-quality testing services. With their combined knowledge and experience,
we are able to meet the diverse testing and inspection needs of our customers in a professional and
efficient manner. Our Company  places a strong emphasis on staff training and development to ensure
our team possesses the necessary skills and expertise to deliver high-quality testing and inspection
services. We invest in comprehensive training programs for our testing and inspection personnel and
technicians that encompass both technical knowledge and practical skills relevant to our industry. Our
training initiatives cover various aspects, including industry regulations, testing methodologies, equipment
handling, safety protocols, and quality control measures. By investing in staff training and development,
we ensure that our team is equipped with the necessary expertise to handle diverse testing and inspection
projects. This commitment to ongoing learning and skill enhancement enables us to maintain the highest
level of proficiency, deliver accurate results, and consistently meet the delivery time expectations of our
customers.
In addition, to ensure rigorous quality control across all our services, we have established a
comprehensive set of standardised quality control measures. These measures are implemented consistently
throughout our operations and are followed by our employees. In order to cater to the unique requirements
of our customers and local conditions, we provide compliance guidance to our employees. To oversee and
enforce these stringent quality control measures, we have appointed experienced quality control officers
who possess extensive on-site expertise. These officers play a crucial role in supervising our day-to-day
operations, ensuring adherence to the established standards. In addition, we have established a dedicated
quality control team responsible for formulating and implementing quality control measures. This team
has the responsibility of monitoring the compliance of our entire network, thereby ensuring the consistent
delivery of high quality services. As of the Latest Practicable Date, our quality control team consisted of
16 members  including nine full time members in the quality control department and seven members are
representatives from various other departments. Notably, Ms. Zhang Yue’e, who possesses over 13 years
of relevant experience in  the  construction engineering testing and inspection  industry, leads our quality
control team.


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BUSINESS
The members of our quality control team collectively possess an average of 10 years of relevant
experience, reflecting their deep understanding and expertise in the field.  This wealth of experience
enables us to effectively address our customers’ specific needs by tailoring our quality control measures,
ensuring maximum satisfaction in a cost-effective manner. Through the implementation of our stringent
quality control measures, we have achieved a high  level of consistency in delivering high-quality and
efficient services. This approach has been instrumental in reducing operational risks inherent in our
operations, ensuring smooth and reliable service delivery.
Our testing and inspection capabilities have consistently demonstrated a high level of accuracy, with
no material delay and instances of challenges by our customers or the government or accidents or quality
failures following our assessments or issuance of the testing reports. The meticulous approach that we
employ during our service process ensures that potential issues are identified and addressed proactively,
mitigating risks and maintaining the integrity and quality of the projects we assess. Our commitment to
deliver reliable and trustworthy results has earned us a reputation and trustworthiness in the industry.
Our management team is recognised for their leadership and commitment.
Our Company is guided by a visionary and dedicated management team which has played a pivotal
role in our significant business growth. Leading our team is Mr. Lai Feng, who serves as our chairman of
the Board  and general manager, bringing with him over 23 years of experience in business management
and quality engineering  in the construction  industry. His expertise and strategic leadership have been
instrumental in driving our success.
Under Mr. Lai’s guidance, our management team has been carefully assembled, comprising
individuals with extensive experience and expertise. This team includes Mr. Huang Fei, Ms. Mai Jiayu
and Mr. Zhang Xihua, who have made valuable contributions to our growth. Their collective efforts have
fostered strong synergies, combining diverse skills and backgrounds to create an effective and cohesive
management style.
Our management team members have forged close working relationships and possess a deep
understanding of our strengths, enabling them to collaborate seamlessly. This collaborative approach has
been pivotal in driving our growth and success. For more information about our management team, see
“Directors, Supervisors and Senior Management” in this prospectus.
BUSINESS STRATEGIES
Our long-term objective is to become one of the leading testing and inspection service providers
in Western Guangdong, utilising our experience and expertise in construction engineering testing and
inspection service to expand our business to other testing and inspection fields in China. To this end, we
intend to implement a business strategy with the following key components.


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BUSINESS
Expanding our construction engineering testing services to achieve Comprehensive Qualification
under the Qualification Standards of Construction Engineering Quality Inspection Agencies  and
strengthen our existing construction engineering testing and inspection services.
The Construction Engineering Quality Inspection Agency Qualification Certificate to be issued
by the Guangdong Provincial Department of Housing and Urban-Rural Development will introduce a
division of testing qualifications into two categories  under the 2023 Administrative  Measures  namely
the Comprehensive Qualification and Specialised Qualifications, as regulated by the Qualification
Standards of Construction Engineering Quality Inspection Agencies. Under the Qualification Standards
of Construction Engineering Quality Inspection Agencies, there will be nine Specialised Qualifications,
including (i) building materials and components, (ii) main structure and decoration, (iii) steel structure, (iv)
foundation, (v) building energy-saving, (vi) building  curtain wall, (vii) municipal engineering materials,
(viii) road works, and (ix) bridge and underground works.
To achieve the Comprehensive Qualification, an institution would have to, among other things:
(i) obtain five specific Specialised Qualifications (namely (i) building materials and components
(or municipal engineering materials); (ii) main structure and decoration; (iii) steel structure;
(iv) foundation; and (v) building energy-saving)  and two other Specialised Qualifications;
(ii) possess the equipment and capability to conduct testings and inspections in respect of all the
necessary parameters of all nine Specialised Qualifications prescribed in the Qualification
Standards of Construction Engineering Quality Inspection Agencies;  and
(iii) maintain a minimum number of technical personnel with specific qualifications.
In order to conduct all our Company’s existing construction engineering testing and inspection
businesses, we need to acquire six out of the nine Specialised Qualifications. These include (i) building
materials and components, (ii) main structure  and decoration, (iii) foundation, (iv) building energy-
saving, (v) municipal engineering materials,  and (vi) road works.  Our Directors expect that, considering
our existing capabilities and qualifications, we will be able to acquire the six Specialised Qualifications
when the new standard is implemented. As at the Latest Practicable Date, the Implementation Rules have
not yet been officially released  and therefore the application process for obtaining the new certificate
and acquiring the Specialised Qualifications under the new standard has not yet been made available. We
will comply with the Implementation Rules and provide an update on the progress of obtaining the six
Specialised Qualifications in the annual report and/or interim report of our Company after Listing.


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BUSINESS
Neither our Directors nor our PRC Legal Advisers foresaw difficulties in obtaining six out of the
nine Specialised Qualifications as described above, fulfilling the application requirements and meeting the
above-mentioned transition deadline,  and the Joint Sponsors concur, after having considered the following
factors:
(a) our Company has reviewed and examined the relevant qualification requirements for the six
Specialised Qualifications under the 2023 Administrative Measures and the Qualification
Standards of Construction Engineering Quality Inspection Agencies, and found that save
for the shortage of a small number of required testing equipment  that are readily available
in the market,  which mainly includes (i) a chloride ion potentiometric titration detector (ಣ
Ꮸ಻ᄃ) and a water absorption rate tester (ᄃ)  for testing of
building material and components; (ii) a non-metallic ultrasonic defect detector (᙮൴ᑊ
ઞෆᄃ) and a push-out test apparatus (પ̈ᄃ ) for testing of main structure and decoration;
(iii) a deadweight and leading bogie (ݖand a high strain dynamic measuring
instrument of pile (ਿᅸ৷ᏐᜊᏨ಻ᄃ) for testing of foundation; (iv) a thermal conductivity
measuring apparatus (ᄃ) and a steady-state thermal transmission properties
measuring system (ӻ୕) for testing of building energy-saving; and (v)
a visible spectrophotometer (ࠇܓand a fibre image analyser (ؓ
ᄃ) for testing of municipal engineering materials. We have formulated a procurement plan,
obtained a quotation for acquisition of the required equipment. As at the Latest Practicable
Date, we have commenced to acquire part of the required testing equipment and expect to
complete the installation by October  2024. We will acquire and install the rest of the required
testing equipment  within one month after  the Implementation Rul es have been published .
The total cost of acquisition and installation of required equipment is expected to be
approximately RMB932,000.  Our Directors believe that our Company has sufficient financial
resources to implement such procurement plan. Save as disclosed, w e have fulfilled all other
requirements (including personnel) of the six Specialised Qualifications;  and
(b) during an interview conducted by our PRC Legal Advisers and the PRC legal advisers of
the Joint Sponsors on 12 April 2024 with an officer of Maoming City Bureau of Housing
and Urban-Rural Development, which, according to our PRC Legal Advisers, is a competent
officer of the competent  administrative governmental authority  entrusted to approve
the construction engineering quality inspection agency qualifications in Maoming and
responsible for the qualification application review work for Specialised Qualifications
of our Company under the draft implementation rules of Guangdong Province regarding
the new qualification standards of construction engineering quality inspection agencies
circulated in December 2023 for public comment and not yet promulgated, after reviewing
our Company’s evaluation of the fulfilment of relevant qualification requirements for the
six Specialised Qualifications and in consideration of the relevant qualification standards,
the responsible officer of the bureau is of the view that there is no impediment for our
Company to acquire the six Specialised Qualifications  having considered the requirements
of the new qualification standards and the shortage of a small number of testing equipment
that we will acquire.  We expect to apply for  the six Specialised Qualifications in one-go


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BUSINESS
once the Implementation Rules have been published.  Further, during an interview with two
officers of Guangdong Provincial Department of Housing and Urban-Rural Development,
(which are competent officers of the superior administrative authority of construction
engineering quality inspection agencies in Guangdong Province according to our PRC
Legal Advisers) , conducted by our PRC Legal Advisers, the PRC legal advisers of the Joint
Sponsors, and Maoming City Bureau of Housing and Urban-Rural Development, on 28
May 2024, the officers interviewed confirmed that according to the Circular of Guangdong
Provincial Department of Housing and Urban-Rural Development on Issuing the Work Plan
on Entrusting the Implementation of Review and Approval of Construction Engineering
Quality Inspection Agency Qualifications (ܔ݄
 ) and other relevant laws and regulations,
Guangdong Provincial Department of Housing and Urban-Rural Development has entrusted
the housing and urban-rural development department of prefecture-level city or above,
including Maoming City Bureau of Housing and Urban-Rural Development, to be responsible
for the review and approval of the licensing of construction engineering quality inspection
agency qualifications, unless the MOHURD promulgates rules to disallow such entrustment
in the future; and the housing and urban-rural development department of prefecture-level
city or above is entitled to approve and grant the qualifications without further consent from
Guangdong Provincial Department of Housing and Urban-Rural Development. Moreover, it
was advised that since the MOHURD has not released relevant implementation regulation,
the Implementation Rules in Guangdong Province has not been finalised. As advised by
the interviewed officers of Guangdong Provincial Department of Housing and Urban-Rural
Development, given  that the Implementation Rules have not been released,  the current
qualification certificate held by our Company will remain valid after 31  July 2024 and our
Company is allowed to carry out construction engineering quality inspection businesses
in its current way , and Guangdong Provincial Department of Housing and Urban-Rural
Development will formulate relevant policies to address the situation, so as to ensure that
there would be sufficient time for enterprises to apply for new qualification certificates and
administrative authorities to review the application under the new qualification standard.
Based on the foregoing, our PRC Legal Advisers are of the view that the above confirmation
given by the officer of Maoming City Bureau of Housing and Urban-Rural Development is
unlikely to be challenged or revoked by the superior administrative authority of housing and
urban-rural development.


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BUSINESS
As part of our expansion plan, we intend to obtain all nine Specialised Qualifications by the end of
2025,  and ultimately to achieve the Comprehensive Qualification status under the Qualification Standards
of Construction Engineering Quality Inspection Agencies  by the end of 2027.  The action plan  for our
Company to obtain the remaining three out of nine Specialised Qualifications, namely (i) steel structure; (ii)
building curtain wall; and (iii) bridge and underground works, is as follows:
Requirements
Status as of the
Latest Practicable Date
Action Plan in Meeting
the Requirements and
the Expected Timeline
1. Experience
and Reputation
1.1 The inspection agency shall be
an enterprise, or a public institution
with independent legal personality,
or a partnership established in
accordance with the law, which
has not less than three years of
experience in quality inspection.
Fulfilled. N/A
1.2 The agency shall have a good
reputation in society, and did not
involve in any general engineering
quality and safety accident or
accident of higher degree in the past
three years.
Fulfilled. N/A


--- page 164 ---
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BUSINESS
Requirements
Status as of the
Latest Practicable Date
Action Plan in Meeting
the Requirements and
the Expected Timeline
2. Personnel 2.1 (a) The technical person in
charge shall have senior or above
technical title in engineering, the
person in charge of quality shall
have intermediate or above technical
title in engineering, and both shall
have more than 5 years of quality
inspection experience; and (b) the
number of principal personnel shall
satisfy the specified requirements
listed in the manning table for
principal personnel in the appendix
of the Qualification Standards of
Construction Engineering Quality
Inspection Agencies.
See “Regulatory Overview –
Laws and Regulations Relating
to the Testing and Inspection
of Construction Engineering –
Qualification” in this prospectus for
details.
(a) Fulfilled.
(b) Our Company has satisfied
the requirements for principal
personnel save for the shortage
of a small number of principal
personnel as set out in 2.1.1,
2.1.2 and 2.1.3 below.
Please refer to the action
plans as set out in 2.1.1, 2.1.2
and 2.1.3 below.
2.1.1 For the Specialised
Qualification of the steel structure,
the agency shall have no less than
one registered structural engineer
Grade II with more than two years’
experience in quality inspection
and shall have no less than 15
technicians, among which 4 or more
shall have intermediate and above
technical titles in engineering and
two or more shall have senior and
above technical titles in engineering,
who shall have more than three
years’ experience in quality
inspection.
Fulfilled. N/A


--- page 165 ---
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BUSINESS
Requirements
Status as of the
Latest Practicable Date
Action Plan in Meeting
the Requirements and
the Expected Timeline
2.1.2 For the Specialised
Qualification of the building curtain
wall, the agency shall have no less
than 15 technicians, among which
4 or more shall have intermediate
and above technical titles in
engineering and two or more shall
have senior and above technical
titles in engineering, who shall have
more than three years’ experience in
quality inspection.
We have over 15 technicians,
among which three have
intermediate and above technical
title in engineering and more than
three years’ experience in quality
inspection.
We will hire three technicians
among which, one h as
intermediate and above
technical title in engineering
and two have senior and
above technical title in
engineering, who have more
than three years’ experience
in quality inspection before
applying for the Specialised
Qualification of the building
curtain wall with the proceeds
from the Share Offer by end
of 2025.
2.1.3 For the Specialised
Qualification of the bridges and
underground works, the agency
shall have no less than one
registered structural engineer Grade
I and one registered civil engineer
(geotechnical) with more than
two years’ experience in quality
inspection, and shall have no less
than 15 technicians, among which
4 or more shall have intermediate
and above technical titles in
engineering and two or more shall
have senior and above technical
titles in engineering, who shall have
more than three years’ experience in
quality inspection.
We have:
(a) one registered structural
engineer Grade I and two
registered civil engineers
(geotechnical), who have more
than two years’ experience in
quality inspection; and
(b) over 15 technicians, among
which four have intermediate
and above technical title in
engineering,  who have more
than three years’ experience in
quality inspection.
We will hire two technicians
who senior and above
technical title in engineering
with more than three
years’ experience in
quality inspection before
applying for the Specialised
Qualification of the bridges
and underground works with
the proceeds from the Share
Offer by end of 2025.


--- page 166 ---
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BUSINESS
Requirements
Status as of the
Latest Practicable Date
Action Plan in Meeting
the Requirements and
the Expected Timeline
3. Inspection
Equipment and
Workplace
3.1 (a) The quality inspection
equipment and facilities of the
inspection agency shall be basically
complete, and the function,
range, and accuracy of inspection
instruments and equipment,
supporting equipment and facilities
shall meet all the necessary testing
parameters requirements for the
specialised qualification applied for;
and (b) the agency shall have fixed
workplace and quality inspection
sites that meet the needs of work.
(a) Save for the capabilities to
measure the testing parameters
as set out in 3.1.1 –  3.1.3
below, we have the capability
to conduct tests on all other
necessary testing parameters
of the three Specialised
Qualifications.
(b) We have fixed workplace and
quality inspection sites that
meet the needs of work.
We have formulated a
procurement plan to acquire
additional equipment
for the three Specialised
Qualifications, i.e. steel
structure, bridge and
underground engineering
and building curtain wall,
as set out in our Company’s
business strategies and
future plan. See “Business
Strategies” in this section
and “Future Plans and Use of
Proceeds” in this prospectus
for details.
3.1.1 steel structure:
(a) the flexural strength, tensile
strength, elongation and
deviation in thickness of steel
and welding;
(b) the optical quality and internal
defects of welds;
(c) the thickness o f steel structure’s
anti-corrosion and heat-
resistance coatings; and
(d) the anti-slip rating and toughness
of high-strength anchors and
fasteners;
Save for the capabilities to
measure:
(a) the optical quality and internal
defects of welds;
(b) the thickness o f steel
structure’s anti-corrosion and
heat-resistance coatings; and
(c) the anti-slip rating and
toughness of high-strength
anchor and fasteners,
our Company has the capability to
conduct tests on all other necessary
testing parameters of steel
structure.
We intend to acquire certain
testing equipment with the
proceeds from the Share
Offer, including but not
limited to a digital ultrasonic
defect detector (ᅰο൴ᑊઞ
ෆᄃ), a magnetic particle
defect detector (ှ ४ઞෆᄃ),
a coating thickness gauge
(ᄃ), a needle
thickness gauge ( ০ό಻
ᄃ), an universal hardness
tester (ࠇܓand
an anti-slip rating measuring
instrument (֛
ᄃ), by end of 2024.


--- page 167 ---
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BUSINESS
Requirements
Status as of the
Latest Practicable Date
Action Plan in Meeting
the Requirements and
the Expected Timeline
3.1.2 building curtain wall:
(a) the Shore hardness, compatibility
and peel properties of sealant,
tensile adhesive strength of
structural sealant and measuring
pollutants of sealant for stone;
(b) the heat transfer coefficient,
transmittance properties and
solar heat gain coefficient of
architectural glass and sealing
performance of insula ting glass;
and
(c) the air permeability,
watertightness, wind resistance,
deformation between stories
of curtain wall and post-install
pull-out bearing capacity of
curtain wall;
Save for the capabilities to
measure:
(i) the Shore hardness of sealant;
(ii) the heat transfer coefficient
and transmittance properties
of architectural glass; and
the sealing performance of
insula ting glass; and
(iii) the air permeability,
watertightness, wind
resistance and deformation
between stories of curtain wall
and the post-install pull-out
bearing capacity of curtain
wall,
our Company has the capability to
conduct tests on all other necessary
testing parameters of building
curtain wall.
We intend to acquire certain
testing equipment with
proceeds from our internal
resources, including but not
limited to a Shore hardness
tester (ࠇܓan UV
spectrophotometer (ഓ̮ʱΈ
ࠇܓa fourier transform
infrared spectroscopy (௩
̮Έᗅᄃ) and an
insula ting glass dew point
meter (ᆨᚣᓃ಻༊
ᄃ), by the first half of 2025.


--- page 168 ---
– 157 –
BUSINESS
Requirements
Status as of the
Latest Practicable Date
Action Plan in Meeting
the Requirements and
the Expected Timeline
3.1.3 bridge and underground works:
(a) the static strain, dynamic strain,
displacement, modal parameters
(including frequency, mode
shape, damping ratio), cable
tensile strength, load-bearing
capacity, bridge alignment,
dynamic deflection, static
deflection, structural dimension,
axis deviation, verticality,
strength of concrete, concrete
carbonation depth, steel bar
position and protective layer
thickness, chloride ion content
of bridge structures and
components; and
(b) the cross dimension, pull-out
strength of anchor, thickness
and compactness of lining,
surface evenness, dimension
of reinforcement meshes,
anchor length, compactness of
anchors, geometric dimension
of duct pieces, deviation and
ovality, concrete strength, steel
bar position and protective
layer thickness of underground
structures and components.
Save for the capabilities to
measure:
(a) the static strain, dynamic
strain, displacement, modal
parameters, cable tensile
strength, load-bearing capacity,
dynamic deflection, static
deflection, structural dimension
and verticality of bridge
structure and components; and
(b) the cross dimension, pull-out
strength of anchor, thickness
and compactness of lining,
anchor length, compactness
of anchors,  deviation and
ovality and concrete strength
of underground structures and
components,
our Company has the capability to
conduct tests on all other necessary
testing parameters of bridge and
underground works.
We intend to acquire certain
testing equipment with
proceeds from the Share
Offer and internal resources,
including but not limited
to a static strain measuring
and capture device (᎑࿒
Ꮠᜊ಻ඎၾમණண௪), a
resistance strain gauge (ཥ
ࠇa vibrating string
extensometer (όᏐᜊ
ࠇtwo static dynamic signal
testing systems (໮
಻༊ӻ୕), a displacement
sensor and data collection
system (ᅰኽમණӻ
୕), an inclinometer (ࠇ ,)
a multi-function vibration
testing system (໮મ
ண௪), a vibration
transducers (ෂชኜ) ,
a bridge structure analysis
software (ؓ
ழ΁), a ground-penetrating
radar (ήሯཤ༺) and a non-
destructive anchor measuring
instrument (ᒞ૖ೌฦᏨ಻
ᄃ), by end of 2025.


--- page 169 ---
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BUSINESS
Requirements
Status as of the
Latest Practicable Date
Action Plan in Meeting
the Requirements and
the Expected Timeline
4. Management
Standard
4.1 The inspection agency shall have
a sound organisational structure and
quality management system, and
sound technical, archival and other
management systems.
Fulfilled. N/A
4.2 The agency shall have
information management system,
and the whole process of quality
inspection activities can be traced.
Fulfilled. N/A
Our Company has reviewed and examined the relevant qualification requirements for the remaining
three out of nine Specialised Qualifications under the 2023 Administrative Measures and the Qualification
Standards of Construction Engineering Quality Inspection Agencies, and found that save for the shortage
of a small number of required testing equipment and technicians as stated in the above table,  we have
fulfilled all other requirements of the three Specialised Qualifications. Neither  our Directors, nor our
PRC Legal Advisers foresaw difficulties in obtaining the remaining three Specialised Qualifications,  and
the Joint Sponsors concur, after having considered that our Company only has to acquire relevant testing
equipment and hire relevant technicians in order to meet  the relevant qualification requirements for the
Specialised Qualifications and our Company has formulated a corresponding procurement and recruitment
plan to meet the requirements.  We estimated that the associated cost for obtaining the three Specialised
Qualifications includes: (a) RMB3.3 million for acquisition and installation of the required equipment; and
(b) RMB363,000 per month for recruitment of additional technical personnel.
To this end, we plan to allocate RMB0. 2 million and RMB0.9 million of the net proceeds of the
Share Offer to purchase the testing equipment to fulfill the Specialised Qualification requirements of  (i)
steel structure;  and (ii)  bridge and underground works, respectively. For implementation of this plan, see
“Future Plans and Use of Proceeds” in this prospectus.
In addition, we plan to enhance our capability in providing testing and inspection services in respect
of (i) foundation; (ii) building energy-saving; and ( iii) main structure  and decoration by purchasing
additional  testing equipment. To finance the purchase of the testing equipment, we expect that RMB 2.9
million of the net proceeds of the Share Offer will be utilised for such purpose. For implementation of this
plan, see “Future Plans and Use of Proceeds” in this prospectus.


--- page 170 ---
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BUSINESS
As at the Latest Practicable Date, we had 106 employees, among them, 5 5 are qualified engineers
specialising in construction engineering in China.  In order to achieve the Comprehensive Qualification
status, we plan to expand our workforce to around 180 technical personnel, by hiring additional
individuals holding an intermediate or higher professional title in an engineering-related field and having a
minimum of three years of experience in the quality testing field, including 20 individuals with a senior or
higher professional title in an engineering-related field. We expect that RMB0.7  million, RMB0.3 million,
RMB0.5 million  and RMB 2.7 million  of the net proceeds of the Share Offer  will be utilised to finance
the recruitment of an aggregate of 84 additional technical personnel who will be working in the (i) steel
structure; (ii) building curtain wall; and (iii) bridge and underground works; and (vi) others construction
engineering, testing and inspection areas. For implementation of this plan, see “Future Plans and Use of
Proceeds” in this prospectus.
Expanding our qualifications and meeting the specified staffing requirements will enable us to
enhance our capabilities and offer a full range of construction engineering testing services. Our Directors
believe that by acquiring all nine Specialised Qualifications and eventually attaining the Comprehensive
Qualification status will enhance our position in our existing markets and enable us to enter into new
markets. This will enable us to participate in larger-scale projects and meet the growing demand from
customers for high quality and comprehensive services. This expansion plan aligns with our goal of
becoming a leading provider in the construction engineering testing and inspection sector in Western
Guangdong.
Meanwhile, in order to strengthen our competitive advantages in Maoming, we plan to allocate
RMB3.4  million and RMB2.1 million of the net proceeds of the Share Offer to (i) upgrade our facilities
in static load testing with the capacity reaching 50,000 kN to obtain the higher qualification; and (ii)
purchase the new model of the existing testing equipment to enhance the accuracy and quality for our
testing, respectively. For implementation of this plan, see “Future Plans and Use of Proceeds” in this
prospectus.
Strengthening our existing market presence in Maoming and  expanding our service footprint into
the 3rd to 5th tiers cities in Western Guangdong.
Headquartered in Xinyi City, Maoming and serving our customers in Maoming during the Track
Record Period, we generated all revenue from Maoming , in particular within  Xinyi City, Gaozhou City ,
Huazhou City  and Dianbai District, in the aggregate of RMB 39.8 million, RMB 20.0 million,  RMB 41.5
million a nd RMB22.8 million for FY2021, FY2022,  FY2023 and 6M2024, respectively.
Over the next three years, w e intend to further strengthen our service presence in Maoming,
including strengthening our current market presence in Dianbai  District,  Gaozhou City and Huazhou
City and expanding into Maonan District in Maoming.  According to the CIC Report, the  independent
construction engineering testing and inspection market in Maoming is projected to reach RMB 419.4
million, RMB 458.5 million, and RMB 496.6 million  in 2024, 2025 and 2026 respectively. This market
size provides ample potential opportunities for us to expand our services, as most residential buildings,
municipal projects and government infrastructure projects require technical services for relevant
construction engineering testing and inspection. Therefore, we plan to deepen our presence in Maoming.


--- page 171 ---
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BUSINESS
In addition, we also intend to extend our service locations and actively collaborate with other 3rd
to 5th tiers cities in Western Guangdong, such as Zhanjiang City, Yunfu City, Yangjiang City, in order
to expand our business coverage and reach more potential customers outside Maoming. According to the
CIC Report, the combined market size of the independent construction engineering testing and inspection
services in Zhanjiang City, Yunfu City  and Yangjiang City is projected to reach RMB 466.8 million,
RMB498.2 million, and RMB531.7 million in 2024, 2025 and 2026 respectively.
As the first step, we plan to set up a branch office  in Zhanjiang City, having considered  factors
such as proximity to our customers, accessibility, and business environment. The new branch office will
be equipped with necessary infrastructure, equipment, and resources to provide comprehensive testing and
inspection services in the area.
We also plan to acquire a company in Western Guangdong that engages in construction engineering
testing and inspection with an established customer base by the end of 2025.  We would consider
acquisition target that fulfills the following criteria: (a) is domiciled in Western Guangdong; (b) recorded
a revenue in the range of RMB10.0 million to RMB20.0 million (equivalent to HK$10.9 million to
HK$21.8 million) in the previous financial year; (c) has sufficient working capital for business operation;
(d) has an adequate workforce and sufficient number of technical personnel to meet staffing requirements
of a foundation engineering inspection agency in the PRC (i.e. The acquisition target shall maintain not
less than four technical professionals with senior or intermediate professional title who have engaged in
the inspection of engineering piles for more than three years, and one of them is a certified geotechnical
engineer) ; (e) has an established customer base consists of state-owned investment companies, relevant
PRC government institutions and PRC government administrative bureaus; (f) is eligible to apply for
the Specialised Qualification of foundation; and (g) was not involved in any litigation or arbitration
proceeding, or experienced any non-compliance, that would have a material adverse impact  on the
business, financial condition or results of operation of the acquisition target. As of the Latest Practicable
Date, we had not engaged in any commercial negotiation or entered into any letter of intent or agreement
for potential acquisitions, and had yet to identify any specific acquisition target. Our Company does not
have a specific preference for location of the acquisition target within Western Guangdong. However, our
Directors expected that the acquisition target will not be located in Zhanjiang City, Guangdong Province.
Our Directors were aware of not less than 10 companies that fulfill the abovementioned selection criteria
in the market.
In addition, we also plan to recruit local talents  in the target cities with expertise in construction
engineering testing and inspection services, including professionals with relevant engineering
qualifications and experience in quality control, and provide comprehensive training programs to ensure
that the branch office staff is well-versed in our service standards, quality control measures, and industry
best practices.
We will also actively engage with local government authorities, construction companies,
developers, and other relevant organisations in the target markets  to foster collaboration and establish
mutually beneficial partnerships. We will showcase our capabilities and build relationships with key
stakeholders in the target areas and districts by participating in relevant industry associations, conferences,
and networking events.


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BUSINESS
To finance the above strategy, we expect that RMB13.9 million of the net proceeds of the Share
Offer, will be utilised for such purpose. See “Future Plans and Use of Proceeds” in this prospectus for
details of implementation of this plan.
Diversifying our testing and inspection services offering,  and expanding into areas including food
and agricultural, transportation and fire protection.
According to the CIC Report, due to the diverse nature of customer testing requirements,
comprehensive network service capabilities are essential for meeting these demands. Given the dispersed
and varied nature of testing needs, inspection organisations require an extensive product portfolio
and professional and attentive “one-stop” services. Considering the current growth in the property
development  industry in China, we have recognised the importance of managing operational risks and
diversifying our customer base. In line with this strategy, we plan to expand our service offerings into new
areas. This expansion will enable us to tap into additional markets and reach a wider range of customers.
By diversifying our services, we aim to enhance the stability and sustainability of our operations while
capitalising on new opportunities for growth. Our objective is to expand our range of testing and
inspection services by venturing into new areas, specifically food and agricultural  products  testing  and
inspection, transportation construction testing  and fire protection testing and inspection. This expansion
will allow us to cater to a wider range of customers’ needs and provide comprehensive solutions in these
domains.
We intend to further expand our service offerings into (i) food and agricultural products testing and
inspection focusing on areas such as heavy metals, microorganisms, additives, agricultural chemicals in
food, medicinal materials, feed residues, and antibiotics testing; (ii) transportation construction testing
encompassing testing of road infrastructure and construction structures, including expressways, national
and provincial roads; and  (iii) fire protection testing and inspection  including the evaluation of fire
prevention systems such as automatic alarm systems, automatic sprinkler systems, fire hydrant systems,
and other fire safety measures in buildings.
According to the CIC Report:
(i) the food and agricultural products testing and inspection industry in Maoming in recent years
has experienced consistent revenue growth, with a 7.9% CAGR from 201 9 to 2023 , reaching
RMB112.6 million in 2023  and is expected to reach RMB205.6 million in 2028, representing
a CAGR of 12.8% from 2023 to 2028, driven by heightened concerns for food safety from
both government and consumers. In 2023, the total market size was RMB 112.6 million, of
which the major market players accounted for about 50% of the market share and the small
players and unmet demand accounted for the remaining 50% of the market share;


--- page 173 ---
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BUSINESS
(ii) the transportation construction testing and inspection market in Maoming reached RMB52.4
million in 2023, with a CAGR of 14.5% from 201 9 to 2023 . Looking ahead, as the quality
requirements for bridge and transportation facilities continue to rise, the transportation
construction testing sector in Maoming is expected to maintain a robust growth trajectory. It is
projected to reach RMB98.2 million, with a CAGR of 13.4% from 2023 to 2028. Of the total
market size in 2023 of RMB5 2.4 million, the major market players accounted for about 70%
of the market share and the small players and the unmet demand accounted for the remaining
30% of the market share;  and
(iii) the fire protection testing and inspection industry in Western Guangdong will be expected to
attain a market size of RMB66.6 million by 2028. The fire protection testing and inspection
industry is significantly influenced by government policies and exhibits strong relevance to
multiple sectors, including the construction and building materials industry, as well as the
industrial sector.  In 2023, the total market size was RMB 51.1 million, of which the major
market players accounted for 75% of the market share, and the small players and unmet
demand accounted for the remaining 25% of the market share.
As at the Latest Practicable Date, we have obtained the qualifications approved by the Guangdong
AMR for carrying out  certain food testing. We plan  to apply for the CATL  qualifications in relation
to the a gricultural product testing in the third  quarter  of  2024. This business will primarily come from
long-standing customers in Xinyi City, Maoming, such as the Market Supervision Bureau and schools.
As at the Latest Practicable Date, we planned to use  a total of RMB 17.6 m illion for the acquisition of
relevant equipmen t and the renovation and installation work of the relevant laboratory and recruitment of
technicians, of which RMB 12.1 million  has been utilised and RMB 5.5 million was  scheduled to be paid
by end  of 2026 . We believe that we can capture the local demand in the food and agricultural products
testing industry of Maoming based on the following reasons: (i) recognizing the perishable nature of food
and agricultural products, we intend to take advantage of our close proximity to customer to offer timely
services; (ii) we have obtained the qualification certificate issued by the Guangdong AMR for carrying
out certain food and agricultural product testing, and have seven technicians who are qualified to carry out
food testing; (iii) through 20 years of experience in the construction engineering  testing and inspection
field and being a state-owned enterprise, we have built a  strong reputation and brand recognition in
Maoming.  We believe our customer will have heightened trust and reliability in our services: and (iv) the
increase in awareness on quality and traceability of food and agricultural products.
Simultaneously, we plan to begin the application for the qualification for transportation construction
testing in 2024. We believe that we can capture the local demand in the transportation construction testing
industry of Maoming based on the following reasons: (i) customers tend to engage local company due to
the transportation costs and workforce involved in setting up the equipment and inspection personnel at
the testing site; (ii) we can offer reliable transportation services to customer by leveraging our knowledge
in roadways engineering and materials  testing which is similar to that of transportation construction
testing; (iii) save for the requirements on equipment, we have met other qualification requirement of a
transportation construction testing and inspection agency in the PRC. We will acquire the qualification


--- page 174 ---
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BUSINESS
certificate in respect of transportation testing by end of 2024; and (iv) we have been deeply rooted in the
field of constructio n engineering testin g and inspection  for over 20 years and built strong reputation in
Maoming. We believe that we are likely to be the preferred service provider if our customers are in need
of transportation testing services.
Additionally, we also plan to acquire a company in Western Guangdong  that holds the necessary
qualifications for fire protection testing and inspection in 2026. The target acquisition candidate  should
be a small to medium-sized testing service company with a reasonable track record of business operations
within its service area and  with targeted business scale. We believe that we can capture the demand in
the fire protection testing industry of Western Guangdong based on the following reasons: (i) as a large
number  of our customers come from construction and infrastructure projects, there is a demand for
fire protection testing and inspection services in their operational and management processes after the
completion of the relevant construction phases. Therefore, we believe that the accumulated customer
base from our operating history will facilitate the expansion of our fire protection testing and inspection
services;  and (ii) we can endorse the fire protection testing and inspection services provided by our
acquisition target by leveraging our Company’s long-standing presence in the construction testing and
inspection industry with  good reputation  and brand recognition and our background as a state-owned
enterprise.
In view of the above, we intend to deploy RMB0.2 million, RMB1.3 million and RMB17. 2
million  of the net proceeds of the Share Offer to expand our services types  to (i) food and agricultural;
(ii) transportation construction; and (iii) fire protection, testing and inspection areas respectively. For
implementation of this plan, see “Future Plans and Use of Proceeds” in this prospectus.
Through the diversification of our testing services into these new areas, we aim to expand our
offerings, address the evolving needs of our customers, and become a comprehensive solution provider in
construction engineering testing and inspection, food and agricultural testing, fire  protection testing and
inspection, and transportation construction testing.
OUR BUSINESS MODEL
We offer a wide range of comprehensive construction engineering testing and inspection services to
customers in the construction industry. Our testing services primarily include foundation testing service,
infrastructure and public roads testing service, construction material testing service and building structure
testing service, and our inspection services include slope monitoring and foundation pit monitoring
services. Since May 2024, we have also commenced to p rovide food testing services.


--- page 175 ---
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BUSINESS
Our customers include primarily property developers, construction companies, state-owned
investment companies, relevant PRC government institutions and PRC government administrative bureaus.
Our construction engineering testing and inspection services cover the main stages of private commercial
and residential construction projects as well as public construction and infrastructure projects and our food
testing services since May 2024 cover various types of food products such as fruits, vegetables, tea leaves
and eggs where we conduct testings to evaluate whether the products meet the relevant national legal
quality and safety standards.
To provide our testing and inspection services, we would rely on our qualified testing and
inspection personnel and technicians, our fleet of testing and inspection equipment sourced from relevant
companies and manufacturers, and testing consumables sourced for our day to day testing process.
The following diagram illustrates the business chain of our Company:
Our Company
Customers and subjects involved
Machinery and
equipment
Property developers
Construction
companies
State-owned investment
companies
Government
administrative bureaus
Government
institutions
Government
administrative bureau
Testing
consumables
Quali/f_ied engineers,
technicians
and others
Private commercial
and residential
construction projects
Public construction
and infrastructure
projects
Food products

 Elements and components for provision of our services
 (1) Provision of construction engineering testing and inspection services to customers
(2) Issuance of testing reports to customers to ensure the quality, safety and compliance of relevant
standards and regulations for materials or process involved in various stages of construction or
infrastructure projects
 (1) Provision of food testing services to a customer in 6M2024
(2) Issuance of testing reports to a  customer  to ensure the compliance of relevant quality and safety
standards for the food products


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As at the Latest Practicable Date, we had obtained accreditation in 39 categories  for testing and
inspection services relating to construction engineering, product and material testing,  environmental
testing , food testing and agricultural related testing approved by the Guangdong AMR  under the Inspection
and Testing Agency Qualification Certificate. The 39 categories are set out below:
Construction Engineering
1. Geological Survey – Geotechnical Engineering Testing and Inspection
2. Geological Survey – Geotechnical Engineering Survey
3. Geological Survey – Geotechnical Engineering Inspection
4. Geological Survey – Engineering Surveying
5. Geological Survey – Geological Inspection
6. Engineering Materials – Construction Engineering Materials
7. Engineering Environment – Building Physics and Energy Saving
8. Engineering Environment – Environmental Engineering
9. Engineering Equipment – Construction Equipment
10. Engineering Equipment – Construction Equipment and Safety Protection Products
11. Engineering Entity – Roadway Engineering
12. Engineering Entity – Foundations
13. Engineering Entity – Engineering Monitoring and Surveying
14. Engineering Entity – Engineering Structures and Fittings
15. Engineering Entity – Curtain Walls, Windows, Doors, and Roofing Systems
16. Engineering Entity – Bridge Engineering
17. Engineering Entity –  Tunneling
18. Highway Transportation – Accessory Works
19. Highway Transportation – Engineering Materials


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20. Highway Transportation – Mechanical and Electrical Works
21. Highway Transportation – Roadbed and Pavement Works
22. Highway Transportation – Bridge Engineering
23. Highway Transportation – Water Transportation Engineering
24. Highway Transportation – Traffic Safety Facilities
25. Highway Transportation –  Tunneling
26. Water Conservancy and Hydroelectric Engineering
Product and Material Testing
27. Construction Materials
28. Metal Products – Structural Metal Products
29. Metal Products – Other Metal Products
30. Daily-use Chemical Products-Paints
31. Ceramic Products – Building Ceramics
32. Electrical and Electronic – Low Voltage
33. Electrical and Electronic – Wire and Cable
34. Electrical and Electronic – High Voltage
35. Electrical and Electronic – Electrical Appliances
36. Furniture – Furniture
Environmental Testing
37. Air and Exhaust
Food Testing
38. Food
Agricultural Related Testing
39. Agricultural Products


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We offer testing services with over 2,700 parameters under the 3 9 categories. These parameters
demonstrate the comprehensive range of testing services that we can offer to support the construction and
other industries. By obtaining accreditation in multiple categories and covering a diverse set of parameters,
we are able to conduct a large number of testing types in relation to each of our services, each testing
type provides the approach or method used to perform the testing, while testing categories and parameters
define the specific areas or characteristics being assessed within those testing types.
Our construction engineering testing and inspection services are required at various stages
throughout our customers’ construction or infrastructure projects. We assist our customers engaging
in construction or infrastructure projects in ensuring compliance with regulatory standards, optimising
performance, and enhancing the overall quality and safety of buildings and infrastructure. By delivering
reliable and accurate results, we  help our customers  ensure compliance with contractual standards and
confirm the quality of the relevant parts or stages in construction or infrastructure projects.
The following diagram illustrates the major stages of a construction project and an infrastructure
project and at which stages our construction engineering testing and inspection services are required.
Construction projects
Construction
Phase
• Foundation testing service
• Slope monitoring and foundation pit monitoring service
• Construction material testing service
• Building structure testing service
• Construction material testing service
• Construction material testing service
• Construction material testing service
Commencement
Endo f
construction
Construction of
them ainp art
Foundation
construction
phase
Main
Construction
Stage
Secondary
Structure or
Decoration
Stage
Equipment
installation
stage
Foundations
C
Construction
Division Works
 Testing or inspection services providedb y our Company
Main
construction
structure
Building
decoration
Roo/f_ing
Equipment
installation


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Infrastructure projects – public roads
Construction
Phase
• Infrastructure and public roads testing service –
compaction testing, bending test, etc
•
•
Infrastructure and public roads testing service –
pipe leak test, CCTV inspection, etc
Commencement
Endo f
construction
Subgrade
Construction
Pipeline
Construction
Road
Pavement
Construction
Construction Division Works
 Testing or inspection services provided
by our Company
Subbase PreparationM aintenance
Line HangingP lant MixedM aterial
Paving Compaction
Construction Surveying and Setting-out
Pipe Section Installation
Pipeline Inspection
Pipeline Lowering
Pipe Stabilization
CoatA pplication
Transportation and Paving
Compaction
Seam
Gravel Foundation
• Infrastructure and public roads testing service –
pavement thickness testing, friction coef/f_icient testing, etc
• Construction material testing service
* Our servicec overage
Foundation testing service

We are headquartered in Xinyi City, Maoming, Guangdong Province to  provide construction
engineering testing and inspection services through our professional teams in construction sites located
primarily in Maoming. To perform quality tests on construction material samples for our customers, we
also operate  two in-house laboratory units  with various laboratorial function located in Xinyi City. Our
laboratories are equipped with advanced testing instrumentation and operated by skilled technicians. Our
food testing services provided since May 2024 were also mainly conducted in our laboratories by our
skilled technicians with relevant qualifications in food testing.  Our employees for our testing services
include field personnel that perform on-site testing at the designated construction sites and technicians
that perform analytical tests in our laboratories  or, for certain food testing, in designated locations.  Our
services are backed by stringent quality control measures to ensure the quality of testing and inspection
services delivered to our customers. For further details, see “– Quality control” below in this section.


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Maoming represents our primary market and all of our revenue generated in FY2021, FY2022 ,
FY2023 and 6M2024 is attributable to our services provided in Maoming.
The following maps  illustrates the location of our headquarters and service locations as at 30 June 2024:
Guangzhou
Guangdong
Province
Xinyi
Western Guangdong
cities
Yunfu
Yangjiang
Zhanjiang
Maoming
Huazhou
Maonan
Dianbai
Gaozhou

Notes :
(1) Zhanjiang City is a 3rd tier city; Maoming and Yangjiang City are 4th tier cities; Yunfu City is a 5th tier city.
(2) Our headquarter is located in Xinyi City, Maoming. During the Track Record Period, we generated all revenue from
Maoming, in particular within Xinyi City, Gaozhou City, Huazhou City and Dianbai District.
(3) As part of our expansion plan, we intend to expand our service presence in Maonan District in Maoming, as well as
other cities in Western Guangdong such as Zhanjiang City, Yunfu City, Yangjiang City. See “– Business strategies”
in this section for details.


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OUR SERVICES
We provide a wide range of comprehensive construction engineering testing and inspection
services to our customers, where (1) our testing services consist of (i) foundation testing service, (ii)
infrastructure and public roads testing service, (iii) construction material testing service, and (iv) building
structure testing service, and (2) our inspection services consist of (v) slope monitoring and foundation
pit monitoring services. In addition, since May 2024, as part of our expansion plan, while remaining our
primary business focus on construction engineering testing and inspection services, we have commenced
to diversify our service offerings and provide food testing services, which contributed 12.3% to our total
revenue generated in 6M2024.
The following diagram illustrates our main service offerings:
Our services
Foundation testing
service
•  Low Strain
 Integrity Test
•  Acoustic Wave
 T ransmission Test
•  Standard
 Penetration Test
•  Core Drilling Method
•  Static Load Test
•  Plate Load Test
Infrastructure and
public road testing
service
Construction material
testing service
Building structure
testing service
Slope monitoring
and foundation pit
monitoring service
Construction engineering
testing services
Construction engineering
inspection services
Major types of tests: Major types of tests: Major types of tests: Major types of tests: Major types of
monitoring works:
•  Compaction Testing •  Specialised
 laboratory tests
 on construction
 material such as
 sand, stone, cement,
 steel, concrete,
 mineral powder,
 geosynthetics,
 asphalt and
 plastic pipes, etc
•  Concrete Strength
•  Full Water Test
 for Structures
•  Thickness of
 Protective layer
•  Reinforcement Bars
 Number and Spacing
•  Monitoring of an
 e xcavation pit in a
 b uilding project
 during the
 construction and
 usage phases
•  Monitoring of a
 b uilding slope during
 the construction,
 trial operation, and
 operational phases
•  Bending Test
•  Pipe Closure Test
•  CCTV Inspection
Construction Engineering
•  Quantitative testing
•  Rapid testing
Types of tests:
Food testing services


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The following table sets forth a breakdown of revenue generated by types of service during the
Track Record Period.
FY2021 FY2022 FY2023 6M2024
RMB’000 % RMB’000 % RMB’000 % RMB’000 %
Construction engineering
Testing services
Foundation testing service 29,743 74.8 11,232 56.2 24,619 59.3 14,112 61.8
Infrastructure and public roads
testing service 893 2.2 456 2.3 5,837 14.1 1,408 6.2
Construction material testing
service 5,185 13.0 2,955 14.8 3,888 9.4 2,409 10.5
Building structure testing service 2,649 6.7 759 3.8 1,682 4.0 810 3.5
Inspection services
Slope monitoring and foundation
pit monitoring services 1,311 3.3 4,564 22.9 5,474 13.2 1,292 5.7
Food testing services – – – – – – 2,799 12.3

Total 39,781 100.0 19,966 100.0 41,500 100.0 22,830 100.0

The growth driver for each type of services are set out below:
Foundation testing service : The increase in number of public buildings and
infrastructure construction projects (Note) .
Infrastructure and public road
testing service
: The increase in infrastructure projects such as roads
and drainage pipelines (Note) .
Construction material testing service : The increase in number of public building and
infrastructure construction projects requiring material
testing (Note) . Additionally, the testing of materials such
as asphalt in municipal projects involving roads and
transportation would generate new testing demands.
Building structure testing service : The increase in number of public building construction
projects (Note) .


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Slope monitoring and foundation pit
monitoring services
Food testing services
:
:
The increase in number of public building and
infrastructure construction projects (Note) .
The regulations relating to food products have been
intensified by the government, the demand from the
government for compliance as well as the need for
companies and individuals to self-inspect increase. In
May 2024, the SAMR  issued the “Food Safety Risk
Control List,”  (ᎈ၍છ૶ఊ ) aiming to
strengthen the supervision and inspection related to
food safety.
Note: According to the CIC Report, the sustained economic growth and significant infrastructure development in the
Western Guangdong regions, driven by relevant government policies including the “Rural Revitalisation Initiative”
(ጳ) and the “Project for the High-Quality Development of Hundreds of Counties, Thousands of Towns
and Tens of Thousands of Villages” (ʈ೻) promoted in lower tiers cities, have created
robust demand for independent testing and inspection services. Sustained focus on infrastructure development
in Western Guangdong is anticipated to drive growth in municipal facility  construction  and public building
construction testing and inspection industry, with forecasted CAGRs of 13.1% and 10.3%, respectively, from 2023
to 2028 . See “Industry Overview” in this prospectus for details.
Construction Engineering Testing Services
Foundation testing service
We specialise  in providing foundation testing service for private and public construction  or
infrastructure  projects. We are involved in various aspects of foundation quality testing  and evaluation
works, as well as quality assessment of completed piles.
Our scope of work includes conducting tests using different methods in accordance with the
instruction of our customers or the design in the relevant construction drawings to ensure the quality of the
foundation works. Some of the main testing types we employ are:
• Low Strain Integrity Test: This method involves using gentle vibrations to stimulate the top
of the pile and measure how the pile responds in terms of speed and force over time. By
analysing these changes in vibrations using wave theory, we can determine the length and
overall condition of the pile. We can also identify any irregularities or problems, such as
cracks or empty spaces within the pile, by examining the patterns in the vibrations.


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• Acoustic Wave Transmission Test:  This method involves using sound waves transmitted
through specially placed acoustic tubes. By measuring how these sound waves change
in terms of travel time, frequency, and amplitude as they pass through the concrete, we
can evaluate the quality of construction for cast-in-place concrete piles and underground
diaphragm wall structures.
• Standard Penetration Test: This widely used method involves using a 63.5kg drop hammer
with a 76cm drop height. A standard penetrometer is inserted into a pre-drilled hole, with a
pre-drilled depth of 15cm from the bottom. The number of hammer blows required to further
penetrate the soil by an additional 30cm is recorded. This test method helps in assessing the
physical and mechanical characteristics of the soil.
• Core Drilling Method: This method involves drilling core samples to determine the length of
piles (or depth of walls) and the thickness of sediment at the bottom of the piles (or walls).
It is also used to identify the characteristics of rock foundations and the soil conditions in
the load-bearing layers of the piles (or walls). Additionally, by examining the core sample
features and conducting compressive strength tests on the core specimens, the construction
quality of cast-in-place concrete piles, underground diaphragm walls, composite ground
improvement structures, and cemented soil walls can be assessed.
• Conical Power Touch: This method determine the physical and mechanical properties of soil.
It involves using a standard weight drop hammer which is dropped from a specific height.
A standard cone-shaped probe is driven into the soil to a certain depth, and the number of
hammer blows required to achieve this depth is recorded. Based on the number of blows
needed to penetrate the soil to a specific distance, the physical and mechanical characteristics
of the soil can be determined.
• Plate Load Test:  This method involves gradually applying vertical pressure on the surface
of natural, treated, or composite soil foundations and measuring the settlement over time.
It helps determine the bearing capacity and deformation parameters of the foundation. For
natural and treated soil foundations, it is known as shallow plate load testing, while for
composite foundations, it is referred to as composite foundation plate load testing. In the case
of deep foundations, it is typically called deep (borehole) plate load testing.
• Rock Foundation Load Test:  This test is conducted on rock foundations that are intact,
partially intact, or fractured. The purpose is to assess the bearing capacity and deformation
parameters of these foundations, whether they are used as natural foundations or pile
foundations. It is also known as rock foundation load testing.


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• Static Load Test:  This method involves applying incremental vertical loads, uplift forces,
or horizontal forces at the top of a pile. The settlement, uplift displacement, or lateral
displacement at the pile top is measured over time to determine the corresponding vertical
compression bearing capacity, vertical uplift bearing capacity, and horizontal bearing
capacity of the single pile.
• Pull-out Test for Foundation Anchors/Soil Nails:  This test involves gradually applying
pulling forces to the anchor head or soil nail, increasing the force until it reaches the
maximum acceptable level. We measure how much the anchor head or soil nail moves over
time to determine if it meets the required strength for pulling out. This method is commonly
used for assessing the performance of foundation anchors and soil nails during acceptance
testing.
The above foundation testing methods  are required in the construction of foundation works stage
during a building construction project and the roadbed construction stage during a public road or highway
infrastructure project.
These testing techniques are utilised to ensure the quality and reliability of the foundation systems
in construction projects. By conducting thorough testings  and evaluations, we help ensure the structural
integrity and safety of the built environment. Our expertise and experience in foundation testing enable us
to provide valuable insights and recommendations to our customers in the construction industry.
We derived a majority of our revenue from foundation testing service during the Track Record
Period. Our revenue derived from foundation testing service was RMB 29.7 million, RMB 11.2 million,
RMB 24.6 million  and RMB 14.1 million  for FY2021, FY2022,  FY2023 and 6M2024, respectively,
representing 74.8%, 56.2%, 59.3%  and 61.8%  of our total revenue for the same years/period, respectively.
Infrastructure and public roads testing service
We provide infrastructure and public roads testing service mainly to municipal roadway projects,
where physical testing is involved in assessing the quality and integrity of various roadway components.
Some common physical testing types used are set out below.
• Compaction Testing:  This test measures the density of compacted road construction
materials as a percentage of the prescribed standard density . This test is normally required
in the roadbed construction stage during a public road or highway infrastructure project, the
pipeline construction stage of an infrastructure project and the base level construction stage
of an infrastructure project.
• Bending Test: This test measures how much the surface of the roadbed or pavement moves
vertically under a specific load. It provides the total deflection or rebound deflection,
measured in units of 0.01mm, indicating the amount of vertical deformation that occurs. This
test is normally required in the roadbed construction stage during a public road or highway
infrastructure project and the base level construction stage of an infrastructure project.


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• Pipe leak test:  After the completion of the installation of water supply and drainage
pipelines, pipeline functionality should be tested according to the following requirements:
(a) Pressure pipelines should undergo a hydraulic test in accordance with the specified
requirements. This test consists of a pre-test and a main test stage. The test is considered
successful if the pressure loss and water seepage values remain within the allowable
limits defined by the design requirements. If there are no specific design requirements, the
qualification will be based on one or both of these values, taking into account the actual
circumstances of the project; (b) Unpressurised pipelines should undergo a leak test. The
leak test can be conducted using either a water leak test or an air leak test, depending on the
design requirements. If there are no specific design requirements, the choice between the
water leak test and air leak test should be based on the actual conditions of the project. This
test is essential to assess the functionality of the pipeline.
This method is normally required in the pipeline construction stage of an infrastructure
project.
• CCTV Inspection: CCTV inspection involves using specialised cameras mounted on robotic
devices to visually inspect the interior of pipes or other underground conduits. This method
helps identify any blockages, cracks, deformations, or other structural issues within the pipe
system. It enables efficient assessment and maintenance planning, facilitating timely repairs
or replacements to ensure the smooth operation of municipal roadways.
This test is normally required in the pipeline construction stage of an infrastructure project.
• Full Water Test for Structures: After the completion of the construction of a pool structure, a
leak test will be performed using water to check for any leaks. Additionally, water treatment
structures will undergo a comprehensive water test after construction is completed. In the
case of anaerobic tanks, they will go through an air leak test after successfully passing the
water test.
The test is conducted when there is a specific request by our customers for testing a water
treatment structure.
• Pavement Thickness Testing: This test is applicable to the measurement of the thickness of
pavement structural layers. The excavation method is suitable for thickness testing of base
layers or gravel pavements; the core drilling method is suitable for thickness testing of asphalt
surface layers, cement concrete pavement panels and base layers from which complete core
samples can be extracted.
This test is normally required during the construction of asphalt concrete pavement surface
layer or cement concrete pavement surface layer in a public road or highway infrastructure
project.


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• Friction Coefficient Testing: This test uses a digital pendulum instrument to measure the
British pendulum number (BPN), which is a value that represents the friction coefficient,
of both ungrooved cement pavement and asphalt pavement. The purpose of this test is to
evaluate the frictional performance of the pavement surfaces.
This test is normally required during the construction of asphalt concrete pavement surface
layer or cement concrete pavement surface layer in a public road or highway infrastructure
project.
• Permeability Coefficient Testing: This test measures the volume of water that penetrates into
a specified area of the road surface within a given time, under a particular initial pressure.
This measurement is expressed in milliliters per minute (ml/min). The water seepage
performance of asphalt pavement serves as an indirect indicator of the composition of the
asphalt mixture, reflecting the gradation of its components. Additionally, it is an essential
indicator of the water stability of the asphalt pavement. Evaluating the water seepage
performance is crucial for assessing the overall performance of the pavement.
This test is normally required during the construction of asphalt concrete pavement surface
layer in a public road or highway infrastructure project.
• Roughness Testing: This test measures the vertical deviation of the pavement surface from
an ideal plane, usually characteris ed by maximum clearance, bump accumulation, and the
International Roughness Index.
This test is normally required during the construction of asphalt concrete pavement surface
layer in a public road project.
• Texture Depth Testing: This test measures the depth of open voids, known as macro texture
depth, on the pavement surface within a specific area. The measurement is expressed in
millimeters (mm). The macro texture depth is a way to characterise the roughness of the road
surface. It, along with the pavement friction coefficient, is a professional technical indicator
used to assess the anti-skid performance of the road surface.
This test is normally required during the construction of cement concrete pavement surface
layer in a public road project.
As part of our infrastructure and public roads testing service, we may also be required by our
customers to conduct laboratory testing for relevant materials such as asphalt raw materials, mineral
powder, cement and geosynthetic materials used in the municipal roadway projects. By offering physical
testing and also laboratory testing for relevant municipal road materials, we contribute to the overall
quality, durability, and safety of municipal road infrastructure projects.


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Our revenue derived from infrastructure and public roads testing service was RMB 0.9 million,
RMB 0.5 million,  RMB 5.8 million  and RMB 1.4 million  for FY2021, FY2022,  FY2023 and 6M2024,
respectively, representing 2.2%, 2.3%, 14.1% and 6.2% of our total revenue for the same years/period,
respectively.
Construction material testing service
Construction material testing is a crucial aspect of construction projects, aiming  at analysing and
evaluating the quality of various materials used in construction. It involves conducting tests on materials
such as sand, stone, cement, steel, concrete, mineral powder, geosynthetics, asphalt and plastic pipes, etc.
The objective is to gather accurate and reliable data on the properties and performance of the construction
materials .
Testing for relevant construction material is normally required in the construction of foundation
works stage and the initial building structure work stage during a building construction project and
the roadbed construction, pipeline construction, base level construction and pavement surface layer
construction during an infrastructure project.
Our customers usually provide samples of the construction materials from construction sites to us
and we subject them to specialised laboratory tests in our laboratories. These tests are designed to assess
the strength and other relevant characteristics specific to each material.
By conducting material testing, construction professionals can make informed decisions about
material selection, ensure compliance with regulations and standards, assess the suitability of materials for
specific applications, and ultimately enhance the quality and performance of construction projects.
Our revenue derived from construction material testing service was RMB 5.2 million, RMB 3.0
million,  RMB 3.9 million  and RMB 2.4 million  for FY2021, FY2022,  FY2023 and 6M2024, respectively,
representing 13.0%, 14.8% , 9.4% and 10.5 % of our total revenue for the same years/period, respectively.
Building structure testing service
Building structure testing is important for building construction, focusing on evaluating the key
components and parameters of the building’s main structure above the zero point (typically ground level).
It is required throughout the building structure work stage during a building construction project.
In particular, the main testing types include:
• Concrete Strength: Testing the compressive strength of concrete to ensure it meets the
required specifications and can bear the expected loads.
• Reinforcement Bars  Number  and Spacing:  The  number  and spacing of the reinforcement
bars used in the construction of the main structure verified to ensure that they are correctly
installed according to design requirements.


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• Thickness of Protective Layer: The protective layer thickness is measured to confirm that it
meets the specified requirements.
• Floor Slab Thickness: The thickness of floor slabs is measured to confirm compliance with
design specifications.
• Settlement Observation: The vertical ground movements, particularly settlement of
structures, are measured and assessed. Observations are conducted based on the established
monitoring points within the building and benchmark survey points to measure the degree of
settlement and collect relevant data.
Our revenue derived from building structure testing service was RMB 2.6 million, RMB 0.8
million,  RMB 1.7 million  and RMB 0.8 million  for FY2021, FY2022,  FY2023 and 6M2024, respectively,
representing 6.7%, 3.8%, 4.0% and 3.5%  of our total revenue for the same years/period, respectively.
Construction Engineering Inspection Services
Slope monitoring and foundation pit monitoring services
Foundation pit monitoring involves regular or continuous inspections, measurements, monitoring,
data collection, analysis, and feedback activities implemented during the construction and usage phases
of an excavation pit in a building project to assess the safety condition, changes, and development trends
of the pit and its surrounding environment. This is done through various means and methods, including
instrument measurements, on-site inspections, and other techniques to ensure the safety of the excavation
pit and its surroundings.
Slope monitoring involves, measurements, monitoring, data collection, analysis, and feedback
activities carried out during the construction, trial operation, and operational phases of a building slope to
assess the safety condition, changes, characteristics, and development trends of the slope. Various means
and methods, such as instrument measurements are employed.
By providing slope and foundation pit monitoring services, we ensure the comprehensive evaluation
of slope conditions, foundation pit stability, and early detection of potential risks. These monitoring
services contribute significantly to the safety and success of construction projects by facilitating timely
interventions, minimising hazards, and maintaining the structural integrity of slopes and foundation pits.
Slope monitoring and foundation pit monitoring are normally required in the stage of excavation
of foundation pit and backfilling of earthworks during a building construction project. They may also be
required throughout certain infrastructure projects.
Our revenue derived from slope monitoring and foundation pit monitoring services was RMB 1.3
million, RMB 4.6 million,  RMB 5.5 million  and RMB 1.3 million  for FY2021, FY2022,  FY2023 and
6M2024, respectively, representing 3.3%, 22.9%, 13.2% and 5.7%  of our total revenue for the same years/
period, respectively.


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Food Testing Services
Since May 2024, we have also commenced to p rovide food testing services.  Food testing primarily
involves the detection and evaluation of pesticide residues and food additives within the product samples,
in order to assess the physical and chemical quality characteristics of the products and to ensure that the
products comply with the relevant national quality and safety standards.
We were engaged by a PRC government administrative bureau which is responsible for overseeing
and regulating the food products market in Xinyi City to conduct government-mandated sampling tests on
various types of food products such as fruits, vegetables, tea leaves and eggs.
Our food testing primarily  involved two main types of testing methods, including quantitative
testing and rapid testing. W e provide quantitative testing and rapid testing on the food products based on
our customer’s designated testing plan formulated to ensure their products’ compliance with the relevant
quality and safety standards.
Quantitative testing involves the process of conducting a quantitative analysis or testing to
accurately measure and determine the levels or amounts of specific components or contaminants, such as
different types of pesticide residues, within a sample.
Rapid testing is a method that can quickly detect the presence of various target substances within
a sample. Rapid testing acts as an initial screening tools that require minimal sample preparation and
technical expertise to operate. The analysis time required is t ypically shorter than conducting quantitative
testing.
Both quantitative testing and rapid testing were mainly conducted in our laboratories by our skilled
technicians with relevant qualifications in food testing with the samples collected. In certain occasion,
for rapid testing, we were required to conduct the tests directly at the food products marketplaces or other
locations designated by our customer, where our technicians will travel to the designated locations with
the testing equipment to perform the necessary testing.
Our revenue derived from food testing services was RMB 2.8 million for 6M2024, representing
12.3% of our total revenue for the period.
KEY SERVICE PROCESS
Our service process comprises of on-site testing and inspection and laboratory testing. We conduct
on-site services for our foundation testing service, infrastructure and public roads testing service, building
structure testing service and slope monitoring and foundation pit monitoring services, and we conduct
laboratory testing for our construction material testing service and as part of our infrastructure and public
roads testing service for specific materials if required by our customers. For our food testing services
provided since May 2024 , they were mainly laboratory testing with a number of on-locations testing on
demand.


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Process for on-site construction engineering testing and inspection services
Our foundation testing service, infrastructure and public roads testing service, building structure
testing service and slope monitoring and foundation pit monitoring services are mainly conducted on-
site at the locations of the relevant construction or infrastructure projects and typically encompasses the
following major components: (1) receive order from customers; (2) collect information and issue testing
plan; (3) conduct on-site testing; (4) prepare testing report (and  issue exception notice if the test results
indicate a failure and addition testing to be conducted); (5) issue payment notification; and (6) receive
payment and release testing report. Our service process follows our standardised procedures and stringent
quality control measures to ensure accurate results for our customers in a cost-effective manner.
The following diagram illustrates the typical on-site testing service process.
Receive order from
customers
Collect information and
issue testing plan
Conduct on-site testing
Pass
Fail
Issue exception notice
Prepare testing report
Issue payment
noti/f_ication after
preparation of the
testing reports
Receive payment and
release testing report

• Receive order. Our customers usually contact us and make order through various channels
such as our  Company’s website, our social media public account, or referrals from other
parties. In some circumstances, there are also internal referrals within different testing and
inspection departments of our Company, i.e. where our customer in one testing service, such
as foundation testing, also requires other  testing services such as material testing service for
their projects involved, and our foundation testing department would refer the customer to
our material testing department.


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• Collect information and formulate testing plan. Upon receipt of order, we will enquire
the customers on the project information including but not limited to the relevant testing
requirements (e.g.  relevant construction drawings  and the geological information of the
construction or infrastructure projects). Our general management department will formulate a
testing plan, which including but not limited to the testing methods and the relevant criteria,
and the expected workload of the projects, which will be reviewed by our technical personnel
in charge. The testing plan will then be submitted to our customer, the relevant working units
and supervisory unit s for confirmation. Our technical personnel in charge  will determine
whether the testing plan is suitable for the projects, taking into account various factors
including the regulations requirement and the capacity of our resources. Generally, we are
required to complete the project assessment within two to five days. Once the testing plan is
approved, we will enter into an official service contract with our customers.
• Conduct on-site testing.  Prior to on-site testing, our testing personnel will coordinate with
the parties at  the construction sites for pre-testing preparations. Our testing personnel
will request for relevant testing equipment from our general management department, and
transport the equipment to the site.
During the on-site testing, the data collection process is conducted systematically in the
presence of responsible parties, including our customers, the relevant working units  and
supervisory units. Once the testing is finished, our testing personnel will return to our
headquarters to analys e the data and acquire initial findings.
• Issue exception notice. In the event that the results indicate a failure to meet any industry
requirements and specified design requirements, an exception notice will be generated
and sent to our customers. We recommend that our customers to also send the exception
notice to the relevant municipal supervisory authorities for quality and safety affairs, as
well as the responsible parties involved in the construction project, including the design
unit, construction unit, and supervisory unit. Our customers will normally receive revised
construction drawings and upon receiving a new order from our customers, we will conduct
additional testing. If no testing failure is identified, the testing results will be conveyed to our
customers, signaling the commencement of the subsequent construction phase. Our testing
personnel will organise the raw record sheets, analys e the data, and obtain the test results.
• Prepare testing report and notification of payment.  After the on-site testing, regardless
of whether the testing indicates a pass or fail result, we will prepare the preliminary and
electronic version of a testing report. The testing report will be signed by our testing
personnel. The report undergoes verification and review by our department heads, and final
approval by our general manager. We will issue an invoice to our customer after preparation
of the testing reports and they will then be notified for payment.
Except for certain  customers with large contract sum or lengthy contract terms which we
may require prepayment  or payment  by instalment  before provision of our services and
preparation of the reports, we typically request for payment from our customers after we
complete the preparation of the testing reports.


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Since our testing and inspection services are always provided in conjunction to the
construction or infrastructure projects, the duration of our services will vary and will
be affected by the overall process of the construction or infrastructure projects or the
construction stages of the specific area where our testing and inspection services are
conducted in. Therefore, during the Track Record Period, the timeline for our services, from
the commencement of on-site testing to completion of the preparation of testing reports, can
range from one day to more than 300 days.
• Receive payment and release testing report.  Once our general management  department
has received  the payment from our customer, we will release the final testing report to
our customer and our customer will sign and return a report acceptance form to complete
the acceptance process. Subject to the preference of our customers and the stages of the
construction or infrastructure projects they are involved in, our customers have the flexibility
to collect the testing report and settle the payment in a prolonged period after we completed
the preparation of the report and issued the invoice to them.
Process for construction engineering laboratory testing services
Our construction material testing service is  conducted in our laboratory units  and typically
encompasses the following major components: (1) receipt of order, testing samples and payment from
customers; (2) conduct laboratory testing; (3) prepare and issue testing report  for samples passing the
relevant testing or issue exception notice for samples failing the relevant testing.
The following diagram illustrates the typical laboratory testing service process.
Receive order, testing
samples and payment
Conduct laboratory
testing
Issue testing report for
samples passing the
relevant testing
Issue exception notice
for samples failing the
relevant testing


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• Receive order, testing samples and payment.  Our customers usually submit the relevant
construction material testing samples to us where our sample receiving personnel  will
confirm the specifications, quantity, and compliance with the testing requirements. If the
testing samples meet the requirements, we will notify our customer and they will place order
for the testing services.
We usually require our customer to make up-front full payment  for the testing service
conducted in our laboratories. Upon receipt of payment, we will enter the samples
information into our testing system and print identification labels to be affixed to the
samples.
• Conduct laboratory testing. Our testing personnel will receive the testing task from the
testing system, and will confirm the integrity, specifications and quantity of the samples.
During laboratory testing, our testing personnel will perform the tests according to the
relevant standards and upload the test results manually or automatically to our testing system.
See “Our major equipment – Laboratories” in this section for our major types of laboratorial
functions in operation and the relevant testing conducted in our laboratory units.
• Issue testing report for samples passing the relevant testing. The test results for the testing
samples uploaded to the testing system will be verified by the testing personnel, reviewed by
the construction material testing department head, and approved by our general manager.
If the samples pass the relevant testing, we will prepare and issue a testing report to our
customer and our customer will sign and return a report acceptance form to complete the
acceptance process.
• Issue exception notice for samples failing the relevant testing. If the samples do not meet
the requirements and fail the testing,  an exception notice will be issued to our customer to
document the non-compliance and the specific issues identified during the testing process.
This exception notice includes details such as the sample information, the test results, and
the specific deviations from the requirements. Our customer shall sign for receipt of the
exception notice  to acknowledge  the test results and the identified issues. This process
ensures transparency and allows the client to be informed about the non-compliant samples
and take appropriate actions where necessary, such as retesting or replacing the materials.
Regardless of whether the samples passing or failing the relevant testing, unless as requested by our
customers when we received the samples, we typically consider the tested samples as scrap. The tested
samples are disposed of according to the our waste management procedures, ensuring proper disposal in an
environmentally responsible manner.


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As part of our infrastructure and public roads testing service, we may be required by our customers
to conduct testing for specific materials such as asphalt raw materials, inorganic binding materials,
geosynthetic materials, and manhole covers used in the municipal roadway projects. The material testing
procedures will be conducted in our laboratory units, which mainly follows the testing process for
construction material testing as stated in the paragraph “Process for construction engineering  laboratory
testing services – Conduct laboratory testing” above.
Process for food testing
Our customer for food testing services in 6M2024 was a PRC government administrative bureau
that was responsible for market  regulation in Xinyi City,  Maoming, including overseeing and regulating
food safety. We entered into a service contract with the customer for food testing for various types of food
products such as fruits, vegetables, tea leaves and eggs and our customer placed separate orders to us for
quantitative testing and rapid testing based on the service contract.
The testing samples were submitted by our customer or collected directly by our technicians.
When receiving samples, we will check and record the conditions of the samples and verify the samples
against the sampling documents. We will not accept samples that do not meet the sampling standard and
will report to our customer in a timely manner.  Both quantitative testing and rapid testing  were mainly
conducted in our laboratory units with similar testing process for construction material testing as described
above. In certain occasion, for rapid testing,  we were required to conduct the tests  directly at the food
products marketplaces or other locations designated by our customer, where our technicians will travel to
the designated locations with the testing equipment to perform the necessary testing.  For food products
that failed the relevant testings, i.e. containing pesticide residues and food additives or the level exceeding
the relevant legal standard s, our customer shall be informed and they shall take further actions such as
prohibiting the sale of the relevant products.


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OUR MAJOR EQUIPMENT
Machinery and equipment
We are equipped with more than  800 units of  machinery and equipment for our construction
engineering testing and inspection services sourced from domestic manufacturers.
Our major types of on-site machinery and equipment are described below:
Foundation testing service
• Static load testing analysis equipment: Used for conducting static load tests. Currently, we
can conduct static load tests up to a capacity of 35,000 kN.
• Static load testing equipment: Used for providing the corresponding reaction force during
vertical compression static load tests, with single bar bearing capacity of 35,000 kN.


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• Plate load testing equipment: Used for providing the corresponding reaction force during
plate load tests, specifically through the use of a load platform reaction device.
• Hydraulic jack: Used for providing the test pressure in various static load tests. It is used in
conjunction with equipment such as high-pressure oil pumps.
• Core drilling rig: Used for core drilling test, involving evaluation of the quality of the
pile body, the type of pile body at the head, the concrete strength of the pile body, the
sedimentation condition at the bottom of the pile, and the rock and soil properties of the
bearing layer.


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• Pile dynamic tester: Used for  detecting  the integrity of the pile shaft, and determining the
extent and location of any defects in the pile shaft.
• Multi-span hole ultrasonic automatic monitoring equipment for foundation piles : Used
for detecting the integrity of the concrete poured piles and the wall body of underground
continuous walls.
Infrastructure and public roads testing service
• Bending Settling Apparatus: Used for measuring the rebound deflection values at various test
points on the roadbed and pavement for assessing the overall strength of the pavement and
inspecting its quality.


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• Sand Pouring Cylinder: Used for compaction testing.
• Eight-wheel roughness meter: Used for characterising the smoothness of the pavement. It has
widespread application in construction inspections, completion acceptance, and maintenance
of roads, including highways, urban roads, squares, airport runways, and other pavement
surfaces.
• Electric sand spreader : Used for testing the surface texture depth of asphalt pavement and
non-grooved cement concrete pavement to assess the skid resistance performance of the road
surface.


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• Digital pendulum friction tester: Used for measuring the friction coefficient, which reflects
the safety performance and friction characteristics of the road surface.
• CCTV pipeline robot: Used for  inspection and diagnosis of drainage pipelines, aiding in
the identification of blockages, cracks, deformations, or other structural issues within the
pipeline system.
Building structure testing service
• Floor Thickness Gauge: Used for measuring the thickness of a floor.


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• Rebound hammer: Used for assessing the strength of concrete.
Slope monitoring and foundation pit monitoring services
• Electronic Total Station: a high-tech surveying instrument that integrates optics, mechanics,
and electronics and combines the functions of measuring horizontal angles, vertical angles,
distances (slope distance, horizontal distance), and height differences into a single surveying
instrument system.
• Inclinometer: Used for measuring deep-seated horizontal displacements through embedded
inclinometer casing.


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• Automatic level: Used for determining the line of sight height and horizontal distance.
Laboratories
We operate two in-house laboratory units with various laboratorial functions located in Xinyi City,
Maoming equipped with machinery and equipment for sample preparation and testing. Our construction
material testing service and the material testing procedures of our infrastructure and public roads testing
service, as well as our food testing services, are conducted in our laboratory units.
The major laboratorial functions conducted in our in-house laboratory units are described below:
Construction material testing
• Metal material mechanical properties laboratorial testing
Used  for testing the mechanical properties of metal materials , which  include s inspecting
the appearance dimensions and weight deviations of the materials, conducting tensile tests
to measure the material’s strength, and evaluating the material’s yield strength and bending
performance.


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• Non-metal material mechanical properties laboratorial testing
Used  for evaluating the mechanical properties of non-metallic materials, which  includes
testing the compressive and flexural strength of concrete, mortar, wall materials, pavement
bricks, and curb stones.
• Cement physical properties laboratorial testing
Used for conducting physical performance tests and evaluating the performance indicators of
cement, which  include testing standard consistency water requirement, stability, initial and
final setting time, and strength of the samples and collaborating with other departments for
related experiments.


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• Concrete permeability testing laboratorial testing
Used for conducting testing on the permeability of concrete, which  includes  measuring the
water permeability of concrete.
• Building electrical laboratorial testing
Used for conducting routine testing of the safety performance of electrical wires, cables, and
other electrical devices.


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• Waterproof material laboratorial testing
Used for testing waterproofing membranes, waterproofing composite materials, polyurethane
waterproof coatings, and waterproof coatings.
• Building energy saving materials laboratorial testing
Used  for testing insulation materials, which  includes  testing the thermal insulation mortar
for building insulation, thermal conductivity of insulation materials, thermal conductivity
of extruded polystyrene foam for insulation purposes, thermal conductivity of autoclaved
aerated concrete blocks, and dimensional measurements.
• Pipe and fittings laboratorial testing
Used for testing plastic pipes, including single-material plastic pipes such as rigid polyvinyl
chloride (PVC) pipes, polyethylene pipes, polyethylene pipes, and PVC plastic pipes.


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• Asphalt raw materials testing laboratorial testing
Used  for conducting physical and chemical performance tests and performance indicator
evaluations for various types of asphalt, which  include but are not limited to: asphalt
penetration degree, softening point, elongation, density and relative density, wax content,
flash point and ignition point, dynamic viscosity, standard viscosity, kinematic viscosity,
emulsified asphalt residue, emulsified asphalt particle ion charge, emulsified asphalt storage
stability, and demulsification rate testing.
• Asphalt mixture testing laboratorial testing
Used  for conducting physical and chemical performance testing, performance indicator
evaluation, and mix design of asphalt mixtures. The main testing include compacting asphalt
mixture density, theoretical maximum relative density, stability and flow value, dynamic
stability, permeability coefficient, saturation rate, asphalt mixture aggregate gradation
inspection and strength testing.


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• Food testing
Used for conducting food testing. The main equipment for conducting quantitative  testing
include (i) gas and liquid chromatography-mass spectrometry systems used to analyse
volatile and non-volatile components, contaminants, and residues like pesticides, veterinary
drugs, and antibiotics; and (ii) gas and liquid chromatographs used to enable the separation
and determination of nutritional elements as well as contaminants for quality assessment. The
main equipment for rapid testing include (i) a multi-functional agricultural and veterinary
drug residue detector which uses various methods such as spectroscopy and colloidal gold
detection to check for pesticide and veterinary drug residues in food products; and (ii) a
nitrogen evaporator used to quickly concentrate samples by evaporating moisture while
preserving purity. This suite of instruments and techniques allows for comprehensive testing
and detection of a wide range of substances in food products.
Our equipment used for rapid testing  is designed to be portable, allowing technicians to
travel to locations such as food products marketplaces  or other locations designated by our
customers and conduct testing of the food products.
We own  all of our machinery and equipment for our business operations. Our machinery and
equipment generally have a useful life  of three  to 10 years. All of our machinery and equipment are
currently in good condition, ensuring sustainable and uninterrupted operation. As part of our commitment
to maintaining high standards, we also periodically assess the need for new machinery and equipment.
Replacement or upgrades are considered based on factors such as the condition of existing machines and
advancements in technology.
In order to comply with the relevant legal requirements, most of our testing and inspection
machineries and equipment are also required to undergo an annual review conducted by relevant
government-approved testing institutions for machineries and equipment. Some of our machineries and
equipment will be subject to review twice a year, or at intervals of every two, three or four years. Our
testing and inspection machineries and equipment had passed all required reviews during the Track Record
Period. These reviews ensure that our testing and inspection machineries and equipment consistently meet
the necessary regulatory requirements, giving our customers confidence in the accuracy and reliability of
our testing services.


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QUALITY CONTROL
Quality control is one of our core values and vital to our business. We implement stringent quality
control measures throughout our service process.
We have obtained the Inspection and Testing Agency Qualification Certificate ( Ꮸ᜕Ꮸ಻ዚ࿴༟
ࣣissued by the Guangdong AMR  for carrying out different types of testing and inspection
services including, in particular, construction engineering testing and inspection and food testing services
for our business during the Track Record Period. This certificate grants us permission to use mark of the
CMA (China Inspection Body and Laboratory Mandatory Approval) when conducting our business. The
CMA is a certification and evaluation of the testing capabilities and reliability of inspection institutions,
conducted by quality inspection departments at the provincial level or above in accordance with the
provisions of the Metrology Law of China.  Additionally, we also hold the Construction Engineering
Quality Inspection Agency Qualification Certificate (ࣣissued by the
Guangdong Provincial Department of Housing and Urban-Rural Development (ணᝂ).
These certificates are crucial for demonstrating our capability and eligibility to provide reliable testing and
inspection services.
We have also established a full set of standardised quality control measures, such as the procedures
of inspection and testing, and we have set up a quality control team w hich  formulates quality control
measures and monitors quality control compliance of our testing personnel to ensure consistently high
quality of our services provided by us.
Headed by Ms. Zhang Yue’e, our quality control team had 16  members  including nine  full time
members in the quality control department and seven members are representatives from various other
departments  as of the Latest Practicable Date. The quality control team members have an average of
9 years of relevant experience. We also have designated quality control staff with extensive on-site
experience deployed at the relevant construction sites or locations which our testing services are conducted
to supervise the day-to-day operation of our on-site testing personnel, and to report to our quality control
team on a daily basis.
Quality control measures
Our quality control team has formulated a comprehensive set of quality control measures to reflect
the latest development of regulatory or industrial requirements.
We strictly adhere to the service procedures outlined in our quality manual and utilise video
surveillance at our service locations to ensure compliance and effective monitoring.
• Quality manual: We have a detailed quality manual that contains precise specifications and
procedures for different testing services. Each employee has received training to ensure his
understanding and strict adherence to these standards. These operating procedures cover
various aspects, including safety protocols, equipment maintenance, data recording, and
reporting.


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• Video surveillance: Our service locations and laboratories are equipped with high-quality
video surveillance system. Cameras are strategically placed to monitor activities at the
construction sites or our laboratories in order to ensure the safety of the work area, supervise
employee behaviour, and provide records and investigations of potential issues and incidents.
We require our operation to strictly comply with the requisite regulatory and widely-acknowledged
industrial operating standards. These standards allow our field personnel and laboratorial technicians to
perform tests with high accuracy in a cost-effective manner.
The following table sets forth certain key national and industrial standards that we follow in our
service process.
Standard Code Standard Name Issuing Organisation Issuing Date
DBJ15–60–2019 Code for testing of building
foundation
Guangdong Provincial
Department of Housing
and Urban-Rural
Development
20 May 2019
JTG 3450–2019 Field Test Methods of
Highway Subgrade and
Pavement
Ministry of Transport of
the PRC
10 December 2019
GB50497–201 9 Technical Standard for
Monitoring of Building
Excavation Engineering
MOHURD&SAMR 22 November 2019
JGJ/T 23–2011 Technical Specification for
Inspecting of Concrete
Compressive Strength by
Rebound Method
MOHURD 3 May 2011
GB/T 50081–2019 Standard for Test Methods
of Concrete Physical and
Mechanical Properties
MOHURD&SAMR 19 June 2019
GB 31647– 2018 National Food Safety
Standards – General
Hygiene Specifications
for Food Additives
Production
SAMR 26 April 2024


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OUR CUSTOMERS
Our customers mainly engage  in the construction industry including property developers,
construction companies, state-owned investment companies, relevant PRC government institutions and
PRC government administrative bureaus.
Property developers play a significant role in the construction industry, being involved in the
development and construction of residential, commercial, and industrial properties. These developers
undertake large-scale projects and require reliable and efficient services to ensure the successful
completion of their ventures.
Construction companies encompass a wide range of businesses involved in various construction
projects, such as infrastructure development, building construction, and renovation projects. They rely on
specialised services and expertise to carry out their projects effectively and meet quality standards.
State-owned investment companies are state-owned enterprises directly or indirectly established
by local governments in the PRC to facilitate urban and rural development and infrastructure projects and
typically engage in investments in areas such as transportation, cultural and tourism, real estate, and public
facilities. We assist these enterprises by conducting comprehensive testing and inspection to ensure the
quality and safety of their construction or infrastructure projects.
PRC government institutions are non-profit public service entities established by the PRC
Government to provide essential public services, such as education, healthcare, cultural activities,
research, and social welfare. The projects  engaged by the PRC government institutions include public
schools, hospitals, research institutes, and social service organisations. They often rely on government
funding and operate with a focus on public service rather than profit-making. We work closely with
these entities to provide the necessary construction engineering testing and inspection expertise to ensure
compliance with regulations and standards set by the PRC G overnment.
Additionally, the relevant PRC government administrative bureaus, such as the municipal bureaus
for housing and u rban-r ural development,  play a crucial role in overseeing and regulating the construction
industry. They are administrative bodies of the PRC Government responsible for implementing
government policies, managing public affairs, providing public services, and overseeing specific sectors or
areas including construction and infrastructure developments  in the country. They may engage our services
for quality assurance, compliance verification, and project supervision purposes. These institutions ensure
that construction and infrastructure projects adhere to safety regulations, environmental standards, and
other legal requirements.
In addition, the customer which engaged us for food testing services in 6M2024 was also a PRC
government administrative bureau that was responsible for market regulation in Xinyi City, Maoming
including overseeing and regulating food safety matters.


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The following table sets forth a breakdown of our revenue by customer type during the Track
Record Period.
FY2021 FY2022 FY2023 6M2024
RMB’000 % RMB’000 % RMB’000 % RMB’000 %
Property developers 23,596 59.3 6,164 30.9 14,854 35.8 9,191 40.3
Construction companies 8,559 21.5 5,348 26.8 8,386 20.2 843 3.7
State-owned investment companies 3,502 8.8 2,091 10.5 5,851 14.1 4,202 18.4
PRC government institutions 2,297 5.8 3,934 19.7 6,743 16.3 2,076 9.1
PRC government administrative
bureaus 308 0.8 1,807 9.1 3,131 7.5 4,434 19.4
Others (Note) 1,519 3.8 622 3.0 2,535 6.1 2,084 9.1

Total 39,781 100.0 19,966 100.0 41,500 100.0 22,830 100.0

Note: Including individuals involving in private construction or building works which require our testing services.
Our customers for construction engineering testing and inspection services involve in both private
commercial and residential construction projects and public construction and infrastructure projects.
Private commercial construction projects involve the development, construction, and renovation
of buildings intended for commercial use. This includes office buildings, shopping centers, hotels,
warehouses, and other structures that cater to business activities. Private residential construction projects
involve the construction, renovation, or expansion of residential properties that are privately owned. These
private construction projects are mainly undergone by property developers and construction companies.
Public construction and infrastructure projects usually involve the construction of hospitals, schools
and other buildings for public use and development of roads, bridges and water supply systems, etc. State-
owned investment companies, PRC government institutions, PRC government administrative bureaus,
construction companies, as well as certain property developers,  are typically involved  in these public
sector projects. Since FY2022, we have shifted our focus towards providing more testing and inspection
services for customers involved in public sector projects. Our Directors believe that we are able to compete
with other market players in capturing demand from the public sector projects for testing and inspection
services based on that (i) we are a state-owned company which provides us a backing for our credibility; (ii)
we hold a prominent position in the industry where we ranked second among all independent construction
engineering testing and inspection companies in Maoming, with a market share of 10.9% in 2023; (iii)
we have a strong management team with extensive experience and expertise in the testing and inspection
industry; (iv) with years of development in Maoming, we have gained recognition from our customers; and
(v) we strategically focused on public projects as a key area of business growth since 2022. We have made
progress in expanding our testing and inspection services for public projects, building valuable experience,
and fostering strong partnerships with our  customers involved in public projects. These accumulated
resources and relationships will enable us to better capture the demand for testing and inspection services
in public projects and enhance our competitive position in the testing and inspection market.


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For the food testing services provided by us in 6M2024, our customer was a PRC government
administrative bureau  that was  responsible for market regulation in Xinyi City, Maoming, including
overseeing and regulating food safety matters, which engaged us to conduct government-mandated
sampling tests on the relevant food products to evaluate whether the required quality, safety, and
regulatory standards were met.
The following table sets forth a breakdown of our revenue by public and private sector construction
engineering projects/ by public sector customer demanding food testing service a nd by customers type
during the Track Record Period:
FY2021 FY2022 FY2023 6M2024
RMB’000 % RMB’000 % RMB’000 % RMB’000 %
Construction engineering testing
and inspection services
Private Sector
Property developers 22,112 55.6 5,583 28.0 13,098 31.6 9,118 40.0
Construction companies 6,604 16.6 3,900 19.5 4,251 10.2 626 2.7
PRC government institutions (1) –* 0 – – 85 0.2 45 0.2
PRC government administrative
bureaus (1) 1 0 – – 3 0 1 0
Others (2) 1,435 3.6 559 2.8 2,028 4.9 943 4.1

Sub-total of private sector 30,152 75.8 10,042 50.3 19,465 46.9 10,733 47.0

Public Sector
Property developers 1,484 3.7 581 2.9 1,756 4.2 73 0.3
Construction companies 1,955 4.9 1,448 7.3 4,135 10.0 217 1.0
State-owned investment companies 3,502 8.8 2,091 10.5 5,851 14.1 4,202 18.4
PRC government institutions 2,297 5.8 3,934 19.7 6,658 16.1 2,031 8.9
PRC government administrative
bureaus 307 0.8 1,807 9.1 3,128 7.5 1,634 7.1
Others 84 0.2 63 0.2 507 1.2 1,141 5.0

Sub-total of public sector 9,629 24.2 9,924 49.7 22,035 53.1 9,298 40.7

Sub-total of construction
engineering testing and
inspection services 39,781 100.0 19,966 100.0 41,500 100.0 20,031 87.7

Food testing services
Public Sector
PRC government administrative
bureau – – – – – 2,799 12.3

Sub-total of food testing services – – – – – – 2,799 12.3

Total 39,781 100.0 19,966 100.0 41,500 100.0 22,830 100.0

* represents that the amount is less than RMB1,000


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Notes :
1. Certain PRC government institutions and PRC government administrative bureaus conduct sampling quality
inspection on various aspect in a private construction project, such as the quality of the construction materials. As
part of this process, they engage us to provide relevant testing services to ensure the required quality standards set
by the government are met and maintained in the private construction projects.
2. Including individuals involving in private construction works which require our testing services.
During FY2021, FY2022,  FY 2023 and 6M2024, we had 268, 182,  279 and 196 customers,
respectively. The table below sets forth a breakdown of number of customers by type of services offered
by us during the Track Record Period.
FY2021 FY2022 FY2023 6M2024
Foundation testing service 156 73 124 62
Infrastructure and public roads testing
service 4 13 15 18
Construction material testing service 121 106 206 160
Building structure testing service 62 31 50 26
Slope monitoring and foundation pit
monitoring services 9 14 17 8
Food testing services – – – 1
Note: Certain customers engaged us to provide more than one type of testing and inspection service during FY2021,
FY2022,  FY2023 and 6M2024
Our customers usually contact us and ask for quotation and make order through various channels
such as our Company’s website, our social media public account, or referrals from other parties. In
some circumstances, there are also internal referrals within different testing and inspection departments
of our Company. See “–  Key service process” in this section  for details. In FY2021, FY2022,  FY2023
and 6M2024, the average spending per customer was  approximately RMB 148,000, RMB 110,000,
RMB 149,000 and RMB 116,000, respectively.  In FY2021, FY2022,  FY2023 and 6M2024, we had a
customer retention rate, representing the number of customers in the previous year who remains as our
customers in the current period divided by the total number of customers in the previous year, of 52.2%,
34.7%, 61.0%  and 47.3% , respectively.  Due to the shift in focus on our revenue and project sector, both
the number and revenue contribution from property developers had decreased in FY2022, as a resul t our
customer retention rate decreased in FY2022.


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The following table sets forth a breakdown of revenue by service types that were attributed from
each customer type throughout the Track Record Period:
FY2021
Foundation testing
service
Infrastructure and
public road testing
service
Construction material
testing service
Building structure
testing service
Slope monitoring
and foundation pit
monitoring services
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
Property developers 23,007 77.4 – – 8 0.2 324 12.2 257 19.6
Construction companies 678 2.3 417 46.7 5,139 99.1 2,325 87.8 – –
State-owned investment companies 2,319 7.8 411 46.0 – – – – 772 58.9
PRC government institutions 2,089 7.0 – – –* – – – 208 15.8
PRC government administrative
bureaus 258 0.9 – – –* – – – 50 3.8
Others  (Note) 1,392 4.6 65 7.3 38 0.7 – – 24 1.9

Total 29,743 100 893 100 5,185 100 2,649 100 1,311 100

* represents that the amount is less than RMB1,000
FY2022
Foundation testing
service
Infrastructure and
public road testing
service
Construction material
testing service
Building structure
testing service
Slope monitoring
and foundation pit
monitoring services
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
Property developers 5,749 51.2 – – 37 1.2 159 20.9 219 4.8
Construction companies 1,143 10.2 451 98.9 2,866 97.0 598 78.8 290 6.4
State-owned investment companies 2,088 18.6 1 0.3 – – 2 0.3 – –
PRC government institutions 254 2.2 4 0.8 5 0.2 – – 3,671 80.4
PRC government administrative
bureaus 1,480 13.2 – – – – – – 327 7.2
Others (Note) 518 4.6 – – 47 1.6 – – 57 1.2

Total 11,232 100 456 100 2,955 100 759 100 4,564 100


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BUSINESS
FY2023
Foundation testing
service
Infrastructure and
public road testing
service
Construction material
testing service
Building structure
testing service
Slope monitoring
and foundation pit
monitoring services
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
Property developers 12,074 49.0 3 0.0 1,518 39.0 289 17.2 970 17.7
Construction companies 3,777 15.3 2,386 40.9 786 20.2 1,351 80.4 86 1.6
State-owned investment companies 3,072 12.5 1,680 28.8 630 16.2 20 1.2 449 8.2
PRC government institutions 1,277 5.2 1,680 28.8 274 7.1 7 0.4 3,505 64.0
PRC government administrative
bureaus 2,369 9.6 31 0.5 353 9.1 1 0.0 377 6.9
Others (Note) 2,050 8.4 57 1.0 327 8.4 14 0.8 87 1.6

Total 24,619 100 5,837 100 3,888 100 1,682 100 5,474 100

6M2024
Foundation testing
service
Infrastructure and
public road testing
service
Construction material
testing service
Building structure
testing service
Slope monitoring
and foundation pit
monitoring services
Food testing
services
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
Property developers 7,965 56.4 – – 751 31.2 176 21.9 299 23.1 – –
Construction companies 252 1.8 101 7.2 121 5.0 349 43.1 20 1.5 – –
State-owned investment
companies 3,336 23.6 142 10.1 598 24.8 19 2.1 107 8.4 – –
PRC government institutions 478 3.4 438 31.1 321 13.3 – – 839 64.9 – –
PRC government
administrative bureaus 235 1.7 727 51.6 416 17.3 257 31.8 – – 2,799 100
Others (Note) 1,846 13.1 – – 202 8.4 9 1.1 27 2.1 – –

Total 14,112 100 1,408 100 2,409 100 810 100 1,292 100 2,799 100

Note: Including individuals involving in private construction works which require our testing services.
In the course of provision of our testing and inspection services, the testing reports produced by us
are of utmost importance to our customers. At various stages in construction or infrastructure projects, it
is essential to conduct targeted monitoring and testing for different aspects such as foundation, building
structure, slope, and material quality as the projects can only proceed to the next stage if the results of
these tests meet the required construction standards and regulations. Qualified test results and supporting
data play a vital role in ensuring the smooth progress of the project.


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BUSINESS
During the acceptance process of different stages of a construction or infrastructure project, the
testing report serves as crucial evidence to demonstrate that the quality of the relevant construction stages
aligns with the relevant standards or regulations set by the MOHURD. The MOHURD issued various
codes on testing and inspection standards involving different construction stages which require testing
and inspections to be conducted by certified testing agencies in order to proceed to further construction
stages, such as “CJJ1- 2008 – Code for Construction and Quality Acceptance of Urban Road Engineering”,
“GB50202- 2018 – Construction Quality Acceptance Criteria for Building Foundation Engineering” , and
“GB-50204- 2015 – Code for Construction Quality Acceptance of Concrete Structure Engineering”. The
format and content of the testing reports produced by certified testing agencies are also regulated and
governed by the MOHURD. These reports validate that the materials and workmanship involved in the
different construction stages of the project comply with the regulatory requirements.
Along with the emphasis on regulatory compliance and enhancing regulations governing safety and
quality standards, customers may request our Company to perform voluntary testing and inspections on
specific procedures or aspects within a construction project. These tests and inspections are not mandatory
under the recent regulatory requirements and the testing reports generated from these testing or inspections
serve as additional safeguards for the quality of the project.
For the food testing services  provided by us in 6M2024, we were engaged by a PRC government
administrative bureau  that was responsible for market regulation in  Xinyi City, Maoming, including
overseeing and regulating food safety matters to conduct government-mandated sampling tests to evaluate
whether the relevant food products meet the required quality, safety, and regulatory standards.
The following table sets forth a breakdown of our revenue by applicability of our testing reports (i.e.
whether the testing reports are needed due to regulatory requirements or for voluntary testing) during the
Track Record Period:
FY2021 FY2022 FY2023 6M2024
RMB’000 % RMB’000 % RMB’000 % RMB’000 %
Due to regulatory requirements 39,554 99.4 19,753 98.9 41,198 99.3 22,757 99.7
For voluntary testing 227 0.6 213 1.1 302 0.7 73 0.3

Total 39,781 100.0 19,966 100.0 41,500 100.0 22,830 100.0


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BUSINESS
The following table sets forth a breakdown of the number of our completed order by service type
during the Track Record Period.
FY2021 FY2022 FY2023 6M2024
Foundation testing service 819 338 878 434
Infrastructure and public road testing
service 12 41 573 266
Construction material testing service 67,278 38,400 44,273 22,505
Building structure testing service 604 208 341 169
Slope monitoring and foundation pit
monitoring services 8 5 10 5
Food testing services – – – 12,605
The following table sets forth a breakdown of the average service order value by service type during
the Track Record Period.
FY2021 FY2022 FY2023 6M2024
RMB RMB RMB RMB
Foundation testing service 36,315 33,232 28,040 32,516
Infrastructure and public road testing
service 74,448 11,123 10,186 5,294
Construction material testing service 77 77 88 107
Building structure testing service 4,386 3,647 4,932 4,785
Slope monitoring and foundation pit
monitoring services 163,926 912,815 547,411 258,475
Food testing services – – – 222


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BUSINESS
Top five contracts
The table below sets forth details of our top five contracts in terms of revenue contribution for each
year/period during the Track Record Period:
FY2021
Rank
Type of service
provided by us Customer
Commencement
date of testing and
inspection services
Issue date of last
testing report
Total contract
sum of relevant
contract
(net of tax)
Revenue derived and
% of total revenue
for the year
RMB’000 RMB’000 %
1. Foundation testing A state owned enterprise
incorporated in China which
its ultimate holding company
is listed on Shanghai stock
exchange with market
capitalisat ion of RMB 97.9
billion as at the Latest
Practicable Date and is
principally engaged in property
development and related
activities.
23 January 2021 10 November 2021 1,056 1,056 2.7
2. Foundation testing Customer C (1) 16 August 2021 30 November 2021 967 (2) 967 2.4
3. Foundation testing Customer B (1) 12 August 2021 30 September 2021 742 (2) 742 1.9
4. Foundation testing Customer B(1) 14 May 2021 20 October 2021 568 (2) 568 1.4
5. Foundation testing Customer D(1) 15 January 2021 25 September 2021 538 (2) 538 1.4
Notes:
1. See “– Major customers” below for details of the background of such customers.
2. There is no fixed contract sum agreed in relevant contract. This amount represents the total service fee attributable to the
relevant contract that is determined based on actual work done.


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BUSINESS
FY2022
Rank
Type of service
provided by us Customer
Commencement
date of testing and
inspection services
Issue date of last
testing report
Total contract
sum of relevant
contract
(net of tax)
Revenue derived and
% of total revenue
for the year
RMB’000 RMB’000 %
1. Slope monitoring
and foundation pit
monitoring
Customer F (1) 8 May 2022 8 April 2023 3,679 (2) 3,671 18.4
2. Foundation testing Customer D (1) 12 October 2022 18 November 2022 764 (3) 764 3.8
3. Foundation testing Customer D (1) 16 June 2022 15 September 2022 432 (3) 432 2.2
4. Foundation testing A state owned enterprise
incorporated in China which
is principally engaged in
hydroelectric power generation,
construction engineering design
and construction activities.
18 August 2021 17 May 2023 884 (3)(4) 375 1.9
5. Foundation testing A government administrative
bureau which oversees and
governs housing and urban-
rural development matters in
Xinyi City, Maoming.
8 January 2022 25 November 2022 348 (3) 348 1.7
Notes:
1. See “– Major customers” below for details of the background of such customers.
2. The remaining contract sum of RMB8,000 had been recognised as revenue in FY2023.
3. There is no fixed contract sum agreed in relevant contract. This amount represents the total service fee attributable to the
relevant contract that is determined based on actual work done.
4. The remaining contract sum of RMB 443,000 and RMB67,000 had been recognised as revenue in FY2021  and  FY2023
respectively.


--- page 220 ---
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BUSINESS
FY2023
Rank
Type of service
provided by us Customer
Commencement
date of testing and
inspection services
Issue date of last
testing report
Total contract
sum of relevant
contract
(net of tax)
Revenue derived and
% of total revenue
for the year
RMB’000 RMB’000 %
1. Slope monitoring
and foundation pit
monitoring
Customer I 5 September 2023 24 November 2023 3,181 3,181 7.7
2. Foundation testing Customer H (1) 28 April 2022 not yet completed 3,221 (2)(3)(4) 2,820 6.8
3. Foundation testing A private company incorporated
in China with RMB50 million
registered capital which is
principally engaged in property
development and related
activities.
11 April 2023 27 December 2023 1,233 (2) 1,233 3.0
4. Foundation testing,
infrastructure and
public roads testing,
construction materials
testing
Customer D(1) 22 March 2023 not yet completed 1,376 (2)(4)(5) 1,053 2.5
5. Foundation testing,
infrastructure
and public roads
testing, construction
materials testing
A state owned enterprise
incorporated in China which is
principally engaged in provision
of construction of municipal
public works services
24 August 2022 not yet completed 1,208 (2)(4)(6 ) 904 2.2
Notes:
1. See “– Major customers” below for details of the background of such customers.
2. There is no fixed contract sum agreed in relevant contract.  This amount represents the total service fee attributable to the
relevant contract that is determined based on actual work done  or the tentative contract sum should the agreed scope of
testing and inspection services in the relevant contract have not yet been completed.
3. Part of the contra ct sum of RMB108,000 and RMB293,000 had been recognised  as revenue in FY2022  and 6M2024
respectively.
4. Certain agreed scope of testing and inspection services in the relevant contract has not yet been completed during the Track
Record Period.
5. Part of the contract sum of RMB77,000 had been recognised as revenue in 6M2024.
6. Part of the contract sum of RMB129,000 and RMB76,000 had been recognised  as revenue in FY2022  and 6M2024
respectively.


--- page 221 ---
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BUSINESS
6M2024
Rank
Type of service
provided by us Customer
Commencement
date of testing and
inspection services
Issue date of last
testing report
Total contract
sum of relevant
contract
(net of tax)
Revenue derived and
% of total revenue
for the period
RMB’000 RMB’000 %
1. Food testing Customer K (1) 11 May 2024 not yet completed 3,297(3) 2,799 12.3
2. Foundation testing Customer L (1) 11 March 2024 not yet completed 1,160(2)(3) 1,160 5.1
3. Foundation testing,
infrastructure
and public roads
testing construction
material testing and
slope monitoring
and foundation pit
monitoring
Customer F (1) 4 July 2023 not yet completed 1,448(2)(3)(4) 1,055 4.6
4. Foundation testing Customer D (1) 6 October 2023 not yet completed 1,166(2)(3)(5) 1,047 4.6
5. Foundation testing A private company incorporated
in China with RMB28 million
registered capital which is
principally engaged in real estate
development and operation
23 December 2023 not yet completed 1,018 (2)(3) 1,018 4.5
Notes:
1. See “– Major customers” below for details of the background of such customers.
2. There is no fixed contract sum agreed in relevant contract. This amount represents the total service fee attributable to the
relevant contract that is determined based on actual work done or the tentative contract sum should the agreed scope of
testing and inspection services in the relevant contract have not yet been completed.
3. Certain agreed scope of testing and inspection services in the relevant contract has not yet been completed during the Track
Record Period.
4. Part of the contract sum of RMB140,000 had been recognised as revenue in FY2023.
5. Part of the contract sum of RMB39,000 had been recognised as revenue in FY2023.


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BUSINESS
Backlogs
The table below sets forth a breakdown of backlog by type of services offered by us.
As at 31 December
As at
30 June
2024
As at
the Latest
Practicable
Date2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Foundation testing service 3,081 5,564 6,753 6,096 5,446
Infrastructure and public roads
testing service 580 2,392 684 3,851 3,473
Construction material testing
service 257 280 533 194 318
Building structure testing service 2,340 2,634 1,505 1,398 1,115
Slope monitoring and foundation
pit monitoring services 308 620 751 974 789
Food testing services – – – 498 809

Total 6,566 11,490 10,226 13,011 11,950

We expect to recognise RMB 5.9 million, RMB 2.6 million and RMB 1.0 million of the backlog
amount as at the Latest Practicable Date as revenue by 31 December 2024, 31 December 2025 and after 31
December 2025, respectively. The timing of recognising the remaining amount of backlog as at the Latest
Practicable Date amounted to RMB2.5 million as revenue cannot currently be reliably estimated because
this is largely depending on the work schedule and construction progress  of our customers which we do
not have knowledge of that as at the Latest Practicable Date.
Our backlog represents an estimate of the total outstanding contract value or amount of service
orders (assuming all works under the agreed testing service scope are required to be carried out) as at 31
December 2021, 2022 and 2023 and 30 June 2024 and the Latest Practicable Date. It is important to note
that n ot all of the contracts nor service orders entered into by us and our customers include a specified
contract sum or fixed amount for the services to be provided. The backlog above only considered orders-
on-hand with workload that can be reliably estimated. Furthermore, the backlog amount for these orders-
on-hand may be subject to potential changes due to various factors, including alterations in the scope and
duration of services, pricing adjustments, and any other unforeseen circumstances. Since  we normally
charge our customers based on a pre-agreed testing service scope and unit price, taking into account the
actual amount of testing or inspection services performed. As a result, t here may be a deviation between
the future actual revenue recognised and the backlog amount estimated at the time of order acceptance.
Our backlog amount of infrastructure and public roads testing service as at 31 December 2022 was
comparatively large due to our effort in expanding our business to serve customers involving in sizeable
infrastructure projects, and our revenue generated from the provision of infrastructure and public roads
testing service increased significantly from RMB0.5 million in FY2022 to RMB5.8 million in FY2023.


--- page 223 ---
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BUSINESS
Major customers
For FY2021, FY2022,  FY2023 and 6M2024, the percentage of our total revenue attributable to
our largest customer amounted to 12.8%, 18.4%, 10.8% and 12.6% , respectively, while the percentage of
our total revenue attributable to our five largest customers amounted to 37.6%, 44.4%, 38.3% and 43.6% ,
respectively. Our relationship with our five largest customers for each year/period during the Track Record
Period ranges from four months to s even years.
Set out below is a breakdown of our revenue by our five largest customers for each year/period
during the Track Record Period and their respective background information:
FY2021
Rank Customer Business profile
Type of services
undertaken by us
Location of
services
Year of
commencement
of business
relationship
Typical payment
and credit terms
Payment
method
Revenue derived
from the customer
RMB’000 %
1. Customer A A private company incorporated in China with RMB12
million registered capital, which was established
in 2002 and is the holding company of our direct
customers and principally engaged in property
development and related activities.
Foundation testing Xinyi City,
Maoming
2020 Payment in advance or
payment on demand
by bank
transfer
5,078 12.8
2. Customer B A company incorporated in China which is the holding
company of our direct customers and their ultimate
holding company is listed on Hong Kong stock
exchange with market capitalisation of HK$13.57
billion as at the Latest Practicable Date with its
principal business are development and sales of real
estate.
Foundation testing Maoming 2020 Payment in advance by bank
transfer
3,133 7.9
3. Customer C (1)(2) A company incorporated in China with RMB10 million
registered capital, which was established in 2018 and
principally engages in planting and sale of vegetable
and fruits. It is the holding company of our direct
customers which principally engage in property
development and related activities.
Foundation testing Xinyi City,
Maoming
2021 Payment in advance or
payment on demand
by bank
transfer
2,668 6.7
4. Customer D (3) A state owned enterprise incorporated in China with
RMB610 million registered capital, which was
established in 2017 and principally engages in
engineering construction for buildings and urban real
estate development and operation.
Foundation testing, slope
monitoring and foundation
pit monitoring
Xinyi City,
Maoming
2018 Payment in advance or
payment by completion
stage or payment on demand
by bank
transfer
2,305 5.8
5. Customer E A private company incorporated in China with RMB10
million registered capital, which was established
in 2019 and principally engages in property
development and related activities.
Foundation testing Xinyi City,
Maoming
2020 Payment on demand by bank
transfer
1,755 4.4

Five largest customers combined 14,939 37.6
All other customers 24,842 62.4

Total revenue 39,781 100.0


--- page 224 ---
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BUSINESS
FY2022
Rank Customer Business profile
Type of services
undertaken by us
Location of
services
Year of
commencement
of business
relationship
Typical payment
and credit terms
Payment
method
Revenue derived
from the customer
RMB’000 %
1. Customer F (3) An entity commissioned by the People’s Government
of Xinyi City to undertake construction management
work of government-invested construction projects
and other assignments from the municipal party
committee and the government.
Slope monitoring and
foundation pit monitoring
Xinyi City,
Maoming,
2022 Payment within five working
days after approval of local
financial bureau
by bank
transfer
3,671 18.4
2. Customer D (3) A state owned enterprise incorporated in China with
RMB610 million registered capital, which was
established in 2017 and principally engages in
engineering construction for buildings and urban real
estate development and operation.
Foundation and building
structure testing
Xinyi City,
Maoming,
2018 Payment within 10 working
days after issuance of
payment notification/bill
by bank
transfer
1,714 8.6
3. Customer A A private company incorporated in China with RMB12
million registered capital, which was established
in 2002 and is the holding company of our direct
customers and principally engaged in property
development and related activities.
Foundation testing Xinyi City,
Maoming
2020 Payment in advance or payment
within 10 working days
after issuance of payment
notification/bill
by bank
transfer
1,403 7.0
4. Customer E A private company incorporated in China with RMB10
million registered capital, which was established
in 2019 and principally engages in property
development and related activities.
Foundation testing Xinyi City,
Maoming
2020 Payment within 10 working
days after issuance of
payment notification/bill
by bank
transfer
1,085 5.4
5. Customer G (2) A private company incorporated in China with
RMB102 million registered capital, which was
established in 1995 and principally engages in
engineering construction for buildings and real estate
development and operation.
Foundation testing, building
structure testing and
construction material testing
Xinyi City,
Maoming
2017 Payment in advance or payment
within 10 working days
after issuance of payment
notification/bill or payment
on demand
by bank
transfer
1,008 5.0

Five largest customers combined 8,881 44.4
All other customers 11,085 55.6

Total revenue 19,966 100.0


--- page 225 ---
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BUSINESS
FY2023
Rank Customer Business profile
Type of services
undertaken by us
Location of
services
Year of
commencement
of business
relationship
Typical payment
and credit terms
Payment
method
Revenue derived
from the customer
RMB’000 %
1. Customer H A private company incorporated in China with RMB5
million registered capital, which was established
in 2022 and principally engages in provision of
commercial complex management services and
leasing of houses.
Foundation testing, building
structure testing and
construction material testing
Xinyi City,
Maoming
2022 Payment within five or 10
working days after issuance
of payment notification/bill
or payment on demand
by bank
transfer
4,470 10.8
2. Customer I (3) An entity commissioned by the People's Government
of Gaozhou City, which principally engaged
in assisting competent authorities to complete
construction projects quota, promote building energy
conservation, new wall materials, gas safety, and
construction, operation and management of urban
water purification facilities.
Slope monitoring and
foundation pit monitoring
Gaozhou
City,
Maoming
2023 Payment on demand by bank
transfer
3,181 7.7
3. Customer D (3) A state owned enterprise incorporated in China with
RMB610 million registered capital, which was
established in 2017 and principally engages in
engineering construction for buildings and urban real
estate development and operation.
Foundation, testing,
building structure testing,
infrastructure and public
road testing, construction
material testing and slope
monitoring and foundation
pit monitoring
Xinyi City,
Maoming
2018 Payment on demand or
payment within five
working days after issuance
of payment notification/
bill or payment subject to
approval of local finance
bureau
by bank
transfer
3,023 7.3
4. Customer F (3) An entity commissioned by the People’s Government
of Xinyi City to undertake construction management
work of government-invested
construction projects and other assignments from the
municipal party committee and the government.
Foundation testing,
infrastructure and public
road testing, construction
material testing and slope
monitoring and foundation
pit monitoring
Xinyi City,
Maoming
2022 Payment subject to approval
of local finance bureau or
payment on demand
by bank
transfer
2,710 6.5
5. Customer J (4) A company incorporated in China with RMB600 million
registered capital, which was established in 2017 and
principally engages in provision of park management
services and leasing of land use right.
Foundation testing, building
structure testing,
infrastructure and public
roads testing, construction
material testing and slope
monitoring and foundation
pit monitoring
Xinyi City,
Maoming
2020 Payment within five working
days after issuance of
payment notification/bill
or payment on demand or
payment by completion
stage
by bank
transfer
2,506 6.0

Five largest customers combined 15,890 38.3
All other customers 25,610 61.7

Total revenue 41,500 100.0


--- page 226 ---
– 215 –
BUSINESS
6M2024
Rank Customer Business Profile
Types of services
undertaken by us
Location of
services
Year of
commencement
of business
relationship
Typical payment
and credit terms
Payment
method
Revenue derived
from the customer
RMB’000 %
1. Customer D (3) A state owned enterprise incorporated in China
with RMB610 million registered capital,
which was established in 2017 and principally
engages in engineering construction for
buildings and urban real estate development
and operation.
Foundation testing, building
structure testing,
infrastructure and public
roads testing, construction
material testing and slope
monitoring and foundation
pit monitoring
Xinyi City,
Maoming
2018 15 – 120 working days Bank
transfer
2,882 12.6
2. Customer K (3) A government administrative bureau that is
responsible for market regulation in Xinyi
City, Maoming, including overseeing and
regulating food safety matters.
Food testing Xinyi City,
Maoming
2024 15 – 120 working days Bank
transfer
2,799 12.3
3. Customer F (3) An entity commissioned by the People’s
Government of Xinyi City to undertake
construction management work of government-
invested construction projects and other
assignments from the municipal party
committee and the government.
Foundation testing,
infrastructure and public
roads testing, construction
material testing and slope
monitoring and foundation
pit monitoring
Xinyi City,
Maoming
2022 15 – 120 working days Bank
transfer
1,490 6.5
4. Customer L A private company incorporated in China with
RMB15 million registered capital which was
established in 2002 and principally engaged in
real estate development.
Foundation testing and
construction material testing
Xinyi City,
Maoming
2021 15 – 60 working days Bank
transfer
1,420 6.2
5. Customer M (5) A private company incorporated in China with
RMB60 million registered capital which was
established in 2022 and principally engaged in
real estate development and related activities.
Foundation testing,
construction material testing
and slope monitoring and
foundation pit monitoring
Xinyi City,
Maoming
2022 15 – 60 working days Bank
transfer
1,354 6.0

Five largest customers combined 9,945 43.6
All other customers 12,885 56.4

Total revenue 22,830 100.0


--- page 227 ---
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BUSINESS
Notes :
(1) To the best knowledge of our Directors, as at the Latest Practicable Date, the father of Ms. Mai Jiayu, an executive
Director and a deputy general manager of our Company, held 22% of equity interests in Customer C and was a
supervisor of Customer C.  Our Directors confirm that the terms of the transactions including the service fees we
charged to Customer C for provision of the relevant testing and inspection services were established through arm’s
length negotiations and were in line with normal commercial terms and the terms of other transactions including the
service fees we charged on comparable testing or inspection services to other independent third-party customers.
(2) To the best knowledge of our Directors, a shareholder of Customer C who effectively holds 40.8% equity interest in
Customer C, also effectively holds 28.0% equity interest in Customer G. The shareholder is an Independent Third
Party, and there was no overlapping in the rest of shareholders and management of Customer C and Customer G.
(3) In accordance with the accounting policies outlined in the Accountant’s Report, entities controlled by the PRC
Government and PRC government administrative bureaus are considered related parties. See Note 30.9 to the
Accountant’s Report in Appendix I to this prospectus for details. In this regard, Customer D, Customer F,  Customer
I and Customer K are considered related parties to our Company under the Accountant’s Report. Customer D,
Customer F,  Customer I and Customer K will not become connected persons of our Company under the GEM
Listing Rules upon Listing.
(4) Customer J is directly wholly owned by Xinyi Xinhui, our substantial Shareholder. Our Directors confirm that
the terms of agreements entered into between us and Customer J are comparable to other independent third party
customers of our Company. The service fees charged by us to Customer J for provision of the relevant testing and
inspection services are no more favourable than the service fees charged by us to  other independent third-party
customers, which were based on quantity of unit for testing and other key factors, ( see “– Pricing” below in this sub-
section,)  and agreed upon on normal commercial terms after arm’s length negotiations.
(5) To the best knowledge of our Directors, as at the Latest Practicable Date, the father and brother of Ms. Mai Jiayu,
an executive Director and a deputy general manager of our Company, indirectly aggregately held 10% of equity
interests in Customer M  and the brother of Ms. Mai Jiayu was a director of Customer M. Our Directors confirm
that the terms of the transactions including the service fees we charged to Customer M for provision of the relevant
testing and inspection services were established through arm’s length negotiations and were in line with normal
commercial terms and the terms of other transactions including the service fees we charged on comparable testing or
inspection services to other independent third-party customers.
Save for Customer J, none  of our Directors, their close associates, or any Shareholders who or
which, to the knowledge of our Directors, owned more than 5% of the issued Shares as at  the Latest
Practicable Date had any interest in any of the five largest customers of our Company for each year/period
during the Track Record Period.
Save as disclosed above , to the best knowledge of our Directors, there is no past or present
relationship (including, without limitation, family, financing, employment or otherwise) between each
of our five largest customers for each year/period  during the Track Record Period and our Company,
including our Shareholders, Directors, senior management, Supervisors and their respective associates.


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BUSINESS
Principal Terms of Service Agreements
We generally enter into standardised testing service agreements  with our customers on a service-
order basis. Set forth below are certain key aspects of our standardised service agreements.
• Scope of services.  Our service agreements outline the intended scope of services we are
required to provide.
• Testing locations and time. Our service agreements outline the intended location and timing
of services we are required to provide.
• Pricing. Our service agreements itemise the service fees we charge for each type of testing
services we are required to provide.
• Payment term and settlement. We typically require settlement of payment before we release
the test results or reports, and sometime before we initiate services. The payment method is
generally by wire transfer. During the Track Record Period, all revenue from our services
was denominated in Renminbi.
• Delivery of test results. For testing services, we are generally required to complete
preparation of the testing reports within 10 days after we complete the relevant testing.
We do not have standardised credit period for our customers prior to December 2023  and may
grant credit period to customers on a case-by-case basis  in considering various factors including but not
limited to the services type we provided, the construction progress of the projects of our customers and
the background of the customers.  We have established credit term policy since December 2023 and have
implemented such policy since January 2024 in order to standardise the procedures for granting credit
period to our customers.
During the Track Record Period and up to the Latest Practicable Date, we were not involved in any
material customer complaints or disputes surrounding the quality of our services.
Pricing
When determining the pricing for our services, we take into account several key factors, including
the required specifications, technical complexities, expected costs, market conditions, and prevailing
prices for similar services. With these considerations in mind, depending on the specific type of service
we provide, our pricing may vary.
We typically charge our services by quantity of unit to be tested, such as the number of piles when
we are required to perform foundation testing, subject to different testing methods,  and the quantity
of material samples when we are required to perform construction material testing. This approach
ensures that our pricing is directly proportional to the scope and scale of the testing required, providing
transparency and fairness in our charges.


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BUSINESS
During the Track Record Period, the price range per testing unit for each type of our services are set
out below:
FY2021 FY2022 FY2023 6M2024
Price range
per testing unit
Price range
per testing unit
Price range
per testing unit
Price range
per testing unit
RMB RMB RMB RMB
Foundation testing service 50 – 72,590 50 – 72,590 21 – 113,422 30 – 106,750
Infrastructure and public roads testing
service 4 – 150 4 – 500 13 – 7,500 15 – 500
Construction material testing service 30 – 1,050 30 – 1,050 30 – 2,300 30 – 2,300
Building structure testing service 35 – 450 35 – 450 35 – 450 17 – 450
Slope monitoring and foundation pit
monitoring services 41 – 600 44 – 600 41 – 600 47 – 600
Food testing services – – – 200 – 1,600
The price we charge for different testing methods under the same type of services for our
construction engineering testing and inspection services can vary significantly due to , among others, (i)
the technical requirements and complexity for different methods; (ii) different measurement of testing unit
associated with specific methods; (iii) the difference in the testing parameters applied to different testing
targets; and (iv) whether any discounts are offered to our customers. For instance, (i) for our foundation
testing services, the highest price per unit we charged  during the Track Record Period was RMB113,422
per pile for conducting static load test and the lowest price per unit we charged  during the Track Record
Period was RMB21 per meter through the testing targets under the acoustic wave transmission test; (ii) for
our infrastructure and public roads testing service, the highest price per unit we charged  during the Track
Record Period was RMB7,500 per structure  under the full water test for structures and the lowest price
per unit we charged  during the Track Record Period was RMB 4 per meter under the pipe leak test ; (iii)
for our construction material testing service, the highest price we charged  during the Track Record Period
was RMB2,300 per unit for conducting relevant testing on geosynthetics and the lowest price we charged
during the Track Record Period was RMB30 per unit for conducting relevant testing on concrete; ( iv) for
our building structure testing service, the highest price we charged  during the Track Record Period was
RMB450 per floor slab for testing of floor slab thickness and the lowest price we charged  during the Track
Record Period was RMB35 per testing point for conducting settlement observation; and (v) for our slope
monitoring and foundation pit monitoring services, the highest price we charged during the Track Record
Period was RMB600 per monitoring point per time for monitoring deep horizontal displacement and the
lowest price we charged during the Track Record Period was RMB 41 per monitoring point per time for
monitoring supporting structure horizontal and vertical displacement.
In addition, the price range for the same testing method we charged  during the Track Record Period
can also vary. For instance, the fee we charged  during the Track Record Period for conducting static load
test under our foundation testing services varies due to the difference in testing capacity  requirements
applied for different orders, and ranges from RMB3,904 per pile (for applying testing capacity of 120kN)
to RMB113,422 per pile (for applying testing capacity of 29,000kN) .


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BUSINESS
For food testing services, the price we charge varies depending mainly on the testing methods, i.e.
quantitative testing or rapid testing,  used for conducting the relevant tests  which involve varying degree
of testing complexity, expected cost and market price . In 6M2024, the highest price we charged was
RMB1,600 per batch of products for conducting quantitative testing and the lowest price we charged was
RMB200 per batch of products for conducting rapid testing.
According to the CIC Report, for construction engineering testing and inspection services, within
the industry, (i) the price for foundation testing service typically ranges from RMB20 to RMB150,000 per
testing unit. Pricing for different testing methods within the same service category can vary significantly
due to the specific measurement units associated with each testing method. For instance, the cost of
conducting static load test typically ranges from RMB5,000 to RMB150,000 per pile depending on the
testing capacity applied. The cost of conducting conical power touch method typically ranges from RMB20
to RMB200 per testing point, and the cost of conducting standard penetration test typically ranges from
RMB300 to RMB800 per meter; (ii) the price for infrastructure and public roads testing service typically
ranges from RMB5 to RMB10,000 per testing unit, for instance, the price for full water test for structures
typically ranges from RMB6,000 to RMB10,000 per structure; (iii) the price for construction materials
testing service varies depending on the type of material being tested, such as sand, stone, cement, steel
bars, concrete, asphalt, plastic pipes, etc., and typically ranges from RMB20 to RMB8,000 per testing unit,
for instance, the cost for testing concrete strength typically ranges from RMB20 to RMB100 per test, while
the cost for testing the rutting resistance for asphalt mixture can range from RMB4,000 to RMB8,000 ;
(iv) the price for building structure testing service typically ranges from RMB30 to RMB700 per testing
unit, depending on the types of testing services; and (v) the price for slope monitoring and foundation pit
monitoring services typically ranges from RMB30 to RMB3,500 per monitoring point per time depends on
factors such as the type of monitoring project, the number of monitoring points and the complexity of the
monitoring services . For food testing services, within the industry, the price for conducting quantitative
testing for similar products as tested by our Company ranges from RMB1,700 to RMB2,200 per batch, and
the price for conducting rapid testing for similar products as tested by our Company ranges from RMB115
to RMB215 per batch.
Seasonality
Our Directors believe that the industry in which we operate does not exhibit any significant
seasonality.
Marketing
Leveraging our team’s industry expertise and experience, we have forged stable business
relationships with our customers.
We generally generate new business though customer referrals. Additionally, we have a corporate
promotional brochure that serves as a comprehensive showcase of our offerings, helping to further enhance
our brand presence.
Our senior management are generally responsible for maintaining customer relationships and
staying attuned to market developments and potential business opportunities. They play a vital role in
liaising with customers, ensuring their satisfaction, and proactively exploring avenues for business growth.


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BUSINESS
OUR SUPPLIERS AND SUBCONTRACTORS
Suppliers
Our suppliers mainly include companies and manufacturers for testing consumables for conducting
our testing services.
Our Company maintains an approved list of suppliers, which is reviewed and updated periodically.
The admission of suppliers onto our approved list is subject to assessment of various factors including
product quality, timeliness of delivery, after-sales services and qualification.
We have not entered into any long term supply agreements with our suppliers, as we consider that
our comprehensive list of approved suppliers already assures a reasonably diversified base of reliable
suppliers which offer competitive prices. During the Track Record Period, we have not experienced any
significant delay in delivery of testing consumables by our suppliers which caused disruption to our works.
Testing consumables purchased by us are normally settled by wire transfer in Renminbi.
During the Track Record Period, purchases from our suppliers accounted for 24.7%, 33.7%,  56.6%
and 70.8% of our total purchases, respectively, for each of FY2021, FY2022,  FY2023 and 6M2024.
Subcontractors
During the course of provision of our foundation testing service, we would outsource certain
physically demanding  works such as extracting core samples during the foundation and geotechnical
drilling process for the core drilling and standard penetration testing method to third party drilling
companies specialising in these types of labour works.  As advised by our PRC Legal Advisers, our
subcontractors are not required to obtain specific licenses or certificates under current PRC laws to
engage in those labour  works relating to core drilling services other than their business licenses.  Since
our subcontractors principally provide labor services to us and do not engage in construction engineering
quality testing and inspection activities in connection with our cooperation, they are not required to
become qualified under the 2023 Administrative Measures and the Qualification Standards of Construction
Engineering Quality Inspection Agencies.  We consider involving certain degree of subcontracting for
part of our foundation testing service process is in line with the common practice of the construction
engineering testing and inspection industry in China.
During the Track Record Period, purchases from our subcontractors accounted for 75.3%, 66.3% ,
43.4% and 29.2%  of our total purchases, respectively, for each of FY2021, FY2022,  FY2023 and 6M2024.
Our subcontracting fees  primarily consist of service fees to subcontractors for extracting core samples
during the foundation and geotechnical drilling processes. Total subcontracting fee  we incur in any
financial period i s closely linked to the frequency of the testing methods we use during the provision of
foundation testing services, such as core drilling method and standard penetration test. In recent years,
with the improvement of construction techniques, the frequency of the usage of these testing methods has
gradually decreased and therefore our procurement from subcontractors as a percentage of total purchases
decreased throughout the Track Record Period.


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BUSINESS
Set forth below are certain key terms of our subcontracting agreements with our subcontractors.
• Contract period. The duration of the subcontracting agreement is in line with the duration of
the whole foundation and geotechnical drilling process.
• Scope of subcontracting. Our subcontracting agreements outline the intended scope of
subcontracting works, i.e. extracting core samples during the foundation and geotechnical
drilling process.
• Standard of subcontracting service. Our subcontracting agreements outline the required
industrial standard for the subcontracting works, such as the Guangdong Province
Construction Foundation Testing Standards.
• Subcontracting fee and payment terms. The subcontracting fee is typically calculated based
on the drilling depth of the core samples extraction process. We typically settle the fee upon
completion of our testing process.
During the Track Record Period and up to the Latest Practicable Date, we were not involved in any
material dispute with our subcontractors.
Our Company maintains an approved list of subcontractors which could provide similar services at
similar costs as the existing subcontractors we engaged during the Track Record Period, and are selected
based on service quality, timeliness of service delivery, after-sales services and qualification. We believe
that our stable relationship with our subcontractors enables us to have a thorough understanding and
assessment of their performance over the years, which in turn allows us to ensure their quality of works.
Costs of goods and services
The costs incurred from the purchases of goods and services from our suppliers and subcontractors
amounted to RMB 1.8  million, RMB 1.2  million,  RMB 1.4 million  and  RMB 1.2 million  respectively,
representing 18.3%, 14.3% , 11.8%  and 17.9%  respectively of our total cost of sales for each of FY2021,
FY2022,  FY2023 and 6M2024.
Major suppliers and subcontractors
We have maintained business relationships with our five largest suppliers or subcontractors  for
each year/period during the Track Record Period for five months to 15 years. Purchases from our largest
suppliers  or subcontractors  accounted for 37.6 %, 41.0% , 31.8 % a nd 23.8%  of our total purchases,
respectively, for each of FY2021, FY2022 , FY2023 and 6M2024 , and purchases from our five largest
suppliers or subcontractors  for each of FY2021, FY2022,  FY2023 and 6M2024 accounted for 90.5%,
80.0%, 61.9% and 78.1 % of our total purchases, respectively.


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BUSINESS
Set out below is a breakdown of our total purchases  attributable to our five largest suppliers or
subcontractors  for each year/period  during the Track Record Period and their respective background
information:
FY2021
Rank
Suppliers/
Subcontractors Business profile
Products/service
provided to our
Company
Year of
commencement
of business
relationship Credit terms
Payment
method
Purchases by us from the
suppliers/subcontracting
costs from the
subcontractors
RMB’000 %
1. Subcontractor A (1) A sole proprietor business established in China in
2017 which principally engages  in provision of
pile foundation core drilling services.
Core drilling service 2017 Payment upon
issuance of payment
notification
by bank
transfer
662 37.6
2. Subcontractor B (2) A private company incorporated in China with
RMB1 million registered capital, which was
established in 2016 and principally engages
in provision of geological drilling engineering
and geological drilling and drilling technology
services and consulting.
Core drilling service 2016 Payment upon
issuance of payment
notification
by bank
transfer
586 33.4
3. Supplier C A sole proprietor business established in 2000
and a private company incorporated in China in
1995 with RMB1 million registered capital held
by the same individual. It principally engages
in manufacturing of hydraulic and pneumatic
power machinery and component and sale,
leasing, repair and maintenance of machinery and
equipment.
Equipment
maintenance
service
2009 Within 10 working
days after receipt of
invoice
by bank
transfer
152 8.7
4. Supplier D A private company incorporated in China with
RMB1 million registered capital, which was
established in 2020 and principally engages in
provision of general cargo warehousing services
and sale/leasing of machinery and equipment.
Equipment
warehousing
service
2020 Annual settlement by bank
transfer
120 6.8
5. Subcontractor E A private company incorporated in China with
RMB500 thousand registered capital, which was
established in 2016 and principally engages in
provision of cleaning services and pile foundation
core drilling service.
Core drilling service 2019 Quarterly settlement by bank
transfer
71 4.0

Five largest suppliers/subcontractors combined 1,591 90.5
All other suppliers/subcontractors 167 9.5

Total purchases 1,758 100.0


--- page 234 ---
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BUSINESS
FY2022
Rank
Suppliers/
Subcontractors Business profile
Products/service
provided to our
Company
Year of
commencement
of business
relationship Credit terms
Payment
method
Purchases by us from the
suppliers/subcontracting
costs from the
subcontractors
RMB’000 %
1. Subcontractor A (1) A sole proprietor business established in China in
2017 which principally engages  in provision of
pile foundation core drilling services.
Core drilling service 2017 Payment upon
issuance of payment
notification
by bank
transfer
496 41.0
2. Subcontractor F (2) A private company incorporated in China with
RMB4.85 million registered capital, which was
established in 2019 and principally engages
in provision of geological drilling engineering
and geological drilling and drilling technology
services and consulting.
Core drilling service 2020 Payment upon
issuance of payment
notification
by bank
transfer
188 15.6
3. Supplier D A private company incorporated in China with
RMB1 million registered capital, which was
established in 2020 and principally engages in
provision of general cargo warehousing services
and sale/leasing of machinery and equipment.
Equipment
warehousing
service
2020 Annual settlement by bank
transfer
120 10.0
4. Supplier G A sole proprietor business established in China in
2019 which principally engages  in manufacturing
and sales of machinery and equipment.
Equipment
maintenance
service
2022 Within seven
working days
after completion
of equipment
maintenance service
by bank
transfer
90 7.4
5. Supplier C A sole proprietor business established in China in
2000 which principally engages  in manufacturing
of hydraulic and pneumatic power machinery
and component and sale, leasing, repair and
maintenance of machinery and equipment.
Equipment
maintenance
service
2009 Within seven working
days after receipt of
invoice
by bank
transfer
73 6.0

Five largest suppliers/subcontractors combined 967 80.0
All other suppliers/subcontractors 242 20.0

Total purchases 1,209 100.0


--- page 235 ---
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BUSINESS
FY2023
Rank
Supplier/
Subcontractors Business profile
Products/service
provided to our
Company
Year of
commencement
of business
relationship Credit terms
Payment
method
Purchases by us from the
supplier/subcontracting
costs from the
subcontractors
RMB’000 %
1. Subcontractor A (1) A sole proprietor business established in China in
2017 which principally engages  in provision of
pile foundation core drilling services.
Core drilling service 2017 Payment upon
issuance of payment
notification
by bank
transfer
438 31.8
2. Supplier C A sole proprietor business established in 2000
and a private company incorporated in China in
1995 with RMB1 million registered capital held
by the same individual. It principally engages
in manufacturing of hydraulic and pneumatic
power machinery and component and sale,
leasing, repair and maintenance of machinery and
equipment.
Equipment
maintenance
service
2009 Within 10 working
days after receipt of
invoice
by bank
transfer
123 8.9
3. Supplier D A private company incorporated in China with
RMB1 million registered capital, which was
established in 2020 and principally engages in
provision of general cargo warehousing services
and sale/leasing of machinery and equipment.
Equipment
warehousing
service
2020 Annual settlement by bank
transfer
120 8.7
4. Subcontractor E A private company incorporated in China with
RMB500 thousand registered capital, which was
established in 2016 and principally engages in
provision of cleaning services and pile foundation
core drilling service.
Core drilling service 2019 Quarterly settlement by bank
transfer
95 6.9
5. Supplier H A private company incorporated in China with
RMB10 million registered capital, which was
established in 2017 and principally engages in
provision of measurement and calibration of
instruments and equipment, testing and inspecting
services.
Equipment
maintenance
service
2021 Payment on demand by bank
transfer
77 5.6

Five largest supplier/subcontractors combined 853 61.9
All other suppliers/subcontractors 525 38.1

Total purchases 1,378 100.0


--- page 236 ---
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BUSINESS
6M2024
Rank
Supplier/
Subcontractors Business Profile
Products/service
provided to our
Company
Year of
commencement
of business
relationship Credit terms
Payment
method
Purchases by us from the
supplier/subcontracting
costs from the
subcontractors
RMB’000 %
1. Subcontractor A (1) A sole proprietor business established in China in
2017 which principally engages in provision of
pile foundation core drilling services.
Core drilling service 2017 Payment upon
issuance of
payment
notification
Bank
transfer
284 23.8
2. Supplier I A private company incorporated in China in 2014
with RMB100,000 registered capital which
principally engaged in sales of laboratory
instruments and chemical products, etc.
Testing consumables
and direct
materials
2024 Within 10 working
days after receipt
of invoice
Bank
transfer
260 21.8
3. Supplier J A private company incorporated in China in 2024
with RMB2 million registered capital which
principally engaged in sales of chemical products,
instruments and meters, office equipment and
consumables, etc.
Testing consumables
and direct
materials
2024 Payment upon
delivery
Bank
transfer
255 21.4
4. Supplier C A private company incorporated in China in 1995
with RMB1 million registered capital which
principally engaged in manufacturing of hydraulic
and pneumatic power machinery and component
and sale, leasing, repair and maintenance of
machinery and equipment.
Equipment
maintenance
service
2009 Within 10 working
days after receipt
of invoice
Bank
transfer
71 6.0
5. Subcontractor E A private company incorporated in China with
RMB500 thousand registered capital, which was
established in 2016 and principally engages in
provision of cleaning services and pile foundation
core drilling service.
Core drilling service,
equipment
maintenance
service and direct
material
2019 Quarterly settlement Bank
transfer
62 5.1

Five largest supplier/subcontractors combined 932 78.1
All other suppliers/subcontractors 263 21.9

Total purchases 1,195 100.0


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BUSINESS
Notes :
1. In 2017, in view of the increasing number of foundation testing service orders and the need of external assistance during the
foundation and geotechnical drilling process, our Company decided to expand our supplier base for core drilling services. A
then customer of our Company, which was a state owned enterprise in China, was aware that our Company was looking for
subcontractors to provide core drilling services, and they introduced the owner of Subcontractor A to our Company during
our provision of testing service to the then customer.
 To the best knowledge of our Directors, Subcontractor A was a sole proprietor based in Xinyi City with eight staff members
which principally engaged in provision of pile foundation core drilling services and our Company had been the sole customer
of Subcontractor A during the period from January 2021 to March 2024. The owner of Subcontractor A is an Independent
Third Party.
Our Directors confirm that the pricing of our Company’s transactions with Subcontractor A are comparable to those charged
to our Company by other independent subcontractors for similar services during the Track Record Period.
 To the best knowledge of our Directors, there is no past or present relationship (including, without limitation, family,
financing, employment or otherwise) between each of such the then customer, Subcontractor A and our Company, including
our Shareholders, Directors, senior management, supervisors and their respective associates.
2. To the best knowledge of our Directors, the shar eholders of  Subcontractor B and Subcontractor F are brothers, however
Subcontractor B and S ubcontractor F are two separate entities operating independently from each other and neither
Subcontractor B nor Subcontractor F is a direct or indirect subsidiary of either party.
To the knowledge of our Directors, save for the relationship between Subcontractor B  and
Subcontractor F, there are no relationship between any of our five largest customers and our five largest
suppliers or subcontractors for each year/period during the Track Record Period.
None of our Directors, their close associates, or any Shareholders who to our Directors’ knowledge
owned more than 5% of the issued Shares as at the Latest Practicable Date had any interest in any of the
five largest suppliers or subcontractors of our Company  for each year/period  during the Track Record
Period.  To the knowledge of our Directors, there is no past or present relationship (including, without
limitation, family, financing, employment or otherwise) between each of our five largest suppliers or
subcontractors for each year/period  during the Track Record Period and our Company, including our
Shareholders, Directors, senior management, Supervisors and their respective associates.


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BUSINESS
RESEARCH AND DEVELOPMENT
We engage  in the research and development solutions for our internal data centers and testing
systems, aiming to continuously enhance our project management and elevate the customer experience
when engaging with us. Through our research and development efforts, we aim to utilise technologies and
systems to enhance the efficiency, reliability, and security of our data centers and testing system.
In 202 0, we have independently developed our own integrated digital management system,
which is an intelligent engineering monitoring and supervision platform. The system is designed for the
management of our testing and inspection services, including project management, task distribution,
task reporting, workload management, as well as machineries and equipment usage record management.
The system enables our managers to easily and accurately supervise the implementation of testing and
inspection services across different locations remotely.  As at the Latest Practicable Date, our employees in
our information technology department, which consists of three members, were, as part of their job duties,
responsible for the research and development functions of our Company, including the maintenance of the
management system.  The research and development expenses recognised amounted to nil, nil,  RMB 0.1
million and RMB0.3 million for FY2021, FY2022, FY2023 and 6M2024 respectively.
COMPETITION
The market size of the construction engineering testing and inspection industry in China reached
RMB115.6 billion in terms of revenue in 2023, growing at a CAGR of 9.6% from 2019 to 2023. We
compete primarily with the construction engineering testing and inspection companies in Western
Guangdong, especially in Maoming, as a majority of testing and inspection companies in China
exclusively provide services within their respective provinces or regions, demonstrating a strong emphasis
on localisation. According to the CIC Report, there are currently more than 100 construction engineering
testing and inspection companies in Western Guangdong. According to the CIC Report, the top five
players with operations in Maoming commanded a combined market share of 40.8% in terms of revenue in
2023. Our Company ranked second among all independent construction engineering testing and inspection
companies in Maoming, with a market share of 10.6% . See “Industry Overview” in this prospectus for
more details.


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BUSINESS
INTELLECTUAL PROPERTIES
As of the Latest Practicable Date, we were the registered owner of one  domain name and one
software copyright in China. As at the Latest Practicable Date, we had registered two trademarks in
Hong Kong and five trademarks in China and were also in the process of applying for one trademark in
Hong Kong  and three  trademarks in China.  In addition, we are also applying for three  patents in China.
For details of our intellectual properties, see “Statutory and General Information” in Appendix VI to this
prospectus. To safeguard our intellectual property, we primarily rely on legal frameworks encompassing
trademark, patent, copyright, and trade secret laws. Our business overall reliance on specific intellectual
property rights is not considered material. Throughout the Track Record Period, we have not encountered
significant claims or disputes related to trademark, patent, or any other intellectual property infringement.
Additionally, as at  the Latest Practicable Date, no substantial adverse effects on our business or
operational outcomes have resulted from any infringement of our intellectual property rights.
INSURANCE
We maintain automobile insurance and personal injury insurance for our operations. We believe the
insurance coverage of our Company is consistent with industry practice in China. For risks related to our
lack of insurance coverage for professional liability, see “Risk Factors – Risks relating to our business and
industry – Our insurance coverage may not be sufficient to cover all losses and we may incur substantial
costs as a result of a severe business liability or disruption or other unexpected events ” in this prospectus.
As at the Latest Practicable Date, we had not made nor been the subject of any material insurance
claims. Our Directors believe that the insurance coverage maintained by us is consistent with our current
business operation and industry practice.
PROPERTIES
We are headquartered in Xinyi City, Maoming, Guangdong Province, China.
As at the Latest Practicable Date, we did not own any property and we operated our business
through three leased properties in Xinyi City.
Our headquarters are located at 4 Xinshang Road of Xinyi City which were used as our main offices
and laboratory unit. We also operate a laboratory unit and equipment warehouse on a piece of land located
next to the Dabei Line Highway d evelopment land on the west side of the Xinyi City.


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BUSINESS
The following table summarises the information regarding our leased properties as of the Latest
Practicable Date:
Address Landlord
Gross
floor area
Use of
the property Rental
Expiry of
lease
(m2)
Office Building
4 Xinshang Road,
Xinyi City
(༩4 ໮
፬ʮᅽɚᅽ)
Xinyi City Bureau
of Housing and
Urban-Rural
Development
800 Use for office RMB20,240 per month
from October 2023
to March 2025
RMB21,859 per month
from April 2025
to March 2027
RMB23,608 per month
from April 2027
to March 2029
31 March
2029
Construction Bureau
Compound,
4 Xinshang Road,
Xinyi City
(༩4 ໮
ண҅ɽ৫)
Xinyi City Bureau
of Housing and
Urban-Rural
Development
669 Use for office
and laboratory
unit
RMB14,718 per month
from October 2023
to February 2024
RMB15,896 per month
from March 2024
to February 2026
RMB17,168 per month
from March 2026
to February 2028
29 February
2028
Building 1 and 2 on
1 Xinyi Main Road S outh,
Dingbao Town, Xinyi City
(ی
1໮1ʿ2໮ᅽ)(Note)
Xinyi Xinye 17,802 Use for office
and laboratory
unit
RMB247,449  per month
from 8 April 2024
to 7 April 2029 , and
a subsequent 5%
increment for every
five year
7 April 2044
Note: See “– Relocation plan” below in this subsection for more details.
Save as disclosed above, our Company  did not have any other property interests as at the Latest
Practicable Date.


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Potential procedural and documentary defect relating to Dabei Line Land
Background
On 16 January 2014, our Company entered into a land leasing agreement (the “Land Leasing
Agreement”) with an independent third party (the “Lessor”), pursuant to which our Company, as lessee,
leased a piece of land located at Pikoudong, Tangchakou and next to the Dabei Line Highway development
land (ɺή)  (the “Dabei Line Land”) with a floor area of
6,000 m 2 from the Lessor from 1 March 2014 to 31 August 203 2.
Our Company has obtained a certificate issued on 8 November 2013 by the Cooperative of Changtang
Neighborhood, Dongzhen District, Xinyi City (ٟthe ultimate lessor
of the Dabei Line Land (the “Ultimate Lessor”), confirming that the Dabei Line Land was leased to the Lessor
and the Ultimate Lessor had no objection on the Lessor sub-leasing the Dabei Line Land to our Company.
On 13 January 2016, our Company received a request from the community cooperative and resident
committee of the community at which the Dabei Line Land was located. It was requested that our Company
should sub-lease the Dabei Line Land for the purpose of building a kindergarten hereon.
On 6 July 2016, our Company, the Lessor and Xinyi City Arts Kindergarten (̹ᖵஔ̼Յ෤) (now
known as Jixiang Kindergarten (Λୂ̼Յ෤)), the “Kindergarten”) entered into a sub-leasing agreement (the
“Sub-leasing Agreement”), pursuant to which our Company would sub-lease part of the Dabei Line Land
with a floor area of 4,000 m 2 to the Kindergarten, whereas our Company would keep a floor area of 2,000m 2
for our own use. Since the subleasing until 31 August 2023, our Company was entitled to an aggregate rental
payment of RMB2,646,000 from the Kindergarten.
Our Company has built certain temporary buildings and structures (the “Buildings”) on the Dabei Line
Land mainly as laboratories and warehouses with a gross floor area of 1,020 m 2. Our Company has been using
the Dabei Line Land and the Buildings thereon as part of the operations of our testing and inspection business.
Our Company’s revenue generated from the use of the Dabei Line Land and the Buildings thereon for
FY2021, FY2022,  FY2023 and 6M2024 were approximately RMB842,000, RMB488,000,  RMB997,000 and
RMB452,000 respectively, accounting for 2.1%, 2.4%,  2.4% and 2.0%  of the total revenue of our Company
for the corresponding periods.
To facilitate the execution of our relocation plan, see “– Relocation plan” below in this sub-section
for details,  on 31 August 2023, our Company, the Lessor and the Kindergarten entered into a termination
agreement (as supplemented by the supplemental agreements  dated 25 November 2023 and 28 April 2024),
pursuant to which it was confirmed that the Land Leasing Agreement and the Sub-leasing Agreement would
be terminated on 31 August 2023, and thereafter the Kindergarten would directly lease the Dabei Line Land
from the Lessor. Further, our Company was granted a transition period until 31 July 2024 to remove the
fixtures and fittings in the Buildings located on the Dabei Line Land and relocate our operations from the
Dabei Line Land. During the transition period, our Company could continue to use the Dabei Line Land and
was not required to make any rental payment.  The relocation of our operations from the Dabei Line Land
was completed i n July 2024.


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BUSINESS
The Lessor has also agreed to indemnify our Company against penalties or other losses arising from
the breach of the warranties and undertakings given by the Lessor as regards his right and authority to lease
the Dabei Line Land to our Company for operating our laboratories and testing and inspection business.
Potential procedural or documentary defect regarding the leasing of the Dabei Line Land
Uncertainty regarding the authority of the Lessor to lease the Dabei Line Land
Despite our Company has received a certification issued by the Ultimate Lessor confirming that the
Dabei Line Land had been leased to the Lessor and the Ultimate Lessor had no objection on the Lessor
sub-leasing the Dabei Line Land to our Company, our Company has not received any relevant documentary
evidence of approval having been obtained from the members in a relevant village meeting or two-thirds or
more of the village representatives of the Ultimate Lessor.
Relevant PRC regulations
As advised by our PRC Legal Advisers, with reference to the Land Administration Law (ɺή၍ଣ
) of the PRC and other related laws and regulations, the transfer or lease of collectively-owned land for
business purposes must be approved by two-thirds or more of the members in a relevant village meeting or
two-thirds or more of the village representatives. As there is no explicit PRC law or regulation to impose
penalties on the lessee for failure to obtain the above-mentioned approval, it is unlikely that we would be
subject to penalties due to the documentary defect regarding the approval from relevant village members.
Relevant certificates obtained by our Company from the regulatory authority
Our Company has obtained a certificate dated 21 November 2023 issued by the Xinyi City Natural
Resources Bureau (̹І್༟๕҅ ), which is responsible for real estate rights registration and land
planning in Xinyi City.
Based on the certificate, it has been confirmed that:
• The Dabei Line Land falls within the jurisdiction of the Xinyi City Natural Resources Bureau.
• The Ultimate Lessor holds the exclusive legal ownership of the Dabei Line Land, which is
designated as construction land.
• The use of the Dabei Line Land by our Company for operating laboratories and conducting
testing services does not violate the Dabei Line Land’s planned usage.
• Our Company was permitted to continue to use the Dabei Line Land for the abovementioned
activities in accordance with the relevant contractual agreements.


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BUSINESS
Compliance regarding the Buildings
Non-compliance regarding the Buildings
Our Company has constructed the Buildings on the Dabei Line Land. The Buildings are primarily
used for testing laboratories and warehouses.
On 11 July 2014, our Company obtained the Construction Project Planning Permit (ணʈ೻஝ྌ஢
̙ᗇ) (Permit No. Jianzi [2014] Lin 006) for part of the Buildings of a floor area of 306 m2. The permit was
valid for two years and our Company did not apply for an extension.
For the building of the remaining portions of the Buildings, including laboratories and warehouses,
our Company did not obtain the relevant Construction Project Planning Permit.
The Buildings have remained in place without being dismantled since their initial construction up to
the date of cessation of operation on the Dabei Line Land.
Relevant PRC regulations
As advised by our PRC Legal Advisers, with reference to the Land Administration Law ( ɺή၍
), the Urban and Rural Planning Law (), the Guangdong Province Urban and Rural
Planning Regulations (ඊ஝ྌૢԷ) and other relevant laws and regulations, temporary land use
within urban planning areas must first be approved by the relevant administrative authority responsible for
urban planning. Users of temporarily allocated land must adhere to the designated purpose specified in the
temporary land use contract and are prohibited from constructing permanent buildings.
For temporary construction within urban and town planning areas, a temporary construction project
planning permit shall be applied through the urban and rural planning department of the city or county
government, or the town government designated by the provincial government. The duration of the temporary
construction project planning permit cannot exceed two years. If an extension is required upon the expiration
of the usage period, an extension application must be submitted to the original issuing authority at least 30
days before the expiration date. The extension period cannot exceed one year.
Temporary constructions must be dismantled, and the land must be restored to its original condition
before the approved usage period expires. Failure to obtain approval for temporary construction, non-
compliance with approved plans, or failure to dismantle temporary buildings or structures beyond the approved
deadline will result in the urban or county government’s urban and rural planning department ordering their
removal within a specified timeframe. Additionally, a fine may be imposed, not exceeding the cost of the
temporary construction project.
In the case of permanent buildings constructed on temporarily allocated land, the natural resources
authority at or above the county level will direct their removal within a specified timeframe and impose a
fine ranging from five to 10 times the land reclamation cost based on the occupied area. Failure to remove
the buildings within the given timeframe may lead the enforcing agency, which made the administrative
decision, to apply for compulsory enforcement through the court in accordance with the law.


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In view of the foregoing, since the construction cost of the Buildings is approximately RMB1.34
million and the land reclamation cost for the Dabei Line Land shall not exceed RMB20,000 under current
local policy, our Directors expect and our PRC Legal Advisers concur that the maximum penalty we may be
subject to in relation to our leasing of, sub-leasing of and construction on the Dabei Line Land is approximately
RMB1.54 million. The Buildings were temporary constructions and as confirmed and undertaken by the
Lessor, any cost incurred in dismantling the Buildings and any penalty in relation to the Buildings shall be
borne by the Lessor.
Relevant certificates obtained by our Company from the regulatory authority
Our Company has obtained a certificate on 27 November 2023 issued by the Xinyi City Natural
Resources Bureau and the Xinyi City Urban Management and Comprehensive Law Enforcement Bureau
(҅).
Based on the certificate, it was confirmed that:
• The Xinyi City Natural Resources Bureau is the authorised governing body responsible for the
approval of temporary land use, temporary planning permits, and the construction of permanent
buildings and structures on temporarily allocated land in Xinyi City; the Xinyi City Urban
Management and Comprehensive Law Enforcement Bureau is the authorised governing body
responsible for matters related to temporary construction, such as overdue removal of temporary
buildings and structures, and holds the power to administer penalties.
• The Buildings fall under the jurisdiction of the Xinyi City Natural Resources Bureau and the
Xinyi City Urban Management and Comprehensive Law Enforcement Bureau (the “Relevant
Authorities”).
• Considering that (i) no complaints or reports concerning our Company have been received by the
Relevant Authorities and that our Company has proactively reported the details of the Buildings
and their usage; and (ii) our Company is relocating the relevant facilities and equipment from
the Buildings to a new operating location (the “Relocation”) and plans to continue our existing
business activities and operations at the new location and cease usage of the Buildings, in order
to ensure the continuous provision of construction engineering testing and inspection services
within the jurisdiction of the Relevant Authorities and to facilitate a smooth transition for the
Relocation, the Relevant Authorities have granted approval for the ongoing use of the Buildings
by our Company until the Relocation takes place. The Relevant Authorities will not require our
Company to dismantle the Buildings during this period. See “–  Relocation plan” below in this
sub-section for details of the Relocation.
• The Relevant Authorities will not impose administrative penalties, initiate investigations, or
initiate administrative dispute procedures against our Company regarding the non-compliance
of our Company to obtain certain temporary construction permits, extensions of temporary
construction permits, or the timely removal of temporary buildings.
• The aforementioned non-compliant issues of our Company do not constitute material non-
compliance of the relevant laws and regulations.


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BUSINESS
View of our PRC Legal Advisers
Our PRC Legal Advisers are of the view that:
• Based on the aforementioned certificates issued by the Xinyi City Natural Resources Bureau
and the Xinyi City Urban Management and Comprehensive Law Enforcement Bureau, the risks
of administrative penalties for our Company regarding the use of the Buildings, such as the
lack of temporary construction permits, extensions, or timely removal, are remote.
• Due to the absence of documentation to prove that the consent of the village meeting or the
village representatives of the Ultimate Lessor in respect of the lease of the Dabei Line Land to
the Lessor has been obtained, there is a risk that the validity of the lease of the Dabei Line Land
by our Company could be challenged by the village meeting or the village representatives, and
our Company may not be able to continue to use the Dabei Line Land.
• In accordance with the agreement between our Company and the Lessor, if the Lessor breaches
his obligation to provide a legally leased property obtained through appropriate legal procedures,
as well as the right to sub-lease the Dabei Line Land to our Company for laboratory and
testing operations, resulting in our inability to use the Dabei Line Land lawfully or incurring
administrative penalties or other losses, the Lessor is obligated to fully compensate our Company.
View of our Directors
Our Directors concur with the view of our PRC Legal Advisers that the risks of administrative penalties
for our Company regarding the use of the Buildings, such as the lack of temporary construction permits,
extensions, or timely removal, are remote.
Although the absence of documentary evidence of the consent of the village meeting or village
representatives of the Ultimate Lessor to lease the Dabei Line Land to the Lessor may expose our Company
to the risk of not being able to continue to use the Dabei Line Land, based on our Company’s plan of the
Relocation and that the revenue generated from our Company with the Dabei Line Land and the Buildings
during the Track Record Period accounted for a relatively small proportion of our Company’s total revenue,
the defects concerning the Dabei Line Land and the Buildings are not anticipated to have a significant adverse
impact on our business operations.
In addition, our Directors are of the view that the abovementioned non-compliances regarding the
Buildings are immaterial based on the below:
• Financially immaterial: The revenue generated with the Dabei Line Land and the Buildings
during the Track Record Period accounted for only 2.0 % to 2.4%  of our total revenue in each
financial year/ period.
• No penalty is anticipated: The Relevant Authorities have confirmed that they will not impose
administrative penalties, initiate investigations, or initiate administrative dispute procedures
against our Company regarding the non-compliances.


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BUSINESS
• No material operational impact: Our Company w as permitted to continue to use the Dabei Line
Land and the Buildings for its operations, as agreed or confirmed by the Lessor and the Relevant
Authorities, until 31 July 2024. As part of our Company’s expansion plan, our Company entered
into a leasing agreement regarding the lease of a new building in April 2024, see “– Relocation
plan” below in this sub-section for details. Our Directors are of the view that the new building
would be sufficient to accommodate the operations originally located on the Dabei Line Land.
• One-off incident: Saved for the Dabei Line Land and the Buildings, there were no similar issues
with respect to other properties leased by our Company; accordingly the non-compliances are
not recurring.
• Indemnity from the lessor of the Dabei Line Land: The Lessor has agreed to indemnify our
Company against penalties or other losses arising from the breach of the warranties and
undertakings given by him as regards his right and authority to lease the Dabei Line Land to
our Company for operating our laboratories and testing and inspection business.
Relocation plan
As part of our expansion plan, we have been looking for a suitable location to accommodate all our
existing offices and laboratories and support our growing operations.
In April 2024, we entered into a leasing agreement (the “New Leasing Agreement”) with Xinyi
Xinye, pursuant to which Xinyi Xinye has agreed to lease a premises  (the “New Building”) to our
Company from 8 April 2024 to 7 April 2044.
The New Building is located on 1 Xinyi Main Road South, Dingbao Town, Xinyi City (̹ɕ
ی1໮) with a  total floor area of 17,802 sq.m. The monthly rental payment for the first five
year of lease of the New Building shall be RMB13.9 per sq.m (RMB247,449 in total), with an increment
of 5% f or every five year.
Xinyi Xinye is a wholly-owned subsidiary and thus an associate of Xinyi Xinhui, a substantial
Shareholder. Hence Xinyi Xinye is a connected person of our  Company. Our Directors consider that
the terms and conditions of the New Leasing Agreement were arrived at after arms’ length negotiations
between the parties and are on normal commercial terms that are considered fair and reasonable and in the
interest of our Company and our Shareholders as a whole. The monthly rental payment during the leasing
terms of the New Building were determined with reference to the prevailing market prices.
As at the Latest Practicable Date, we have obtained the necessary licences and permits to carry
out laboratory operations in the New Building. We have commenced to move our business operations by
phases into the New Building, the relocation of our laboratory units on the Dabei Line Land to the New
Building was completed as at the Latest Practicable Date. W e expect that all of our operations including
our office and all laboratories units  shall be transited to the New Building and the relocation shall be
completed in the third quarter of 2024.


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BUSINESS
As we are relocating all our operations by phases from around April 2024 until the third quarter of 2024,
our Directors do not expect any material disruption to our operations arising from our relocation plan. The
two properties which we leased on 4 Xinshang Road, Xinyi City for office and laboratory units will remain
operational and serve our business needs during the relocation period. Therefore we believe our business to
continue without potential material disruptions during the relocation period.
As we expected to complete the relocation of our entire business to the New Building in the third
quarter of 2024, we expect not to continue the rental of the two properties on 4 Xinshang Road, Xinyi City
after the third quarter of 2024. Pursuant to the term of the leases, our Company is entitled to terminate the
leases with three months’ notice in advance without payment of any termination fee or charges by us.
After the relocation, the new office space and laboratories in the New Building will support the
development of our existing operations of the provision of construction engineering testing and inspection
services. It will also provide the additional space required to diversify our testing and inspection services
beyond construction engineering and expanding into areas including transportation, food and agricultural,
and fire protection. See “– Business strategies” in this section and “Future Plans and Use of Proceeds” i n
this prospectus for details.
The estimated total expenditure to relocate to the New Building is estimated to be RMB2.0 million,
which includes the relevant labour costs, purchase of office furniture, new equipment and other materials.
EMPLOYEES
Our people are at the core of our success, and we attribute much of our achievements to them. We
place great emphasis on cultivating and retaining a robust workforce. When recruiting new personnel, we
evaluate various criteria such as professional experience, educational qualifications, and alignment with
the specific requirements of our open positions. Moreover, we are committed to offering our employees
ongoing development through training programs to enhance their skill sets and expand their knowledge
base. As of the Latest Practicable Date, we had 106 employees in total, all of which are located in Xinyi
City, Maoming. The table below illustrates the distribution of our employees across different functions as
of the Latest Practicable Date:
Function
Number of
Employees
Management 7
Finance 3
Administration 19
On-site testing personnel 44
Laboratories technicians 22
Quality control 9
Information technology 2

Total 106


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BUSINESS
Our 106 employees hold a total of 179 testing qualifications issued and approved by the Guangdong
Association for Quality and Safety Testing and Appraisal of Construction Projects,  which are essential
in order to conduct proficient testing and inspection process in China. Among them, 5 5 are qualified
engineers specialising in construction engineering in China . By leveraging this broad range of expertise
and the collective knowledge and skills of our team, we are able to provide reliable and accurate testing
services that contribute to the success and safety of different types of construction projects. As at the
Latest Practicable Date, we also had three  qualified engineers specialising in food and agriculture in
China.
We have maintained certain number of employees to fulfil the corresponding personnel requirements
in relation to our certificates for construction engineering testing and inspection services. See “Regulatory
Overview – Qualifications”  in this prospectus for details. We have taken a number of measures to ensure
sufficient and qualified employees to comply with those statutory personnel requirements during the Track
Record Period and up to the Latest Practicable Date. First of all, we have maintained a Quality Manual in
accordance with relevant laws and regulations, which sets out our management requirements for personnel
including, among others, licenses required for our testing personnel, the implementation of an induction
qualification assessment system for personnel in key positions, and requirements and qualifications for the
authorized signatory. Secondly, we have compiled procedural guides related to personnel management,
including the Management Procedures for Recruitment, the Training and Assessment of Personnel, the
Management Procedures for Recruitment of Personnel and Confirmation of Competence, the Management
Procedures for Quality Supervision and the Competence Monitoring. Thirdly, we have designated
our comprehensive management department to assist the person in charge of quality to coordinate the
establishment of personnel files. In addition to retaining personnel files, such as academic certificates,
technical curriculum vitae, certificates of competency training, certificates and qualifications, we have
established and updated technical files of our technicians regularly. Fourthly, our quality person in charge
has been responsible for the annual training and examination program for our technicians to ensure that we
have sufficient reserves of technical personnel. Furthermore, our Company conducted an annual evaluation
of our integrated management system and personnel qualifications in order to make sure we comply with
relevant statutory personnel requirements.
According to the written confirmations issued by the Xinyi City Administration for Market
Regulation, the Xinyi City Bureau of Housing and Urban-Rural Development, and the Maoming City
Bureau of Housing and Urban-Rural Development on 20 November 2023, 21 November 2023, 19 March
2024,  28 March 2024 and 11 July  2024, our Company possessed necessary conditions and capacities
for provision of testing and inspection businesses, and had been in possession of requisite and qualified
personnel and conditions for our construction engineering testing and inspection businesses since we
obtained our first Construction Engineering Quality Inspection Agency Qualification Certificate from 6
November 2015 and our first Inspection and Testing Agency Qualification Certificate from 6 November
2001.


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BUSINESS
Our Company also places a strong emphasis on staff training and development to ensure our team
possesses the necessary skills and expertise to deliver high-quality testing and inspection services. We
invest in comprehensive training programs for our testing and inspection personnel and technicians that
encompass both technical knowledge and practical skills relevant to our industry. Our training initiatives
cover various aspects, including industry regulations, testing methodologies, equipment handling, safety
protocols, and quality control measures. We regularly update our training curriculum to stay abreast of the
latest advancements and best practices in the field of testing and inspection. By investing in staff training
and development, we ensure that our team is equipped with the necessary expertise to handle diverse
testing and inspection projects.
Our employee compensation package comprises several components, including base salary
and bonuses. The determination of employee compensation takes into account various factors such
as individual performance, qualifications, position, and seniority. We adhere to the social insurance
contribution plans established by the local governments in China. In accordance with national and local
laws and regulations governing social welfare and housing reserve funds, we fulfill our responsibility of
paying monthly social insurance premiums on behalf of our employees. These premiums cover essential
areas such as basic pension insurance, basic medical insurance, unemployment insurance, employment
injury insurance, maternity insurance and housing reserve fund. By meeting these obligations, we ensure
that our employees have access to the necessary social security benefits as mandated by the relevant
authorities.
Our Directors consider that we have maintained good relationship with our employees. We have not
experienced any significant disputes with our employees or any disruption to our operations due to labour
disputes. In addition, we have not experienced any difficulties in recruitment and retention of experienced
core staff or skilled personnel during the Track Record Period.
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
complying 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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BUSINESS
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
Company’s environmental, social, and climate-related risks and opportunities impacting our Company,
establishing and adopting the ESG policy and targets of our Company, reviewing our Company’s
performance annually against ESG-related targets and revising the ESG strategies as appropriate if
significant variance from the target is identified.
Our Board has established an ESG working group that comprises of the deputy general manager, a
staff from the finance department and a staff from the legal 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 Company  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 Company’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 semi-
annually basis via board meetings on the ESG performance of our Company and the effectiveness of the
ESG systems.
Strategies in addressing ESG-related risks
We will conduct enterprise risk assessment at least once a year to cover the current and potential
risks faced by our Company, 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 Company’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 Company’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 Company  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 Company 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 Company’s performance
in addressing the risks, we may revise and adjust the ESG strategies as appropriate.


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BUSINESS
We have adopted various strategies and measures to evaluate and manage the material ESG related
areas and to ensure our compliance with the Stock Exchange’s requirements on ESG, including but not
limited to, discussing among our management team from time to time to ensure all the material ESG
areas are recognised and reported, and ensuring the recommendations and the requirements on ESG under
the GEM Listing Rules are complied with. 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 Company  and our stakeholders in accordance with the
standards of Appendix C2 to the GEM Listing Rules. During the materiality assessment, our Company has
identified several key ESG areas, including environmental and resources management, occupational health
and work safety, service quality, supply chain management and anti-corruption. 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 Company and our Company
will continue to monitor related performances.
Impacts of ESG-related risks
In assessing the materiality of ESG risk factors, our Company  has taken aspects and extents of
impacts of the issues on the daily operation of our Company as a major consideration as shown below:
Material ESG-related risks Potential impacts
Environmental and
resources management
(short and long term)
Climate-related risks may reduce revenue and increase our
operating cost. See  “ – Tackle with climate change” below for
details.
Lack of monitoring for energy and water consumption may
increase operating cost.
Improper or delayed treatment or leakage of various wastes may
cause adverse impacts on surrounding environment, resulting in
complaints and environmental penalties.
Occupational health and work
safety (short term)
Our testing process carries out on site and in laboratories. Failure
to maintain safe work conditions and a lack of protective gears
may cause occupational hazards with fine and compensation to
employee.
Service quality (long term) Failure of or non-compliance with our quality control measures
may result in unreliable or inaccurate test results, which may in
turn damage our reputation and affect the demand for our services.


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BUSINESS
Supply chain management
(short term)
Our Company  contract with suppliers for testing consumables
for conducting testing services and subcontractors for certain
physically demanding works for foundation testing service.
Our Company  may fail to provide quality service in light of
inappropriate selection of suppliers/subcontractors and unsatisfactory
performance and/or unavailability of our subcontractors may
adversely affect our operations and profitability because of cannot
providing timely and accurate test results.
Anti-corruptions (long term) Violation of business ethics by our employees with customers
or suppliers/subcontractors may damage our reputation and
materially and adversely affect our business, financial conditions
and results of operations.
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 G overnment, a summary of which is set out in “Regulatory Overview – Laws and
Regulations Relating to Environmental Protection” in this prospectus. Given the nature of our business
that does not relate to manufacturing and production, our operational activities do not directly generate
industrial pollutants and thus our Directors are of the view that our Company’s  operational activities do
not significantly pose negative impact to the environment and our Company is not aware of any material
environmental liability risk or compliance costs during the Track Record Period. Our Directors also expect
that we will not incur significant costs for the compliance with applicable environmental protection rules
and regulations in the future. However, as a supporter of environment protection, we advocate for green
environment practices  to reduce our carbon footprint, constantly raise the awareness of environmental
protection among our employees and take  into  account of the resources and materials we uses in daily
operation.
Waste management
During the testing process of construction materials in our laboratories, we generate noise, waste
gases, liquid waste and solid waste pollutants. Set forth below are the major governance measures towards
our major environmental related risks.


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BUSINESS
Solid waste
We would separate the solid waste into two categories:
–  hazardous solid waste such as polychlorinated (brominated) biphenyl waste generated from
testing process of asphalt raw materials; and
–  non-hazardous solid waste such as waste construction materials sample (i.e. scrap iron,
cement and geosynthetic materials) and domestic waste.
We have engaged qualified third-party service providers for centralised disposal of our solid wastes.
For hazardous solid waste, they are required to be sealed and stored in special bottles before disposal.
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.
Liquid waste
Our liquid waste is mainly generated from testing process of asphalt raw materials and is required
to be sealed and stored in special bottles before collecting by qualified third-party service providers.
Domestic wastewater is treated by our sewage purification equipment to make sure the wastewater is
discharged after being treated legally.
Waste gases and dust
Waste gases and dust generated during our testing process are mainly treated by air purification
equipment before discharge.
Noise control
Noise may be generated during our testing process with the use of our laboratory equipment. We
minimise our noise emission by purchasing hearing protection devices for testing personnel and installing
soundproofed  doors and soundproofing and vibration reduction measures in our laboratory equipment to
reduce the level of noise.
During the Track Record Period, as confirmed by the relevant competent government authorities,
we had complied with applicable environmental laws and regulations in the PRC, and 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.  Our cost in relation to environmental protection was not significant for FY2021 , FY2022 and
6M2024. The expenses of RMB 0.2 million incurred during FY 2023 was mainly for purchasing and
installing those environmental protection equipment and facilities in our new laboratories.


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Resources management
Our energy consumption is mainly derived from electricity consumption in our headquarters,
laboratories and warehouses during our daily operation. We endeavour to proactively conserve energy
in response to the government’s initiatives and thus we have implemented measures to increase energy
efficiency in our operations to fulfil our environmental and social responsibility. See  “ – Metrics and
targets of ESG-related risks” below for our measures taken for saving energy.
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.
GHG emissions mainly consist  of scope 1 direct emissions from consumption of unleaded petrol
and diesel by daily use of vehicles, scope 2 indirect emissions derived from electricity consumption in our
headquarters, laboratories and warehouses during our daily operation and scope 3 other indirect emissions
that mainly arise  from business travel of employees. Regarding scope 3 other indirect emissions, such
emissions are mainly arising from purchased goods and services, business travel, employee commuting,
and other categories of activities in our value chain, all of which are counted as scope 3 emissions in
ESG disclosures, which tends to be reported voluntarily to avoid double counting. 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 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.
Although scope 3 other indirect emissions arising from our daily operation are expected to be
not significant as 1) most of our major suppliers, service providers and customers are located within
Guangdong Province of the PRC with relatively short distance logistic, 2) business trip by management
and employees during COVID-19 period was limited and 3) strict selection of suppliers and service
providers implemented as mentioned above, 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.


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Regarding climate-related metrics, assets especially all items under category of “Property, Plant and
Equipment” in the balance sheets are materially exposed to flooding and storms (physical risks). Besides,
all items of machinery equipment under category of “Property, Plant and Equipment” in the balance sheets
are materially exposed to shifts in customer preferences for our testing services (transition risks). All
items under category of “Property, Plant and Equipment”, “Trade and other receivables and prepayments”
and “Cash and cash equivalents” in the balance sheets are aligned with increase in revenue and business
expansion in the future if local authorities are enforcing higher standards for construction projects to meet
safety and environmental requirements, which also drive the demand for testing and inspection services
(climate-related opportunities). 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. See “ – Tackle with climate change” below for details.
The table below sets forth the quantitative disclosure of GHG emissions, energy consumption, water
consumption and waste generation during the Track Record Period of our operation in the PRC.
FY2021 FY2022 FY2023 6M2024
GHG emissions (note)
Scope 1 direct emissions (tonnes CO 2
equivalent) 21.88 16.84 29.59 16.31
Scope 2 indirect emissions (tonnes CO 2
equivalent) 70.29 70.23 84.20 38.63
Total (tonnes CO 2 equivalent) 92.17 87.07 113.79 54.94
Intensity (tonnes CO 2 equivalent/Revenue
RMB’000) 0.002 0.004 0.003 0.002
Energy consumption
Unleaded petrol (kWh) 60,637.52 46,984.90 81,474.25 45,493.79
Diesel (kWh) 20,368.49 15,369.86 28,140.22 14,864.56
Purchased electricity (kWh) 115,218.00 115,106.00 138,015.80 63,320.31
Total (kWh) 196,224.01 177,460.76 247,630.27 123,678.66
Intensity (kWh/Revenue RMB’000) 4.93 8.89 5.97 5.42
Water consumption
Usage (tonnes) 412.00 275.00 295.00 132.00
Intensity (tonnes/Revenue RMB’000) 0.01 0.01 0.01 0.01
Waste generation
Hazardous waste (kg) – – 2,600.00 7,000.00
Non-hazardous waste (kg) 1,250.00 1,250.00 2,012.50 1,112.50
Total (kg) 1,250.00 1,250.00 4,612.50 8,112.50
Intensity (kg/Revenue RMB’000) 0.03 0.06 0.11 0.36
Note: Scope 3 other indirect emissions arising from our daily operation are not significant as mentioned above.


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Going forward, we plan to control the consumption of energy,  GHG emissions, water consumption
and waste generation and aim to maintain relevant levels per RMB1,000 revenue at 90% to 110%
compared to that of 2024 over the next three years. 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:
• implementing recycling policy to ensure solid waste and liquid waste will be collected and
recycled by qualified third-party service providers;
• 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 Company will continue to monitor emission of various waste regularly and our administration
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 categorised 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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BUSINESS
Set forth below is a summary of the climate-related risks our Company  identified over the short,
medium and long term.
Risks Sources Potential Impacts
Physical risks
(actual)
–  Extreme weather conditions such as
flooding and storms (Short term)
–  Reduced revenue from damage
to assets
–  Increased operating expenses
Transition risks
(potential)
–  Change in climate-related
regulations ( Medium to long term)
–  Shifts in customer preferences
(Long term)
–  Increased operating expenses
–  Reduced demand for our
services
Regarding physical risks, we have purchased adequate insurance to safeguard us and our employees
against any climate change or extreme weather conditions like typhoons  and storms  that would materially
and adversely affect our business and operations. See “ – Insurance” in this section for details.
In response to transition risks, particularly (i) the evolving environmental and climate regulatory
requirements and (ii) the shifts in customer preferences that could lead to negative financial impact such as
increase our environmental compliance costs, 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, See  “ – Environmental, Social and Corporate Governance – Environmental and Resources
Management” in this section. During the Track Record Period, we had not experienced any material
impact on our business operations or financial performance as a result of climate change or extreme
weather conditions.
Occupational health and work safety
We have in place stringent internal safety policies to ensure our safe operations and ensure our
compliance with relevant PRC laws and regulations. Our Company has implemented various precautions
and safety measures including but not limited to:
• formulating safety policies for on-site testing and laboratory testing;
• providing safety training to our employees;
• requiring all employees to wear appropriate personal protective equipment for on-site testing
and laboratory testing;


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BUSINESS
• placing warning signs and labelling the containers  in our laboratories holding the dangerous
substance legibly with the name of the substance, hazard classification and symbol, particular
risks inherent in the substance, and required safety precautions; and
• prohibiting smoking in the work areas.
During the Track Record Period, as confirmed by the relevant competent government authorities,
we had complied with applicable occupational health and work safety laws and regulations in the PRC,
and did not involve in work safety accidents. During the Track Record Period, we did not record any
accidents that had a material impact on our business or operations.
Supply Chain Management
Our Company  aims to minimise the environmental and social risks of its suppliers and
subcontractors by setting criteria for supplier/subcontractor s selection. Suppliers and subcontractors
should comply with all relevant local and international laws and regulations regarding anti-bribery, anti-
corruption and other unethical business practices. In addition, our Company will prioritise local suppliers/
subcontractors  or suppliers/subcontractors  that are geographically closer and more accessible to our
Company to reduce carbon footprint (i.e.  scope 3 upstream emission from logistics).
Our Company  evaluates supplier/subcontractor by various criteria such as quality, timeliness of
delivery, after-sales services and qualification during the supplier/subcontractor selection process. Only
supplier/subcontractor that meet our criteria may be added to an approved list for further considerations.
Supplier/subcontractor who are found to be incompliant with our Company’s policy will be terminated and
removed from the approved list until the situation has been improved.


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BUSINESS
Social matters
We have adopted policies on compensation and dismissal, equal opportunities, diversity, anti-
discrimination, and other benefits and welfare. See “– Employees” in this section 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 the Latest Practicable Date:
Number of staff % of total
By gender
Male 67 63.2
Female 39 36.8

Total 106 100

By age group
30 or below 37 34.9
31–40 55 51.9
41–50 11 10.4
51 or above 3 2.8

Total 106 100

For further discussion on the other key ESG areas we have identified, namely, the areas of service
quality  and anti-corruption, see “ – Quality Control”  and “– Risk Management and Internal Controls” in
this section.
To sum up, we attach great importance to our ESG management and recognize that an effective and
efficient ESG management requires our continuous efforts and investment and contribution from a variety
of departments. We endeavor 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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BUSINESS
APPROVALS, LICENCES  AND PERMITS
As advised by our PRC L egal Advisers, as of  the Latest Practicable Date, our Company had
obtained all the requisite approvals, licences and permits from the relevant regulatory authorities for our
operation in China and all of them are in force as of the Latest Practicable Date. For details of the requisite
approvals, licences and permits, see “Regulatory Overview” in this prospectus.
A summary of our approvals, licences and permits is as follows:
Approval/License/Permit Issuing Organisation Issuing Date Expiry Date
The Construction Engineering
Quality Inspection Agency
Qualification Certificate (1)
Guangdong Provincial
Department of Housing
and Urban-Rural
Development
20 December
2023
5 November 2024 (2)
The Inspection and Testing
Agency Qualification
Certificate (1)
Guangdong AMR 31 July 2024 25 March 2030
Notes :
(1) The Construction Engineering Quality Inspection Agency Qualification Certificate is governed by the Administrative
Measures for the Quality Inspection of Construction Engineering promulgated by the Ministry of Construction on
28 September 2005 which was re-promulgated by the MOHURD on 29 December 2022 and became effective on
1 March 2023, the Notice on Issuance of Qualification Standards of Construction Engineering Quality Inspection
Agencies issued and implemented by the MOHURD on 31 March 2023, together with other regulations.  As at the
Latest Practicable Date, our Company has obtained both the qualification of special inspection agency and the
qualification of evidential inspection agency under the relevant Administrative Measures.
 The Inspection and Testing Agency Qualification Certificate is governed by the Administrative Measures for the
Qualification Accreditation of Inspection and Testing Agencies promulgated by the General Administration of
Quality Supervision, Inspection and Quarantine on 9 April 2015 and amended on 2 April 2021 by the SAMR,
together with other relevant regulations.
 See “Regulatory Overview” in this prospectus for details.
(2) Our Company will apply for a new certificate under the  2023 Administrative Measures and the  Qualification
Standards of Construction Engineering Quality Inspection Agencies, according to which a new qualification
standard for the Construction Engineering Quality Inspection Agency Qualification Certificate shall be introduced
comprising the Comprehensive Qualification and Specialised Qualifications. As at the Latest Practicable Date, the
Implementation Rules have not yet been officially released  and therefore the  application process for obtaining the
new certificate under the new standard  has not yet been made available. Existing construction engineering quality
inspection agency is granted a transition period till 31 October  2024 to apply for a new qualification certificate
according to such standard. See “Regulatory Overview” in this prospectus for details.
Neither our Directors nor our PRC Legal Advisers foresaw difficulties in obtaining six out of the nine Specialised
Qualifications as described in “– Business Strategies – Expanding our construction engineering testing services
to achieve Comprehensive Qualification under the Qualification Standards of Construction Engineering Quality
Inspection Agencies and strengthen our existing construction engineering testing and inspection services.” in
this section, fulfilling the application requirements and meeting the above-mentioned transition deadline. See “–
Business Strategies” in this section for details.


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BUSINESS
MATERIAL AWARDS
During the Track Record Period, we have obtained a number of recognitions in respect of our
services and operations, a summary of which is as follows:
Award/Certificate Issuing Organisation Issuing Date Expiry Date
Comparative test for “ Low
strain in foundation piles.”
(“ਿᅸЭᏐᜊ” ࿁ˢ༊᜕
တจ)
Guangdong Construction
Engineering Quality and
Safety Inspection and
Appraisal Association
30 October 2023 N/A
Comparative test for
“Waterproofing membrane
(tensile strength, elongation
at break)”
(“ԣ˥՜ҿ(e
ଟ) ”࿁ˢ༊᜕ධͦ
တจ)
Guangdong Construction
Engineering Quality and
Safety Inspection and
Appraisal Association
20 October 2022 N/A
Comparative test for “ Sand
chloride ion content”
(“ಣᕎɿўඎ” ࿁ˢ༊᜕
တจ)
Guangdong Construction
Engineering Quality and
Safety Inspection and
Appraisal Association
20 October 2022 N/A
Guangdong Province (Yue)
Hainan Province (Qiong)
“Chuang’ er Cup”  Cement
Inspection Comparative
Physical Performance
Inspection – Qualified
Unit 2022
(2022޲؇(ຽ)޲ی(ᖘ)
“؎”Ꮸ᜕ɽ࿁ˢ
ঐᏨ᜕ – ఊЗ)
Guangdong Quality
Supervision Cement
Inspection Station
(Guangzhou)
15 November 2021 N/A
Guangdong Province (Yue)
Hainan Province (Qiong)
“Chuang’ er Cup”  Cement
Inspection Comparative
Physical Performance
Inspection – Qualified
Unit 2021
(2021޲؇(ຽ)޲ی(ᖘ)
“؎”Ꮸ᜕ɽ࿁ˢ
ঐᏨ᜕ – ఊЗ)
Guangdong Quality
Supervision Cement
Inspection Station
(Guangzhou)
18 November 2021 N/A


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EFFECT OF THE COVID-19 PANDEMIC
The initial outbreak of COVID-19 in China during the first quarter of 2020, followed by subsequent
resurgences of the virus in certain major cities throughout 2022, has resulted in the implementation of
several measures to mitigate the spread of the pandemic. These measures include imposing lockdowns,
suspending construction activities, implementing travel restrictions, and enforcing strict social distancing
and quarantine protocols. In particular, the construction personnel in Maoming have faced the challenges
of intermittent isolation periods throughout the pandemic. Various companies in Guangdong Province
including Maoming periodically required employees to undergo nucleic acid testing for COVID-19
and employees infected or identified as close contacts shall be isolated, which affected their normal
work operations. Both our Company and our customers experienced increased abnormal working hours
and reduced normal working hours due to the aforementioned reasons. For instance, our Company had
arranged several rounds of collective nucleic acid tests for our employee in FY2022, and the total number
of days off due to the pandemic was 206  person-day, as compared to nil  in FY2021. These necessary
precautions have disrupted the regular workflow and caused delays in the progress of various construction
and infrastructure projects, which led to a direct impact on our testing and inspection operations.
With the construction schedules being pushed back, our customers ’ demand on our construction
engineering testing and inspection services had been postponed. As a result, the revenue for FY2022 has
experienced a decline compared to previous years. The reduced revenue has put additional strain on our
net profit as a result of the presence of fixed costs and expenses, which remain relatively inflexible.
Meanwhile, measures imposed by the PRC G overnment in relation to the pandemic had also
affected our customers’ settlement progress. As a result, the trade receivables turnover day of our
Company for FY2022 has increased significantly  from 271 days in FY 2021 to 639 days in FY2022.
Attributable to the  prolonged settlement cycle due to the pandemic, combined with the decrease in net
profit, our Company recorded negative cash flows from operating activities for FY2022.
Overall, the combination of the slow settlement from customers, reduced revenue, and fixed costs
and expenses has led to a challenging financial situation for our Company in FY2022, impacting various
vital financial metrics and requiring prudent management and adaptation in response to the circumstances.
As of the Latest Practicable Date, the impact of the COVID-19 pandemic on our operation has diminished
and our Company’s operation has already resumed to normal level. Our Directors are of the view that the
COVID-19 pandemic will not cause material adverse impact on our financial performance and its business
operation.


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BUSINESS
LEGAL PROCEEDINGS AND COMPLIANCE
Legal Proceedings
We are subject to legal proceedings, investigations and claims incidental to the regular operations
of our business from time to time. During the Track Record Period and up to the Latest Practicable Date,
we were not involved in any material litigation or arbitration proceedings pending or, to our knowledge,
threatened against us or any of our directors that could have a material adverse effect on our business,
financial condition or results of operation.
Non-compliance
We are subject to a number of regulatory requirements and guidelines issued by the regulatory
authorities in China. During the Track Record Period and up to the Latest Practicable Date, we had not
experienced any non-compliance that, in the opinion of our Directors, is likely to have a material adverse
effect on our business, financial condition or results of operation. Our Directors are of the view, and our
PRC Legal Advisers concur, that during the Track Record Period and up to the Latest Practicable Date, we
had complied with applicable PRC laws and regulations that are essential to our business operations in all
material respects.
RISK MANAGEMENT AND INTERNAL CONTROLS
Risk management
We are exposed to various risks during our operation. For more details, see “Risk Factors” in this
prospectus. We have implemented various policies and procedures to ensure effective risk management
at each aspect of our operation, including the provision of on-site testing and inspection, performance of
analytical tests in our laboratories, administration of daily operation, financial reporting and recording,
fund management, compliance with applicable laws and regulations on environmental protection and
workplace safety.
We have also in place anti-corruption, anti-bribery and anti-money laundering policies to safeguard
against any such activity. The policy explains potential conduct prohibited under our anti-corruption,
anti-bribery and anti-money laundering policies and the relevant measures to be adopted pursuant to such
policies. In particular, our key anti-corruption and anti-bribery measures include:
• our Board and our risk control and audit department are responsible for anti-corruption and
anti-bribery works;
• the management of our Company is responsible for advocating the corporate culture of
honesty and integrity and creating an anti-corruption and anti-bribery corporate culture
environment, assessing the risk of fraud and establishing specific control procedures and
mechanisms to reduce the chances of fraud occurring, establishing mechanisms for receiving,
investigating, reporting and proposing opinions on the handling of reports of fraud, as well as
accepting supervision from our Board and our risk control and audit department;


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BUSINESS
• our risk control and audit department is responsible for organising and executing cross-
departmental and company-wide anti-corruption and anti-bribery work including assisting
in the establishment of anti-corruption and anti-bribery mechanisms and paying reasonable
attention to and checking possible fraudulent behaviours in the process of internal auditing,
assisting the management and different departments in conducting the annual risk assessment,
assisting in carrying out anti-corruption and anti-bribery publicity activities, and accepting
fraud reports, conducting relevant investigations and reporting;
• we conduct background checks on personnel who are prepared to be hired or promoted to
important positions, such as educational background, work history and criminal records;
• we provide anti-fraud and ethics training to our new employees and distribute our anti-
corruption and anti-bribery policies to all employees through employee handbooks, rules and
regulations and quality manual;
• we strictly prohibit our management and employees to accept bribes in any of our business
operations;
• any unethical and non-honest behaviours can be reported through our reporting channels,
either in real names or anonymously. For anonymous reports involving ordinary employees
and middle management, our risk control and audit department shall make a preliminary
assessment before deciding whether or not to report to the management; for reports in real
names involving ordinary employees and middle management, our risk control and audit
department shall report to our Board for further action within ten working days from the
receipt of the reports. For anonymous reports or reports in real names involving senior
management, our risk control and audit department shall report to our Board for further
action within seven  working days from the receipt of the reports. When conducting the
relevant investigation, our risk control and audit department may also collaborate with
other relevant departments within our Company or engage external experts to participate in
the investigation as necessary. Regardless of whether an investigation is initiated, our risk
control and audit department is required to provide feedback to the whistleblower on the
results of the actions.
Our Directors confirm that, during the Track Record Period and up to the Latest Practicable Date,
we were in compliance with anti-corruption and anti-bribery laws and regulations in the PRC, and were
not subject to any administrative penalties or investigations from any regulatory authorities in respect of
such activities.
Our Board oversees and manages the overall risks associated with our operation. We have prepared
written terms of reference in compliance with Rule 5.28 of the GEM Listing Rules and the Corporate
Governance Code as set out in Appendix C1 to the GEM Listing Rules.


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To monitor the ongoing implementation of our risk management policies and corporate governance
measures after the Listing, we have adopted or will continue to adopt, among other things, the following
risk management measures:
• establish an audit committee to review and supervise our financial reporting process and
internal control system. Our audit committee consists of three members, namely Ms. Liu
Hongge, who serves as the chairlady of the committee, Ms. Deng Dian and Mr. Luo Qiling.
For the qualifications and experience of these committee members, see “Directors and Senior
Management” in this prospectus;
• adopt various policies to ensure compliance with the GEM Listing Rules, including but
not limited to aspects related to risk management, connected transactions and information
disclosure;
• provide anti-corruption and anti-bribery compliance training periodically to our senior
management and employees to enhance their knowledge and compliance with applicable laws
and regulations; and
• attend training session by our Directors in respect of the relevant requirements of the GEM
Listing Rules and duties of directors of companies listed in Hong Kong.
Internal control
Our Directors are responsible for monitoring our internal control system and for reviewing its
effectiveness. In accordance with the applicable PRC and Hong Kong laws and regulations, we will
implement the following internal control procedures to ensure our compliance with legal or regulatory
requirements in respect of our business operation:
• We have established a comprehensive list of standards, licences, and filings that are essential
for the proper operation of our business. This list is regularly reviewed and updated to reflect
our evolving experience with local authorities and the guidance provided by our external
advisors.
• We will closely monitor the acquisition of licences  and fulfill the necessary filings in
accordance with the list referred to above and ensure that all relevant licences and filings are
obtained and up-to-date.
• We will regularly communicate with our employees with regard to contributions to social
insurance plans and housing reserve fund, and with local labor and housing reserve fund
authorities with regard to specific local practice.


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BUSINESS
• We will organise internal training programs to be conducted by in-house or external experts
to our Directors, senior management and relevant employees on updates regarding the
relevant PRC laws and regulations on a regular basis with a view to proactively identify any
concerns and issues relating to any potential non-compliance.
In preparation for the Listing, our  Company has engaged an independent third party consultant
(the “Internal Control Consultant”) to perform a review over selected areas of our internal controls
over financial reporting in September 2023 (the “Internal Control Review”). The scope of the Internal
Control Review performed by the Internal Control Consultant was agreed between us, the Joint Sponsors
and the Internal Control Consultant. The selected areas of our internal controls over financial reporting
that were reviewed by the Internal Control Consultant included entity-level controls and business process
level controls, including revenue and receivables, purchases and payables, payroll, fixed and intangible
assets, inventory, treasury, insurance, financial reporting, taxes, legal management and general controls of
information technology.
The Internal Control Consultant performed the follow-up reviews in November 2023 to review
the status of the management actions taken by our  Company to address the findings of the Internal
Control Review (the “Follow-up Review”). The Internal Control Consultant did not have any further
recommendation in the Follow up Review.
The Internal Controls Review and the Follow-up Review were conducted based on the information
provided by our Company and no assurance or opinion on internal controls was expressed by the Internal
Control Consultant.


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RELATIONSHIP WITH THE CONTROLLING SHAREHOLDER
AND NON-COMPETITION UNDERTAKING
RELATIONSHIP WITH XINYI CITY CEQS CENTER
As at the Latest Practicable Date, Xinyi City CEQS Center directly held 80% of our issued share
capital, thus the Controlling Shareholder of our Company under the GEM Listing Rules. Immediately
following the completion of the Share Offer (assuming the Offer Size Adjustment Option is not exercised),
Xinyi City CEQS Center will hold 56% of our enlarged issued share capital. As such, Xinyi City CEQS
Center will continue to be the Controlling Shareholder immediately following the completion of the Share
Offer.
Xinyi City CEQS Center is a public institution of the Xinyi City People’s Government, under
the Xinyi City Bureau of Housing and Urban-Rural Development, which is principally responsible for
the implementation of the policies, laws and regulations in relation to the quality of construction works
and construction safety in the PRC, the supervision and management of building construction and
infrastructure projects, supervision and inspection of the quality of construction works and construction
safety, issuance of project quality supervision report, safety evaluation letter and safety supervision
report; educating and provision of training to parties involved in the construction projects to establish
and improve the construction safety system in Xinyi City.  To the best knowledge, information and belief
of the Directors,  having made all reasonable enquiries, Xinyi City CEQS Center does not engage in any
commercial business or operate any commercial entity.  As such, Xinyi City CEQS Center constitutes
a PRC Governmental Body under the GEM Listing Rules. As at the Latest Practicable Date,  to the
best knowledge, information and belief of our Directors after making reasonable enquiries , Xinyi City
CEQS Center does not carry out or control any other business and directly or indirectly invested in other
companies.
According to the Regulations on the Quality Supervision and Management of Housing Construction
and Municipal Infrastructure Projects (), spot checks
will be conducted by Xinyi City CEQS Centre on major construction materials, building components and
engineering entity during the project quality supervision process.  Given that Xinyi City CEQS Center
does not have the qualification to perform construction engineering inspection, it would engage qualified
inspection agencies, such as our Company, to conduct testing and inspection of construction materials
on its behalf.  As such, o ur Company was engaged by Xinyi City CEQS Center to conduct testing and
inspection of construction materials used in the projects. During the Track Record Period and up to the
Latest Practicable Date, save for the provision of said services to Xinyi City CEQS Center, our Company
did not engage in any other transactions with Xinyi City CEQS Center.
Each of our Directors and Controlling Shareholder has confirmed that none of them nor any of
their respective close associates has any interest in any business, apart from the business of our Company,
which competes with, or is likely to compete with our business, whether directly or indirectly, which
would otherwise require disclosure under Rules 11.04 of the GEM Listing Rules.


--- page 268 ---
– 257 –
RELATIONSHIP WITH THE CONTROLLING SHAREHOLDER
AND NON-COMPETITION UNDERTAKING
NON-COMPETITION UNDERTAKINGS
To ensure a clear delineation of the Restricted Business (as defined below) and the business of
Xinyi City CEQS Center and its associates, on 13 August 2024, Xinyi City CEQS Center, being the
convenantor,  entered into the deed of non-competition (the “Deed of Non-Competition”) with our
Company, pursuant to which, Xinyi City CEQS Center has, among other things, unconditionally and
irrevocably undertaken and covenanted  to our Company that during the Relevant Period (as defined
below), Xinyi City CEQS Center shall (and shall procure its associate, excluding our Company, to):
(a) not, directly or indirectly (including through any body corporate, partnership, joint venture
or other contractual arrangement or as a principal or an agent, whether on their own account
or on behalf of any person, firm or company or through any entities), invest in, be engaged
in, participate in or hold any right or interest in any business or activity which will or may
compete with the business engaged by our Company (the “Restricted Business”);
(b) in respect of any business opportunity identified, being proposed or offered to participate
by it and/or its associates for the carrying on, investment in or engagement in any principal
business (the “ Business Opportunity ”) currently and from time to time engaged by our
Company, refer, or shall procure its associates to refer (where such Business Opportunity has
been proposed or offered to it and/or its associates by a third party), such Business Opportunity
to our Company by giving a written notice (which shall contain all information of, and the
relevant terms and conditions for, the Business Opportunity obtained thereby) (the “Referral
Notice”) within 14 days after it and/or its associates has identified, has been proposed or
offered to participate in the Business Opportunity, and our Directors who are not the directors
of any associates of Xinyi City CEQS Center and have no actual or potential material interest
in the Business Opportunity, directly or indirectly, will decide whether or not to take up such
opportunity. Any Director who is a director of any associates of Xinyi City CEQS Center or
has actual or potential material interest in the Business Opportunity shall abstain from voting
at, and shall not be counted in the quorum for, any Board meeting convened to consider
such Business Opportunity. The factors that will be taken into consideration in making the
decision shall include whether taking up the Business Opportunity is in line with the business
strategy and future business development of our Company and hence the overall interests of
our Shareholders. If it is decided that our Company shall take up such Business Opportunity,
our Directors shall take all actions as may be necessary, including passing the requisite
resolutions, to give full effect to such decision;
(c) if a Business Opportunity is refused by our Company, Xinyi City CEQS Center or its
associates may take up such opportunity if (i) a notice is received by Xinyi City CEQS Center
from our Company confirming that the Business Opportunity is not accepted or Xinyi City
CEQS Center or its associates have not received from our Company a notice confirming that
the Business Opportunity is accepted within 30 days after the Referral Notice is given to our
Company; (ii) the principal terms of which Xinyi City CEQS Center or its associates carry
on, invest or engage in are no more favourable than those made available to our Company;
and (iii) it would not result in a breach of any provisions of the Deed of Non-Competition;


--- page 269 ---
– 258 –
RELATIONSHIP WITH THE CONTROLLING SHAREHOLDER
AND NON-COMPETITION UNDERTAKING
(d) If there is any material change in the nature, terms or conditions of such Business
Opportunity pursued by Xinyi City CEQS Center or its associates, it (or they) shall and
shall procure its (or their) associates to refer such Business Opportunity as so revised to our
Company as if it were a new Business Opportunity; and
(e) provide to our Company and/or our Directors (including the independent non-executive
Directors) from time to time all information necessary for an annual review by the
independent non-executive Directors with regard to compliance with the terms of the Deed
of Non-Competition. Such review results will be disclosed in our Company’s annual reports
after Listing. Xinyi City CEQS Center has also undertaken to allow our Directors, their
respective representatives and the auditors of our Company to have sufficient access to the
relevant records of Xinyi City CEQS Center and its associates to ensure their compliance
with the terms and conditions of and for monitoring the performance of the Deed of Non-
Competition. Xinyi City CEQS Center has also undertaken to issue an annual confirmation to
our Company on compliance with the terms of the Deed of Non-Competition, and consenting
to the disclosure of such confirmation in the annual reports of our Company, thereby
enabling our Company to keep monitoring the compliance with the Deed of Non-Competition
by Xinyi City CEQS Center.
For the purpose of the Deed of Non-Competition, Xinyi City CEQS Center and its close associates
are allowed to hold shares in a company or business which engages in the Restricted Business, provided
that the aggregate interest of Xinyi City CEQS Center and its close associates is less than 30% or any
lower percentage which would trigger the mandatory general offer obligations under the applicable
rules of the relevant stock exchange, and do not have power to control the majority of the relevant
board of directors; and the “Relevant Period” with respect to Xinyi City CEQS Center means the period
commencing from the Listing Date and expiring on the earlier of the date on which (i) that entity and its
close associates (individually or taken as a whole) cease to own 3 0% or more of the then issued share
capital of our Company directly or indirectly or Xinyi City CEQS Center ceases to be considered as the
Controlling Shareholder (within the meaning ascribed to it under the GEM Listing Rules from time to
time) of our Company and do not have power to control the majority of the Board; and (ii) the H Shares
cease to be listed on the Stock Exchange.
Our Directors (including our independent non-executive Directors) are allowed to engage
professional advisers at our costs for advices on matters relating to the Business Opportunity or if and
when they think necessary in the course of reviewing the compliance with the Deed of Non-Competition.


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– 259 –
RELATIONSHIP WITH THE CONTROLLING SHAREHOLDER
AND NON-COMPETITION UNDERTAKING
INDEPENDENCE FROM XINYI CITY CEQS CENTER
Having considered the following factors, our Directors are of the view that our Company is capable
of carrying on our business independently from our Controlling Shareholder and its close associates
following the completion of the Share Offer, details of which are set out below:
Management Independence
Our Board comprises four  executive Directors, two  non-executive Directors and three  proposed
independent non-executive Directors and our board of supervisors consists of five  Supervisors. The
non-executive Directors will not be involved in the major decision making of our Company  and only
participate in board meetings of our Company where decisions are collectively made by members of our
Board. The independent non-executive Directors will be  appointed in accordance with the requirements
under the GEM Listing Rules to ensure that they will  be  able to bring independent judgment to the
decision-making process of our Board and the decision of our Board are made only after due consideration
of independent and impartial opinions. None of our Directors, Supervisors or the members of our senior
management team holds any position at our Controlling Shareholder or its close associates.
Having considered the above factors, our Directors are of the view that they are able to perform
their roles in our Company independently, and our Directors are of the view that we are capable of
managing our business independently from Xinyi City CEQS Center after the Listing.
Operational Independence
Our Company holds all of the relevant material licences, qualifications and permits required for
conducting our business. We have access to customers and suppliers independent of Xinyi City CEQS
Center. We have our own accounting and financial department, and human resources and administration
department which have been in operation and are expected to continue to operate separately and
independently from Xinyi City CEQS Center and its close associates. We have also established a set of
internal control procedures and adopted corporate governance practices to facilitate the effective operation
of our business.
In light of the above, we believe that we are capable of carrying on our business independently of
Xinyi City CEQS Center and its associates. Our Directors confirmed that our Company will be able to
operate independently from Xinyi City CEQS Center and its associates upon the Listing.


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– 260 –
RELATIONSHIP WITH THE CONTROLLING SHAREHOLDER
AND NON-COMPETITION UNDERTAKING
Financial Independence
We have our own internal control and financial and accounting departments and respective systems,
which are independent from those of Xinyi City CEQS Center and its close associates. Accounting
functions and financial decision making will be carried out by our Company independently and according
to our business needs and financial conditions. In addition, we have in place independent internal control
and independent treasury function for cash collection and payment.
Our Directors confirmed that, as at the Latest Practicable Date, our Company did not provide any
loans, guarantees or pledges to Xinyi City CEQS Center and its close associates and vice versa. Save for
capital injection by Xinyi City CEQS Center for subscription of the registered capital of our Company, o ur
source of funding was independent of Xinyi City CEQS Center and none of Xinyi City CEQS Center or its
associates, financed our operations during the Track Record Period and as at the Latest Practicable Date.
CORPORATE GOVERNANCE MEASURES
Our Company will comply with the provisions of the Corporate Governance Code in Appendix
C1 to the GEM Listing Rules (the “Corporate Governance Code”), which sets out principles of good
corporate governance.
Our Directors recognize the importance of good corporate governance in protection of our
Shareholders’ interests. We would adopt the following measures to safeguard good corporate governance
standards and to avoid potential conflict of interests between our Company and Xinyi City CEQS Center:
(a) where a shareholders’ meeting is to be held for considering proposed transactions in which
Xinyi City CEQS Center or its associates has a material interest, Xinyi City CEQS Center
will not vote on the resolutions and shall not be counted in the quorum in the voting.  If
necessary, our Company will engage external professionals, such as financial advisers,
valuers and other advisers, to give advice;
(b) our Company has established internal control mechanisms to identify connected transactions.
Upon the Listing, if our Company enters into connected transactions with any of Xinyi
City CEQS Center  or its associates, our Company will comply with the relevant provisions
under Chapter 20 of the GEM Listing Rules including, where applicable, the announcement,
reporting, annual review and independent Shareholders’ approval requirements and with
those conditions imposed by the Stock Exchange for the granting of waiver from strict
compliance with the relevant requirements under the GEM Listing Rules;
(c) the independent non-executive Directors will review, on an annual basis, whether there is
any conflict of interests between our Company and Xinyi City CEQS Center (the “Annual
Review”) and provide impartial and professional advice to protect the interests of our
minority Shareholders;


--- page 272 ---
– 261 –
RELATIONSHIP WITH THE CONTROLLING SHAREHOLDER
AND NON-COMPETITION UNDERTAKING
(d) Xinyi City CEQS Center has undertaken to provide all information necessary, including all
relevant financial, operational and market information and any other necessary information as
required by the independent non-executive Directors for the Annual Review;
(e) the independent non-executive Directors will review, on an annual basis, all information
necessary to our Company and our Directors with regard to Xinyi City CEQS Center’s
compliance with the terms of the Deed of Non-Competition and the enforcement of the
undertakings contained therein by each of them;
(f) Xinyi City CEQS Center will produce an annual declaration on its compliance with the Deed
of Non-Competition in the annual report of our Company and confirm that the disclosure
of details of the compliance with and the enforcement of the Deed of Non-Competition is
constant with the principles of disclosure under the Corporate Governance Code enclosed in
Appendix C1 to the GEM Listing Rules;
(g) we are committed to ensuring that the Board has a balanced composition of executive and
non-executive Directors,  including not less than one-third of independent non-executive
Directors to ensure that there is a strong independent element on our Board, which can
efficaciously exercise independent judgement and will be able to deliver neutral and
professional advice to safeguard the interest of the minority Shareholders; and
(h) we have appointed Yue Xiu Capital Limited  as our compliance adviser to provide advice
and guidance to us in respect of compliance with the GEM Listing Rules, including various
requirements relating to corporate governance, directors’ duties and internal control.
Based on the above, our Directors are satisfied that sufficient corporate governance measures have
been put in place to manage conflicts of interest between our Company and Xinyi City CEQS Center, and
to protect minority Shareholders’ interests after the Listing.


--- page 273 ---
– 262 –
CONTINUING CONNECTED TRANSACTIONS
OVERVIEW
Pursuant to Chapter 20 of the GEM Listing Rules, the Directors, substantial s hareholders,  chief
executive officer, S upervisors, any person who was a Director within 12 months pending the Listing Date
and any of their associates will become a connected person of our Company upon Listing. Upon Listing,
transactions between our Company and our connected persons will constitute connected transactions or
continuing connected transactions under Chapter 20 of the GEM Listing Rules.
CONNECTED PERSON
Xinyi Xinhui is a substantial shareholder of our Company and therefore a connected person of our
Company.
PARTIALLY EXEMPT CONTINUING CONNECTED TRANSACTIONS
Framework Service Agreement with Xinyi Xinhui
On 13 August 2024, our Company entered into a framework agreement with Xinyi Xinhui  (the
“Framework Service Agreement”), pursuant to which our Company agreed to provide construction
engineering testing and inspection services to Xinyi Xinhui and its subsidiaries.
The Framework Service Agreement will become effective on the Listing Date and is valid until 31
December 2026 or the date on which Xinyi Xinhui ceases to be our connected person, whichever comes
earlier.
Subject to the provision of the Framework Service Agreement, our Company will enter into specific
agreements with Xinyi Xinhui  to set out the specific terms and conditions in respect of the provision of
construction engineering testing and inspection services.
Reasons for the transactions
Provision of construction engineering testing and inspection services forms our ordinary business.
In particular, as a leading construction engineering testing and inspection service provider in Maoming
according to t he CIC Report, we are in a competitive position in securing service contract of the said
services  from Xinyi Xinhui and its subsidiaries, including  Xinyi Xinye, which has been our valued
customer since 2021 . We expect to continue to provide services to Xinyi Xinhui and its subsidiaries
(including Xinyi Xinye) upon Listing.


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– 263 –
CONTINUING CONNECTED TRANSACTIONS
Pricing policy
The pricing in a specific service agreement under the Framework Service Agreement will be
determined based on arm’s length negotiation  with reference to (i) an internal service price list of our
Company which will be reviewed and updated where necessary by our finance department annually based
on the current market price;  (ii) the required specifications, technical complexities, expected costs, market
conditions  and prevailing prices for similar services; and (iii ) the service fees of similar or same testing
and inspection services offered to Independent Third Parties, and we will only enter into such a specific
service agreement if (i) the terms and conditions are fair and reasonable and based on normal or no less
favourable commercial terms as compared to our provision of similar service to other customers who
are Independent Third Parties; and (ii) it is in the best interests of our Company and the Shareholders as
a whole. Prior to any specific service agreement is entered into, our finance department will review the
pricing terms of the agreement and compare with at least three other recent transactions with independent
customers in order to ensure the terms of such agreement are consistent with and no less favourable to our
Company than the terms on which we provide similar services to independent customers.
Historical transaction amounts
The amounts of transactions in respect of provision of construction engineering testing and
inspection services for the three years ended 31 December 2023 and six months period ended 30 June 2024
were set out below:
For the year ended 31 December
For the
six months
period ended
30 June
2021 2022 2023 2024
Provision of construction engineering
testing and inspection services RMB21,005 – RMB2,506,160 RMB869,798
Annual caps on future transaction amounts
For the year ending 31 December
2024 2025 2026
Provision of construction engineering
testing and inspection services RMB3,0 00,000 RMB3,0 00,000 RMB3,0 00,000


--- page 275 ---
– 264 –
CONTINUING CONNECTED TRANSACTIONS
In determining the above annual caps, the Directors have considered:
(1) the historical transactions amount for the services provided by our Company to Xinyi Xinhui
and its subsidiaries for FY2023 and 6M2024 of approximately RMB2.5 million and RMB0.9
million, respectively;  and
(2) our Company’s expectation of the demand of our services with reference to several
construction projects to be undertaken by  Xinyi Xinhui and its subsidiaries  in the coming
years.  According to  the investment forecast provided by Xinyi Xinye in December 2023,
Xinyi Xinye will take part in the construction of an apparel park, expansion of an industrial
park,  construction of a sewage treatment plant in Xinyi City, and the potential construction
of ancillary facilities, in the next three years with a potential investment amount of around
RMB1,168 million. Based on the potential i nvestment to be made by Xinyi Xinye and with
reference to the historical demand for our testing and inspection services in the construction
projects invested by Xinyi Xinye, o ur Directors believe that the expected total contract sum
to be awarded to our Company will be not less than RMB 3.0 million  for each of the three
years ending 31 December 2026.
GEM Listing Rules implications
As each of the applicable percentage ratios in respect of the annual cap for the Framework Service
Agreement is less than 25% and the aggregate amount is less than HK$10,000,000, the transactions
contemplated under the Framework Service Agreement will be subject to the reporting, annual review
and announcement requirements but are exempt from the independent shareholders’ approval requirement
under Chapter 20 of the GEM Listing Rules.
OUR DIRECTORS’ VIEW
Our Directors, including the independent non-executive Directors, are of the view that the partially
exempt continuing connected transactions described above, which have been and shall be entered into in
the ordinary and usual course of business of our Company, are on normal commercial terms and are fair
and reasonable and in the interests of our Company and the shareholders of our Company as a whole. Our
Directors, including the independent non-executive Directors, are of the view that the proposed annual
caps for the partially exempt continuing connected transaction described in this section are fair and
reasonable and in the interests of our Company and the shareholders of our Company as a whole.
CONFIRMATION FROM THE JOINT SPONSORS
The Joint Sponsor are of the view that the partially exempt continuing connected transactions
described above have been and shall be entered into in the ordinary and usual course of business of our
Company, are on normal commercial terms, are fair and reasonable and in the interests of our Company
and the Shareholders as a whole, and that the proposed annual caps for these transactions referred to in
this section are fair and reasonable and in the interests of our Company and the Shareholders as a whole.


--- page 276 ---
– 265 –
CONTINUING CONNECTED TRANSACTIONS
WAIVER APPLICATION
In relation to the continuing connected transactions described under “Partially exempt Continuing
Connected Transactions” in this section, since the highest applicable percentage ratio for the three
financial years ending 31 December 2024, 2025 and 2026 calculated for the purpose of Chapter 20 of the
GEM Listing Rules is expected to be less than 2 5% and the aggregate amount is less than HK$10,000,000,
such transactions will, upon Listing, constitute partially exempt continuing connected transactions of our
Company subject to annual reporting, annual review, and announcement requirements but are exempt from
the independent shareholders’ approval requirement under Chapter 20 of the GEM Listing Rules.
As the above partially exempt continuing connected transactions are expected to continue after
the Listing on a recurring and continuing basis and have been fully disclosed in the prospectus, the
Directors consider that strict compliance with announcement requirement  would be impractical, and
such requirements would lead to unnecessary administrative costs and would be unduly burdensome
to us. Accordingly, we have applied to the Stock Exchange, and the Stock Exchange has granted  us, a
waiver from strict compliance with the announcement  requirement  pursuant to Rule 20.103 of the GEM
Listing Rules, provided that the total value of transactions for each of the three financial years ending 31
December 2024, 2025 and 2026 will not exceed the relevant annual caps set forth above. We shall strictly
comply with other relevant requirements under Chapter 20 of the GEM Listing Rules. Our independent
non-executive Directors will review whether the partially exempt continuing connected transactions
have been entered into based on the principal terms and pricing policies under the relevant agreements
as disclosed in this section. The Company will engage its auditor to report on the continuing connected
transactions every year.  The confirmations of our independent non-executive Directors and our auditor
will be disclosed annually, as required by the GEM Listing Rules.


--- page 277 ---
– 266 –
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
BOARD OF DIRECTORS
Our Board is responsible and has general powers for the management and conduct of our business.
As at the Latest Practicable Date, our Board consisted of nine  Directors, comprising four  executive
Directors, two non-executive Directors and three independent non-executive Directors. The information of
the current members of our Board is set out as follows:
Name Age Position(s)
Time of
joining our
Company
Date of
appointment
as Director Roles and responsibilities
Executive Directors
Mr. Lai Feng
(፠ቜ)
45 Chairman of our Board,
executive Director
and general manager
of our Company
January 2013 7 July 2023 Overall business strategies
and operations of our
Company
Mr. Huang Fei
(࠭)
48 Executive Director
and deputy general
manager of our
Company
August 2015 26 October 2023 Overall operations of the
Engineering Monitoring
and Mapping Department
(ʈ೻္಻ၾ಻ᖭ௅) and
Structural Engineering
Inspection Department
(ഐ࿴ʈ೻Ꮸ಻௅) of our
Company
Ms. Mai Jiayu
(ຄ)
36 Executive Director
and deputy general
manager of our
Company
January 2014 7 July 2023 Overall day-to-day
management of the
business operations of our
Company, the Corporate
General Management
Department and overall
operations of the Road,
Bridge and Water
Resources Inspection
Department (༩዗ၾ˥л
Ꮸ಻௅) of our Company
Mr. Zhang Xihua
(ੵఃശ)
36 Executive Director
and deputy general
manager of our
Company
August 2010 26 October 2023 Overall operations of the
Foundation Testing
Department I (ήਿਿᓾᏨ
಻ɓ௅) of our Company


--- page 278 ---
– 267 –
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
Name Age Position(s)
Time of
joining our
Company
Date of
appointment
as Director Roles and responsibilities
Non-executive Directors
Ms. Zou Chan
(ཅᄬ)
34 Non-e xecutive
Director and head of
Foundation Testing
Department I (ήਿਿ
ڗ)
March 2013 7 July 2023 Supervision of the
management of our
Company and day-to-
day operations of the
Foundation Testing
Department I (ήਿਿᓾᏨ
಻ɓ௅) of our Company
Mr. Chen Guangfu
(௓Έబ)
40 Non-e xecutive
Director
October 2023 26 October 2023 Supervision of the
management of our
Company
Independent Non-executive Directors
Ms. Liu Hongge
(᱌)
54 Independent non-
executive Director
August 2024 13 August 2024 Supervising and providing
independent judgement to
our Board
Ms. Deng Dian
(቎ᓃ)
40 Independent non-
executive Director
August 2024 13 August 2024 Supervising and providing
independent judgement to
our Board
Mr. Luo Qiling
(ᖯ઼ᜳ)
47 Independent non-
executive Director
August 2024 13 August 2024 Supervising and providing
independent judgement to
our Board


--- page 279 ---
– 268 –
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
Executive Directors
Mr. Lai Feng (賴鋒), aged 45, is the chairman of our Board, executive Director and the general
manager of our Company and joined our Company in January 2013 . He is responsible for the overall
business strategies and operations of our Company. Mr. Lai was appointed as a Director on 7 July 2023
and re-designated as an executive Director on 26 October 2023. He has been the legal representative of
our Company since January 2013.
Mr. Lai has 2 4 years of experience in business management and quality engineering  in the
construction industry. From January 2013 to July 2023, Mr. Lai was a station manager of our Company.
From July 2023 till now, Mr. Lai has been the chairman of the Board and the general manager of
our Company. Prior to joining our Company, Mr. Lai served as a supervisor  of Guangdong Xizhu
Architectural Design Co., Ltd. (ʮ̡) from August  2000 to July  2003 and was
responsible for construction site supervision. From August  2003 to December  2012, Mr. Lai was a cost
estimator  of Xinyi City Bureau of Housing and Urban-Rural Development  and was responsible for  cost
estimation for construction projects. From March 2023 till now, Mr. Lai has been a director and a deputy
general manager of Xinyi Xinhui and is responsible for overseeing the overall management and operations
of the company.
Mr. Lai was the principal of the company below prior to its deregistration. Mr. Lai confirmed that
there was no wrongful act on his part leading to the deregistration of the company below, which was
solvent prior to its deregistration, and he is not aware of any actual or potential claim that has been or will
be made against him as a result of the deregistration of this company.
Name of company
Place of
establishment Nature of business Status
Reason for
deregistration
Date of
deregistration
Maoming Huixin
Engineering Tendering
Agency Xinyi City
Branch (ڦ
ה
ה)
PRC Provision of bidding
agency and
consulting services
for construction
projects
Deregistration Cessation of
business
17 May 2011
Mr. Lai graduated from China University of Geosciences ( ʕ਷ήሯɽኪ)  in the PRC with an
undergraduate  degree in civil engineering (distance learning)  in January 2018. Mr. Lai qualified as an
architectural technician in 2001 and assistant construction engineer in 2003 by the Xinyi Personnel Bureau
(̹ɛԫ҅)  which was reformed into Human Resources and Social Security Bureau (ٟ
ღ҅) since August 2023 . Mr. Lai also obtained a qualification certificate for Construction Costing
Engineer in 2008 issued by the Maoming Municipal Personnel Bureau (Τ̹ɛԫ҅) . He also obtained
a qualification certificate for senior engineer in construction engineering management issued by the
Department of Human Resources and Social Security of Guangdong Province (ڭ
ღᝂ) of the PRC in February 2018.


--- page 280 ---
– 269 –
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
Mr. Huang Fei (黃飛), aged 48, is an executive  Director and deputy general manager of our
Company and joined our Company in August 2015. He is responsible for the overall operations of the
Engineering Monitoring and Mapping Department ( ʈ೻္಻ၾ಻ᖭ௅) and Structural Engineering
Inspection Department ( ഐ࿴ʈ೻Ꮸ಻௅) of our Company. Mr. Huang was appointed as an executive
Director on 26 October 2023.
Mr. Huang has 11 years of experience in business management in the construction industry. From
August 2015 to January 2016, Mr. Huang served as an inspector of our Company and was responsible
for conducting testing and inspections on construction works and construction materials. From February
2016 to July 2023, Mr. Huang served as a deputy station manager of our Company and was responsible for
overseeing the Engineering Monitoring  and Mapping  Department and Structural Engineering Inspection
Department of our Company. From July 2023 till now, Mr. Huang served as a deputy general manager of
our Company. Prior to joining our Company, Mr. Huang served as a staff member of Xinyi Bulk Cement
Office (܃from September 2012 to August  2015 and was responsible for general
matters of the office.
Mr. Huang graduated from Zhanjiang Normal College (ᇍኪ৫)  (currently known as Lingnan
Normal University (ᇍኪ৫) ) in the PRC with an undergraduate  degree in Chinese language and
literature (distance learning) (߅(Ռબ)) in January 2012. Mr. Huang also obtained the
qualification for intermediate engineer  in  construction engineering management issued by the Maoming
Municipal Human Resources and Social Security Bureau (ღ҅) in May 2021.
Ms. Mai Jiayu  (麥家瑜) (former name: Mai Hanlian  ( 麥漢連)), aged 3 6, is an executive
Director and a deputy general manager of our Company and joined our Company in January 2014. She
is responsible for the overall day-to-day management of the business operations of our  Company, the
Corporate General Management Department  and overall operations of the Road, Bridge  and  Water
Resources Inspection Department ( ༩዗ၾ˥лᏨ಻௅) of our Company. Ms. Mai was appointed as a
Director on 7 July 2023 and re-designated as an executive Director on 26 October 2023.
Ms. Mai has 10 years of experience in construction engineering  management and quality
engineering  in the construction  industry. From January 2014 to August 2021, Ms. Mai served as an
inspector of our Company and was responsible for conducting testing and inspections on construction
works and construction materials. From August 2021 to July 2023, Ms. Mai served as a deputy station
manager of our Company and was responsible for overseeing the overall operations of our Company. From
July 2023 till now, Ms. Mai has been serving as a deputy general manager of our Company.


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DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
Ms. Mai was a supervisor of the company below prior to its deregistration. Ms. Mai confirmed
that there was no wrongful act on her part leading to the deregistration of the company below, which was
solvent prior to its deregistration, and she is not aware of any actual or potential claim that has been or
will be made against her as a result of the deregistration of this company.
Name of company
Place of
establishment Nature of business Status
Reason for
deregistration
Date of
deregistration
Xinyi Yulimu Catering
Co., Ltd. (̹੿Ԣ
ʮ̡)
PRC Catering business Deregistration Cessation of
business
12 October
2018
Ms. Mai graduated from China University of Geosciences ( ʕ਷ήሯɽኪ) with an undergraduate
degree in civil engineering (distance learning) in January 2013. Ms. Mai obtained a qualification for
assistant engineer  in  construction engineering management issued by the Xinyi City Human Resources
and Social Security Bureau  (ღ҅) in December 2015. Ms. Mai obtained
a qualification for  intermediate  geotechnical engineer issued by the Maoming Municipal  Human
Resources and Social Security Bureau (ღ҅) in May 2019. She also obtained
a qualification certificate for senior engineer in construction engineering management issued by the
Department of Human Resources and Social Security of Guangdong Province (ڭ
ღᝂ) of the PRC in August 2023.
Mr. Zhang Xihua  (張喜華), aged 3 6, is an executive  Director and a deputy general manager of
our Company and joined our Company in August 2010. He is responsible for supervising and monitoring
the overall operations of the Foundation Testing Department I (ήਿਿᓾᏨ಻ɓ௅) of our Company.  Mr.
Zhang was appointed as an executive Director on 26 October 2023.
Mr. Zhang has 14 years of experience in quality engineering  in the construction  industry. From
August 2010 to August 2021, Mr. Zhang was an inspector of our Company and was responsible for
conducting testing and inspections on construction works and construction materials . From September
2021 to July 2023, Mr. Zhang was a deputy station manager of our Company and was responsible for
overall management of foundation testing projects. From July 2023 till now, Mr. Zhang has been a deputy
general manager of our Company and is responsible for supervising and monitoring the overall operations
of the Foundation Testing Department I (ήਿਿᓾᏨ಻ɓ௅) .
Mr. Zhang graduated from China University of Geosciences ( ʕ਷ήሯɽኪ) in the PRC with an
undergraduate  degree in civil engineering (distance learning) in January 2014. Mr. Zhang also obtained
a qualification for top laboratory engineer issued by the JYPC National Vocational Qualification
Examination and Certification Center  (JYPCϽ༊Ⴉᗇʕː) in January 2016 and a
qualification certificate for senior engineer in construction engineering management issued by the
Department of Human Resources and Social Security of Guangdong Province (ڭ
ღᝂ) of the PRC in August 2023.


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DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
Non-executive Directors
Ms. Zou Chan  (鄒嬋), aged 3 4, is a non-executive Director and the head of the Foundation
Testing  Department I  of our Company and joined our Company in March 2013. She is responsible for
the supervision of the management of our Company and day-to-day operations of the Foundation Testing
Department I of our Company. Ms. Zou was appointed as a Director of our Company on 7 July 2023 and
re-designated as a non-executive Director on 26 October 2023.
Ms. Zou has 11 years of experience in quality engineering in the construction industry. From March
2013 to August 2021, Ms. Zou served as an inspector of our Company and was responsible for conducting
testing and inspections on construction works and construction materials. From September 2021 to July
2023, Ms. Zou was the head of the Foundation Testing  Unit 3 and was responsible for coordinating
the inspection operations of the unit. From July 2023 till now, Ms. Zou has been serving as the head of
the Foundation Testing  Department I  of our Company and is responsible for overseeing its day-to-day
operations.
Ms. Zou graduated from China University of Geosciences ( ʕ਷ήሯɽኪ)  in the PRC with an
undergraduate  degree in civil engineering (distance learning) in July 2023 . Ms. Zou also obtained a
qualification  certification  for intermediate geotechnical engineer issued by the Maoming M unicipal
Human Resources and Social Security Bureau (ღ҅) in April 2020.
Mr. Chen Guangfu  (陳光富), aged 4 0, is a non-executive Director and joined our Company in
October 2023. Mr. Chen is responsible for supervision of the management of our Company. Mr. Chen was
appointed as a non-executive Director on 26 October 2023.
Mr. Chen has 17 years of experience in project management and financial industry. Prior to joining
our Company, from December 2006 to April 2013, Mr. Chen served as a project manager of the pledging
and finance center of the China Material Storage & Transportation Guangzhou Company (༟Ꮇ
༶ᄿψʮ̡) and he was responsible for project management, product development, client management
and provision of employee training. From May 2013 to September  2022, Mr. Chen served as a product
manager of transaction banking department of the Guangdong South Guangdong Bank Co., Ltd. (ی؇
ʮ̡) and he was responsible for developing, maintaining and promoting asset products
and corresponding systems, assisting and supervising branch business marketing, risk asset control and
overall operational analysis of the transaction banking department. From July 2023 till now, Mr. Chen
served as a manager of finance and capital management department of Xinyi Xinhui and he is responsible
for establishing and maintaining communication and cooperative relations with financial institutions
and relevant government authorities, conducting industrial research and formulating the  investment and
financing procedures and systems.
Mr. Chen graduated from Huizhou College ( ౉ψኪ৫ ) in the PRC with a bachelor’s degree in
economics in June 2006. Mr. Chen also obtained a vocational qualification certificate of foreign trader
issued by the Ministry of Commerce of  the PRC in December 2005 and an intermediate  qualification
certificate of speciality and technology in business administration issued by the Ministry of Human
Resources and Social Security of the PRC in February 2013.


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DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
Independent Non-executive Directors
Ms. Liu Hongge  (劉紅哿哿), aged 54, is an independent non-executive Director who is responsible
for supervising and providing independent judgment to our Board. Ms. Liu joined and was appointed as an
independent non-executive Director on 13 August 2024.
Ms. Liu has 29 years of experience in business management in the finance industry. From
September 1994 to August 1996, Ms. Liu was a business assistant of the securities department of China
Vanke Co., Ltd. (ʮ̡) , company listed on the Stock Exchange (stock code: 2202),
and was responsible for assisting the secretary of the board in managing investor relation and engaging
in equity investment . From September 1999 to March 2002, Ms. Liu served as a senior manager of the
research department, CITIC Securities Company Limited (ʮ̡) , a company dually
listed on the Shanghai Stock Exchange (stock code: 600030) and the Stock Exchange (stock code: 6030),
and was responsible for conducting macroeconomic and capital market research. From August 2004 to
November 2006, Ms. Liu served as a co-director of Corporate Ratings, Fitch Ratings (౉ᚑ൙ॴʮ̡) and
was responsible for overseeing the corporate ratings department in Greater China. From December 2006
to August 2008, Ms. Liu served as a director of Anglo Chinese Investment Banking Group, Hong Kong,
China (৷ҳ༟ვБණྠ) and was responsible for assisting companies in China to go public in
Hong Kong. From October 2008 to April 2013, Ms. Liu worked at CCB International (China) Limited (ܔ
ვ਷ყ(ʕ਷)ʮ̡) with her last held position as a senior analyst and was responsible for financial
analysis of the company. From May 2013 to November 2014, she served as a deputy head of research
division of CCB International Securities Limited and was responsible for financial research and analysis
of the company. From November 2014 to July 2017, Ms. Liu served as an assistant managing director of
CCB International Capital Limited  and was responsible for overseeing the investment banking business
in Hong Kong.  From March 2018 to March 2020, Ms. Liu served as a director and general manager of
Taikang Healthcare Investment Holdings Co., Ltd. (ʮ̡) and was responsible
for investment research and post-investment management. From May 2020 to July 2021, Ms. Liu served
as an executive director of the sector team of the corporate finance  department of Haitong International
Securities Group Limited, Beijing Representative Office  (ஈ) ,
shares of which were listed on the Stock Exchange (stock code: 665) until its privatisation on 11 January
2024,  and was responsible for overall business strategies and operation of the team. From August 2021
to January 2023, Ms. Liu served as the chief financial officer of Shanghai Elite Healthcare Management
Co., Ltd. (ʮ̡) and was responsible for the financial and investment management
of the company. Ms. Liu joined HitGen Inc. (ʮ̡) , company whose shares
are listed on the Shanghai Stock Exchange (stock code: 688222), and been serving as their chief financial
officer since January 2023 and was responsible for the financial management of the company.
Ms. Liu graduated from the Graduate School of Chinese Academy of Social Sciences (ٟ
Ӻ͛৫) in the PRC with a doctorate degree in economics in July 1999. She also graduated
from Judge Business School, University of Cambridge with an MBA in July 2009. She graduated from
Southwest University of Finance and Economics (ৌ຾ɽኪ) in the PRC with a bachelor’s degree in
economics in July 1991 and a master’s degree in economics in June 1994.  She also obtained a qualification
of chartered financial analyst issued by the Chartered Financial Analyst Institution in September 2006.


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DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
Ms. Deng Dian  (鄧點), aged 40, is an independent non-executive Director who is responsible for
supervising and providing independent judgement to our Board. Ms. Deng joined and was appointed as an
independent non-executive Director on 13 August 2024.
Ms. Deng has 16 years of experience in corporate finance industry. She is currently the managing
director of Maxa Capital Limited (ʮ̡) and is responsible for advising on corporate
finance regulated activities as defined under the SFO.  Prior to that, she served as an executive of Anglo
& International Corporate Finance, Limited, the London office of the Anglo Chinese Group from January
2008 to September 2008, and was responsible for financial analysis. From October 2008 to April 2020,
she worked at  Anglo Chinese Corporate Finance, Limited (ʮ̡) , t he Hong Kong
headquarter of the Anglo Chinese Group,  with her last held position as its director  since January 2016 ,
and was responsible for advising on corporate finance regulated activities as defined under the SFO and
overseeing the overall operation of the company.
Ms. Deng graduated from the University of Oxford with a degree of master of science in
management research in September 2007 and graduated from Nanjing University (ԯɽኪ) with a degree
of bachelor in business administration in June 2006.
Mr. Luo Qiling (羅 啟靈), aged 47, is an independent non-executive Director who is responsible for
supervising and providing independent judgment to our Board. Mr. Luo joined and was appointed as an
independent non-executive Director on 13 August 2024.
Mr. Luo has 21 years of experience in research and engineering in the construction industry. From
March 2003 to August 200 6, he served as the  director of technical department and an engineer of the
Research Institute of Structural Engineering,  Shenzhen University (הand was
responsible for scientific research on the durability of concrete structures and testing of construction
materials. From September 2006 till now, he served as a professorate senior engineer and senior
experimenter of the College of Civil and Transportation Engineering,  Shenzhen University ( ଉέɽኪɺ˝
ၾʹஷʈ೻ኪ৫), the deputy director of Guangdong Provincial Key Laboratory of Durability for Marine
Civil Engineering (܃the head of quality of the Research Institute
of Structural Engineering,  Shenzhen University (הand was engaged in research
on the civil engineering and construction related topics.
Mr. Luo graduated from Shenzhen University ( ଉέɽኪ) with a master’s degree, majoring in
architecture and civil engineering in December 200 8. He also graduated from Chongqing University (ᅅ
ɽኪ) in July 2000, majoring in inorganic non-metallic materials. Mr. Luo is studying Ph.D. in Civil and
Hydraulic Engineering in the School of Civil Engineering of Tianjin University (ɽኪ).


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DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
SUPERVISORS
In accordance with the PRC Company Law, all joint stock companies are required to establish a
supervisory committee (the “Supervisory Committee”), responsible for supervising the B oard and senior
management on fulfilling their respective duties, financial performance, internal control management and
risk management of the corporation. The Supervisory Committee consists of five members, comprising
two employee representative Supervisors and three Supervisors.
The detailed information of our Supervisors are listed below.
Name Age
Time of
joining our
Company Position
Date of
appointment as
Supervisor Responsibilities
Wu Weiyuan
(๕)
31 January 2021 President of the
Supervisory
Committee and
Supervisor
7 July 2023 Presiding the work of the
Supervisory Committee,
supervising the Board and
the senior management of
our Company
Chen Haibin
(௓ऎᏵ)
35 September 2017 Employee representative
Supervisor
7 July 2023 Supervising the Board and
the senior management of
our Company
Zhou Kelin
(ᎌ)
31 June 2016 Employee representative
Supervisor
7 July 2023 Supervising the Board and
the senior management of
our Company
Zhang Zhihang
(ੵқঘ)
37 March 2022 Supervisor 7 July 2023 Supervising the Board and
the senior management of
our Company
Chen Shende
(௓ଉᅃ)
32 February 2013 Supervisor 7 July 2023 Supervising the Board and
the senior management of
our Company


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DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
Mr. Wu Weiyuan  (吳威源) , aged 31, is our Supervisor and the president of the Supervisory
Committee and joined our Company in January 2021. Mr. Wu is primarily responsible for presiding the
work of the Supervisory Committee, supervising the Board and the senior management of our Company.
Mr. Wu has nine years of experience in the property development and construction  industry. Mr.
Wu joined our Company in January 2021 as an inspector. From January 2021 till now, Mr. Wu has been
serving as an inspector of our Company and was responsible for c onducting testing and inspections
on construction works and construction materials. Since 7 July 2023, Mr. Wu has been a Supervisor.
Prior to joining our Company, Mr. Wu served as a general staff of Dongguan Zhongzheng Real Estate
Development Co., Ltd. (ʮ̡) from July 2015 to October 2020 and was
responsible for leasing activities.
Mr. Wu graduated from Guangdong Institute of Science and Technology (Ҧኪ৫) in the
PRC with a bachelor’s degree in marketing in June 2015. Mr. Wu also obtained a qualification for assistant
engineer, building inspection issued by the Maoming Municipal Human Resources and Social Security
Bureau (ღ҅) in September 2023.
Mr. Chen Haibin (陳海濱), aged 35, is our Supervisor and joined our Company in September 2017.
Mr. Chen is primarily responsible for supervising the Board and the senior management of our Company.
Mr. Chen has six  years of experience in business management  in the construction  industry. Mr.
Chen joined our Company since September 2017 as an office staff  and is responsible for the day-to-day
administrative affairs of our Company. Since 7 July 2023, Mr. Chen has been our Supervisor.
Mr. Chen graduated from Nankai University (කɽኪ) in the PRC with an undergraduate
degree in Chinese language and literature  (distance learning)  in January 2023 . Mr. Chen also obtained a
qualification for technician, building inspection issued by the Maoming Municipal Human Resources and
Social Security Bureau (ღ҅) in September 2023.
Mr. Zhou Kelin  (周科霖) (former name: Zhou Xiangyun ( 周祥雲)), aged 31, is our Supervisor
and joined our Company in June 2016. Mr. Zhou is primarily responsible for supervising the Board and
the senior management of our Company.
Mr. Zhou has eight  years of experience in quality engineering  in the construction  industry. From
June 2016 to August 2021, Mr. Zhou served as an inspector of our Company and was responsible for
conducting testing and inspection on construction works and construction materials.  In September
2021, he became the head of Structural Engineering Inspection Unit 2, responsible for coordinating and
managing the inspection work of the Unit. From September 2023  till now, Mr. Zhou has been serving as
the deputy head of Structural Engineering Inspection Department and is responsible for overseeing its
overall operations. Since 7 July 2023, Mr. Zhou has been a Supervisor of our Company.
Mr. Zhou graduated from China University of Geosciences ( ʕ਷ήሯɽኪ) in the PRC with an
undergraduate  degree in civil engineering (distance learning) in January 2023.  Mr. Zhou also obtained
a qualification for assistant engineer, building inspection issued by the Maoming Municipal  Human
Resources and Social Security Bureau (ღ҅) in December 2022.


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DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
Ms. Zhang Zhihang (張志航), aged 3 7, is our Supervisor and joined our Company in March 2022.
Ms. Zhang is primarily responsible for supervising the Board and the senior management of our Company.
Ms. Zhang has 13 years of experience in project management  in the construction  industry.
From December 2022 till now, Ms. Zhang has been serving as the deputy head  of the Road,  Bridge &
Water Resources Inspection Department of our Company and was responsible for the management of
inspection projects. Since 7 July 2023, Ms. Zhang has been a Supervisor. From March 2011 to February
2022, Ms. Zhang served as a project manager of Maoming Xinyi Construction Engineering Company (߱
ጘʈ೻ʮ̡) and was responsible for staff management and monitoring safety of construction
projects.
Ms. Zhang was a manager of the company below prior to its deregistration. As confirmed by Ms.
Zhang, (i) this company was solvent at the time of their deregistration; and (ii) to her best knowledge,
the deregistration of this company was not due to her own fault or involved any integrity issue of herself,
and did not result in any punishment imposed on her by any administration bureaus for industry and
commerce, nor any liability or obligation being imposed against her.
Name of company
Place of
establishment Nature of business Status
Reason for
deregistration
Date of
deregistration
Xinyi Maoxin
Construction Labor
Service Co., Ltd.
(ጘ௶ਕ
ʮ̡)
PRC Provision of
construction labor
hire services
Deregistration Cessation of
business
5 September
2023
Ms. Zhang graduated from China University of Geosciences ( ʕ਷ήሯɽኪ) in the PRC with an
undergraduate  degree in civil engineering (distance learning) in July 2015.  M s. Zhang also obtained a
qualification for intermediate municipal road and bridge construction engineer issued by the Maoming
Municipal  Human Resources and Social Security Bureau (ღ҅) in December
2015.
Mr. Chen Shende (陳深德) , aged 32, is our Supervisor and joined our Company in February 2013.
Mr. Chen is primarily responsible for supervising the Board and the senior management of our Company.
Mr. Chen has 11 years of experience in quality engineering  in the construction  industry. From
February 2013 to September 2021, Mr. Chen served as an inspector in our Company and was responsible
for conducting testing and inspections on construction works and construction materials. From September
2021 till now, Mr. Chen has been serving as the Head of the Engineering Monitoring and Mapping
Department our Company and was responsible for the overall operations of the department. Since July
2023, Mr. Chen has been our Supervisor.


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DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
Mr. Chen graduated from China University of Geosciences ( ʕ਷ήሯɽኪ) in the PRC with an
undergraduate  degree in civil engineering (distance learning) in January 2023. Mr. Chen also obtained a
qualification for intermediate geotechnical engineer issued by the Maoming Municipal Human Resources
and Social Security Bureau (ღ҅) in July 2023.
Save as disclosed in this section, each of our Directors and Supervisors (i) did not hold other
positions in our Company as at  the Latest Practicable Date; (ii) had no other relationship with any
Directors, Supervisors, senior management or substantial or Controlling Shareholder of our Company as at
the Latest Practicable Date; (iii) did not hold any directorship in any other public companies the securities
of which are listed on any securities market in Hong Kong or overseas in the three years prior to the Latest
Practicable Date; and (iv) there is no other matter in respect of our Directors and Supervisors that needs to
be brought to the attentions of our Shareholders and there is no other information about our Directors and
Supervisors that is required to be disclosed pursuant to Rule 17.50(2)(h) to (v) of the GEM Listing Rules.
SENIOR MANAGEMENT
The table below shows certain information in respect of members of our senior management of our
Company:
Name Age
Time of
joining our
Company
Existing
position in
our Company
Date of
appointment
as senior
management Responsibilities
Mr. Lai Feng
(፠ቜ)
45 January 2013 Chairman of our Board,
executive Director
and general manager
our Company
21 January 2013 Overall business strategies and
operations of our Company
Mr. Huang Fei
(࠭)
48 August 2015 Executive Director
and deputy general
manager of our
Company
5 February 2016 Overall operations of the
Engineering Monitoring
and Mapping Department
(ʈ೻္಻ၾ಻ᖭ௅) and
Structural Engineering
Inspection Department
(ഐ࿴ʈ೻Ꮸ಻௅) of our
Company


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DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
Name Age
Time of
joining our
Company
Existing
position in
our Company
Date of
appointment
as senior
management Responsibilities
Ms. Mai Jiayu
(ຄ)
36 January 2014 Executive Director
and deputy general
manager of our
Company
10 August 2021 Overall day-to-day
management of the business
operations of our Company,
the Corporate General
Management Department
and overall operations
of the Road, Bridge and
Water Resources Inspection
Department (༩዗ၾ˥лᏨ
಻௅) of our Company
Mr. Zhang Xihua
(ੵఃശ)
36 August 2010 Executive Director
and deputy general
manager of our
Company
1 September
2021
Overall operations of the
Foundation Testing
Department I (ήਿਿᓾᏨ
಻ɓ௅) of our Company
Mr. Liu Dongxue
(ᄎ̆௛)
37 November 2023 Chief financial officer 24 November
2023
General financial management
of our Company
Ms. Zhang Yue’e
(ࢎ)
40 June 2010 Head of Quality
(பɛ)
1 May 2020 Overseeing the operations
of the Commonly-used
Materials Inspection
Department (Ꮸ಻
௅) of our Company
Mr. Lu Feihua
(ശ)
37 May 2013 Deputy General
Manager and Head
of Technology
(பɛ)
5 February 2016 Overseeing the operations
of the Foundation Testing
Department II (ήਿਿᓾ
Ꮸ಻ɚ௅) and operation of
inspection technology of our
Company
For the biographical details of Mr. Lai Feng, Mr. Huang Fei, Ms. Mai Jiayu and Mr. Zhang Xihua,
see “– Board of Directors – Executive Directors” in this section.


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DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
Mr. Liu Dongxue ( 劉冬雪) , aged 3 7, is the chief financial officer of our Company and joined our
Company on 16 November 2023. He is responsible of the financial management of our Company.
Mr. Liu has nearly 11 years of experience in accounting and financial management in the property
management industry.  From February 2013 to September 2014, Mr. Liu worked at Tianjin Xinronghong
Real Estate Development Company Limited (ʮ̡ ) with his last held
position as the finance supervisor, and he was responsible for the company’s overall accounting, internal
control management and day-to-day financial management.  He studied for  a master’s degree in business
management in Tianjin University of Finance and Economics (ৌ຾ɽኪ) from September 2014 to
December 2016. From March 2016 to January 2022, Mr. Liu worked at the Beijing Ziguang Technology
Service Group Co. (ʮ̡)  with his last held position as the chief financial
officer of Suzhou Ziguang Kecheng Technology Development Co. (ʮ̡)
and was responsible for audit account processing and statements, developing and improving financial
management and accounting. From June 2022 to October 2022, Mr. Liu served as the general manager of
the financial management department of the Jiangsu Yunhu Modern Service Industry Group Co. (Ϫᘽථ
ʮ̡) and was responsible for corporate financing, accounting, tax planning and
reporting. From March 2023 to November 2023, Mr. Liu served as the chief accountant of Tianjin Hebei
District Heat and Gas Supply Co. (ʮ̡) and was responsible for finance and
administration management.
Mr. Liu graduated from Tianjin University of Finance and Economics in the PRC with a master’s
degree in business management in December 2016. Mr.  Liu also graduated from Binhai College of Nankai
University (කɽኪᏵऎኪ৫) in June 2011, majoring in financial management and subsequently
obtained a bachelor’s degree in management from Nankai University (කɽኪ). Mr. Liu has been a non-
practicing member of the Chinese Institute of Certified Public Accountants since March 2022. He also
obtained qualification of an intermediate accountant issued by the Tianjin Occupational Title Work Office
(܃in September 2016. He also obtained  license  of the securities practitioner’s
licence in October 2010, a licensee of the futures practitioner’s licence in November 2011 and a licensee
of the fund practitioner’s licence in March 2011.
Ms. Zhang Yue’e (張月娥), aged 40, is the h ead of Quality of our Company since May 2020 and
joined our Company in June 2010. Ms. Zhang is primarily responsible for overseeing the operations of the
Commonly-used Materials Inspection Department (Ꮸ಻௅) of our Company.
Ms. Zhang has 13 years of experience in quality engineering  in the construction  industry. Ms.
Zhang joined our Company in June 2010 as an inspector. From June 2010 to May 2020, Ms. Zhang served
as an inspector of our Company. From May 2020 till now, Ms. Zhang has been serving as the head of
Quality of our Company and is primarily responsible for overseeing the operations of the Commonly-used
Materials Inspection Department.
Ms. Zhang graduated from China University of Geosciences ( ʕ਷ήሯɽኪ) in the PRC with
an undergraduate  degree in civil engineering (distance learning) in July 2023.  Ms. Zhang also obtained
a qualification for intermediate engineer, construction project management issued by the Maoming
Municipal Human Resources and Social Security Bureau (ღ҅) in May 2019.


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DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
Mr. Lu Feihua  (陸飛華), aged 37, is the deputy general manager and the head of Technology of
our Company and joined our Company in May 2013. Mr. Lu is responsible for overseeing the operations
of the Foundation Testing Department II (ήਿਿᓾᏨ಻ɚ௅) and operation of inspection technology of
our Company.
Mr. Lu has 1 4 years of experience in technology operations. From May 2013 to January 2016, Mr.
Lu served as an inspector of our Company and was responsible for conducting testing and inspections
on construction works and construction materials. From February 2016 to July 2023, Mr. Lu served
as a deputy station manager of our Company and was responsible for overseeing the operations of the
Foundation Testing  Department II.  From May  2020 till now, Mr. Lu has been serving as the head of
Technology of our Company. From July 2023 till now, he has been serving as a deputy general manager of
our Company. Prior to joining our Company, Mr. Lu served as a technician of Guangdong Hangxiao Steel
Structure Co., Ltd. (ጽ፻࿴(؇)ʮ̡), a wholly-owned subsidiary of Hangxiao Steel Structure
Co., Ltd. (ʮ̡)  (a company listed on the Shanghai Stock Exchange (stock code:
600477)  from July 2010 to April 2013 and was responsible for providing technical support.
Mr. Lu graduated from Guangzhou University  ( ᄿψɽኪ)  in the PRC with a bachelor’s degree
in civil engineering in April 2013.  Mr. Lu also obtained a qualification for intermediate geotechnical
engineer issued by the Maoming Municipal Human Resources and Social Security Bureau (Τ̹ɛɢ༟
ღ҅) in December 2017.
JOINT COMPANY SECRETARIES
Ms. Cheung Lai Ha ( 張麗霞) was appointed as a joint secretary with effect from the Listing Date.
She is an assistant vice president of Governance Services of Computershare Hong Kong Investor Services
Limited, a professional services provider specializing in corporate services. She has over 14 years of
experience in corporate governance area  including providing services to listed companies, corporate
management and compliance. Ms. Cheung obtained a bachelor’s degree in business administration from
the Lingnan University in Hong Kong in November 2002 and a master’s degree in corporate governance
from the Hong Kong Metropolitan University, formerly known as the Open University of Hong Kong
in June 2011. Ms. Cheung has been admitted as an associate member of the Hong Kong Chartered
Governance Institute and an associate member of the Chartered Governance Institute in the United
Kingdom in July 2013.
To the best of the knowledge, information and belief of our Directors having made all reasonable
enquiries, save as disclosed in this section, there is no additional matter with respect to the appointment of
our senior management members that needs to be brought to the attention of the Shareholders, and none
of our senior management members held any directorship in any other public companies the securities of
which are listed on any securities market in Hong Kong or overseas in the three years prior to the Latest
Practicable Date.
Mr. Liu Dongxue, our chief financial officer, was appointed as one of our joint company secretaries
with effect from the Listing Date. For details of his background, see “– Senior Management” above in this
section.


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DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
BOARD COMMITTEES
Audit Committee
We have established an audit committee to be effective from the Listing Date  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 to the GEM Listing Rules. The audit committee comprises three members,
namely Ms. Liu Hongge, Mr. Luo Qiling  and Ms. Deng Dian, all being our independent non-executive
Directors. The audit committee is chaired by Ms. Liu Hongge.
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 Company, 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 to be effective from the Listing Date  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 to the GEM Listing Rules. The remuneration committee comprises
three members, namely Ms. Liu Hongge, Mr. Luo Qiling and Ms. Deng Dian. The remuneration committee
is chaired by Ms. Liu Hongge.
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 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 any share option scheme.
Nomination committee
We have established a nomination committee to be effective on the Listing Date 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 to the GEM Listing Rules. The nomination committee comprises
three members, namely Mr. Lai Feng, Mr. Luo Qiling and Ms. Liu Hongge. The nomination committee is
chaired by Mr. Lai Feng.
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.


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DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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 Company to our
Directors for the FY2021, FY2022,  FY2023 and 6M2024 was approximately nil, nil,  RMB1,065,000 and
RMB550,000, 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 Company to the
five highest paid individuals for FY2021, FY2022,  FY2023 and 6M2024 excluding nil, nil, three and two
directors, respectively, was approximately RMB989,000, RMB1,032,000,  RMB427,000 and RMB5 45,000.
No remuneration was paid by our Company to the Directors or the five highest paid individuals as an
inducement to join or upon joining our Company or as a compensation for loss of office  in  FY2021,
FY2022,  FY2023 and 6M2024. 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 around RMB1.1 million.
BOARD DIVERSITY AND POLICY
In order to enhance the effectiveness of our Board and to maintain the high standard of corporate
governance, we have adopted the board diversity policy (the “Board Diversity Policy”) which sets out the
objective and approach to achieve and maintain diversity of our Board. Pursuant to our Board Diversity
Policy, we seek to achieve Board diversity through the consideration of a number of factors when selecting
the candidates to our Board, including but not limited to gender, skills, age, professional experience,
knowledge, cultural, education background, ethnicity and length of service. The ultimate decision of
appointment will be based on merit and the contribution which the selected candidates will bring to our
Board.
Our Directors have a balanced mix of knowledge and skills, including overall management and
strategic development, accounting and financial management, and research and development. We have
three independent non-executive Directors with different industry backgrounds, representing one-third of
our Board. Our Board Diversity Policy is also well implemented as evidenced by the fact that our Board
has a wide range of age, ranging from 3 4 years old to 5 4 years old, and comprises of four female Directors
and five male Directors.


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DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
Our Nomination Committee is responsible for ensuring the diversity of our Board members and
compliance with relevant codes governing board diversity under the Corporate Governance Code as set
forth in Appendix C1 to the GEM Listing Rules. We will continue to apply the principle of appointments
based on merits with reference to our Board Diversity Policy as a whole and are committed to provide
career development opportunities for female staff. Under our Board Diversity Policy, our Company
intends to promote gender diversity when recruiting staff at mid to senior level so that our Company
will have a pipeline of female members at senior management level and also potential successors to our
Board. Under our Board Diversity Policy, we also plan to offer all-rounded trainings to female employees
whom we consider to have suitable experience, relevant skills and knowledge of our operation and
business, including but not limited to, business operation, management, accounting and finance, legal
and compliance and research and development. Our Directors are of the view that such strategy will offer
opportunities for our Board to identify capable female employees to be nominated as members of our
Board in the future with the aim to providing our Board with a pipeline of female candidates to achieve
gender diversity in our Board in the long run. Moreover, 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 Nomination Committee will review our Board Diversity Policy and our diversity profile
(including gender balance) from time to time to ensure its continued effectiveness. We will also disclose
in our corporate governance report about the implementation of our Board Diversity Policy on an annual
basis.
We are also committed to adopting similar approach to promote diversity, including but not
limited to gender diversity, at all other levels of our Company from the Board downwards to enhance the
effectiveness of our corporate governance as a whole.
CORPORATE GOVERNANCE
Our Directors recognize the importance of incorporating elements of good corporate governance
in the management structures and internal control procedures of our Company for achieving effective
accountability. Our Company has adopted the code provisions stated in the CG Code as set forth in
Appendix C1 to 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.


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DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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
The roles of the chairman and the chief executive officer of our Company have not been separated
as required by Code Provision C.2.1 of the CG Code. The roles of the chairman of our Board and general
manager of our Company are both performed by Mr. Lai Feng, an executive Director. Our Board believes
that vesting the roles of both chairman and general manager in the same individual enables our Company
to achieve higher responsiveness, efficiency and effectiveness when formulating business strategies and
executing business plans. Furthermore, in view of Mr. Lai Feng’s extensive industrial experience and
significant role in the historical development of our Company, our Board believes that it is beneficial to
the business prospects of our Company  that Mr. Lai Feng continues to act as the chairman and general
manager of our Company  following the Listing Date, and that the balance of power and authority is
sufficiently maintained by the operation of the Board, comprising the executive Directors, non-executive
director and independent non-executive Directors.
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.


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SUBSTANTIAL SHAREHOLDERS
So far as our Directors are aware, the following persons will, immediately following completion of
the Share Offer (without taking into account any H Shares which may be issued upon the exercise of the
Offer Size Adjustment Option) , have interests or short positions in our H Shares or underlying H Shares
which would be required to be disclosed to us and the Stock Exchange 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:
As at the
Latest Practicable Date
Immediately following completion
of the Share Offer (Note 3 )
Name of Shareholders
Class of Shares
held after the
Share Offer
Capacity/
Nature of interest
Number of
Shares held/
interested
Approximate
 percentage of
shareholding in
 our Company
Number of
Shares held/
interested
Approximate
percentage of
shareholding in
our Company
Xinyi City CEQS Center (Note 1) Unlisted Shares Beneficial owner 19,000,000 80% 19,000,000 56%
Xinyi Xinhui  (Note 2) Unlisted Shares Beneficial owner 4,750, 000 20% 4,750,000 14%
Notes:
1. Xinyi City CEQS Center (formerly known as Xinyi City Construction Engineering Quality Supervision Station
(ணʈ೻ሯඎ္ຖ१ )) is a public institution under the Xinyi City Bureau of Housing and Urban-Rural
Development.
2. Xinyi Xinhui is a limited liability company incorporated in the PRC on 24 August 2022. Xinyi Xinhui is wholly
owned by Xinyi City Bureau of Finance (҅), a department of the Xinyi County People’s Government
(ִ݁.)
3. The calculation is based on the total number of 23,750,000 Unlisted  Shares and 10,179,000 H Shares in issue
immediately following completion of the Share Offer  and assuming that the Offer Size Adjustment Option  is not
exercised at all.
Save as disclosed in this section, our Directors are not aware of any other persons who will,
immediately following completion of the Share Offer, have interests or short positions in our H Shares
or underlying H Shares which would be required to be disclosed to us and the Stock Exchange 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.


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SHARE CAPITAL
As at the date of this prospectus, the share capital of our Company is RMB23,750,000, divided into
23,750,000 Shares with a nominal value of RMB1.00 each.
On 7 March 2024, we obtained the CSRC approval for the issue of not more than 11,705,000 H
Shares  assuming the  Offer Size  Adjustment Option will be exercised in full  with a nominal value of
RMB1.00 per H Share  under the Share Offer. As a result, a total of 23,750,000 Unlisted  Shares with
nominal value of RMB1.00 each will be in issue upon the Listing.
Assuming the Offer Size Adjustment Option  is not exercised,  the share capital of our Company
immediately after the Share Offer will be as follows:
Number of
Shares Description of shares
Approximate
percentage
 to total
share capital
23,750,000 Unlisted Shares 70%
10,179,000 H Shares to be issued under the Share Offer 30%
33,929,000 Shares 100%
Assuming the Offer Size Adjustment Option is exercised in full, the share capital of our Company
immediately after the Share offer will be as follows:
Number of
Shares Description of shares
Approximate
percentage
to total
share capital
23,750,000 Unlisted Shares 67%
11,705,000 H Shares to be issued under the Share Offer 33%
35,455,000 Shares 100%
The above table assumes the Share Offer becomes unconditional and is completed.


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SHARE CAPITAL
Our Shares
Upon completion of the Share Offer, our Unlisted  Shares and H Shares are both ordinary shares
in our Company. H Shares may only be subscribed for and traded in HK$. U nlisted Shares, on the other
hand, may only be subscribed for and traded in RMB. Apart from certain qualified domestic institutional
investors in the PRC or via Shanghai-Hong Kong Stock Connect (လಥஷ) or Shenzhen-Hong Kong Stock
Connect ( ଉಥஷ), H Shares generally cannot be subscribed for by or traded by legal or natural persons
of the PRC. Unlisted Shares, on the other hand, can only be subscribed for by and traded between legal or
natural persons of the PRC. We must pay all dividends in respect of H Shares in HK$ and all dividends in
respect of Unlisted Shares in RMB.
Under the PRC Company Law, in relation to the public share offering of a company, the shares of
the company which have been issued prior to the offering shall not be transferred within one year from the
date of the listing on any stock exchange.
Except as described in this prospectus and in relation to the despatch of notices and financial reports
to our Shareholders, registration of Shares in different parts of our register of Shareholders, the method
of share transfer and the appointment of dividend receiving agents, which are provided for in the Articles
of Association and summarised in Appendix V to this prospectus, our Unlisted Shares and our H Shares
will rank pari passu with each other in all respects and, in particular, will rank equally for all dividends
or distributions declared, paid or made after the date of this prospectus. However, the transfer of Unlisted
Shares is subject to such restrictions as PRC law may impose from time to time.
Save for the Share Offer, we do not propose to carry out any public or private issue or to place
securities simultaneously with the Share Offer or within the next six months. We have not approved any
share issue plan other than the Share Offer.
CONVERSION OF OUR UNLISTED SHARES INTO H SHARES
Upon Listing, we will have two classes of ordinary shares, H Shares and Unlisted  Shares. Our
Unlisted Shares are unlisted Shares which are currently not listed or traded on any stock exchange.
According to the stipulations by the State Council’s securities regulatory authority and the Articles
of Association, our Unlisted  Shares may be converted into overse as listed shares, and such converted
shares may be listed or traded on an overseas stock exchange provided that prior to the conversion  and
trading of such converted shares any requisite internal approval processes shall have been duly completed
and the approval from the relevant PRC regulatory authorities, including the CSRC, shall have been
obtained. In addition, such conversion, trading and listing shall in all respects comply with the regulations
prescribed by the State Council’s securities regulatory authorities and the regulations, requirements and
procedures prescribed by the relevant overseas stock exchange.


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SHARE CAPITAL
If any of our Unlisted  Shares are to be converted  and to be traded as H Shares on the Stock
Exchange, such transfer and conversion will need to obtain the approval of the relevant PRC regulatory
authorities including the CSRC. Approval of the Stock Exchange is required for the listing of such
converted shares on the Stock Exchange. Based on the methodology and procedures for the conversion of
our Unlisted Shares into H Shares as described in this section, we can apply for the listing of all or any
portion of our Unlisted  Shares on the Stock Exchange as H Shares in advance of any proposed transfer
to ensure that the transfer process can be completed promptly upon notice to the Stock Exchange and
delivery of shares for entry on the H Share register. As any listing of additional shares after our initial
listing on the Stock Exchange is ordinarily considered by the Stock Exchange to be a purely administrative
matter, it does not require such prior application for listing at the time of our initial listing in Hong Kong.
However, we are generally required to make filings with the CSRC for the offering and listing of the
additional shares pursuant to applicable PRC laws and regulations.
Any application for listing of the converted shares on the Stock Exchange after our initial listing
is subject to prior notification by way of announcement to inform shareholders and the public of any
proposed conversion. The relevant procedural requirements for the conversion of the Unlisted Shares to H
Shares are:
(1) The holder of U nlisted Shares shall obtain the requisite approval of CSRC or the authorised
securities approval authorities of the State Council for the conversion  of all or part of its
Unlisted Shares into H Shares.
(2) The holder of Unlisted  Shares shall issue to us a removal request in respect of a specified
number of the Shares attaching the relevant documents of title.
(3) Subject to obtaining the approval of the Board, we would then issue a notice to the H Share
Registrar with instructions that, with effect from a specified date, our H Share Registrar is to
issue the relevant holders with H share certificates for such specified number of Shares.
(4) Such specified number of Unlisted Shares to be converted to H Shares are then re-registered
on the H share register maintained in Hong Kong on the condition that:
(a) our H Share Registrar lodges with the Stock Exchange a letter confirming the proper
entry of the relevant H Shares on the H share register and the due despatch of H share
certificate; and
(b) the admission of the H Shares (converted from Unlisted Shares) to trade in Hong Kong
will comply with the GEM Listing Rules and the General Rules of HKSCC  and the
HKSCC Operational Procedures in force from time to time.


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SHARE CAPITAL
(5) Upon completion of the conversion, the shareholding of the relevant holder of Unlisted
Shares in our domestic share register will be reduced by such number of Unlisted  Shares
transferred and the number of H Shares in the H share register will correspondingly be
increased by the same number of Shares.
(6) We will comply with the GEM Listing Rules to inform our Shareholders and the public by
way of an announcement of such fact not less than three days prior to the proposed effective
date.
LOCK-UP OF SHARES
The PRC Company Law provides that in relation to the Share Offer of a company, the shares issued
by a company prior to the Share Offer shall not be transferred within a period of one year from the date
on which the publicly offered shares are traded on any stock exchange. Accordingly, Shares issued by our
Company prior to the Listing Date shall be subject to its statutory restriction and not be transferred within
a period of one year from the Listing Date.


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FINANCIAL INFORMATION
You should read the following discussion and analysis in conjunction with our financial
statements including the notes thereto, as set forth in the Accountant’ s Report included as Appendix I
to this prospectus. The Accountant’ s 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 HKFRS.
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 Accountant’ s Report set out in Appendix I to this
prospectus and not rely merely on the information contained in this section.
OVERVIEW
Our Company  is principally engaged in the provision of construction engineering testing and
inspection services, serving mainly to customers in Maoming,  Guangdong Province  of China. Founded
in 2000 and headquartered in Xinyi City, Maoming, we have grown significantly in terms of revenue
generated from such services. Our service offerings include  a range  of construction engineering testing
and inspection services, covering different  types of testing  and inspection processes  involved  in  the
industry.  We primarily offer construction engineering testing services including foundation testing service,
infrastructure and public roads testing service, construction material testing service, as well as building
structure testing service. Additionally, we provide construction engineering inspection services including
slope monitoring and foundation pit monitoring services. Since May 2024, as part of our expansion plan,
while remaining our primary business focus on construction engineering testing and inspection services,
we have commenced to diversify our service offerings and provide food testing service, which contributed
12.3% to our total revenue generated in 6M2024. Our customer base primarily consists of entities involved
in the construction industry in China, including private and public sector entities such as property
developers and construction companies, state-owned investment companies, relevant PRC government
institutions and PRC government administrative bureaus. These customers rely on our expertise to ensure
the quality, safety and compliance of their construction or infrastructure projects. The primary focus of
our testing and inspection services lies in private commercial and residential construction projects as well
as public construction and infrastructure projects. We are committed to delivering high quality testing and
inspection services to our customers.
Our revenue decreased from RMB 39.8 million in FY2021 to RMB 20.0 million in FY2022,
representing a decrease of 49.8%. Our revenue grew substantially from RMB 20.0 million in FY2022 to
RMB41.5 million in FY2023, representing an increase of 107.9%. Our revenue increased from RMB16.3
million in 6M2023 to RMB 22.8 million in 6M2024, representing an increase  of 39.8%.  Our gross profit
decreased from RMB 30.2 million in FY2021 to RMB 11.5 million in FY2022, representing a decrease
of 61.9%. Our gross profit grew significantly from RMB 11.5 million in FY 2022 to RMB29.8  million
in FY2023, representing an increase of 159.1%.  Our gross profit increased  from RMB 10.8 million in


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FINANCIAL INFORMATION
6M2023 to RMB16.2  million in 6M2024, representing an increase of 49.3%. Our net profit decreased from
RMB17.7 million in FY2021 to RMB 2.9 million in FY2022, representing a decrease of 83.6%. Our net
profit increased from RMB2.9 million in FY2022 to RMB13.3  million in FY2023, representing an increase
of 355.2%.  Our net profit increased  from RMB 4.3 million in 6M2023 to RMB 7.3 million in 6M2024,
representing an increase of 71.4%.
KEY FACTORS AFFECTING OUR RESULTS OF OPERATIONS
We are actively engaged in the provision of construction engineering testing and inspection
services in China. According to the CIC Report, this sector emerged with significant potential. The total
market size of the construction engineering testing and inspection industry in China was RMB 115.6
billion in 202 3 and is expected to reach RMB 157.4 billion in 202 8, representing a CAGR of 6.4% from
2023 to 2028 . Over the years, the industry has also demonstrated steady growth, mainly driven by the
government’s initiative for rapid  infrastructure development. The construction engineering testing and
inspection industry showcased an increase with the  CAGR of 9.6% from 2019  to 2023 , according to the
CIC Report.  This growth highlights the increasing importance placed on quality assurance, compliance,
and safety standards within the construction sector  in China, driving the demand for independent
construction engineering testing and inspection services.
Since May 2024, we have also commenced to provide  food testing service. According to the CIC
Report, the food and agricultural products testing and inspection industry in China  has experienced
consistent revenue growth  in recent years, with a 9.7% CAGR from 2019 to 2023, reaching RMB30.5
billion in 2023 and is expected to reach RMB49.2 billion in 2028, representing a CAGR of 10.1%
from 2023 to 2028, driven by heightened concerns for food safety from both  the PRC Government and
consumers.  For details, see “Industry Overview – Overview  of the Independent Testing and Inspection
Industry in China –  The market size of the independent T&I industry in China” in this prospectus.  In
particular, our financial condition and results of operations in any given period are expected to be affected
by the following factors.
Macroeconomic Environment
China’s economy has experienced significant growth over the past several years, with its nominal
GDP increasing from RMB 99.1 trillion in 201 9 to RMB 125.1 trillion in 202 3. As our customer base
primarily consists of entities involved in the construction industry in China, including private and
public sector entities such as property developers and construction companies, state-owned investment
companies, relevant PRC government institutions and PRC government administrative bureaus, the growth
or contraction of the China’s construction industry will affect our business and results of operations.
China’s construction industry value exhibited steady growth with a CAGR of 4.9% from 2019
to 2023 . Due to the impact of COVID-19 in 2022, the overall output value of the construction industry
contracted, leading to a decrease in revenue for the construction engineering testing and inspection
industry.  It is forecasted that the construction industry value will further increase to RMB 10.4 trillion
by 2028  at a CAGR of 3 .9% from 2023  to 2028 . With an ongoing demand for new construction projects
and the resumption of previously halted initiatives, the construction industry is poised to contribute


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FINANCIAL INFORMATION
significantly to China’s overall economic prosperity.  In the future, the construction engineering testing
and inspection industry is expected to recover and experience growth, which the revenue will reach an
estimated RMB157.4 billion by 2028  with a CAGR of 6.4%.
As a result, our business operations and financial conditions  are in part subject to the economic
growth in China insomuch as it affects the development of the construction industry. Any economic
downturn in China may have a negative impact on the development of the construction industry and the
demand for the construction engineering testing and inspection services.
Development of Construction Engineering Testing and Inspection Industry
The construction engineering testing and inspection industry  is driven by the overall economic
development in China and government regulations in downstream industries. Our business operations,
financial condition and prospects are therefore subject to the future development of China’s construction
engineering testing and inspection industry. Over the years, there has been increasing importance placed
on quality assurance, compliance, and safety standards within the construction sector in China, which has
driven the demand for the independent construction engineering testing and inspection services from the
downstream industries. China’s construction engineering testing and inspection industry grew at a CAGR
of 9.6% from 2019  to 2023  despite the overall slowdown of China’s economy and construction industry in
recent years.
During the Track Record Period, we successfully tapped into some of the 3rd to 5th tiers cities in
Maoming including Gaozhou City and Huazhou City.  These cities are undergoing rapid urbanisation and
infrastructure development. As these cities expand, new construction projects emerge, including residential
complexes, commercial buildings, industrial facilities, and transportation infrastructure. The need for
testing and inspection services arises to ensure the quality, safety, and compliance of these projects. With
the implementation of stricter regulations and building codes, these cities are placing greater emphasis on
compliance and quality control. Local authorities are enforcing higher standards for construction projects
to meet safety and environmental requirements, which also drives the demand for testing and inspection
services.
The increasing demand for construction engineering testing and inspection services in 3rd to 5th tier
cities is driven by urbanisation, regulatory compliance, quality assurance needs and government support.
As these cities continue to grow and develop, the demand for reliable and comprehensive testing and
inspection services is expected to further increase.
Ability to Control our Direct Labour Costs
Our results of operations are affected by our ability to manage our direct labour costs, which are the
largest  component of our cost of sales. For FY2021, FY2022,  FY2023, 6M2023 and 6M2024, the direct
labour costs among our cost of sales were RMB 5.6 million, RMB 5.6 million,  RMB 7.7 million, RMB 3.4
million  and RMB 4.1 million, respectively, accounting for 58.2%, 66.3% , 65.5%, 61.6% and 61.5%  of
our total cost of sales  for the same years/periods, respectively.  Our direct labour costs consist primarily
of salaries, bonuses and social insurance benefits  paid to our operational staff such as on-site testing


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FINANCIAL INFORMATION
personnel and laboratories technicians. The increase in our direct labour costs reflected an increase in
headcounts as a result of our business expansion during the Track Record Period. In addition, our ability
to attract and retain key personnel, and in particular, qualified testing and inspection professionals and
qualified engineers, is a critical aspect of our competitiveness. Competition for these individuals could
require us to offer higher compensation and other benefits in order to attract and retain them, which would
increase our direct labour costs.
Our results of operations, financial condition and profitability may be materially and adversely
affected if we cannot effectively manage our direct labour costs.
The following table sets forth a sensitivity analysis illustrating the impact of hypothetical
fluctuations on our direct labour costs with all other factors remaining unchanged. Fluctuations are assumed
to be 5 % and 10% for each of FY2021, FY2022,  FY2023 and 6M2024, which reflected the approximate
historical fluctuations.
Hypothetical fluctuations on our
direct labour costs
+5% –5% +10% –10%
(%)
Impact on certain financial indicators
for FY2021
Change in gross profit margin -0.70 +0.70 -1.41 +1.41
Change in net profit margin -0.53 +0.53 -1.05 +1.05
Impact on certain financial indicators
for FY2022
Change in gross profit margin -1.41 +1.41 -2.81 +2.81
Change in net profit margin -1.04 +1.04 -2.07 +2.07
Impact on certain financial indicators
for FY2023
Change in gross profit margin -0.92 +0.92 -1.85 +1.85
Change in net profit margin -1.18 +1.18 -2.36 +2.36
Impact on certain financial indicators
for 6M2024
Change in gross profit margin -0.90 +0.90 -1.79 +1.79
Change in net profit margin -1.11 +1.11 -2.21 +2.21
Effect of the COVID-19 Pandemic
The initial outbreak of COVID-19 in China during the first quarter of 2020, followed by subsequent
resurgences of the virus in certain major cities throughout 2022, has resulted in the implementation of
several measures to mitigate the spread of the pandemic. These measures include imposing lockdowns,
suspending construction activities, implementing travel restrictions, and enforcing strict social distancing


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and quarantine protocols. In particular, the construction personnel in Maoming have faced the challenges
of intermittent isolation periods throughout the pandemic. Various companies in Guangdong Province
including Maoming periodically required employees to undergo nucleic acid testing for COVID-19
and employees infected or identified as close contacts shall be isolated, which affected their normal
work operations. Both our Company and our customers experienced increased abnormal working hours
and reduced normal working hours due to the aforementioned reasons. For instance, our Company had
arranged several rounds of collective nucleic acid tests for our employee in FY2022, and the total number
of days off due to the pandemic was 206  person-day, as compared to nil  in FY2021. These necessary
precautions have disrupted the regular workflow and caused delays in the progress of various construction
and infrastructure projects, which led to a direct impact on our testing and inspection operations.
With the construction schedules being pushed back, our customers’ demand on our construction
engineering testing and inspection services had been postponed. As a result, the revenue for FY2022 has
experienced a decline compared to FY2021. The reduced revenue has put additional strain on our net
profit as a result of the presence of fixed costs and expenses, such as direct labour costs and depreciation
of fixed assets, which remain relatively inflexible.
Meanwhile, measures imposed by the PRC Government in relation to the pandemic had also
affected our customers’ settlement progress. As a result, the trade receivable turnover day of our Company
for FY2022 has increased significantly  from 271 days in FY2021 t o 639 days in FY2022. Attributable
to the prolonged settlement cycle due to the pandemic, combined with the decrease in net profit, our
Company recorded negative cash flows from operating activities for FY2022.
Overall, the combination of the slow settlement from customers, reduced revenue, and fixed costs
and expenses has led to a challenging financial situation for our Company in FY2022, impacting various
vital financial metrics and requiring prudent management and adaptation in response to the circumstances.
As at the Latest Practicable Date, the impact of the COVID-19 pandemic on our operation has diminished
and our Company’s operation has already resumed to normal level. Our Directors are of the view that the
COVID-19 pandemic will not cause material adverse impact on our financial performance and its business
operation.
BASIS OF PREPARATION
Our Company was established as a joint-stock cooperative enterprise  in Guangdong Province of
the PRC on 28 March 2000. In July 2023, our Company was converted into a limited liability company
wholly owned by Xinyi City CEQS Centre. Subsequently, in October 2023, in contemplation of the
Listing, our Company was converted into a joint stock company with limited liability. Our Company is
principally engaged in the provision of construction engineering testing and inspection services and food
testing service in Xinyi City in Maoming in Guangdong Province,  the PRC. Our Company’s immediate
holding company is Xinyi City CEQS Center, a public institution of the Xinyi City People’s Government
under the Xinyi City B ureau of Hou sing and Urban -Rural Development.


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FINANCIAL INFORMATION
The Historical Financial Information of our  Company has been prepared in accordance with
principal accounting policies as set out below which are in accordance with Hong Kong Financial
Reporting Standards (“HKFRS”) issued by the HKICPA. The principal accounting policies have been
consistently applied to all the years presented, unless otherwise stated. The preparation of financial
statements in conformity with HKFRS  requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of applying our  Company’s accounting
policies. For more details in relation to the areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the Historical Financial Information, see Note 4
to the Accountant’ s Report in Appendix I to this prospectus.
MATERIAL ACCOUNTING POLICY INFORMATION AND ESTIMATES
We have identified certain accounting policies and estimates that are significant to the preparation
of our financial statements. Our material  accounting policies and estimates, which are important for an
understanding of our financial condition and results of operations, are set forth in details in Notes 2, 4 and
30 to the Accountant’ s Report in Appendix I to this prospectus. Some of our accounting policies involve
subjective assumptions and estimates, as well as complex judgment relating to accounting items. In each
case, the determination of these items requires management judgment based on information and financial
data that may change in future periods. When reviewing our financial statements, you should consider
(i) our selection of material  accounting policies, (ii) the judgment and other uncertainties affecting the
application of such policies, and (iii) the sensitivity of reported results to changes in conditions and
assumptions. We have identified the accounting policies, judgments and estimates that we believe are the
most critical to our financial information and that involve the most significant estimates and judgments.
Our Directors have confirmed that the estimates and judgments were accurate during the Track Record
Period by comparing with actual results and have confirmed that these estimates and judgments did not
change during the Track Record Period and do not expect to change materially in the future in light of our
current business operations and future plans.
Revenue recognition
 We generate revenue primarily from the provision of testing and inspection services. We enter
into contracts that may involve multiple performance obligations  among which we allocate transaction
price  on the basis of the standalone s elling prices  of each performance obligation. Standalone  selling
prices are generally determined based on the prices charged to customers. If it is not directly observable,
the standalone selling price is estimated using expected cost plus a margin or adjusted market assessment
approach, depending on the availability of observable information, the data utilised, and considering our
pricing policies and practices in making pricing decisions.
Revenue from contracts with customers is recognised when control of good s or services is
transferred to the customers at an amount that reflects the consideration to which we expect to be entitled
in exchange for those goods or services. Depending on the terms of the contract and the laws that apply to
the contract, control of the goods and services may be transferred over time or at a point in time. See Note
6 to the Accountant’ s Report in Appendix I to this prospectus for more details.


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Impairment of financial assets
Our Company  performs impairment assessment under expected credit loss (“ECL” ) model on
financial assets (including trade receivables, other receivables and cash and cash equivalents) which are
subject to impairment assessment under HKFRS 9. The amount of ECL is updated at each reporting date
to reflect changes in credit risk since initial recognition.
Assessments are done based on our Company’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.
For impairment on trade receivables, our Company applies the simplified approach prescribed by
HKFRS 9 to measure expected credit losses which uses a lifetime expected losses allowance for all trade
receivables.  Significant customers with different credit risk profiles and higher risk of default (mainly
comprised material receivables with substantial delayed settlement and without collateral) are assessed
on an individual basis. The individual assessment focused on the customer  payment history and current
and future ability for payment taking into account the information specific to the customer. Individually
impaired trade receivables represented customers with higher credit risk profile. To measure the expected
credit losses, except for those individual receivables which loss allowance has been provided for, trade
receivables have been grouped based on shared credit risk characteristics and aging periods. Future cash
flows for each group of receivables are estimated on the basis of historical default rates, adjusted to reflect
the effects of existing market conditions as well as forward looking information on macroeconomic factors
affecting the ability of the customers to settle the receivables.
 For impairment on other receivables, it is measured as either 12-month  expected credit losses or
lifetime expected credit loss, depending on whether there has been significant increase in credit risk since
initial recognition.
 For further details, see  Notes 3.1( b) and 18  to the Accountant’ s Report in Appendix I to this
prospectus.
Depreciation of property, plant and equipment
Depreciation of property, plant and equipment is calculated using the straight-line method to
allocate their costs, net of their residual values, over their estimated useful lives or, in case of leasehold
improvements, the shorter of their useful life or the lease term.
The residual values and useful lives of assets are reviewed, and adjusted if appropriate, at the end
of each reporting period. For further details, see Note 13 to the Accountant’ s Report in Appendix I to this
prospectus.


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FINANCIAL INFORMATION
STATEMENTS OF COMPREHENSIVE INCOME
The following table sets forth a summary of our statements of comprehensive income for the years/
periods indicated.
FY2021 FY2022 FY2023 6M2023 6M2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Revenue 39,781 19,966 41,500 16,329 22,830
Cost of sales (9,605) (8,472) (11,719) (5,494) (6,658)

Gross profit 30,176 11,494 29,781 10,835 16,172
General and administrative
expenses (4,726) (6,383) (10,157) (3,703 ) (5,485)
Research and development
expenses – – (113) – (280)
Net impairment losses on financial
assets (2,121) (1,380) (1,317) (1,589) (127)
Other income 548 417 620 317 60
Other losses – (13) (931) – (84)

Operating profit 23,877 4,135 17,883 5,860 10,256
Finance income 100 97 70 33 49
Finance costs (254) (281) (219) (142) (488)

Finance costs – net (154) (184) (149) (109) (439)

Profit before income tax 23,723 3,951 17,734 5,751 9,817
Income tax expense (5,986) (1,039) (4,480) (1,467) (2,474)

Net profit 17,737 2,912 13,254 4,284 7,343

Other comprehensive income,
net of tax – – – – –

Total comprehensive income 17,737 2,912 13,254 4,284 7,343


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FINANCIAL INFORMATION
Revenue
During the Track Record Period, we generated revenue primarily from ( i) our comprehensive
construction engineering testing and inspection services, including (a ) testing services which primarily
include foundation testing service, construction material testing service, building structure testing service,
infrastructure and public roads testing service; and (b ) inspection services which primarily include slope
monitoring and foundation pit monitoring services  and (ii) food testing service. For FY2021, FY2022,
FY2023, 6M2023 and 6M2024, our total revenue was RMB 39.8 million, RMB 20.0 million,  RMB 41.5
million, RMB 16.3 million  and RMB 22.8 million, respectively. The following table sets forth the
components of our revenue for the years/periods indicated.
FY2021 FY2022 FY2023 6M2023 6M2024
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(Unaudited)
Construction engineering
Testing services
Foundation testing service 29,743 74.8 11,232 56.2 24,619 59.3 10,683 65.4 14,112 61.8
Construction material testing
service 5,185 13.0 2,955 14.8 3,888 9.4 1,831 11.2 2,409 10.5
Building structure testing service 2,649 6.7 759 3.8 1,682 4.0 657 4.0 810 3.5
Infrastructure and public roads
testing service 893 2.2 456 2.3 5,837 14.1 2,037 12.5 1,408 6.2
38,470 96.7 15,402 77.1 36,026 86.8 15,208 93.1 18,739 82.0
Inspection services
Slope monitoring and foundation
pit monitoring services 1,311 3.3 4,564 22.9 5,474 13.2 1,121 6.9 1,292 5.7
1,311 3.3 4,564 22.9 5,474 13.2 1,121 6.9 1,292 5.7

39,781 100.0 19,966 100.0 41,500 100.0 16,329 100.0 20,031 87.7

Food testing service – – – – – – – – 2,799 12.3

Total 39,781 100.0 19,966 100.0 41,500 100.0 16,329 100.0 22,830 100.0


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Our revenue from  construction engineering  testing services  represented revenue mainly generated
from the provision of foundation testing service, which accounted for 74.8%, 56.2% , 59.3% , 65.4%
and 61.8%  for FY2021, FY2022,  FY2023, 6M2023 and 6M2024, respectively, and other  construction
engineering  testing services including construction material testing service, building structure testing
service and infrastructure and public roads testing service. Our revenue generated from the provision
of construction engineering  testing services  decreased from RMB 38.5 million in FY2021 to RMB 15.4
million in FY2022, mainly attributable to the overall downturn in the real estate industry and the impact
of the COVID-19 pandemic on real estate projects in FY2022, which resulted in delays in the construction
progress of foundations and building structures of real estate projects. Our revenue from  construction
engineering testing services increased from RMB15.4 million in FY2022 to RMB36.0  million in FY2023,
mainly attributable to (i) the lifting of COVID-19 restrictions, such as lockdown and quarantine, as a
result, the total number of service orders we completed increased significantly in FY2023 ; and (ii) our
increase in the number and scope of qualifications in infrastructure and public roads testing  from 20
parameters under eight categories as at 31 December 2022 to 586 parameters under 11 categories as at 31
December 2023 . Our revenue generated from the provision of  construction engineering  testing services
increased  from RMB 15.2 million in 6M2023 to RMB 18.7 million in 6M2024, primarily benefiting from
(i) the overall growth in the construction engineering T&I industry in Maoming between 6M2023 and
6M2024 according to the CIC Report; and (ii) an increase in revenue generated from foundation testing
service by RMB3.4 million from RMB10.7 million in 6M2023 to RMB 14.1 million in 6M2024 primarily
due to an increase in the average service order value for foundation testing service from RMB25,993 per
service order in 6M2023 to RMB32,516 per service order in 6M2024 mainly because we had provided
more foundation testing services with higher testing complexity to our customers in 6M2024.
Our revenue from construction engineering inspection services represented revenue generated from
the provision of slope monitoring and foundation pit  monitoring  services . Our revenue generated from
slope monitoring and foundation pit monitoring services was RMB1.3 million, RMB4.6 million,  RMB5.5
million , RMB 1.1 million  and RMB 1.3 million  for FY2021, FY2022,  FY2023, 6M2023 and 6M2024,
respectively, representing 3.3%, 22.9% , 13.2% , 6.9% and 5.7% of our total revenue for the same years/
periods, respectively.
Since May 2024, we have also commenced to provide food testing service.  Our revenue generated
from food testing service was nil, nil, nil, nil and RMB2.8 million for FY2021, FY2022, FY2023, 6M2023
and 6M2024, respectively, representing nil, nil, nil, nil and 12.3% of our total revenue for the same years/
periods, respectively.
Construction engineering testing services
Foundation testing service
During the Track Record Period, we specialised in providing foundation testing service for
construction, infrastructure, municipal, and transportation projects. We are involved in various aspects
of foundation quality testing and evaluation works, as well as quality assessment of completed piles. We
derived a majority  of our revenue from foundation testing service during the Track Record Period. Our


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FINANCIAL INFORMATION
revenue generated from foundation testing service was RMB 29.7 million, RMB 11.2 million,  RMB 24.6
million , RMB 10.7 million  and RMB 14.1 million  for FY2021, FY2022,  FY2023, 6M2023 and 6M2024,
respectively, representing 74.8%, 56.2%, 59.3%, 65.4% and 61.8% of our total revenue for the same years/
periods, respectively.
Revenue from our foundation testing service decreased by 62.2%  from RMB29.7 million in FY2021
to RMB 11.2 million in FY2022, primarily due to (i) the impact of the COVID-19 pandemic leading
to delays in the construction progress of projects  in the industry  as construction  had been temporaril y
suspended due to quarantine measures, unexceptionally that the construction progress of foundation
works which usually  requir e foundation testing service  were also postponed ; and (ii) our Company
commenced shifting focus of our business strategies to customers in the public sector in FY2022 leading
to decrease in our revenue generated from projects in private sector for our foundation testing service from
RMB23.2 million in FY2021 to RMB 6.8 million in FY2022 . As a result, the number of service orders
we completed  for our foundation testing service decreased significantly  from 819 in FY2021 to 338 in
FY2022.
Revenue from our foundation testing service  increased by 119.2 % from RMB 11.2 million in
FY2022 to RMB24.6  million in FY2023, primarily due to (i) the lifting of COVID-19 restrictions leading
to the resumption of previously suspended construction projects  of our customers,  including property
developers and construction companies, and the total number of service orders  we completed  for our
foundation testing service increased from 338 in FY2022 to 878  in FY2023; and (ii ) an increase in revenue
generated from  our foundation testing service  provided to projects  in the public sector from RMB 4.4
million in FY2022 to RMB9.8 million in FY2023,  particularly driven by school projects which increased
by RMB4.7 million in FY2023.
Revenue from our foundation testing service increased  by 32.1% from RMB 10.7 million in
6M2023 to RMB14.1 million in 6M2024, primarily due to an increase in the average service order value
for foundation testing service from RMB25,993 per service order in 6M2023 to RMB32,516 per service
order in 6M2024 mainly because we had provided more foundation testing services with higher testing
complexity to our customers in 6M2024.
Construction material testing service
Construction material testing is a crucial aspect of construction projects, aiming  at analysing and
evaluating the quality of various materials used in construction. Our customers usually provide samples of
the construction materials from construction sites to us and we subject them to specialised laboratory tests
in our laboratories. It involves conducting tests on materials such as sand, stone, cement, steel, concrete,
mineral powder, geosynthetics, asphalt and plastic pipes, etc. These tests are designed to gather accurate
and reliable data on the properties and performance of the construction materials. Our revenue generated
from construction material testing service was RMB 5.2  million, RMB 3.0  million,  RMB 3.9  million,
RMB1.8 million and RMB2.4 million for FY2021, FY2022,  FY2023, 6M2023 and 6M2024, respectively,
representing 13.0%, 14.8% , 9.4% , 11.2%  and 10.5 % of our total revenue for the same years/periods,
respectively.


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Revenue from our construction material testing service decreased by 43.0% from RMB5.2 million
in FY2021 to RMB3.0 million in FY2022, primarily due to the impact of the COVID-19 pandemic leading
to delays in the construction progress of projects requiring  construction material testing service, for
example, the construction of foundation works stage  and  the initial building structure work stage. The
decrease was  mainly attributable  to our construction  companies customers, and revenue generated from
them decreased from RMB5.1 million in FY2021 to RMB2.9 million in FY2022.
Revenue from our construction material testing service increased by 31.6% from RMB 3.0 million
in FY2022 to RMB3.9 million in FY2023, primarily due to  the  (i) lifting of COVID-19 restrictions
leading  to the resumption of previously suspended construction projects;  and  (ii) s ynergy among our
service types, as our customers who required our infrastructure and public roads testing service also had
demand for our construction material testing service in FY2023, which resulted in an increase of revenue
aggregately generated from state-owned investment companies, relevant PRC government institutions and
PRC government administrative bureaus from RMB6,000 in FY2022 to RMB1.3 million in FY2023.  The
increase of our revenue from construction material testing service from FY2022 to FY2023 was partially
offset by the decrease in revenue generated from provision of  construction material testing service  to
projects in private sector from RMB2.3 million in FY2022 to RMB2.1 million in FY2023.
Revenue from our construction material testing service increased  by 31.6% from RMB 1.8 million
in 6M2023 to RMB2.4 million in 6M2024, primarily due to ( i) an increase in revenue  generated from
our construction material testing service provided to projects in the public sector  from RMB 0.8 million
in 6M2023 t o RMB 1.4 million in 6M2024,  which was partially  driven  by the increased demand for our
asphalt, soil and rocks testing services provided to municipal projects in 6M2024; and (ii) an increase in
the number and scope of our qualifications in construction material testing from 1,548 parameters under
20 categories as at 30 June 2023 to 1,639 parameters under 20 categories as at 30 June 2024.
Building structure testing service
We provided our customers with building structure testing service during the Track Record
Period. Building structure testing is important for building construction, focusing on evaluating the key
components and parameters of the building’s main structure above the zero point (typically ground level).
The main testing types primarily include concrete strength, reinforcement diameter, thickness of protective
layer, anchorage resistance and floor slab thickness. Our revenue generated from building structure testing
service was RMB2.6 million, RMB0.8 million,  RMB1.7 million, RMB0.7 million and RMB0.8 million for
FY2021, FY2022,  FY2023, 6M2023 and 6M2024, respectively, representing 6.7%, 3.8%, 4.0%, 4.0% and
3.5% of our total revenue for the same years/periods, respectively.
Revenue from our building structure testing service decreased by 71.3% from RMB 2.6 million in
FY2021 to RMB0.8 million in FY2022, primarily due to the impact of the COVID-19 pandemic on the
construction progress of building construction projects in the industry  which normally require  building
structure testing service throughout the building structure work stage.  The delay in construction progress
led to the significant decrease in revenue derived from  construction companies  customers from RMB2.3
million in FY2021 to RMB0.6 million in FY2022.


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Revenue from our building structure testing service increased by 121.6% from RMB0.8  million in
FY2022 to RMB1.7 million in FY2023, primarily due to the lifting of COVID-19 restrictions which led to
the resumption of previously suspended residential property development projects and therefore unleashed
demands in building structure testing service as the projects are required to pass the building structure
testing  for further construction, and the total number of service orders  we completed  for our building
structure testing service increased from 208 in FY2022 to 341 in FY2023. In particular, revenue generated
from projects in private sector for our building structure testing service increased fr om RMB0.6 million in
FY2022 to RMB1.4 million in FY2023.
Revenue from our building structure testing service increased  by 23.3% from RMB 0.7 million
in 6M2023 to RMB0.8 million in 6M2024, primarily due to an i ncrease in revenue generated from our
building structure testing service provided to projects in public sector from RMB0 .1 million in 6M2023 to
RMB0.4 million in 6M2024, particularl y driven by the increase in number of service orders completed by us
for construction projects of schools and kindergartens from 22 in 6M2023 to 34 in 6M2024.
Infrastructure and public roads testing service
We provide infrastructure and public roads testing service mainly to government infrastructure
projects and municipal roadway projects, where physical testing is involved in assessing the quality
and integrity of various  pipelines and  roadway components. Some common physical testing types  used
primarily include compaction testing, bending test, pipe closure test, and CCTV inspections. Our revenue
generated from infrastructure and public roads testing service was RMB 0.9 million, RMB 0.5 million,
RMB 5.8 million, RMB 2.0 million  and RMB 1.4 million  for FY2021, FY2022,  FY2023, 6M2023 and
6M2024, respectively, representing 2.2%, 2.3%, 14.1%, 12.5% and 6.2% of our total revenue for the same
years/periods, respectively.
Revenue from our infrastructure and public roads testing service decreased by 4 8.9% from RMB0.9
million in FY2021 to RMB0.5 million in FY2022, primarily due to the substantial testing service work we
provided to a water purification facility project in FY2021, which we recognised revenue in the amount of
RMB0.4 million.
Revenue from our infrastructure and public roads testing service increased by 1,180.0% from
RMB0.5  million in FY2022 to RMB5.8 million in FY2023, primarily attributable to (i) our increase in the
number and scope of qualifications in infrastructure and public roads testing  from 20 parameters under
eight categories as at 31 December 2022 to 586 parameters under 11 categories as at 31 December 2023;
and (ii) revenue generated from our provision of infrastructure and public roads testing service to several
road construction projects  aggregately amounted to RMB3.1 million and several water treatment and river
management projects  aggregately amounted to RMB2.3 million, respectively.
Revenue from our infrastructure and public roads testing service decreased by 30.9% from RMB2.0
million in 6M2023 to RMB 1.4 million in 6M2024 despite an increase in the number of infrastructure
construction projects that we provided t esting services to in 6M2024.  Such decrease was primarily because
certain  infrastructure  and public roads testing servic es provided to several  road construction  proj ects
and ecological environment improvement projects  had not yet been fully completed as at 30 June 2024,


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and relevant revenue had not yet been  recogni sed in 6M2024. As a result, despite the revenue from our
infrastructure and public roads testing service decreased in 6M2024 as compared to that in 6M2023, our
contract fulfillment  costs associated with our  ongoing  infrastructure and public roads testing service
increased by 102.9% to RMB1.2 million as at 30 June 2024 as compared to RMB0.6 million as at 30 June
2023. Relevant revenue is expected to be recognis ed once these works have been fully completed and our
performance obligation has been satisfied.
Construction engineering inspection services
Slope monitoring and foundation pit monitoring services
We also derived our revenue from construction engineering  inspection services which involve
providing slope monitoring and foundation pit monitoring services to our customers during the Track
Record Period. Foundation pit monitoring involves regular or continuous inspections, measurements,
monitoring, data collection, analysis, and feedback activities implemented during the construction and
usage phases of an excavation pit or a building slope in a building project to assess the safety condition,
changes, and development trends of the pit or slope and its surrounding environment. Slope monitoring
involves regular or continuous inspections, measurements, monitoring, data collection, analysis, and
feedback activities carried out during the construction, trial operation, and operational phases of a
building slope to assess the safety condition, changes, characteristics, and development trends of the slope
and its surrounding environment. The primary objectives of these monitoring services are  to ensure the
comprehensive evaluation of slope conditions, foundation pit stability, and early detection of potential
risks.  Our revenue generated from slope  monitoring and foundation pit monitoring services was RMB1.3
million, RMB 4.6 million,  RMB 5.5 million, RMB 1.1 million  and RMB 1.3 million  for FY2021, FY2022,
FY2023, 6M2023 and 6M2024, respectively, representing 3.3%, 22.9% , 13.2% , 6.9% and 5.7% of  our
total revenue for the same years/periods,  respectively.
Revenue from our slope monitoring and foundation pit monitoring services increased by 248.1 %
from RMB 1.3 million in FY2021 to RMB 4.6 million in FY2022, primarily due to the substantial
monitoring service work  we provided to  a sewage network reconstruction project in the fourth quarter
of 2022, which resulted in the recognition of revenue of RMB 3.7 million.  The customer of the sewage
network reconstruction project is Customer F, our largest customer in FY2022, which is an entity
commissioned by the People’s Government of Xinyi City to undertake construction management work of
government-invested construction projects and other assignments from the municipal party committee and
the PRC Government. We commenced construction engineering  inspection  services for such project in
May 2022 and completed our construction engineering inspection services in January 2023, and our testing
report was issued in April 2023.  Up to the Latest Practicable Date, we had not received additional service
orders from this customer in connection with this sewage network reconstruction project.  The contract sum
of our construction engineering inspection services  provided to this project was RMB3.7  million and the
amount of revenue attributable to the project for FY2021, FY2022 and FY2023 was nil, RMB3.7 million
and RMB8,000, respectively. Despite there was some disruption on construction progress of such project
attributable to the COVID-19 pandemic, such sewage network reconstruction  project continued and we
provided our construction engineering inspection  service as required by the customer and recognised
majority of the revenue attributable to this project in FY2022.


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Revenue  from our slope monitoring and foundation pit monitoring  services increased by 19.9%
from RMB4.6 million in FY2022 to RMB5.5 million in FY2023, which was mainly driven by the increase
in the number of service orders completed from five in FY2022 to 10 in FY2023, particularly attributable
to the services provided to an urban renewal project in Gaozhou City, Maoming, which generated revenue
of RMB 3.2 million in FY2023.  The customer of the urban renewal  project is Customer I, one of our
five largest customer s in FY2023. The contract sum of our construction engineering  inspection  services
provided to this project was RMB3.2 million and had been recognised in full as revenue in FY2023.
Revenue from our slope monitoring and foundation pit monitoring services increased  by 15.3 %
from RMB1.1 million in 6M2023 to RMB1.3 million in 6M2024, primarily due to a n increase in revenue
generated from our slope monitoring and foundation pit monitoring services p rovided to property
developers for their  projects in private sector from RMB0.2 million in 6M2023 to RMB0.3 million in
6M2024.
Food testing service
We have commenced to provide food testing service since May 2024. Our revenue generated from
food testing service was nil, nil, nil, nil and RMB2.8 million for FY2021, FY2022, FY2023, 6M2023 and
6M2024, respectively, representing nil, nil, nil, nil and 12.3% of our total revenue for the same years/
periods, respectively.  Our revenue  generated from food testing service was attributable from a PRC
government  administrative bureau  customer  who engaged us to conduct government-mandated  sampling
tests on various types of food such as fruits, vegetables,  tea leaves and eggs in 6M2024.
Cost of Sales
Our cost of sales consists primarily of direct labour costs, depreciation of fixed asset and right-of-
use asset, subcontracting fee  and various other expenses related to our business.  For FY2021, FY2022,
FY2023, 6M2023 and 6M2024, our cost of sales was RMB 9.6 million, RMB 8.5 million , RMB 11.7
million, RMB 5.5 million  and RMB 6.7 million, respectively, representing 24.1%, 42.4%, 28.2% , 33.6%
and 29.2% of our revenue for the same years/periods, respectively. Our cost of sales decreased by 11.8%
from RMB9.6 million in FY2021 to RMB8.5 million in FY2022, which was primarily due to a decrease
in our subcontracting fee  of RMB0.8 million in FY2022. Our cost of sales increased by 38.3% from
RMB8.5 million in FY2022 to RMB11.7  million in FY2023, which was driven primarily by the expansion
of our infrastructure and public roads testing service business, and therefore an increase in the number of
qualified personnel and equipment.  Our cost of sales increased by 21.2% from RMB5.5 million in 6M2023
to RMB6.7  million in 6M2024, which was primarily driven by (i) an increase in our direct labour costs of
RMB0.7 million  as a result of the increase i n headcounts for our infrastructure and public roads testing
service, slope monitoring and foundation pit monitoring services and food testing service; (ii) an increase
in direct material costs of RMB0.3 m illion in 6M2024 mainly attributable to consumables utilised for our
food testing service and slope monitoring and foundation pit monitoring services; and (iii) an increase i n
depreciation of fixed assets,  right-of-use assets and amortisation of intangible assets of RMB0 .3 million, as
a results of the increase in depreciation expenses of right-of-use assets in association with the lease of the
New Building.


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FINANCIAL INFORMATION
The following table sets forth the components of our cost of sales for the years/periods indicated.
FY2021 FY2022 FY2023 6M2023 6M2024
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Direct labour costs 5,591 58.2 5,619 66.3 7,674 65.5 3,382 61.6 4,096 61.5
Depreciation of fixed assets,
right-of-use assets and
amortis ation of intangible
assets 1,206 12.6 1,038 12.3 1,491 12.7 799 14.5 1,117 16.8
Subcontracting fee 1,381 14.4 573 6.8 766 6.5 448 8.2 382 5.7
Office expenses 431 4.5 315 3.7 582 5.0 311 5.7 315 4.7
Equipment maintenance fee 448 4.7 307 3.6 398 3.4 187 3.4 127 1.9
Direct material costs 157 1.6 386 4.6 360 3.1 181 3.2 440 6.6
Taxes and surcharges 252 2.6 185 2.2 312 2.7 132 2.4 71 1.1
Other expenses 139 1.4 49 0.5 136 1.1 54 1.0 110 1.7

Total 9,605 100.0 8,472 100.0 11,719 100.0 5,494 100.0 6,658 100.0

During the Track Record Period, direct labour costs, depreciation of fixed assets, right-of-use
assets and amortis ation  of intangible assets  and subcontracting fee were the principal types of cost for
our business. Direct material  costs primarily include costs  for consumables in relation to our foundation
testing service,  slope monitoring and foundation pit monitoring services  and food testing service. Direct
labour costs and depreciation of fixed assets, right-of-use assets and amortis ation of intangible assets are
major cost of sales that we considered as fixed costs , which represented 70.8%, 78.6%, 78.2%, 76.1% and
78.3% of our total cost of sales in FY2021, FY2022,  FY2023, 6M2023 and 6M2024, respectively.
Direct labour costs
Our direct labour costs primarily consist of salaries, bonuses and social insurance benefits paid to
our operational staff such as on-sit e testing personnel and laboratories technicians.  For FY2021, FY2022,
FY2023, 6M2023 and 6M2024, the direct labour costs were RMB5.6 million, RMB5.6 million,  RMB7.7
million, RMB 3.4 million  and RMB 4.1 million, respectively, which accounted for 58.2%, 66.3% , 65.5%,
61.6% and 61.5% of our cost of sales, respectively. Our direct labour costs remained relatively stable in
FY2021 and FY2 022 as we are required to maintain certain number of employees in order to fulfil our
qualification requirements.  The increase in our direct labour costs of 36.6% from RMB5.6 million in
FY2022 to RMB7.7  million in FY2023 was mainly attributable to an increase in headcounts.  The increase
in our direct labour costs of 21.1% from RMB3.4 million in 6M2023 to RMB4.1 million in 6M2024 was
primarily attributable to a n increase in headcounts  particularly for the provision of infrastructure  and
public road testing service,  slope monitoring and foun dation pit monitoring services and food testing
service.


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FINANCIAL INFORMATION
Subcontracting fee
Our subcontracting fee primarily represents  subcontracting costs paid to drilling companies during
our course of providing foundation testing service. For FY2021, FY2022,  FY2023, 6M2023 and 6M2024,
the subcontracting fee  were RMB1.4 million, RMB0.6 million,  RMB 0.8 million, RMB 0.4 million  and
RMB0.4 million, respectively, which accounted for 14.4%, 6.8%, 6.5%, 8.2% and 5.7 % of our cost of
sales, respectively. The fluctuations  in our  subcontracting fee  during the Track Record Period were
primarily driven by the needs of our customers to apply the core drilling method in our foundation te sting
service.
Gross Profit and Gross Profit Margin
For FY2021, FY2022,  FY2023, 6M2023 and 6M2024, our gross profit was RMB 30.2 million,
RMB11.5 million,  RMB29.8  million, RMB10.8 million and RMB16.2 million, respectively. For FY2021,
FY2022,  FY2023, 6M2023 and 6M2024,  our overall gross profit margin was 75.9% , 57.6%, 71.8%, 66.4%
and 70.8%, respectively.
The following table sets forth our gross profit and gross profit margin by types of services for the
years/periods indicated.
FY2021 FY2022 FY2023 6M2023 6M2024
Gross
 profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Construction engineering
Testing services
Foundation testing service 24,060 80.9 7,617 67.8 20,022 81.3 8,105 75.9 12,513 88.7
Construction material testing
service 2,714 52.3 111 3.8 972 25.0 383 20.9 492 20.4
Building structure testing service 1,899 71.7 97 12.8 942 56.0 300 45.7 469 58.0
Infrastructure and public roads
testing service 741 83.0 (243) (53.3) 3,430 58.8 1,274 62.5 508 36.1

29,414 76.5 7,582 49.2 25,366 70.4 10,062 66.2 13,982 74.6

Inspection services
Slope monitoring and foundation
pit monitoring services 762 58.1 3,912 85.7 4,415 80.7 773 69.0 476 36.9

762 58.1 3,912 85.7 4,415 80.7 773 69.0 476 36.9
30,176 75.9 11,494 57.6 29,781 71.8 10,835 66.4 14,458 72.2

Food testing service – – – – – – – – 1,714 61.2

Total 30,176 75.9 11,494 57.6 29,781 71.8 10,835 66.4 16,172 70.8


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FINANCIAL INFORMATION
Our gross profit decreased significantly from RMB30.2 million in FY2021 to RMB11.5 million in
FY2022 and increased significantly from RMB 11.5 million in FY2022 to RMB29.8  million in FY2023.
Our gross profit increased  from RMB 10.8  million in  6M2023 to RMB 16.2  million in  6M2024.  The
fluctuations in our gross profit were generally affected by the fluctuations in our revenue during the same
years/periods. Our gross profit margin decreased from 75.9% in  FY2021 to 57.6% in  FY2022 mainly
because majority of our cost of sales , such as direct labour costs and depreciation, are fixed cost, while  our
revenue decreased significantly in FY2022. The increase in our gross profit margin from 57.6% in FY2022
to 71.8% in FY2023 was primarily due to the increase in our revenue, especially from our foundation
testing service  and infrastructure and public roads testing service, as a result of business recovery after
lifting of  the COVID-19 restrictions . The increase  in our gross profit margin from 66.4% in 6M2023 to
70.8% in 6M2024 was primarily driven by an increase in gross profit margin of construction engineering
testing services  from 66.2% to 74.6% due to the economies of scale we  achieved as our  revenue from
the provision of construction engineering testing services had increased by RMB3.5  million or 23.2% in
6M2024 whilst the majority of our cost of sales, such as direct labour costs, are fixed costs.
Our gross profit margin of infrastructure and public roads testing service decreased significantly
from 83.0% in FY2021 to - 53.3% in FY2022 primarily because we strategically expanded our capabilities,
leading to an increase in the number of employees who were responsible for the provision of infrastructure
and public roads testing service  by five qualified engineers  with an associated costs of sales amounted
to RMB0.3 million  for enhancing our qualifications in the provision of infrastructure and public roads
testing service,  however  the relevant  revenue growth was only  materialised subsequent  to FY2022.  Our
gross profit margin of construction material testing service decreased significantly from 52.3% in FY2021
to 3.8% in FY2022 mainly due to an increase of RMB0.4 million or 15.1 % in cost of sales from FY2021
to FY2022 driven by the slight increase in direct labour costs and equipment maintenance cost despite of
the decrease of RMB2.2 million or 43.0% in revenue.  Our gross profit margin of building structure testing
service decreased significantly from 71.7% in FY2021 to 12.8% in FY2022, which was mainly due to the
decrease in our revenue of RMB1.9 million or 71.3% from FY2021 to FY2022, whilst the cost of sales of
building structure testing service only decreased slightly by RMB 0.1 million or 11.7% from FY2021 to
FY2022. The decrease in our gross profit margin of foundation testing service from FY2021 to FY2022
was generally consistent with the decrease in our revenue during FY2022.
Our gross profit margin of infrastructure and public roads testing service increased significantly
from -53.3% in FY2022 to 58.8% in FY2023 mainly due to the significant increase in our revenue in
FY2023 as a result of an increase in the number and scope of qualifications in infrastructure and public
roads testing from 20 parameters under eight categories as at 31 December 2022 to 586 parameters under
11 categories as at 31 December 2023, which also leveraged out the increase in associated cost of sales
and achieved gross profit in FY2023.  Our gross profit margin of construction material testing service
increased significantly from 3.8% in FY2022 to 25.0% in FY2023 mainly due to an increase of RMB0.9
million or 31.6% in revenue of construction material testing service from FY2022 to FY2023 whilst the
relevant cost of sales only increased by RMB72 ,000. Our gross profit margin of building structure testing
service increased significantly from 12.8% in FY2022 to 56.0% in FY2023 mainly due to an increase of
RMB0.9 million or 121.6% in revenue of building structure testing service from FY2022 to FY2023 whilst
the relevant costs of sales only increased by RMB 78,000.  Our gross profit margin of foundation testing
service  increased from 67.8% in FY 2022 to 81.3% in FY2023 mainly due to an increase of RMB 13.4
million or 119.2% in revenue of foundation testing service from FY2022 to FY2023 whilst relevant costs
of sales only increased by RMB1.0 million.


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FINANCIAL INFORMATION
Our gross profit margin of infrastructure and public roads testing service decreased  from 62.5%
in 6M2023 to 36.1% in 6M2024 mainly due to a  decrease in our revenue o f RMB0.6 million or 30.9% in
6M2024 as discussed in “– Statements of Comprehensive Income – Revenue” in this section, whilst the
relevant cost of sales increased by RMB0.1 million,  which was primarily driven by the increase in relevant
headcounts and therefore the increase in  direct labour cos ts of infrastructure and public roads testing
service by RMB0.1 million. Our gross profit margin of construction material testing service r emained
relatively stable at 20.9% in 6M2023 and 20.4% in 6M2024. Our gross profit margin of building structure
testing service increased  from 45.7% in 6M2023 to 58.0% in 6M2024 mainly due to an increase  of
RMB0.2 million or 23.3% in revenue of building structure testing service from 6M2023 to 6M2024 whilst
the relevant cost of sales decreased slightly by RMB17,000. Our gross profit margin of foundation testing
service increased  from 75.9% in 6M2023 to 88.7% in 6M2024 mainly due to an increase  by RMB 3.4
million or 32.1% in revenue of foundation testing service from 6M2023 to 6M2024  whilst the relevant
cost of sales decreased by RMB 1.0 million  primarily because certain of our staff who were principally
responsible for other testing and inspection services had been assigned to also work on foundation testing
services during 6M2023, as a result, part of their direct labour costs were recognised as cost of sales of
foundation testing services, thereby increasing cost of sales of foundation testing service in 6M2023. In
6M2024, such arrangement ceased, hence direct labour costs of foundation testing service decreased and
relevant cost of sales decreased accordingly.
Our gross profit margin of slope monitoring and foundation pit monitoring services increased from
58.1% in FY2021 to 85.7% in FY2022, which was  mainly due to  the increase in  the revenue generated
from slope monitoring and foundation pit monitoring services  during the year.  Our gross profit margin
of slope monitoring and foundation pit monitoring services slightly decreased from 85.7% for FY2022 to
80.7% for FY2023 mainly due to the increase in direct labour costs of slope monitoring and foundation pit
monitoring testing service by RMB0.3 million. Our gross profit margin of slope monitoring and foundation
pit monitoring services decreased from 69.0% in 6M2023 to 36.9% in 6M2024, which was mainly due to
an increase  in the cost of sales of slope monitoring and foundation pit monitoring services by RMB 0.5
million  primarily driven by  the increase in relevant headcounts and hence the increase in  direct  labour
costs of slope monitoring and foundation pit monitoring services  by RMB0.3 million.
During the Track Record Period, the gross profit margin of  slope monitoring and foundation
pit monitoring services in FY2021 , 6M2023 and 6M2024  was relatively lower than that in FY2022
and FY2023 mainly due to the absence of service orders for sizeable projects like sewage network
reconstruction project and urban renewal project  from our customers which aggregately attributed to
revenue of RMB3.7 million and RMB3.2 million in FY2022 and FY2023 respectively, leading to relatively
lower revenue generated from slope monitoring and foundation pit monitoring services  in FY2021,
6M2023 and 6M2024; meanwhile the  costs of sales of slope monitoring and foundation pit monitoring
services  only increased slightly during the Track Record Period  from RMB0.5 million in FY2021 to
RMB0.7 million in FY2022 and further to RMB1.1 million in FY2023.
Since May 2024, we have  commenced to provide  food testing service and generated revenue of
RMB2.8 million in 6M2024,  whilst incurred cost of sales of RMB1.1 million which mainly consisted of
direct labour costs, depreciation of fixed assets, right-of-use assets and amortisation of intangible assets
and direct material costs. As a result,  our g ross profit margin of food testing  services in 6M2024 was
61.2%.


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FINANCIAL INFORMATION
General and Administrative Expenses
 The following table sets forth the components of our general and administrative expenses for the
years/periods indicated.
FY2021 FY2022 FY2023 6M2023 6M2024
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Employee remuneration 3,983 84.3 4,988 78.1 5,372 52.9 2,480 67.0 2,457 44.8
Depreciation of fixed assets  and
right-of-use assets 51 1.1 279 4.4 399 3.9 206 5.6 484 8.8
Office expenses 474 10.0 663 10.4 876 8.6 335 9.0 470 8.6
Listing expenses – – – – 1,779 17.5 – – 887 16.2
Professional fees 57 1.2 322 5.0 1,237 12.2 657 17.7 891 16.2
Other expenses 161 3.4 131 2.1 494 4.9 25 0.7 296 5.4

Total 4,726 100.0 6,383 100.0 10,157 100.0 3,703 100.0 5,485 100.0

During the Track Record Period, our general and administrative expenses consist primarily of
employee rem uneration, depreciation of fixed assets  and right-of-use assets , office expenses, listing
expenses, professional fees and other expenses.
Employee remuneration
Our employee remuneration included salaries, bonuses and social insurance benefits paid to our
employees. The increase in employee remuneration from RMB4.0 million for FY2021 to RMB5.0 million
for FY2022 was primarily due to increase in employee salary as (i) we granted basic performance bonuses
to our employees in FY2022, the amounts of which were associated with the job titles of our employees;
and (ii) we promoted certain employees and managers in our back-office in FY2022, resulting in higher
salaries for the relevant personnel.  The basic performance bonus of  RMB 0.7 million that was included
in g eneral and administrative expenses in FY 2022 had been granted  to 31 employees who were mainly
our senior management  and staff from administration and finance department s in FY2022 to rec ognise
their  contribution  and such bonus was mainly tied to individual achievement instead of our Company’s
financial performance.  The employee remuneration increased from RMB5.0 million in FY2022 to RMB5.4
million in FY2023, which was primarily due to an increase in the number of our employees whose salaries
were included in general and administrative expenses from 39 employees for FY2022 to 45 employees for
FY2023.  The employee remuneration remained relatively stable at RMB2.5 million and RMB2.5 million
in 6M2023 and 6M2024, respectively.


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FINANCIAL INFORMATION
Professional fees
Professional fees mainly represent professional services fees incurred for the advisory services
provided to our Company  by the IPO Consultant, which  resulted in the increase from  RMB57,000 in
FY2021 to RMB0.3  million in FY2022 and a further increase to RMB1.2 million in FY2023.  Professional
fees increased  from RMB 0.7 million  in 6M2023 to RMB0.9 million  in 6M2024 partially due to human
resources advisory service fee incurred in 6M2024.
The IPO Consultant entered into an exclusive capital and management consultancy service
agreement with our Company in August 2022, pursuant to which the IPO Consultant shall provide, on an
exclusive basis, consultancy and advisory services to our Company in relation to strategic development,
management and corporate reorganisation, financial planning, corporate governance enhancement,
equity and asset restructuring, and equity and debt financing in the PRC. The service period is two years
commencing from 8 August 2022 and the service fee is RMB1.6 million.
Research and Development Expenses
Our research and de velopment expenses w ere nil, nil , RMB 0.1 million , nil and RMB 0.3 million
for FY 2021, FY2022,  FY2023, 6M2023 and 6M2024, respectively. The increase from nil  in FY2022 to
RMB0.1 million in FY2023 was primarily due to the increase in staff cost of our employees in information
technology department and related office expenses.  The increase from nil in 6M2023 to RMB0.3 million
in 6M2024 was primarily due to the increase in staff cost of our employees in information technology
department and d epreciation of fixed assets and right-of-use assets.
Net Impairment Losses on F inancial Assets
We recorded net impairment losses on financial assets of RMB 2.1 million in FY2021 which
decreased  to RMB1.4  million in FY2022, primarily representing the change in impairment provision  made
to trade receivables during the year.  The net impairment losses on financial assets of RMB1.3 million in
FY2023 remained relatively stable as compared to RMB1.4 million in FY2022. The net impairment losses
on financial assets decreased from RMB1.6 million in 6M2023 to RMB0.1 million in 6M2024, primarily
representing the change in impairment provision made to trade receivables during the period.
Other Income
We recorded other income of RMB0.5 million, RMB0.4 million,  RMB0.6 million, RMB0 .3 million
and RMB 60,000 in FY2021, FY2022,  FY2023, 6M2023 and 6M2024, respectively.  Our other income
consisted primarily of finance income from sublease, government subsidies, income from sales of scrap
materials and interest income from a related party, of which interest income from a related party amounted
to nil, nil,  RMB0.3 million, RMB0.1 million and nil in FY2021, FY2022,  FY2023, 6M2023 and 6M2024,
respectively.


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FINANCIAL INFORMATION
Other Losses
We recorded other losses of nil , RMB 13,000,  RMB 0.9 million, nil and RMB 84,000 in FY2021,
FY2022 , FY2023 , 6M2023  and 6M2024 , respectively. The increase in other losses from FY 2022 to
FY2023 was primarily due to an early termination of our lease for the Dabei Line Land.  The increase in
other losses from 6M2023 to 6M2024 was primarily due to the exchange loss of RMB84,000 recognised in
6M2024.
Finance Costs
We recorded net finance costs of RMB 0.2 million, RMB 0.2 million,  RMB 0.1 million, RMB 0.1
million  and RMB 0.4 million  in FY2021, FY2022,  FY2023, 6M2023 and 6M2024, respectively, which
consisted primarily of interest of lease liabilities. Our finance income was RMB 0.1 million, RMB 0.1
million,  RMB 0.1 million, RMB 33,000 and RMB 49,000 in FY2021, FY2022,  FY2023, 6M2023 and
6M2024, respectively. We incurred finance costs of RMB0.3 million, RMB0.3 million,  RMB0.2 million,
RMB0.1 million and RMB0.5  million in FY2021, FY2022,  FY2023, 6M2023 and 6M2024, respectively.
Income Tax Expenses
Our income tax consists primarily of PRC enterprise income tax charged on our Company  and
deferred tax expenses arising from the timing difference between accounting and taxable profits. The
following table sets forth our income tax expenses for the years/periods indicated.
FY2021 FY2022 FY2023 6M2023 6M2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Current income tax 6,693 1,200 5,058 1,694 2,737
Deferred income tax credit (707) (161) (578) (227) (263)

Total income tax expenses 5,986 1,039 4,480 1,467 2,474

Our  Company was incorporated in the PRC. Enterprise income tax (“EIT”) was made on the
estimated assessable profits of our  Company and was calculated in accordance with the relevant
regulations of the PRC after considering the available tax benefits from refunds and allowances. The
general PRC EIT rate is 25.0% during the Track Record Period.
For FY2021, FY2022,  FY2023, 6M2023 and 6M2024, our income tax expenses were RMB 6.0
million, RMB 1.0 million,  RMB 4.5 million, RMB 1.5 million  and RMB2.5 million, respectively, and our
effective tax rate during the same year was 25.2 %, 26.3%, 25.3%, 25.5% and 25.2% , respectively,  which
was generally in line with the general PRC EIT rate of 25.0%.


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FINANCIAL INFORMATION
During the Track Record Period, we made all material tax filings and paid all material outstanding
tax liabilities with the relevant tax authorities in China, and we are not aware of any outstanding or
potential dispute with such tax authorities.
Profit for the Year/Period
As a result of the foregoing, we had profit for the year  of RMB 17.7 million, RMB 2.9 million,
RMB 13.3  million, RMB 4.3 million  and RMB 7.3 million  for FY2021, FY2022,  FY2023, 6M2023 and
6M2024, respectively.
RESULTS OF OPERATIONS
6M2024  Compared to 6M2023
Revenue
Our total revenue increased  by 39.8% from RMB 16.3 million in 6M2023 to RMB 22.8 million in
6M2024. For detailed discussion on the reasons of the fluctuations, see “– Statements of Comprehensive
Income – Revenue” in this section.
Cost of sales
Our cost of sales increased  by 21.2% from RMB 5.5 million in 6M2023 to RMB 6.7 million in
6M2024. For detailed discussion on the reasons of the fluctuations, see “– Statements of Comprehensive
Income – Cost of sales” in this section.
Gross profit and gross profit margin
Our gross profit increased  by 49.3% from RMB 10.8 million in 6M2023 to RMB 16.2 million in
6M2024. Our gross profit margin increased  from 66.4% in 6M2023 to 70.8 % in 6M2024. For detailed
discussion on the reasons of the fluctuations, see “– Statements of Comprehensive Income – Gross Profit
and Gross Profit Margin” in this section.
General and administrative expenses
Our general and administrative expenses increased  by 48.1% from RMB 3.7 million in 6M2023 to
RMB5.5  million in 6M2024. For detailed discussion on the reasons of the fluctuations, see “– Statements
of Comprehensive Income – General and Administrative Expenses” in this section.


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FINANCIAL INFORMATION
Research and development expenses
Our research and development expenses increased  from nil in 6M2023 to RMB0.3 million in
6M2024. For detailed discussion on the reasons of the fluctuations, see “– Statements of Comprehensive
Income – Research and Development Expenses” in this section.
Net impairment losses on financial assets
We recorded  net impairment losses on financial assets of RMB 1.6 million in 6M2023 and which
decreased to RMB0.1  million in 6M2024 primarily representing the change in impairment provision made
to trade receivables during the year.
Other income
Our other income decreased by 81.0% from RMB0.3 million in 6M2023 to RMB60,000 in 6M2024
primarily due to the decrease in (i) interest income from related party from RMB0.1 million in 6M2023 to
nil in 6M2024; and (ii) rental income from RMB93,000 in 6M2023 to nil in 6M2024.
Finance costs
Our net finance costs significantly  increased by 302.8% from RMB 0.1 million i n 6M2023 t o
RMB0.4 million i n 6M2024 p rimarily due to the incurrence of interest of lease liabilities in association
with our lease for the New Building which commenced in April 2024.
Profit before income tax
As a result of the foregoing, our profit before tax substantially increased by 70.7% from RMB5.8
million in 6M2023 to RMB9.8  million i n 6M2024.
Income tax expenses
Our income tax expenses substantially increased  by 6 8.6% from RMB 1.5 million in 6M2023 to
RMB2.5  million in 6M2024, which was generally in line with the increase in profit before income tax.
Profit for the period
As a result of the foregoing, our net profit increased  by 71.4% from RMB 4.3 million in 6M2023
to RMB7.3 million in 6M2024. The increase was primarily due to the increase in our total revenue from
RMB16.3 million in 6M2023 to RMB22.8 million in 6M2024, which was partially offset by the increase
in (i) our general and administrative expenses from RMB 3.7 million in 6M2023 to RMB 5.5 million in
6M2024; (ii) our research and development expenses from nil in 6M2023 to RMB0.3 million in 6M2024;
(iii) our net finance cost from RMB0.1 million  in 6M2023 to RMB0 .4 million in 6M2024; and (iv) our
income tax expenses from RMB1.5 million in 6M2023 to RMB2.5 million in 6M2024.


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FINANCIAL INFORMATION
FY2023 Compared to FY2022
Revenue
Our total revenue increased by 107.9% from RMB20.0 million in FY2022 to RMB41.5 million in
FY2023. For detailed discussion on the reasons of the fluctuations, see “– Statements of Comprehensive
Income – Revenue” in this section.
Cost of sales
Our cost of sales increased by 38.3% from RMB 8.5 million in FY 2022 to RMB11.7  million in
FY2023. For detailed discussion on the reasons of the fluctuations, see “– Statements of Comprehensive
Income – Cost of sales” in this section.
Gross profit and gross profit margin
Our gross profit increased by 159.1% from RMB 11.5 million in FY 2022 to RMB29.8  million in
FY2023. Our gross profit margin increased from 57.6% in FY 2022 to 71.8% in FY 2023.  For detailed
discussion on the reasons of the fluctuations, see “– Statements of Comprehensive Income – Gross Profit
and Gross Profit Margin” in this section.
General and a dministrative expenses
Our general and administrative expenses increased by 59.1% from RMB 6.4 million in FY2022 to
RMB10.2  million in FY2023. For detailed discussion on the reasons of the fluctuations, see “– Statements
of Comprehensive Income – General and Administrative Expenses” in this section.
Research and development expenses
Our  research and development expenses increased from nil in FY2022 to RMB 0.1 million in
FY2023. For detailed discussion on the reasons of the fluctuations, see “– Statements of Comprehensive
Income – Research and Development Expenses” in this section.
Net impairment losses on financial assets
Our net impairment losses on financial assets of RMB1.4 million i n FY2022 and RMB1.3 million i n
FY2023 respectively,  were relatively stable.
Other income
Our other income increased by 48.7% from RMB 0.4 million in FY 2022 to RMB0.6 million in
FY2023 primarily due to an increase in interest income from related party in FY2023.


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FINANCIAL INFORMATION
Finance costs
We incurred net finance costs of RMB 0.2 million i n FY2022 and  RMB 0.1 million i n FY2023
respectively, which were relatively stable.
Profit before income tax
As a result of the foregoing, our profit before tax substantially increased by 3 48.9% from RMB4.0
million in FY2022 to a profit of RMB1 7.7 million i n FY2023.
Income tax expenses
Our income tax expenses substantially increased by 331.2% from RMB1.0 million in FY2022 to
RMB4.5  million in FY2023, which was generally in line with the increase in profit before income tax.
Profit for the year
As a result of the foregoing, our net profit substantially increased by 355.2% from RMB2.9 million
in FY2022 to RMB13.3 million in FY2023. The increase was primarily due to the increase in our total
revenue from RMB20.0 million in FY2022 to RMB41.5 million in FY2023, which was partially offset by
the increase in (i) our general and administrative expenses from RMB6.4 million in FY2022 to RMB10.2
million in FY2023; (ii) our research and development expenses from nil in FY2022 to RMB0.1 million in
FY2023; and (iii) our other losses from RMB13,000 in FY2022 to RMB0.9 million in FY2023.
FY2022 Compared to FY2021
Revenue
Our total revenue decreased by 49.8 % from RMB 39.8 million in FY2021 to RMB 20.0 million
in FY2022.  For detailed discussion on the reasons of the fluctuations, see  “– Statements of Other
Comprehensive Income – Revenue” in this section.
Cost of sales
Our cost of sales decreased by 11.8% from RMB 9.6 million in FY2021 to RMB 8.5 million in
FY2022.  For detailed discussion on the reasons of the fluctuations, see “– Statements of Comprehensive
Income – Cost of sales” in this section.
Gross profit and gross profit margin
As a result of the foregoing, our gross profit decreased by 61.9% from RMB 30.2 million in
FY2021 to RMB11.5 million in FY2022.  For detailed discussion on the reasons of the fluctuations, see
“– Statements of Comprehensive Income – Gross Profit and Gross Profit Margin” in this section.


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FINANCIAL INFORMATION
General and Administrative expenses
Our general and administrative expenses increased by 35.1% from RMB 4.7 million in FY2021 to
RMB6.4 million in FY2022. For detailed discussion on the reasons of the fluctuations, see “– Statements
of Comprehensive Income – General and Administrative Expenses” in this section.
Net impairment losses on financial assets
We recorded net impairment losses on financial assets of RMB 2.1 million in FY2021 and which
decreased  to RMB1.4  million in FY2022 primarily representing the change in i mpairment provision made
to trade receivables during the year.
Other income
We had other income of RMB0.5 million and RMB0.4 million in FY2021 and FY2022 respectively,
which was relatively stable.
Finance costs
We incurred net finance costs of RMB 0.2 million  and RMB 0.2 million  in  FY2021 and FY2022
respectively, which was relatively stable.
Profit before income tax
As a result of the foregoing, our profit before tax decreased by 83.3% from  RMB 23.7 million in
FY2021 to RMB4.0 million in FY2022.
Income tax expenses
Our income tax expenses decreased by 82.6% from RMB6.0 million in FY2021 to RMB1.0 million
in FY2022, which was generally in line with the decrease in our revenue. Our effective tax rate was 25.2%
and 26.3% in FY2021 and FY2022, respectively.
Profit for the year
As a result of the foregoing, our net profit decreased by 83.6% from RMB17.7 million in FY2021
to RMB 2.9 million in FY2022 . The decrease was primarily due to (i) the decrease in our total revenue
from RMB39.8 million in FY2021 to RMB20.0 million in FY2022; and (ii) the increase in our general and
administrative expenses from RMB4.7 million in FY2021 to RMB6.4 million in FY2022.


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FINANCIAL INFORMATION
DISCUSSION OF CERTAIN ITEMS FROM THE STATEMENTS OF FINANCIAL
POSITION
The following table sets forth our summary statements of financial position as at the dates indicated.
As at 31 December
As at
30 June
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB'000
ASSETS
Non-current assets
Property, plant and equipment 3,949 4,812 4,225 15,906
Right-of-use assets 1,953 2,974 1,688 37,362
Deferred tax assets 2,301 2,462 3,040 3,303
Intangible assets 79 69 116 339
Other receivables and prepayments 4,187 3,976 3,025 2,985


12,469 14,293 12,094 59,895

Current assets
Contract fulfilment costs 820 2,053 1,390 2,440
Inventory – – – 233
Trade and other receivables and
prepayments 36,599 35,843 46,201 55,304
Cash and cash equivalents 35,846 32,221 59,145 42,459

73,265 70,117 106,736 100,436

Total assets 85,734 84,410 118,830 160,331


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FINANCIAL INFORMATION
As at 31 December
As at
30 June
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB'000
LIABILITIES
Non-current liabilities
Lease liabilities 4,995 5,786 1,494 37,119

4,995 5,786 1,494 37,119

Current liabilities
Trade payables 105 738 612 492
Contract liabilities 750 1,060 1,394 1,232
Lease liabilities 391 693 508 1,483
Current income tax liabilities 7,652 2,016 3,267 994
Other payables and accruals 4,853 4,786 8,970 9,083

13,751 9,293 14,751 13,284

Total liabilities 18,746 15,079 16,245 50,403

Net Assets 66,988 69,331 102,585 109,928

Property, Plant and Equipment
Our property, plant and equipment consist primarily of machinery  equipment,  leasehold
improvements, office equipment and vehicles. We had property, plant and equipment of RMB3.9 million,
RMB4.8 million,  RMB4.2 million and RMB15.9 million as at 31 December 2021,  2022 and 2023 and 30
June 2024, respectively. The increase as at 31 December 2022 from 31 December 2021 was primarily
due to (i) the addition of machinery equipment, such as CCTV pipe robots and testing machines; (ii) the
addition of leasehold improvements in our office building; and (iii ) the addition of vehicles. The decrease
as at 31 December 2023 from 31 December 2022 was primarily due to the depreciation charged for the
year and partially offset by the addition of machinery equipment, vehicles and office equipment during
FY2023. The increase as at 30 June 2024 from 31 December 2023 was primarily due to (i) the addition of
machinery equipment,  such as (a) intelligent testing system for compressive strength of concrete  for our
construction material testing service, (b) static load test reaction frame of building foundation pile f or our
foundation testing service and (c) machinery and other production equipment for our food testing service;
(ii) the addition of leasehold improvements in our New Building; and (iii) the addition of vehicles. The
following table sets forth a breakdown of the net book value of our property, plant and equipment as at the
dates indicated.


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FINANCIAL INFORMATION
As at 31 December
As at
30 June
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB'000
Machinery equipment 3,109 3,595 3,039 14,286
Leasehold improvements 451 578 380 624
Office equipment 345 333 302 252
Vehicles 44 306 504 744


Total 3,949 4,812 4,225 15,906

Right-of-use Assets
Our right-of-use assets consist primarily of land use rights and properties. We had right-of-use assets
of RMB2.0 million, RMB 3.0 million , RMB 1.7 million  and RMB 37.4 million  as at 31 December 2021 ,
2022 and 2023 and 30 June 2024, respectively. The following table sets forth a breakdown of the net book
value of our right-of-use assets as at the dates indicated.
As at 31 December
As at
30 June
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB'000
Land use rights 1,030 933 – –
Properties 923 2,041 1,688 37,362

Total 1,953 2,974 1,688 37,362

The increase as at 31 December 2022 from 31 December 2021 was primarily attributable to our
lease of office building in FY2022. The significant decrease from 31 December 2022 to 31 December 2023
was due to the early termination of our lease for the Dabei Line Land.  The increase  as at 30 June 2024
from 31 December 2023 was primarily attributable to our lease for t he New Building which commenced in
April 2024.
Deferred Tax Assets
Our deferred tax assets consist primarily of deferred tax in relation to the provision for credit
loss of trade receivables and other receivables . We had deferred tax assets of RMB2.3 million, RMB 2.5
million,  RMB 3.0 million  and RMB 3.3 million  as at 31 December 2021 , 2022 and 2023 and 30 June
2024, respectively. The increase as at 31 December 2022 from 31 December 2021 was primarily due to
the tax credited in relation to the provision for credit loss of trade receivables and other receivables and


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FINANCIAL INFORMATION
partially offset by tax charged in relation to payroll accrual. The increase as at 31 December 2023 from 31
December 2022 was primarily due to the tax credited to provision for credit loss of trade receivables and
other receivables.  The increase as at 30 June 2024 from 31 December 2023 was primarily due to the tax
credited in relation to lease liabilities and partially offset by tax charged in relation to right-of-use assets.
Intangible Assets
Our intangible assets primarily represented the carrying amount of our  accounting software  and
material testing software. We had intangible assets of RMB 79,000, RMB 69,000,  RMB 116,000 and
RMB339,000 as at 31 December 2021,  2022 and 2023 and 30 June 2024, respectively. Our intangible assets
remained relatively stable for FY2021 and FY2022.  The increase of our intangible assets from RMB69,000
as at 31 December 2022 to RMB116,000 as at 31 December 2023 was primarily due to the acquisition of
software in FY2023.  Our intangible assets further increased to RMB339,000 as at 30 June 2024 primarily
due to our purchase of the management system of the control cabinet in our New Building and the food
and agricultural products testing.
Contract Fulfilment Costs
Our contract fulfilment costs represented the asset recognised in relation to costs to fulfil
contracts for testing services including foundation testing service, building structure testing service and
infrastructure and public roads testing service.
Our contract fulfilment costs increased significantly  to RMB 2.1 million  as at 31 December 2022
from RMB0.8 million as at 31 December 2021 primarily due to the increase in ongoing services provided
by our Company as at 31 December 2022. Our contract fulfilment costs decreased from RMB2.1 million
as at 31 December 2022 to RMB1.4  million as at 31 December 2023 primarily due to the decrease in the
contract fulfilment costs of our foundation testing service.  Our contract fulfilment costs increased  from
RMB1.4 million as at 31 December 2023 to RMB2.4 million as at 30 June 2024 primarily due to the
increase in ongoing services,  particularly our infrastructure and public roads testing service, provided by us
as at 30 June 2024.
Inventory
Our inventory primarily represented the testing consumables which were purchased but not yet
utilised by us in 6M2024 for the purpose of our food testing service.
As at 31 December 2021, 2022 and 2023 and 30 June 2024, we had inventory of nil, nil, nil and
RMB0.2 million, respectively, which was primarily due to the commencement of our food testing service
since May 2024, resulting in an increase in inventory of testing consumables as at 30 June 2024.


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FINANCIAL INFORMATION
Trade Receivables
During the Track Record Period, our trade receivables primarily represented amounts receivable
from our customers for our services provided in the ordinary course of business.  As at 31 December
2021,  2022 and 2023 and 30 June 2024, we had trade receivables of RMB35.4 million, RMB34.5  million,
RMB29.3  million and RMB32.9  million, respectively. The table below sets forth the details of our trade
receivables as at the dates indicated.
As at 31 December
As at
30 June
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB'000
Trade receivables 44,479 44,983 41,165 44,842
Less: provision for credit loss of trade
receivables (9,068) (10,438) (11,840) (11,968)

Total 35,411 34,545 29,325 32,874

We did not hav e standardised credit period for o ur customers prior to December 2023 and may
grant credit period to customers on a case-by-case basis.  Since December 2023, we have established
credit term policy in order to standardise the procedures for granting credit period to our customers  and
we have implemented such policy since  January 2024 . For details of our credit term policy, see “– Our
credit term policy” in this section. Our trade receivables as at 31 December 2021 and 31 December 2022
remained relatively stable at RMB35.4 million and RMB34.5 million, respectively. Our trade receivables
decreased to RMB 29.3 million mainly because we had strengthened and sped up the collection of our
trade receivables from our customers  in FY2023.  Our trade receivables as at 30 June 2024 increased  to
RMB32.9  million, which was mainly attributable to the increase in trade receivables of RMB4.0 million
due from our PRC government administrative bureaus customers as a result of the substantial increase in
revenue generated from such customers in 6M2024. As at the Latest Practicable Date, RMB3.9 million,
which accounted for  8.7% of our outstanding trade receivables as at 30 June 2024,  were subsequently
settled. Our top five trade receivables amounted to RMB22.2 million, RMB24.4 million,  RMB 14.1
million  and RMB 14.7 million  as  at 31 December 2021 , 2022 and 2023 and 30 June 2024, respectively,
representing 49.9%, 54.2% , 34.3%  and 32.7%  of our total trade receivables before any provision of
credit loss as at the respective dates. As at the Latest Practicable Date, RMB1.6 million or 1 0.7% of our
outstanding trade receivables due from our top five trade receivables debtors as at 30 June 2024  were
subsequently settled.


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FINANCIAL INFORMATION
Analysis of trade receivables by customer type
The table below sets forth the analysis of trade receivables by customer types and corresponding impairment provision as at 31 December 2021,
2022 and 2023 and 30 June 2024, and the amount of subsequent settlement of trade receivables up to the Latest Practicable Date.
As at 31 December As at 30 June
2021 2022 2023 2024
Total
trade
receivables
% of total
trade
receivables
Less:
impairment
provision
Net trade
receivables
Total
trade
receivables
% of total
trade
receivables
Less:
impairment
provision
Net trade
receivables
Total
trade
receivables
% of total
trade
receivables
Less:
impairment
provision
Net trade
receivables
Total trade
receivables
% of total
trade
receivables
Less:
impairment
provision
Net trade
receivables
Less: amount
subsequently
settled up to
the Latest
Practicable
Date
Remaining
balance up
to the Latest
Practicable
Date
RMB’000 % RMB’000 RMB’000 RMB’000 % RMB’000 RMB’000 RMB’000 % RMB’000 RMB’000 RMB’000 % RMB’000 RMB’000 RMB’000 RMB’000
Property developers 25,649 57.7 (6,784) 18,865 19,634 43.7 (6,794 ) 12,840 22,141 53.8 (8,891) 13,250 20,501 45.7 (8,520) 11,981 (623) 11,358
Construction companies 2,349 5.3 (464) 1,885 2,471 5.5 (503) 1,968 7,071 17.2 (1,393) 5,678 3,912 8.7 (1,199) 2,713 (1) 2,712
State-owned investment companies 12,573 28.3 (1,369) 11,204 14,214 31.6 (2,215) 11,999 5,159 12.5 (650) 4,509 6,163 13.8 (784) 5,379 (679) 4,700
PRC government institutions 2,391 5.4 (286) 2,105 6,113 13.6 (673) 5,440 5,484 13.3 (568) 4,916 7,401 16.5 (718) 6,683 (10) 6,673
PRC government administrative bureaus 513 1.2 (76) 437 2,049 4.6 (214) 1,835 482 1.2 (84) 398 4,806 10.7 (409) 4,397 (1,540) 2,857
OthersNote 1,004 2.1 (89) 915 502 1.0 (39) 463 828 2.0 (254) 574 2,059 4.6 (338) 1,721 (1,058) 663

44,479 100.0 (9,068) 35,411 44,983 100.0 (10,438) 34,545 41,165 100.0 (11,840) 29,325 44,842 100.0 (11,968) 32,874 (3,911) 28,963

Note: Including individuals involving in private construction or building works which require our testing services.


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FINANCIAL INFORMATION
Reasons of our prolonged trade receivables settlement cycle
Different types of customers would have  different settlement cycles . For property developers  and
construction companies, their  settlement cycle typically  depends on the progress of their  construction
projects; while for state-owned investment companies, PRC government institutions and PRC government
administrative bureaus, their  settlement cycle is generally subject to the length of approval process
required by  government financial departments such as Xinyi City Bureau of Finance. According to the
CIC Report, the above practice are consistent with the testing and inspection industry norm in the PRC.
Our overall prolonged trade receivables settlement cycle during the Track Record Period are
primarily due to:
(i)  Increasing proportion of the customers with longer settlement cycle
According to the CIC Report, trade receivables due from state-owned investment companies,
relevant PRC government institutions and PRC government administrative bureaus usually have a
relatively long settlement cycle because projects undertaken by these customers are typically larger
in terms of contract sum and the prolonged settlement review process mainly due to, among others (a)
construction or development projects undertaken from state-owned investment companies, relevant PRC
government institutions and PRC government administrative bureaus often come with special initiatives,
and relevant fundings are specifically earmarked for dedicated use. Typically, stringent approvals
procedures would be carried out by government financial departments resulting in relatively longer project
timelines; (b) the involvement of the customer’s management and/or the lengthy internal approval process
of the finance department; and (c) some of the larger and/or complex projects require a longer period of
time for inspection, which results in the need of a longer period of time to complete the internal review of
the settlement.
With government ownership as a credit endorsement, our  Directors believe that state-owned
investment companies, relevant PRC government institutions and PRC government administrative bureaus
generally have higher credibility, and it is likely that the trade receivables from such customers could
finally be settled.
Specifically, we have provided foundation testing services to one of the sizeable infrastructure
projects of our major customer, together with its immediate holding company  and its wholly owned
subsidiary, collectively being Customer D. Customer D, being one of our five largest customers during the
Track Record Period, is a state-owned enterprise established in the PRC in 2017, with RMB610 million of
registered capital and principally engages in engineering construction for buildings and urban real estate
development and operation. That sizeable infrastructure project was considered as a key construction
project in Maoming and Xinyi City, which primarily involved the construction of roads, flood drains,
sewage, water supply, lighting, traffic and greening. We commenced our foundation testing services for
such project in May 2019 and completed our foundation testing services for the project in December 2021.


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FINANCIAL INFORMATION
We had completed  92 ser vice orders throughout that period and the relevant trade receivables attributed
from such project amounted to RMB7.8 million. In view of the complexity in construction work and the
massi ve investment cost involved the time taken for prog ress inspection woul d be comparatively l onger
and hence lengthen the approval time for settlement by Xinyi City Bureau of Finance for such project as a
whole. Nonetheless the relevant trade receivables had been fully settled by August 2023.
(ii)  Impact of COVID-19 pandemic
Maoming represents our primary market and substantially all of our revenue generated during the
Track Record Period was attributable to the services provided in Maoming. See “Business – Our Business
Model” in this prospectus for further details. As such, measures imposed by the Maoming Government in
relation to the pandemic including imposing lockdowns, suspending construction activities, implementing
travel restrictions, and enforcing strict social distancing and quarantine protocols had affected most of
our customers, that resulted in delays in the progress of construction and infrastructure projects which has
in turn affected the settlement progress of the trade receivables.  For instance, among the total revenue of
RMB20.0 million we generated in FY2022, there was RMB14.1 million outstanding as trade receivables as
at 31 December 2022, representing 70.9% of the revenue for the yea r, showing that the settlement progress
in FY2022 had been slowed down as compared to that in FY2021 of 56.7% . In addition, RMB30.8 million
of trade receivables brought forward from 31 December 2021 (i.e. trade receivables aged over one year as
at 31 December 2022) remained unsettled, which accounted for 69.3% of the total trade receivables as at
31 December 2021, as a result, there was a significant increase in the trade receivable turnover days from
271 days in FY2021 to 639 days in FY2022. As the impact of the COVID-19 pandemic gradually relieved
in 2023, the trade receivable turnover days decreased to 281 days in FY2023 and further decreased to 248
days in 6M2024.
(iii)  Impact of the PRC property market downturn
According to the CIC Report, property  development in the PRC is capital intense and when the
PRC regulatory authorities promulgated new financing rule of “Three Red Lines” in 2020 tightening the
financing in the property development industry nationwide, coupled with the reduce in demand in the PRC
property market, many property developers started to experience liquidity issue.
Property developers were one of our major customer types during the Track Record Period. Trade
receivables from such property developer debtors accounted for 57.7%, 43.7%,  53.8%  and 4 5.7% of
our total trade receivables as at 31 December 2021, 2022 and 2023  and 30 June 2024, respectively. The
property market downturn and tightening in financing led to the settlement cycle of property developer
debtors becoming comparatively longer. In FY2021, FY2022,  FY2023 and 6M2024, the trade receivable
turnover days of property developer debtors of our Company were 245  days, 939 days,  321 days and 2 50
days, respectively. In view of the above, we have negotiated settlement plans, including but not limited to
extending  the due date and formulating payment schedule and instalment amount,  with certain  property
developer debtors and has been closely monitoring and following-up the settlement progress with these


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FINANCIAL INFORMATION
debtors.  Nonetheless, based on our impairment policy, we recognised specific impairment provision in
relation to trade receivables due from nine, nine, 17 and 1 7 property developer debtors as at 31 December
2021, 2022 and 2023 and 30 June 2024, respectively,  involving 21 projects of these property developers,
which  accounted for  RMB4.3 million, RMB4.4 million,  RMB 7.7 million  and RMB 7.5 million  as at 31
December 2021, 2022 and 2023 and 30 June 2024, respectively, and fully reflected the relevant impact in
our Statements of Comprehensive Income.  For further details, see “Appendix I – Accountant’s Report –
Historical Financial Information of the Company” in this prospectus.
Our credit term policy
We have established credit term policy since December  2023 and have implemented such policy
since January 2024 in order to standardise  the procedures for granting  credit period to our customers .
Pursuant to our latest credit term policy, we grant different credit terms to our customers primarily
considering the nature of enterprises, background of shareholders and sources of funding. We generally
grant credit terms ranging from (i) 15 working days to 120 working days to customers that are mainly
state-owned investment companies, relevant PRC government institutions and PRC government
administrative bureaus; and (ii) 15 working days to 60 working days to customers that are mainly property
developers, construction companies and others. The abovementioned credit terms begin from the date
we complete the testing reports and inform our customers to collect them. According to the CIC Report,
the credit terms we grant to our customers are in line with those granted by our peers in the testing and
inspection industry.
We actively monitor and review the payment terms of our customers on a regular basis.  For
customers with long aging trade receivables  (i.e. aged over one year), we are required to implement
verification procedures for such customers on the credit terms and their payment capability and to maintain
stricter control over uncollected trade receivables. As trade receivables due from state- owned investment
companies, PRC government institutions and PRC government administrative bureaus usually have a
relatively long settlement cycle, we will comprehensively conduct credit assessment on them based on
the actual progress of different projects undertaken by such customers, and set a reasonable credit period
and limit for them. We do not hold any collateral or other credit enhancements over our trade receivables
balances, and our trade receivables are non-interest-bearing.


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FINANCIAL INFORMATION
Our credit assessment and impairment loss policy
We are exposed to credit risk in relation to the outstanding trade receivables. In case of our trade
receivables cannot be recovered or are not remitted by our customers to us on a timely basis and in full,
we will have to make provision or write off the relevant trade receivables, which in turn may adversely
affect our financial position and profitability.
We closely review the trade receivable balance and any overdue balances on an ongoing basis
and assess the collectability of overdue balances. Pursuant to our latest credit term policy  established
in December 2023 and implemented in January 2024 , on one hand, our finance department shall
regularly update the settlement status and report any overdue balances in trade receivables to our general
management department. On the other hand, our general management department is responsible for
the assessment on the corporate credit and business operation condition of the customers, generally by
obtaining background information of the customers in relation to their business condition, background
of shareholders and financial status from public sources including information enquiry websites. After
receiving the status and information of any overdue balances from our finance department, our general
management department , under the supervision of our senior management,  will coordinate with our
business department to follow up on the progress of collection of trade receivables.
At the end of each reporting period, our management assess each debtor individually and identify
any debtor who is in bankruptcy, liquidation, insolvency or in other situations with higher default risk. The
impairment asse ssment on the trade r eceivables of the debtors  with higher default risk mainly depended
on the debtor’s  payment history  and their current and future ability for payment taking into account the
information specific to the debtors.  The loss allowance provision made on such trade receivables on
individual basis as at 31 December 2021, 2022 and 2023 and 30 June 2024 were RMB4.6 million, RMB4.7
million , RMB 9.0 million  and RMB 8.8 million, respectively.  For the remaining debtors that are not
identified as debtors with higher default risk, our management would group their trade receivables based
on shared credit risk characteristics and aging periods and estimate the future cash flows for each group
of these trade receivables to determine their loss allowance provisions on a group basis. Our management
takes into consideration the historical default rates, existing market conditions as well as forward-
looking information on macroeconomic factors that will affect the ability of our debtors to settle the trade
receivables when determining the expected credit loss rates of each group of trade receivables.
The loss allowance provisions made on a group basis as at 31 December 2021, 2022 and 2023 and
30 June 2024 were RMB4.5 million, RMB5.7 million,  RMB2.8 million and RMB3 .2 million, respectively.
As a result, the provision of credit loss of trade receivables as at 31 December 2021, 2022 and 2023 and 30
June 2024 in aggregate were RMB9 .1 million, RMB10.4 million,  RMB11.8 million and RMB12.0 million,
respectively, representing 20.4%, 23.2% , 28.8%  and 26.7% of the trade receivables as at the respective
dates.  For further details of our impairment policy on trade receivables, see “– Material Accounting Policy
Information and Estimates –  Impairment of financial assets” in this section.


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FINANCIAL INFORMATION
Aging analysis of trade receivables
The table below sets forth an aging analysis of our trade receivables based on the dates when the trade receivables are recognised as at the dates
indicated and the subsequent settlement up to the Latest Practicable Date.
As at 31 December As at 30 June
2021 2022 2023 2024
Total
trade
receivables
Less:
impairment
provision
Less: amount
subsequently
settled up to
the Latest
Practicable
Date
Remaining
balances up
to the Latest
Practicable
Date Note
Total
trade
receivables
Less:
impairment
provision
Less: amount
subsequently
settled up to
the Latest
Practicable
Date
Remaining
balances up
to the Latest
Practicable
Date Note
Total
trade
receivables
Less:
impairment
provision
Less: amount
subsequently
settled up to
the Latest
Practicable
Date
Remaining
balances up
to the Latest
Practicable
Date Note
Total
trade
receivables
Less:
impairment
provision
Less: amount
subsequently
settled up to
the Latest
Practicable
Date
Remaining
balance up
to the Latest
Practicable
Date Note
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Within 1 year 22,544 (2,660) (19,426) 458 14,146 (1,067) (11,9 13) 1,166 27,950 (2,578) (10,803) 14,569 31,302 (2,525) (3,905) 24,872
1 year to 2 years 13,339 (2,749) (11,016) (426) 12,908 (2,602) (9,765) 541 3,852 (1,150) (1,695) 1,007 4,707 (1,763) (5) 2,939
2 years to 3 years 6,985 (2,398) (5,856) (1,269) 11,743 (3,213) (9,419) (889) 3,327 (2,456) (210) 661 2,997 (2,195) – 802
3 years to 4 years 562 (320) (290) (48) 4,870 (2,349) (3,741) (1,220) 2,644 (2,264) (320) 60 3,114 (2,763) (1) 350
Over 4 years 1,049 (941) (47) 61 1,316 (1,207) (41) 68 3,392 (3,392) (990) (990) 2,722 (2,722) – –

44,479 (9,068) (36,635) (1,224) 44,983 (10,438) (34,879) (334) 41,165 (11,840) (14,018) 15,307 44,842 (11,968) (3,911) 28,963

Note: Negative remaining balances up to the Latest Practicable Date  indicate that there was certain  impaired amounts had been subsequently settled. The subsequent settlement has been
considered in the calculation of expected credit losses of the trade receivables in the respective year/period.
Our trade receivables aged over one year increased from RMB21.9 million as at 31 December 2021 to RMB30.8 million as at 31 December 2022
mainly due to delay in payment by our customers as a result of the impact of COVID-19 pandemic. Our trade receivables aged over one year decreased
to RMB 13.2 million as at 31 December  2023 mainly  due to substantial settlement of our trade receivables  aged  over one year in FY2023 due to the
lifting of the COVID-19 restrictions.  Our trade receivables aged over one year slightly increased to RMB13.5 million as at 30 June 2024,  which remained
relatively stable as compared to RMB13.2 million as at 31 December 2023. Our net trade receivables as at 30 June 2024 were considered recoverable,
taking into account that most of them were within one year, the financial standing of the relevant customers were reliable, our business relationship with
the relevant customers were stable and they had no disputes or legal proceedings with our Company.


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FINANCIAL INFORMATION
 As at 31 December 2021, 2022 and 2023 and 30 June 2024, RMB21.9 million, RMB30.8 million,
RMB13.2 million and RMB13.5 million, representing 49.3%, 68.6%,  32.1% and 30.2%  of our total trade
receivables respectively, were aged over one year.  As different types of customers would have different
settlement cycles, for property developers and construction companies, their settlement cycle typically
depends on the progress of their construction projects, while for state-owned investment companies, PRC
government institutions and PRC government administrative bureaus, their settlement cycle is generally
subject to the length of approval process required by government financial departments, therefore,  we
mainly consider, among others, (i) the nature and background of the customer’s business including its
shareholders and sources of funding of these customers; (ii) whether there are any negative news or
lawsuits of these customers that we would cast doubt on their repayment capability; and (iii) the result of
our comprehensive assessment performed on these customers after considering their historical repayment
records, whether there are any existing settlement plans of such customers and their construction progress
based on observation from on-site visits to these customers’ projects which may indicate their liquidity
and repayment capability, in order to assess the financial standings and measure the credit risks of such
customers.
Trade receivables turnover days by customer type
The table below sets forth the trade receivable turnover days by customer type for the years/periods
indicated.
FY2021 FY2022 FY2023 6M2024
Property developers 245 939 321 250
Construction companies 64 131 166 906
State-owned investment companies 997 2,025 515 214
PRC government institutions 222 350 280 508
PRC government administrative bureaus 419 229 130 98
Others 210 404 75 100
Overall trade receivable turnover days (1) 271 639 281 248

Note:
(1) Trade receivable  turnover days were calculated based on the average of the opening and closing trade receivables
divided by revenue for the relevant year multiplied by 365 days for FY2021,  FY2022 and FY2023.  Trade receivables
turnover days were calculated based on the average of the opening and closing trade receivables divided by revenue
for the relevant period multiplied by 182  days for 6M2024.


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FINANCIAL INFORMATION
Our trade receivable turnover days increased significantly from 271 days in FY2021 to 639 days
in FY2022, which was primarily due to (i) significant decrease in revenue and delay in payment by our
customers, in particular for property developers, construction companies and state-owned investment
companies, as a result of the impact of COVID-19 in FY2022; (ii) the significant increase in trade
receivable turnover days of state-owned investment companies from 997 days in FY2021 to 2,025 days in
FY2022, primarily attributable to a long outstanding trade receivable due from one of our major customers
(which together with its immediate holding company and its wholly-owned subsidiary collectively is
Customer D) amounted to RMB13.2 million as at 31 December 2022, of which RMB8.9 million was aged
over two years, see “ – Discussion of Certain Items from the State ments of Financial Position – Reasons of
our prolonged trade receivables  settlement cycle – (i) Increasing proportion of the customers with longer
settlement cycle” in this section for details; and (iii) the PRC property market downturn and tightening in
financing that resulted in the increase in the trade receivable turnover days of property developers from
245 days in FY2021 to 939 days in FY2022.
Our trade receivable turnover days decreased significantly from 639 days in FY2022 to 281 days
in FY2023, which was mainly a combined result of (i) the gradually relieved impact of the COVID-19
pandemic in 2023 such that trade receivable turnover days of most of our customers types had been
decreased; (ii) significant decrease in the trade receivable turnover days of state-owned investment
companies from 2,025 days in FY2022 to 515 days in FY2023 as a substantial part of the aforementioned
significant trade receivables due from that major customer had subsequently been settled during FY2023;
and (iii) a slight increase in trade receivable turnover days of construction companies from 131 days in
FY2022 to 166 days in FY2023 primarily because we had completed more orders and generated more
revenue from our provision of foundation testing service  and infrastructure and public road testing
service to construction companies in FY2023 which we typically allowed a longer credit period than our
construction material testing service, oppositely we mainly provided construction material testing service
to construction companies in FY2022.
Our trade receivable turnover days decreased  from 281 days in FY 2023 to 2 48 days in 6M2024,
which was mainly a combined result of ( i) our efforts in strengthening and speeding up the collection
of our trade receivables from our customers in 6M2024; (ii) an increase in payment from  our property
developer customers resulting in a  decrease in the trade receivable turnover days of property developers
from 321 days in FY2023 to 250 days in 6M2024; (iii) the settlements made by state-owned investment
companies resulting in a decrease in trade receivable turnover days of state-owned investment companies
from 515 days in FY2023 to 214 days in 6M2024; (iv) an increase in revenue generated from PRC
government administrative bureaus in 6M2024 resulting in the decrease in its trade receivable turnover
days from 130 days in FY2023 to 98 days i n 6M2024; (v) a significant i ncrease in tra de rec eivab le
turnover days of con stru ction  c ompa nies from 166 days in FY2023 to 906 days in 6M2024, primari ly
attributable t o a significant de crease in our revenue gen erated fro m cons truction compa nies in 6M2024;
and (vi) a significan t increa se in trade receivable tu rnover days of PRC government institutions from 280
days in FY2023 to 508 days in 6M2024, primarily attributable to t he lengthy approval process required by
government financial dep artments for settlement.


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FINANCIAL INFORMATION
According to the CIC Report, prolonged payment cycle is a common phenomenon across the entire
construction engineering testing and inspection industry. To certain extent, the length of trade receivable
turnover days depends on the length of credit period granted to customers, the length of settlement cycle
of customers and the amount of revenue recognised in the respective year, therefore trade receivable
turnover days of market participants in the industry may vary differently.
Other Receivables and P repayments
Our other receivables and prepayments consist primarily of lease payments receivable, amount due
from related parties,  prepayments for property, plant and equipment, prepayments  for professional services
fee and deferred listing expenses. We had other receivables and prepayment of RMB1.2 million, RMB1.3
million,  RMB 16.9 million  and RMB 22.4 million  as at 31 December 2021 , 2022 and 2023 and 30 June
2024, respectively.
As at 31 December
As at
30 June
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB'000
Other receivables
Lease payments receivable 5,021 4,748 559 559
Amount due from related parties 436 – – –
Others 485 640 548 404

5,942 5,388 1,107 963
Less: allowance for credit loss of other
receivables (640) (650) (565) (564)

5,302 4,738 542 399
Prepayments
Prepayments for property, plant and
equipment – – 3,025 2,337
Prepayments for professional services fee – 450 450 1,126
Prepayments for listing expense – – 133 50
Others 73 86 207 202

73 536 3,815 3,715

Deferred listing expense – – 15,544 21,301

Less: Non-current portion of other
receivables and prepayments (4,187) (3,976) (3,025) (2,985)

1,188 1,298 16,876 22,430


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FINANCIAL INFORMATION
Other receivables
Our other receivables decreased from RMB5.3  million as at 31 December 2021 to RMB4.7 million as
at 31 December 2022 mainly due to (i) the decrease in lease payments receivable; and (ii) the decrease in
amount due from related parties. The amount due from related parties as at 31 December 2021 represented
the amount due from our immediate holding company, which amounted to RMB0.4 million and was non-
trade in nature, unsecured and interest free. Such amount had been fully settled in December 2022.
Our other receivables decreased from RMB4.7 million as at 31 December 2022 to RMB0.5 million
as at 31 December 2023 mainly due to the significant decrease in lease payments receivable from RMB4.7
million as at 31 December 2022 to RMB0.6 million as at 31 December 2023, which was mainly due to the
early termination of our lease for the Dabei Line Land.
Our other receivables remained relatively stable  at RMB 0.5 million as at 31 December 2023 and
RMB0.4 million as at 30 June 2024.
Prepayments
The increase in our prepayments during the Track Record Period was primarily due to (i) the
increase of prepayments for property, plant and equipment from nil as at 31 December 2022 to RMB3.0
million as at 31 December 2023, of which RMB2.8 million was due from Xinyi Xinye as Xinyi Xinye will
purchase certain machinery equipment for us in association with our relocation plan; and (ii) the i ncrease
of deferred listing expenses from nil as at 31 December 2022 to RMB15.5  million as at 31 December 2023
and our deferred listing expenses further increased to RMB21.3 million as at 30 June 2024.
Trade Payables
Our trade payables primarily represent amounts payable to suppliers and subcontractors.  The table
below sets forth the details of our trade payables as at the dates indicated.
As at 31 December
As at
30 June
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB'000
Trade payables 105 738 612 492


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FINANCIAL INFORMATION
Our trade payables amounted to  RMB 0.1 million , RMB 0.7 million , RMB 0.6 million  and RMB 0.5
million  as at 31 D ecember 2021 , 2022 and 2023 and 30 June 2024, respectively. Our trade payable was
comparatively lowe r as  at 31 December 2021  was primarily due to  our substantial settlement of trade
payables to our subcontractors in late 2021. As at the Latest Practicable Date, RMB0.3 million or 64.4%
of our outstanding trade payables as at 30 June 2024 had been subsequently settled.
The carrying amount of trade payables approximated as their fair value due to their short-term
maturity in nature. The table below sets forth the aging of trade payables based on the date of the goods
and services received as at the dates indicated.
As at 31 December
As at
30 June
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB'000
Within 1 year 105 738 489 492
1 year to 2 years – – 123 –

105 738 612 492

The following table sets forth our trade payables turnover days for the years/periods indicated.
FY2021 FY2022 FY2023 6M2024
Trade payables turnover days (1) 14 18 21 15

Note:
(1) Trade payables turnover days were calculated based on the average of the opening and closing trade payables
divided by cost of sales for the relevant year multiplied by 365 days  for FY2021 , FY2022 and FY 2023 . Trade
payables turnover days were calculated based on the average of the opening and closing trade payables divided by
cost of sales for the relevant period multiplied by 182  days for 6M2024.
 During the Track Record Period, our trade payables turnover days remained relatively stable and
we did not default on any trade payables.


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FINANCIAL INFORMATION
Other Payables and A ccruals
Our other payables and accruals primarily represent salaries and welfare payables,  tax payables
and accruals for listing expenses. As at 31 December 2021 , 2022 and 2023 and 30 June 2024, we had
other payables and accruals of RMB4.9 million, RMB4.8 million,  RMB9.0 million and RMB9 .1 million,
respectively. The table below sets forth the details of our other payables and accruals as at the dates
indicated.
As at 31 December
As at
30 June
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB'000
Salaries and welfare payables 1,617 1,616 998 608
Tax payables 2,935 1,825 1,655 1,401
Accruals for listing expenses – – 5,661 6,029
Payables for property, plant and equipment 231 720 – 368
Other payables 70 625 656 677

4,853 4,786 8,970 9,083

Our other payables and accruals remained relatively stable as at 31 December 2021 and 31
December 2022. The increase of RMB4.2 million in our other payables and accruals from RMB4.8 million
as at 31 December 2022 to RMB9.0 million as at 31 December 2023 was primarily attributable to listing
expenses accrued  during the year.  Our other payables and accruals s lightly increased from RMB 9.0
million as at 31 December 2023 to RMB9 .1 million as at 30 June 2024,  which was primarily attributable
to the listing expenses accrued during the period and partially offset by the decrease in tax payables.
Current Income Tax Liabilities
Our current income tax liabilities decreased from RMB 7.7 million as at 31 December 2021 to
RMB 2.0 million as at 31 December 2022 mainly due to a decrease in our profit chargeable to  tax in
FY2022 . Our current income tax liabilities increased to RMB3.3 million as at 31 December 2023 mainly
due to the increase in our profit chargeable to tax during the year and partially offset by the income tax
paid in FY2023.  Our current income tax liabilities decreased  from RMB 3.3 million as at 31 December
2023 to RMB1.0 million as at 30 June 2024 was a combined effect of  our profit chargeable to tax in
6M2024 and the income tax paid in 6M2024.


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FINANCIAL INFORMATION
Contract Liabilities
Our contract liabilities primarily represented  cash received from customers in advance for which
services are yet to be delivered. As at 31 December 2021 , 2022 and 2023 and 30 June 2024, we had
other contract liabilities of RMB 0.8 million, RMB 1.1 million,  RMB 1.4 million  and RMB 1.2 million,
respectively. The table below sets forth the details of our contract liabilities as at the dates indicated.
As at 31 December
As at
30 June
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB'000
Testing services 729 1,060 1,394 1,232
Inspection services 21 – – –

750 1,060 1,394 1,232

Our contract liabilities increased from RMB0.7 million as at 31 December 2021 to RMB1.1 million
as at 31 December 2022 primarily attributable to the increase in advance payment from customers of three
residential property projects which we provided building structure testing service to in 2022. The increase
as at 31 December  2023  from 31 December 2022 was primarily attributable  to the increase in a dvance
payment from  construction material testing service  customers.  Our contract liabilities decreased  from
RMB1.4 million as at 31 December 2023 to RMB1.2 million as at 30 June 2024 primarily attributable to
the decrease in advance payment from our foundation testing service customers.
Net Assets
Our net assets increased from RMB67.0 million as at 31 December 2021 to RMB69.3 million as
at 31 December 2022, representing an increase of 3.5%, primarily due to (i) the profit for the year of
RMB2.9 million; (ii) the capital contribution from an equity holder of RMB1.3 million, and offset by
(iii) the dividends paid to shareholders of RMB1.9 million. Our net assets further increased to RMB102.6
million as at 31 December  2023 as compared to that of RMB69.3 million as at 31 December 2022, due
mainly to (i) the profit for the year  of RMB 13.3 million; and (ii) the capital contributions  from Xinyi
Xinhui to our Company  of RMB20.0 million.  Our net assets increased  from RMB 102.6 million as at 31
December 2023 to RMB109.9  million as at 30 June 2024, representing an increase of 7.2%, primarily due
to the profit for the period of RMB7.3 million.


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FINANCIAL INFORMATION
LIQUIDITY AND CAPITAL RESOURCES
Our business operations and expansion plans require a significant amount of capital, including (i)
expanding our construction engineering testing services to achieve Comprehensive Qualification under
the Qualification Standards of Construction Engineering Quality Inspection Agencies and strengthen our
existing construction engineering testing and inspection services; (ii) strengthening our existing market
presence in Maoming and expanding our service footprint into the 3rd to 5th tiers cities in Western
Guangdong; (iii) diversifying our testing and inspection services beyond construction engineering and
expanding into areas including food and agricultural  products, transportation, and fire protection; (iv)
upgrading our ERP system; and (v) general working capital.  Historically, we have financed our capital
expenditures and working capital requirements mainly through cash generated from operations and capital
contribution from shareholders.
Cash Flows
The following table sets forth a summary of our cash flows for the years/periods indicated.
FY2021 FY2022 FY2023 6M2024
RMB’000 RMB’000 RMB’000 RMB'000
Net cash generated from/(used in)
operating activities 8,138 (1,848) 21,942 1,640
Net cash used in investing activities (882) (995) (4,592) (11,929)
Net cash (used in)/ generated from
financing activities (2,432) (782) 9,574 (6,397)

Net increase/(decrease) in cash and cash
equivalents 4,824 (3,625) 26,924 (16,686)
Cash and cash equivalents at beginning of
the year/ period 31,022 35,846 32,221 59,145

Cash and cash equivalents at end of the
year/ period 35,846 32,221 59,145 42,459


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FINANCIAL INFORMATION
Net cash generated from/(used in) operating activities
We derive our cash inflow from operating activities primarily through our service offerings. Cash
outflow from operating activities primarily consists of payments for labour costs, direct material  costs,
subcontracting fee and other operating expenses. Our net cash flow generated from/(used in)  operating
activities reflects (i) cash generated from operations which is our profit before income tax, as adjusted
for non-cash items, such as depreciation of property, plant and equipment, and the effects of changes in
working capital items;  (ii) the income tax paid; and (iii) interest received.
For 6M2024, we had net cash generated from operating activities of RMB 1.6 million, primarily
attributable to cash generated from operations of RMB6.6 million and interest received of RMB 49,000,
and partially offset by the payment of income tax of RMB5.0 million. The movement in working capital
was mainly attributable to ( i) the increase in contract fulfillment costs and inventory of RMB1.2 million;
and (ii) the increase in trade receivables of RMB3.7 million.
For FY2023, we had net cash generated from operating activities of RMB 21.9 million, primarily
attributable to cash generated from operations of RMB 25.4 million and interest received of RMB 0.3
million, and partially offset by the payment of income tax of RMB3.8 million.  The movement in working
capital was mainly attributable to the decrease in trade receivables of RMB3.8 million mainly attributable
to the substantial settlement of our trade receivables i n FY2023 after  the lifting of the COVID-19
restrictions,  and partially offset by the increase in trade receivable associated with our revenue growth in
FY2023.
For FY2022, we had net cash used in operating activities of RMB1.8 million, primarily attributable
to cash generated from operations of RMB 4.9 million and interest received of RMB 0.1 million, fully
offset by the payment of income tax of RMB6.8 million. The decrease in cash generated from operations
compared with FY2021 was in line with the decrease in revenue and net profit in FY2022.  The movement
in working capital was mainly attributable to (i) increase in contract fulfillment cost of RMB1.0 million
due to the increase in ongoing services provided by our Company as at 31 December 2022; (ii) i ncrease
in prepayments and other receivables of RMB0.8 million; and (iii) increase in trade payables of RMB0.6
million mainly attributable to amount due to our subcontractors.
For FY2021, we had net cash generated from operating activities of RMB 8.1 million, primarily
attributable to cash generated from operations of RMB 13.1  million and interest received of RMB 0.1
million, partially offset by the payment of income tax of RMB 5.0 million.  The movement in working
capital was mainly attributable to (i) decrease in contract fulfillment costs  of RMB0.4 million; (ii) increase
in trade receivables of RMB13.8 million due to the increase in revenue in FY2021;  and (iii) decrease in
trade payables of RMB0.5 million mainly attributable to amount due to our subcontractors.


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FINANCIAL INFORMATION
Net cash used in investing activities
Our net cash used in investing activities during the Track Record Period primarily represents cash
paid for purchase of property, plant and equipment. Our net cash used in investing activities was RMB0.9
million, RMB 1.0 million,  RMB 4.6 million  and RMB 11.9 million  for FY2021, FY2022,  FY2023 and
6M2024, respectively.  The significant  increase in 6M2024 was mainly attributable to the purchase of
property, plant and equipment of RMB11.7 million. The significant increase in FY2023 was mainly due to
the purchase of property, plant and equipment of RMB4.5 million.
Net cash generated from/(used in) financing activities
In 6M2024, our net cash used in  financing activities of RMB 6.4 million was primarily due to
payment of listing expenses to be deducted against equity of RMB6.2 million and principal elements and
interest elements of lease payments of RMB0.2 million. In FY2023, our net cash generated from financing
activities  of RMB 9.6 million  was primarily due to proceeds of capital contribution from equity holders
of RMB 20.0 million, partially offset by  payments of  listing expenses  to be deducted  against equity of
RMB10.0 million.  In FY2022, our net cash used in financing activities of RMB0.8 million was primarily
due to distribution of dividends  of RMB 1.9  million  in 2022 , partially offset by proceeds of capital
contribution from equity holders of RMB1.3 million. In FY2021, our net cash used in financing activities
of RMB2.4 million was primarily due to distribution of dividends of RMB1.9 million in 2021.
Capital Management
The primary objectives of our capital management are to safeguard our ability to continue as
a going concern, to maintain healthy capital ratios in order to support our business and maximize our
Shareholders’ value and to maintain an optimal capital structure to reduce the cost of capital. We manage
and adjust our capital structure in light of changes in economic conditions and the risk characteristics of
the underlying assets. To maintain or adjust our capital structure, we may adjust the amount of dividend
paid to the shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. No
changes were made to the objectives, policies or processes for managing capital during the Track Record
Period.


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FINANCIAL INFORMATION
Net Current Assets
The following table sets forth our current assets and current liabilities as at the dates indicated.
As at 31 December
As at
30 June
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Current assets
Contract fulfilment cost 820 2,053 1,390 2,440
Inventory – – – 233
Trade and other receivables and
prepayments 36,599 35,843 46,201 55,304
Cash and cash equivalents 35,846 32,221 59,145 42,459

Total current assets 73,265 70,117 106,736 100,4 36

Current liabilities
Trade payables 105 738 612 492
Contract liabilities 750 1,060 1,394 1,232
Lease liabilities 391 693 508 1,483
Current income tax liabilities 7,652 2,016 3,267 994
Other payables and accruals 4,853 4,786 8,970 9,083

Total current liabilities 13,751 9,293 14,751 13,284

Net current assets 59,514 60,824 91,985 87,152

We generally maintained stable working capital position during the Track Record Period.  Our net
current assets were RMB59.5 million, RMB60.8 million,  RMB92.0 million and RMB8 7.2 million as at 31
December 2021,  2022 and 2023 and 30 June 2024, respectively.
Our net current assets increased from RMB59.5 million as at 31 December 2021 to RMB60.8
million as at 31 December 2022, representing an increase of 2.2%. Such increase was primarily
attributable to (i) a decrease in current liabilities as a result of a decrease in current income tax liabilities
of RMB5.6 million; and (ii) an increase in contract fulfilment cost of RMB1.2 million, which was partially
offset by (i) a decrease in cash and cash equivalents of RMB3.6 million; and (ii) a decrease in trade and
other receivables and prepayments of RMB0.8 million during the year.


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– 339 –
FINANCIAL INFORMATION
Net current assets as at 31 December 2023 amounted to RMB92.0  million, representing an increase
of 51.2% or RMB31. 2 million from RMB60.8 million as at 31 December 2022. Such increase was mainly
due to ( i) an increase in trade and other receivables and prepayments of RMB 10.4 million; and (ii) an
increase in cash and cash equivalents of RMB 26.9 million  and pa rtially offset by the increase in other
payables and accruals of RMB4.2 million.
Net current assets decreased  to RMB 87.2 million as at 30 June  2024 as compared to that of
RMB 92.0 million as at 31 December  2023. Such decrease  was mainly attributable t o the combined
effect of (i) the decrease in cash and cash equivalents of RMB16.7 million for the purpose of purchasing
property, plant and equipment and paying income tax in 6M2024; (ii)  an increase in trade and other
receivables and prepayments of RMB9.1 million; and (iii)  a decrease in current income tax liabilities of
RMB2.3 million.
As at 30 June 2024, we had no present plan for dividend distribution, and therefore we believe that
our liquidity risk would decrease following the Listing. Going forward, we intend to continue to enhance
our liquidity risk management capabilities by matching closely the maturity profiles of our assets and
liabilities.
INDEBTEDNESS
The following table set forth the indebtedness information as at the dates indicated.
As at 31 December
As at
30 June
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Lease liabilities 5,386 6,479 2,002 38,602
Except for our indebtedness as disclosed above, as at 30 June 2024, being the latest practicable date
for determining our indebtedness, we did not have any bank and other loan, unutilised banking facilities,
or any loan capital issued and outstanding or agreed to be issued, bank overdraft, borrowing or similar
indebtedness, liabilities under acceptance (other than normal trade bills) or acceptance credits, debentures,
mortgages, charges, hire purchases or finance lease commitments, guarantees or other material contingent
liabilities. Our Directors confirm that there has not been any material change in our indebtedness since
30 June  2024 up to the date of this prospectus.  Our Directors further confirm that our Company did not
experience any difficulties in obtaining bank loan and other borrowing, default in payment of bank loan
and other borrowing or breach of covenant during the Track Record Period and up to the Latest Practicable
Date.


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FINANCIAL INFORMATION
Working Capital
Taking into consideration of the financial resources presently available to us, including (i) the
expected cash generated from our operations; (ii) existing cash and cash equivalents;  and (iii) the estimated
net proceeds from the Listing, our Directors are of the opinion that our Company has sufficient working
capital for our present working capital requirements for at least the next 12 months from the date of this
prospectus.
Capital Expenditures
Our capital expenditures during the Track Record Period primarily represented expenditures
incurred in relation to additions of properties, plants and equipment and intangible assets. During the
Track Record Period, we incurred  capital expenditures of RMB 1.5 million, RMB 2.0 million,  RMB 0.8
million  and RMB 13.0 million, respectively.  Our Directors estimated that our capital expenditure for the
year end ing 31 December 2024 w ould be RMB 27.3 million.  Such estimate represents the total capital
expenditure that we expect to incur in the relevant period based on our existing business plans. We may
adjust our business plans from time to time and the estimated total capital expenditure may also change.
Capital Commitments
The table below sets forth the significant capital expenditure contracted for but not recognised as
liabilities as at the dates indicated.
As at 31 December
As at
30 June
2021 2022 2023 2024
Property, plant and equipment – – 4,439 1,385

Capital commitment  as at 31 December 2 023 of RMB 4.4 million was primarily related to the
purchase of machinery equipment in association with our relocation plan.  Capital commitment as at 30
June 2024 of RMB1.4 million was primarily related to the purchase of office equipment in association
with our relocation plan and the purchase of m achinery equipment for our business operation.
Contingent liabilities
We did not have any significant contingent liabilities as at 31 December 2021,  2022 and 2023 and
30 June 2024.


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FINANCIAL INFORMATION
DISTRIBUTABLE RESERVES
In accordance with the PRC Company Law, our  Company is required to appropriate 10% of its
profits after tax, as determined in accordance with relevant accounting principles generally accepted in
the PRC and other applicable regulations, to the statutory reserve until such reserve reaches 50% of its
registered capital. The appropriation to the reserve must be made before any distribution of dividends to
equity holders of our Company. The statutory reserve can be used to offset losses carried forward from
previous years, if any, and part of the statutory reserve can be capitalised as the company capital provided
that the amount of the remaining balance of reserve after the capitalisation shall not be less than 25% of its
capital.
As at 30 June 2024, our Company had reserves available for distribution to our shareholders in an
aggregate amount of RMB1 .2 million.
OFF-BALANCE SHEET ARRANGEMENTS
As at the Latest Practicable Date, we had not entered into any off-balance sheet arrangements.
KEY FINANCIAL RATIOS
FY2021 FY2022 FY2023 6M2024
Profitability ratios
Gross profit margin (1) 75.9% 57.6% 71.8% 70.8%
Net profit margin (2) 44.6% 14.6% 31.9% 32.2%
Return on equity (3) 26.5% 4.2% 12.9% 13.4%(5)
Return on total assets (4) 20.7% 3.4% 11.2% 9.2%(6)
Liquidity ratios
Current ratio (7) 5.3 times 7.5 times 7.2 times 7.6 times
Notes:
(1) The calculation of gross profit margin is based on gross profit for the year/period divided by revenue for the respective year/
period and multiplied by 100.0%.
(2) The calculation of net profit margin is based on profit for the year/period divided by revenue for the respective year/period
and multiplied by 100.0%.
(3) The calculation of return on equity  for FY2021, FY2022 and FY2023 is based on profit for the year  divided by equity
attributable to owners of our Company and multiplied by 100.0%.
(4) The calculation of return on total assets for FY2021, FY2022 and FY2023 is based on profit for the year divided by total assets
and multiplied by 100.0%.
(5) The calculation  of return  on equity for 6M2024 is based on the annualis ed profit for the period (ie. profit for the period
divided by 182 days and multiplied by 366 days) divided by equity attributable to owners of our Company and multiplied by
100.0%.


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FINANCIAL INFORMATION
(6) The calculation of return in total assets for 6M2024 is based on the annualised profit for the period (i.e. profit for the period
divided by 182 days and multiplied by 366 days) divided by total assets and multiplied by 100.0%.
(7) The calculation of current ratio is based on current assets divided by current liabilities and multiplied by 100.0%.
Gross Profit Margin
See “– Results of Operations” in this section for a discussion of the factors affecting our gross
profit margin during the Track Record Period.
Net Profit Margin
Our net profit margin was 44.6%, 14.6% , 31.9%  and 3 2.2% for FY2021, FY2022,  FY2023 and
6M2024, respectively. Our net profit margin was affected primarily by the same factors affecting our gross
profit margin during the Track Record Period. See “– Results of Operations” in this section.
Return on Equity
Our return on equity decreased from 26.5% in FY2021 to 4.2% in FY2022 primarily due to a
significant decrease in net profit in FY2022 . Our return on equity increased from 4.2% in FY2022 to
12.9% in FY2023 primarily due to the increase in net profit and partially offset by the capital contribution
from an equity holder in FY2023. Our return on equity remained relatively stable at 12.9% in FY2023 and
13.4% in 6M2024.
Return on Total Assets
Our return on total assets from 20.7% in FY2021 decreased to 3.4% in FY2022 primarily due to a
significant decrease in net profit in FY2022.  Our return on total assets increased from 3.4% in FY2022 to
11.2% in FY2023 prim arily due to the increase in net profit and partially offset by the increase in trade
and other receivables and prepayments and cash and cash equivalents  and partially offset by the increase
in other payables and accruals in FY2023. Our return on total assets decreased from 11.2% in FY2023 to
9.2% in 6M2024 primarily due to the  increase in property, plant and equipment and  right-of-use assets,
which was attributable to our lease for New Building in 6M2024.
Current Ratio
We generally maintained stable working capital position during the Track Record Period. The
increase in our current ratio during the Track Record Period was primarily due to a general increase in our
current assets.


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FINANCIAL INFORMATION
MATERIAL RELATED PARTY TRANSACTIONS
The following table sets forth our significant transactions with related parties d uring the Track
Record Period.
FY2021 FY2022 FY2023 6M2024
RMB’000 RMB’000 RMB’000 RMB'000
Addition of right-of-use assets
– Xinyi City Bureau of Housing and Urban-Rural
Development 1,048 1,421 – –
– Xinyi Xinye Note – – – 36,304

Interest expenses on lease liabilities
– Xinyi City Bureau of Housing and Urban-Rural
Development 36 86 96 42
– Xinyi Xinye – – – 447

Interest income on other receivables
– Xinyi Xinye – – 258 –

Provision of services
– Xinyi City CEQS Center –* – 85 43
– PRC government administrative bureaus and
entities controlled by the PRC Government 2,305 8,550 15,600 9,753

2,305 8,550 15,685 9,796

* represents that the amount is less than RMB1,000 for respective year.
Note: Addition of right-of-use assets is recognised at the date at which the lease assets, being the New Building, are
available for use by our Company and such amount represents the net present value of f ixed lease payments
throughout the entire lease term.


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FINANCIAL INFORMATION
We entered into a lease agreement with Xinyi City Bureau of Housing and Urban-Rural
Development  to lease office premises. T he monthly rents payable by our Company are determined with
reference to the prevailing market prices.  In April 2024, we entered into a lease agreement with Xinyi
Xinye to lease the New Building with a lease term of 20 years from April 2024. The New Building will be
used for offices and laboratories. We provided testing services to our Controlling Shareholder. In FY2021,
FY2022,  FY2023 and 6M2024, the transaction amounts  were RMB200,  nil, RMB85,000 and RMB43,000.
During the Track Record Period, we also provided testing and inspection services with the aggregated
transaction amounts of RMB 2.3 million,  RMB 8.6 million,  RMB 15.6 million  and RMB 9.8 million  to
certain PRC government administrative bureaus and entities controlled by the PRC Government which
transaction amounts with our  Company are individually significant.  Two loans  with principal amounts
of RMB3.75 million and RMB4.1 million were granted to Xinyi Xinye in January 2023 and March 2023,
respectively. The loans are unsecured and bearing interest of 4.35% per annum. The loan interest for
FY2023 amounted to RMB258,000. In December 2023, the loans and interest were fully repaid.
In addition to the significant  transactions disclosed above, the other individually insignificant
transactions with PRC government administrative bureaus and entities controlled by the PRC G overnment
accounted for 12.8 %, 1.8%, 6.8% and 5.3%  of the total revenue of our  Company in FY 2021,  FY2022,
FY2023 and 6M2024, respectively.
For further details of our related party transactions, see Note 2 7 to the Accountant’ s Report in
Appendix I to this prospectus. Our Directors confirm that these related party transactions were conducted
on normal commercial terms that are considered fair and reasonable and in the interest of our Shareholders
as a whole, and would not distort our results of operations during the Track Record Period or make our
historical results not reflective of our future performance.
FINANCIAL RISKS
Our financial instruments comprise trade receivables, cash and cash equivalents, other receivables,
trade payables and other payables. Our trade receivables and trade payables are financial assets and
liabilities arising directly from our business operations.
We are exposed to various types of financial risks in the ordinary course of business, primarily
including credit risk and liquidity risk. For further details of our financial risk management, see Note 3  to
the Accountant’ s Report in Appendix I to this prospectus.
Credit Risk
We are exposed to credit risk in relation to our  trade receivables,  other receivables and cash
and cash equivalents. The carrying amounts of trade receivables,  other receivables and cash and cash
equivalents represent our maximum exposure to credit risk in relation to financial assets. To manage this
risk, cash at banks is placed with highly reputable financial institutions in the PRC.


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FINANCIAL INFORMATION
For trade receivables and other receivables, our management has monitoring procedures to ensure
that follow-up action is taken to recover overdue debts. In addition, we review the recoverability of these
receivables at the end of each reporting period to ensure that adequate impairment losses are made for
irrecoverable amounts. In this regard, our Directors consider that our credit risk is significantly reduced.
The quantitative data of our exposure to credit risk arising from trade receivables, other receivables and cash
and cash equivalents are disclosed in Note 3 to the Accountant’ s Report in Appendix I to this prospectus.
Liquidity Risk
Our primary cash requirements are for additions and upgrades to property, plant and equipment,
payments for purchases and operating expenses and unexpected cash outflow due to the COVID-19
pandemic or other unforeseen crisis. We finance our working capital requirements through funds
generated from its operations. To manage the liquidity risk, we monitor and maintain a level of cash and
cash equivalents deemed adequate by the management to finance our operations and mitigate the effects of
fluctuations in cash flows. We expect to fund our future cash flow needs through internally generated cash
flows from operations and available sources of financing.
LISTING EXPENSES
The listing expenses in connection with the Share Offer are expected to be  HK$ 42.3 million
(equivalent to RMB3 8.8 million), representing 4 3.7% of the gross proceeds from the Share Offer (based
on the mid-point of the indicative Offer Price range of HK$ 9.5 per Share Offer and assuming the Offer
Size Adjustment Option is not exercised). During the Track Record Period, we incurred listing expenses
of RMB24.0 million, of which RMB2 .7 million was charged to our statements of comprehensive income
during the Track Record Period, while the remaining amount of RMB2 1.3 million was directly attributable
to the issuance of H Shares and will be deducted from our equity upon the completion of the Share Offer.
We expect to further incur listing expenses of RMB14.8 million upon the completion of the Share Offer,
out of which RMB1 .9 million will be charged to the statements of comprehensive income, and RMB12.9
million, that is directly attributable to the issuance of H Shares and will be deducted from our equity.
The total listing expenses consist primarily of professional fees paid and payable to the professional
parties for their services rendered in relation to the Listing and the Share Offer which are non-underwriting
related expenses, including (i) fees and expenses of legal advisers and accountants of HK$17.1 million
(equivalent to RMB15.7 million); (ii) fee and expenses of HK$4.7  million (equivalent to RMB4.3 million)
for engaging Logosage Equity Investment Management Co., Ltd. (the “IPO Consultant”) (1) to provide
support services (2); and (iii)  the other fees and expenses of HK$ 14.4 million  ( equivalent  to RMB 13.2
million), and underwriting related expenses (including SFC transaction levy, Stock Exchange trading fee
and AFRC transaction levy) of HK$6.1 million  ( equivalent  to RMB5.6 million), mainly payable to the
Underwriters in connection with the offering of H Shares under the Share Offer.


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FINANCIAL INFORMATION
Notes:
1. The IPO Consultant which is an I ndependent Third Party is a limited liability company established in the PRC. It is a
registered asset management company of the Asset Management Association of China which is principally engaged in
management of private equity investment fund, equity investment, investment advisory, corporate management consulting
and investment advisory services in the PRC.
 From 2022 to 2023, the IPO Consultant was engaged as the investment adviser of the Xinyi City People’s Government to assist
with the restructuring of and provide strategic advisory services to certain state-owned companies in Xinyi City (including
our Company and Xinyi Xinye). Recognizing the potential of our Company for going public, the IPO Consultant advised our
Directors to take our Company public and entered into an exclusive capital and management consultancy service agreement
with our Company in August 2022.  For details, see “– Statements of Comprehensive Income – General and Administrative
Expenses – Professional fees” in this section.
2. In August 2023, our  Directors and the IPO Consultant entered into the Internal Work Implementation Support Service
Agreement, pursuant to which the IPO Consultant shall provide support services to our Company in relation to our listing
application, including but not limited to devising an internal implementation plan for the listing application, assisting
in identifying and engagement of suitable and qualified professional parties, coordinating between our  Company and
professional parties, and assisting our  Company in gathering internal documents and information requested by the
professional parties from time to time. The service period is from 24 August 2023 to 8 August 2024 and the service fee is
RMB4.3 million  which is recognised as part of our listing expenses.
DIVIDEND AND DIVIDEND POLICY
Dividend distribution to our shareholders is recognised as a liability in our financial statements in
the period in which the dividends are approved by our shareholders and/or directors, where appropriate. In
May 2021 and September 2021, cash dividends of RMB1.9 million in total were declared and paid for the
year ended 31 December 2020. In March 2022, a cash dividend of RMB1.9 million was declared and paid
for the year ended 31 December 2021.
According to our dividend policy adopted in August  2024, d istribution of dividends shall be
formulated by our Board and will be subject to shareholders’ approval. A decision to declare or to pay
any dividends and the amount of any dividends will be made when our Company achieves annual profit
and at the discretion of our Directors and will depend upon, among others, our business conditions and
strategies, capital requirements and expenditure plans, financial results, future operations and earnings,
characteristics of the industry, the stage of development, and any restrictions on payment of dividends, and
other factors that our Directors may consider relevant. Provided that the working capital of our Company
can be healthily maintained, the general principle shall be to distribute profits to our shareholders
on an annual basis, wherein the payout ratio shall be no less than 20% of the current year’s after-tax
distributable profits. We will continue to evaluate our dividend policy in light of our financial condition
and the prevailing economic environment. Our future declarations of dividends may or may not reflect our
historical declarations of dividends and will be at the absolute discretion of the Board.


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FINANCIAL INFORMATION
UNAUDITED PRO FORMA STATEMENT OF ADJUSTED NET TANGIBLE ASSETS
See Appendix II in this p rospectus for further details.
NO MATERIAL ADVERSE CHANGE
Our Directors confirm that, up to the date of this prospectus there has been no material adverse
change in our financial, operational or trading position since 30 June 2024.
DISCLOSURE REQUIRED UNDER THE GEM LISTING RULES
Our Directors confirm that, as at the Latest Practicable Date, there were no circumstances which
would give rise to a disclosure required under Rules 17.15 to 17.21 of the GEM Listing Rules.


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FUTURE PLANS AND USE OF PROCEEDS
BUSINESS OBJECTIVES AND STRATEGIES
Our long-term objective is to become one of the leading testing and inspection service providers
in Western Guangdong, utilising our experience and expertise in construction engineering testing and
inspection service to expand our business to other testing and inspection fields in China.
See “Business – Business strategies” in this prospectus for details of our business objectives and
strategies.
REASONS FOR THE SHARE OFFER
We believe that the estimated net proceeds from the Share Offer (assuming an Offer Price of
HK$9.5 per Offer Share, being the mid-point of the indicative range of the Offer Price after deduction
of underwriting fees and estimated expenses in connection with the Share Offer and assuming that the
Offer Size Adjustment Option is not exercised) of HK$54.4  million (equivalent to RMB5 0.0 million) will
enable us to implement our business objectives and strategies, strengthen our position in the testing and
inspection market in the PRC, and benefit our Company and its shareholders as discussed below:
(1) Funding for business expansion
The market of independent testing and  inspection companies in the Western Guangdong is
fragmented. According to the CIC Report, these companies are mainly localised small and micro-
sized enterprises operating within limited geographic areas, contributing to a distinct fragmentation
trend. The top five players held a 9 .4% market share of revenue from these services in 2023 .
To maintain our competitive edge and as part of our expansion plan, over the next three
years, we intend to obtain all nine Specialised Qualifications and ultimately to achieve the
Comprehensive Qualification status under the Qualification Standards of Construction Engineering
Quality Inspection Agencies.
We also intend to strengthen our  existing market presence in Maoming and expanding our
service footprint into the 3rd to 5th tiers cities in Western Guangdong.
At the same time, we also intend to diversify our testing and inspection services beyond
construction engineering and expanding into areas,  including transportation, food and agricultural,
and fire protection.
We will need additional funding to execute our expansion plan. Our Directors believe that
the Share Offer will be a suitable means to strengthen our capital base and raise additional fund to
support our long-term future growth without incurring additional financing cost.


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FUTURE PLANS AND USE OF PROCEEDS
In view of the needs of additional funding to execute our expansion plan, our Directors
remain open to the idea of debt financing and it does not consider debt financing and equity
financing to be mutually exclusive. However, our Directors decided to proceed with the Share Offer
for the purpose of our business expansion instead of debt financing based on the following factors:
(i) Financial institutions generally require debtor to provide assets as securities for long-
term loans. As our fixed assets amounted to RMB 15.9 million as at 3 0 June 2024,
which mainly comprise our services equipment amounting to RMB 14.3 million, our
Directors are of the view that our assets structure provide limited capacity for the
long-term loan.
(ii) If we raise additional funds by debt financing, we may be subject to various covenants
under the relevant debt instruments which may restrict our ability to pay dividends or
obtain additional financing. Further, the repayment terms of such loans, including but
not limited to the covenants and interest rates, may not be commercially acceptable to
us. Uncertain interest rate movement in the future may also expose our Company to
increasing borrowing costs which may adversely affect our financial performance and
liquidity.
(iii) Servicing debt obligations could be burdensome to our operations. If we fail to service
such debt obligations on time or we are unable to comply with any of the covenants,
we could be in default of such debt obligations and our liquidity, financial credibility
and financial condition could be materially and adversely affected. In contrast, by
proceeding with equity financing, our Company could enlarge our shareholders’ base
and no additional financial liability will be incurred.
(2) Enhancing corporate profile
Following the Listing, we believe that we will gain greater bargaining power in negotiating
terms with our business partners (such as customers, suppliers and subcontractors). In addition, we
consider that the Listing will enhance our corporate profile, market reputation and brand awareness
which will strengthen our customers’ confidence in our Company and in turn boost our business.
Our Directors believe that customers may prefer to conduct business with a listed company
in Hong Kong given its reputation, listing status, public financial disclosures and general regulatory
supervision by relevant regulatory bodies. Our services will also be better known to attract new
potential customers.
Therefore, our Directors are of the view that the listing status will give us a competitive edge
over our competitors.


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FUTURE PLANS AND USE OF PROCEEDS
(3) Platform for future fund raising
The Listing will offer us a platform to access to capital markets for future secondary fund
raising through the issuance of shares, which could offer lower financing cost as opposed to
interest-bearing bank loans. The listing status may also help us to negotiation for better financing
terms. This will also provide additional funding flexibility to cater for our future financing needs
and expansion plans (other than those future plans stated in this prospectus).
(4) Talent retention and recruitment
Key managerial and professional personnel is the essential component for our business
operation and achieve our business strategy. Our Directors are of the view that a public listing status
allows us to retain our existing staff and attract talent more easily. Our Directors consider that we
will become more appealing to talents within and outside Maoming by becoming publicly listed on
the Hong Kong Stock Exchange. Access to a larger pool of talents will improve our service quality
and facilitate our recruitment of additional manpower under our expansion plans. In addition, the
status of being a listed company will also facilitate our in-house talent management, through staff
retention and development, whereby our existing staff may be motivated to further develop their
career with us in view of the perceive status associated with working for a company listed on the
Stock Exchange.
USE OF PROCEEDS
Based on the Offer Price of HK$ 9.5 per Offer Share, being the mid-point of the indicative Offer
Price range of HK$ 8.6 to HK$ 10.4 per Offer Share (assuming that the Offer Size Adjustment Option is not
exercised), we will receive gross proceeds of HK$96.7 million (equivalent to RMB88.7 million).
The net proceeds from the Share Offer are estimated to be HK$ 54.4 million (equivalent to
RMB50.0 million), after deducting the underwriting commission and other estimated listing expenses in
the aggregate amount of HK$4 2.3 million paid and payable by our Company in relation to the Share Offer.
We intend to apply such net proceeds from the Share Offer (based on the Offer Price of HK$9.5, the
mid-point of the Offer Price range) (assuming that the Offer Size Adjustment Option is not exercised) for
the following purposes.


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FUTURE PLANS AND USE OF PROCEEDS
From the Listing Date
to end of 2 H2024 1H2025 2H2025 1H2026 2H2026 Total
% of net
proceeds
from the
Share
Offer
RMB’000 HK$’000 RMB’000 HK$’000 RMB’000 HK$’000 RMB’000 HK$’000 RMB’000 HK$’000 RMB’000 HK$’000 %
Expanding our construction engineering
testing services to achieve
Comprehensive Qualification under the
Qualification Standards of Construction
Engineering Quality Inspection Agencies
and strengthen our existing construction
engineering testing and inspection
services
957.8 1,043.0 6,341.2 6,905.4 1,978.4 2,154.4 3,372.8 3,672.9 1,078.7 1,174.6 13,728.9 14,950.3 27.5
Strengthening our existing market
presence in Maoming and expanding
our service footprint into the 3rd to 5th
tiers cities in W estern Guangdong.
– – – – 8,265.7 9,001.1 5,315.5 5,788.4 287.2 312.8 13,868.4 15,102.3 27.7
Diversifying our testing and inspection
services beyond construction
engineering and expanding into areas
including food and agricultural,
transportation and fire protection.
1,324.3 1,442.1 64.7 70.5 28.9 31.5 – – 17,249.1 18,783.8 18,667.0 20,327.9 37.4
Upgrading our ERP system 1,377.6 1,500.2 1,377.6 1,500.2 – – – – – – 2,755.2 3,000.4 5.5
General working capital 234.1 254.9 234.1 254.9 234.1 254.9 234.1 254.9 – – 936.3 1,019.6 1.9

3,893.8 4,240.2 8,017.6 8,731.0 10,507.1 11,441.9 8,922.4 9,716.2 18,615.0 20,271.2 49,955.9 54,400.5 100.0

If the final Offer Price is set at the highest or lowest point of the indicative Offer Price range,
the net proceeds of the Share Offer will increase or decrease by HK$8.6 million  (equivalent to RMB 9.4
million). The net proceeds are intended to be used in approximately the same proportions as disclosed
above irrespective of whether the Offer Price is determined at the highest or lowest point of the indicative
Offer Price range.
The net proceeds that we would receive if the Offer Size Adjustment Option is exercised in full
(assuming the Offer Price of HK$ 10.4 per Share (being the highest point  of the indicative Offer Price
range)) are estimated to be HK$7 7.9 million (equivalent to RMB8 4.8 million).  The additional net proceeds
would be allocated on a pro rata basis in accordance with the proposed allocations set out above.
To the extent that the net proceeds from the Share Offer are not immediately applied for the above
purposes and to the extent permitted by applicable law and regulations, it is the present intention of
our Directors that such net proceeds will be placed on 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.


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FUTURE PLANS AND USE OF PROCEEDS
The use of proceeds described above may change in light of our evolving business development
and/or material changes in circumstances such as changes in government policies or force majeure. In
the event that any of our plans does not proceed or any material modification to the use of proceeds
as described above is needed, our Directors will carefully evaluate the situation and may reallocate
such funds for other purposes. In this connection, our Company will issue an announcement and make
disclosure in its annual report for the relevant year as required by the GEM Listing Rules.
IMPLEMENTATION PLANS
In the pursuance of our business objectives, we will adopt the implementation plans set forth below
for each of the six months periods from the Listing Date until 31 December 2026.
Investors should note that the following implementation plans are formulated on the bases and
assumptions referred to “– Bases and Assumptions” in this section below. These bases and assumptions
are inherently subject to many uncertainties and unpredictable factors, in particular the risk factors set
forth in “Risk Factors” in this prospectus.
(1) Expanding our construction engineering testing services to achieve Comprehensive
Qualification under the Qualification Standards of Construction Engineering Quality
Inspection Agencies and strengthen our existing construction engineering testing and
inspection services
As part of our expansion plan, we intend to obtain all nine Specialised Qualifications,  and
ultimately to achieve the Comprehensive Qualification status under the Qualification Standards of
Construction Engineering Quality Inspection Agencies.  In order to obtain the Specialised Qualifications
and the Comprehensive Qualification, we are required to, among others, (i) possess the equipment and
capability to conduct tests and inspections in respect of all the necessary testing  parameters prescribed
in the Qualification Standards of Construction Engineering Quality Inspection Agencies for relevant
Specialised Qualifications; and (ii) maintain a minimum number of technical personnel with specific
qualifications. As such, we will apply the proceeds to acquire relevant testing equipment and hire technical
personnel, details of which are set out in the paragraphs below.
 In view of the following factors, neither our Directors nor our PRC Legal Advisers foresaw
difficulties in obtaining the  Specialised Qualifications of (i) building materials and components; (ii)
main structure and decoration; (iii) foundation; (iv) building energy-saving; (v) municipal engineering
materials; and (vi) road works, fulfilling the application requirements and meeting the above-mentioned
transition deadline: (a) our Company has reviewed and examined the relevant qualification requirements
for the six Specialised Qualifications under the 2023 Administrative Measures and the Qualification
Standards of Construction Engineering Quality Inspection Agencies, and found that save for the
shortage of a small number of required testing equipment, we have fulfilled all other requirements of


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FUTURE PLANS AND USE OF PROCEEDS
the six Specialised Qualifications. We intend to have the testing equipment acquired before making
application for the relevant qualification certificates; and (b) during an interview conducted by our PRC
Legal Advisers and the PRC legal advisers of the Joint Sponsors on 12 April 2024 with Maoming City
Bureau of Housing and Urban-Rural Development, which is the administrative governmental authority
responsible for the qualification application review work for Specialised Qualifications of our Company
under the draft implementation rules of Guangdong Province regarding the new qualification standards of
construction engineering quality inspection agencies circulated in December 2023 for public comment and
not yet promulgated, after reviewing our Company’ s evaluation of the fulfilment of relevant qualification
requirements for the six Specialised Qualifications and in consideration of the relevant qualification
standards, the responsible officer of the bureau is of the view that there is no impediment for our Company
to acquire the six Specialised Qualifications.
We expected that the total costs for obtaining all nine Specialised  Qualifications and the
Comprehensive Qualification status will be approximately RMB 22.9 million  (equivalent to HK$ 24.9
million) , of which RMB 13.7 million  (equivalent to HK$ 15.0 million) will be funded by the proceed of
the Share Offer. In particular, we will apply a total of RMB5.8 million  (equivalent to HK$ 6.3 million)
to obtain three other Specialised Qualifications by end of 2027, namely (i) steel structure; (ii) building
curtain wall; and (iii) bridge and underground works, of which RMB 2.6 million  (equivalent to HK$ 2.8
million) will be funded by the proceeds of the Share Offer and RMB 3.2 million  (equivalent to HK$ 3.5
million) will be funded by the internal resources of our Company.
See “Business – Business Strategies – Expanding our construction engineering testing services
to achieve Comprehensive Qualification under the Qualification Standards of Construction Engineering
Quality Inspection Agencies and strengthen our existing construction engineering testing and inspection
services.” in this prospectus for details of our plan to achieve Comprehensive Qualifications and
“Regulatory Overview – Laws and Regulations Relating to the Testing and Inspection of Construction
Engineering – Qualifications” in this prospectus for details of requirements for obtaining Comprehensive
Qualification and Specialised Qualifications status.


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FUTURE PLANS AND USE OF PROCEEDS
(i) Acquiring the Specialised Qualification – Steel structure
We will apply RMB1 .6 million (equivalent to HK$1.7  million) to acquire testing equipment
and employ 15 additional technical personnel, of which RMB 0.9 million  (equivalent to HK$ 1.0
million) will be funded by the proceeds from  the Share Offer and RMB 0.7 million  (equivalent
to HK$ 0.7 millio n) will be funded by internal resources of our Company . Set out below is the
expected timeline for the aforementioned use of proceeds from the Share Offer.
Period Action plan
Use of net proceeds from
the Share Offer
(RMB’000) (HK$’000)
From the Listing Date to
the end of 2 H2024
Acquire testing equipment (Note 1) 89.9 97.9
Employ 10 additional technical
personnel with the required
professional qualifications (Note 2)
330.6 360.0
1H2025 Payment of staff cost of the 10
additional technical personnel
(Note 2)
165.3 180.0
2H2025 – – –
1H2026 Acquire testing equipment (Note 1) 89.9 97.9
2H2026 Employ 5 additional technical
personnel with the required
professional qualifications (Note 2)
248.0 270.0

Total 923.7 1,005.9

Notes:
1. Approximately RMB 0.2 m illion  (equivalent to HK$ 0.2 million) will be used to acquire testing equipment
for satisfying the equipment requirement for obtaining the Specialised Qualification by the end of 2024. The
particulars of the testing equipment to be acquired are as follows:
(a) a digital  ultrasonic defect detector ( ᅰο൴ᑊઞෆᄃ) for detection of internal defects which meet
the requirements of the Standard for Acceptance of Construction Quality of Steel Structures (፻
ʈሯඎ᜕ϗᅺ๟) GB 50205-2020, the Non-destructive Testing of Welds – Ultrasonic
Testing – Techniques, Testing Levels and Assessment ( ଔᐻೌฦᏨ಻  ൴ᑊᏨ಻ ҦஔeᏨ಻
) GB/T 11345- 2013, the Non-destructive Testing of Welds – Ultrasonic Testing  –
Techniques, the Non-destructive Testing of Welds – Ultrasonic Testing – Acceptance Levels  (ଔ
ᐻೌฦᏨ಻ ൴ᑊᏨ಻ ᜕ϗഃॴ) GB/T 2971 2-2013 and  the Method for Ultrasonic Testing and
Classification for Steel Structures () JG/T 203- 2007;
(b) a magnetic particle defect detector ( ှ४ઞෆᄃ) for detection of surface cracks which meet the
requirements of Non-destructive Testing of Welds – Magnetic Particle Testing ( ଔᐻೌฦᏨ಻ ှ
४Ꮸ಻) GB/T 26951- 2011, the Non-destructive Testing of Welds – Magnetic Particle Testing of
Welds – Acceptance Levels ( ଔᐻೌฦᏨ಻ ଔᐻှ४Ꮸ಻ ᜕ϗഃॴ) GB/T  26952-2011 and
Non-destructive Testing of Welds – Penetrant Testing of Welds – Acceptance Levels ( ଔᐻೌฦ
Ꮸ಻ ଔᐻသீᏨ಻ ᜕ϗഃॴ) GB/T 26953-2011;


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FUTURE PLANS AND USE OF PROCEEDS
(c) a coating thickness gauge (ᄃ) and a needle thickness gauge (ᄃ)  for
measurement of coating thickness which meets the requirements of the Technical Standard for In-
site Testing of Steel Structure ( ፻ഐ࿴ତఙᏨ಻Ҧஔᅺ๟) GB/T 50621- 2010, the Non-magnetic
Coatings on Magnetic Substrates – Measurement of Coating Thickness – Magnetic Method (ှ
ᔧႊᄴ ಻ඎ ) GB/T 4956, the Thermal Spraying Coating
– Non-destructive Methods for Measurement of Thickness ()
GB/T 11374- 2012 and the Code for Acceptance of Construction Quality of Steel Structures ( ፻ഐ
ʈሯඎ᜕ϗᅺ๟) GB 50205- 2001;
(d) an universal hardness tester (ࠇܓfor measurement of hardness of the metallic materials
and sealant which meets the requirements of the Metallic Materials – Brinell Hardness Test – Part
1: Test Method (ࣘ ༊᜕ ୋ1) GB/T 231.1-2018, the Metallic
Materials – Rockwell H ardness Test – Part 1: Test Method (ࣘ ༊᜕ ୋ1௅ʱj
) GB/T 230.1- 2018 and the Metallic Materials – Vickers Hardness Test – Part 1: Test
Method (ࣘ ༊᜕ ୋ1) GB/T 4340.1-2009; and
(e) an anti-slip rating measuring instrument (ᄃ) for measurement of slip resistance
which meets the requirements of the Determination of Anti-Slip Coefficient at Bolted Connect
Steel Plates’ Surfaces ( ) GB/T 34478- 2017 and the Code for
Acceptance of Construction Quality of Steel Structures (ʈሯඎ᜕ϗᅺ๟ )
GB 50205- 2001.
2. Approximately RMB 0.7 million  (equivalent to HK$ 0.8 million) will be used to employ 15 additional
technical personnel who obtained (i) an undergraduate degree or above in engineering ; and (ii) a Special
Equipment Testing and Inspection Personnel Qualification and Certification in Non-destructive Testing
(ᗇ( ೌฦᏨ಻)). Specifically, we plan to hire:
(a) nine technical personnel who preferably has prior work experience in quality inspection  in steel
structure. The monthly salary of each of them will be in a range of RMB9,000 to RMB10,000
(equivalent to HK$9,800 to HK$10,900);
(b) four engineers who hold an intermediate professional title and has no less t han three years  of work
experience in quality inspection in steel structure. The monthly salary of each of them will be in a
range of RMB12,000 to RMB14,000 (equivalent to HK$13,100 to HK$15,200); and
(c) two engineers who hold a senior professional title and has no less than three years of work
experience in quality inspection. The monthly salary of each of them will be in a range of
RMB18,000 to RMB25,000 (equivalent to HK$19,600 to HK$27,200).
Of the 15 additional technical personnel to be hired, nine technical personnel will be hired to support
business expansion and six engineers will be hired to satisfy the personnel requirement for obtaining the
Comprehensive Qualification.


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FUTURE PLANS AND USE OF PROCEEDS
(ii) Acquiring the Specialised Qualification – Building curtain wall
We will apply approximately RMB 1.7 million  (equivalent to HK$ 1.8 million) to acquire
testing equipment and employ nine additional inspection personnel  to support the business
expansion, of which RMB 0.3 million  (equivalent to HK$ 0.3 mi llion) will be funded by the proceeds
from the Share Offer and RMB 1.4 million  (equivalent to HK$ 1.5 million) will be funded by the
internal resources of our Company.  Set out below is the expected timeline for the aforementioned use
of proceeds from the Share Offer.
Period Action plan
Use of net proceeds from
the Share Offer
(RMB’000) (HK$’000)
From the Listing Date to
the end of 2 H2024
– – –
1H2025 Employ 3 additional inspection
personnel with the required
professional qualifications (Note)
86.8 94.5
2H2025 – – –
1H2026 Employ 3 additional inspection
personnel with the required
professional qualifications (Note)
86.8 94.5
2H2026 Employ 3 additional inspection
personnel with the required
professional qualifications (Note)
86.8 94.5

Total 260.4 283.5

Note: Nine inspection personnel will be employed who (i) obtained an undergraduate degree or above in
engineering;  (ii) possessed a Training Qualification Certificate of Engineering Test and Appraisal ( Ꮸ಻
ᗇ) issued by Guangdong Construction Quality Security Test and Appraisal Association (ᄿ
՘ึ); and (iii) preferably have work experience in quality inspection.
The monthly salary of each of them will be in the range from RMB7,000 to RMB10,000  (equivalent to
HK$7,600 to HK$10,900).


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FUTURE PLANS AND USE OF PROCEEDS
(iii) Acquiring the Specialised Qualification – Bridge and underground works
We will apply approximately RMB 2.4 million  (equivalent to HK$ 2.6 million) to acquire
testing equipment and hire 10 intermediate or senior engineers, of which RMB1.4 million (equivalent
to HK$ 1.5 million) will be funded by the proceeds from  the Share Offer and RMB 1.0 million
(equivalent to HK$1.1 million) will be funded by internal resources of our Company. Set out below is
the expected timeline for the aforementioned use of proceeds from the Share Offer.
Period Action plan
Use of net proceeds from
the Share Offer
(RMB’000) (HK$’000)
From the Listing Date to
the end of 2 H2024
– – –
1H2025 – – –
2H2025 Acquire testing equipment (Note 1) 924.5 1,006.8
Employ 5 additional intermediate or
senior engineers with the required
professional qualifications (Note 2)
248.0 270.0
1H2026 – – –
2H2026 Employ 5 additional intermediate or
senior engineers with the required
professional qualifications (Note 2)
248.0 270.0

Total 1,420.5 1,546.8

Notes:
1. Approximately RMB0.9 million (equivalent to HK$1.0 million) will be used to acquire testing equipment.
Specifically, we plan to use:
(a) approximat ely RMB 0.5 mi llion  (equivalent to HK$ 0.5 million) to acquire testing equipment for
bridges engineering testing and inspection services, including but not limited to:
(i) a static strain measuring and capture device (᎑࿒Ꮠᜊ಻ඎၾમණண௪), a resistance strain
gauge (ࠇand a vibrating string extensometer (ࠇfor measurement
of static strain and static deflection,  which meets the requirements for (i) the static load
testing and dynamic load testing of the Technical Standard for Inspection of Urban Bridges
(̹዗ᆃᏨ಻Ҧஔᅺ๟) DBJ/T 15- 87-2022;
(ii) a static dynamic signal testing system (໮಻༊ӻ୕)  for measurement of dynamic
strain and dynamic deflection which meets the requirements of the Technical Standard for
Inspection of Urban Bridges (̹዗ᆃᏨ಻Ҧஔᅺ๟) DBJ/T 15–87–2022;


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FUTURE PLANS AND USE OF PROCEEDS
(iii) a displacement sensor  and data collection system (ᅰኽમණӻ୕) and an
inclinometer (ࠇfor measurement of displacement  which meets the requirements of
static load testing and self-vibration characteristic testing of the Specifications for Load
Test Methods for Highway Bridge (ʮ༩዗ᆃஃ༱༊᜕஝೻) JTG/T J21-01-2015;
(iv) a multi-function vibration testing system (ண௪) and a vibration
transducers (ෂชኜ) for measurement of modal parameters which meets the
requirements of the Specifications for Inspection and Evaluation of Load-bearing Capacity
of Highway Bridges (஝೻) JTG/T J21-2011; and
(v) a bridge structure analysis software (ழ΁) and a static dynamic signal
testing system (໮಻༊ӻ୕)  for assessing a pavement’s capability of handling
traffic loading which meets the requirements of the Specification for Inspection and
Evaluation of Load-bearing Capacity of Highway Bridges (֛
஝೻) JTG/T J21-2011, the static load testing and self-vibration characteristic testing of
the Specifications for Load Test Methods for Highway Bridge ( ʮ༩዗ᆃஃ༱༊᜕஝೻)
JTGT J21-01-2015 and the Technical Standard for Inspection of Urban Bridges (̹዗
ᆃᏨ಻Ҧஔᅺ๟) DBJ/T 15-87-2022; and
(b) approximately RMB 0.5 million  (equivalent to HK$ 0.5 million) to acquire testing equipment for
undergrounds engineering testing and inspection services, including but not limited to:
(i) a ground-penetrating radar (ήሯཤ༺) for measurement of surface evenness, and thickness
and compactness of lining  which meets the requirements of the TB 10223-2004 Code for
Undestructive Defecting of Railway Tunnel Lining (ሯඎೌฦᏨ಻஝೻);
and
(ii) a non-destructive anchor measuring instrument (ᒞӅೌฦᏨ಻ᄃ) for measurement of pull-
out strength, length and compactness of the anchor installations evenness which meets the
requirements of the JGJ/T 182-2009 Technical Specification for Non-destructive Testing of
Rock Bolt System ( ᒞ૖ᒞոሯඎೌฦᏨ಻Ҧஔ஝೻).
2. Approximately RMB 0.5 million  (equivalent to HK$ 0.5 million) will be used to employ 10 additional
engineers who: (i) obtained an undergraduate degree or above in engineering; (ii) are qualified to conduct
testing and inspections on bridges and undergrounds in the PRC; and (c) has more than three years,  experience
in quality inspection. Specifically, we plan to hire:
(a) nine engineers who hold an intermediate or senior professional title. The monthly salary of each of
them will be in a range from RMB10,000 to RMB12,000 (equivalent to HK$10,900 to HK$13,100);
and
(b) one registered structural engineer Grade I. The monthly salary of each of them will be in a range
from RMB15,000 to RMB30,000 (equivalent to HK$16,300 to HK$32,700).
Of the 10 intermediate or senior engineers to be hired, one of the senior engineers  will also oversee
the building curtain wall segment to satisfy the personnel requirement for obtaining the Specialised
Qualification by the end of 2025 and nine of them will be hired to satisfy the personnel requirement for
obtaining the Comprehensive Qualification.


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FUTURE PLANS AND USE OF PROCEEDS
(iv) Upgrading the qualification and equipment and recruiting additional engineers  for the
construction engineering testing and inspection and other services
We will apply approximately RMB1 6.1 million (equivalent to HK$1 7.5 million) to upgrade
the qualification and equipment and recruit additional engineers to meet the requirements of
Comprehensive Qualification and enhance our capabilities in providing  construction engineering
testing and inspection and other services, of which RMB 11.1 million  (equivalent to HK$ 12.1
million) will be funded by the proceeds from the Share Offer and RMB 5.0 million  (equivalent to
HK$5.4 million) will be funded by the internal resources of our Company. We need to upgrade the
qualifications and equipment and recruit additional personnel due to the following reasons:
(a) Acquire new equipment to upgrade the qualification to conduct static load testing up
to 50,000 kN – In order to tap into the high-end market, it is crucial for our Company
to upgrade our static load testing capacity from 35,000 kN to 50,000 kN. Currently,
this service is primarily provided by companies located outside of Maoming. Static
load testing requires inspection personnel and testing equipment to be present at the
testing site. By upgrading our qualifications in static load testing, we can leverage our
geographical advantage to reduce the testing cost. This cost advantage would enable us
to capture the demand in the high-end market in Maoming;
(b) Replace old equipment  – Some of the equipment of our Company have been in use
for around eight years. It is therefore necessary to replace the old equipment to ensure
smooth operation of the testing and inspection business of our Company;
(c) Acquire equipment to enhance our capability in providing testing and inspection
services  – We plan to obtain the Comprehensive  Qualification by end of 2027. To
obtain the capabilities to conduct tests on all the necessary testing parameters, we plan
to acquire the relevant equipment in the first half of 2026 ; and
(d) Employ 50 additional engineers  – To meet the requirement on personnel of
Comprehensive Qualification, we need a minimum of 150 technicians. As at the Latest
Practicable Date, our existing workforce fell short of this requirement. To bridge this
gap, we plan to hire 50 additional engineers with required professional qualifications.


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FUTURE PLANS AND USE OF PROCEEDS
Set out below is the expected timeline for the aforementioned use of proceeds from the Share
Offer.
Period Action plan
Use of net proceeds from
the Share Offer
(RMB’000) (HK$’000)
From the Listing Date to
the end of 2H2024
Employ 15 additional engineers
with the required professional
qualificati ons (Note 1)
537.3 585.1
1H2025 Payment of staff cost of the 15
additional engineers (Note 1)
268.6 292.5
Acquire new equipment to upgrade
the qualification to conduct static
load testing from the maximum
test load of 35,000 kN to 50,000
kN (Note 2)
3,444.0 3,750.5
Replace old equipment (Note 3) 2,066.4 2,250.3
Employ 5 additional engineers
with the required professional
qualifications (Note 1)
310.0 337.5
2H2025 Employ 15 additional engineers
with the required professional
qualifications (Note 1)
805.9 877.6
1H2026 Acquire equipment to enhance our
capability in providing testing and
inspection services (Note 4)
2,886.1 3,142.9
Employ 5 additional engineers
with the required professional
qualifications (Note 1)
310.0 337.5
2H2026 Employ 10 additional engineers
with the required professional
qualifications (Note 1)
495.9 540.1

Total 11,124.3 12,114 .0


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FUTURE PLANS AND USE OF PROCEEDS
Notes:
1. Approximately RMB 2.7 million  (equivalent to HK$ 3.0 million) will be used to employ 50 additional
engineers  who (i) obtained an undergraduate degree or above in engineering (ii) possessed  a Training
Qualification Certificate of Engineering Test and Appraisal (ᗇ)  issued by Guangdong
Construction Quality Security Test and Appraisal Association (՘ึ) ;
and (iii) has no less than three years of work experience in quality inspection. Specifically, we plan to hire:
(a) 30 engineers  who hold an intermediate professional title  with a monthly salary in the range from
RMB11,000 to RMB13,000 (equivalent to HK$12,000 to HK$14,200); and
(b) 20 engineers who hold an intermediate to senior professional title with a monthly salary in the range
from RMB11,000 to RMB18,000 (equivalent to HK$12,000 to HK$19,600).
2. Approximately RMB3.4 million (equivalent to HK$3.8 million) will be used to acquire testing equipment to
upgrade the qualification to conduct static load testing from the maximum test load of 35,000 kN to 50,000
kN, including but not limited to:
(a) a pile static load test device ( ᅸ᎑༱༊᜕ˀɢༀໄ) for conducting vertical pile load test up to
50,000kN which meets the requirements of the Code for Testing Building Foundation (ጘήਿ
ਿᓾᏨ಻஝ᇍ) DBJ/T 15-60-2019;
(b) a precast concrete sample component ( ૿ኑɺ༊෯ཫႡ࿴΁) that weighs 20,000kN for exerting
uniform pressure over the pile being tested which meets the requirements of the Code for Testing
Building Foundation (ጘήਿਿᓾᏨ಻஝ᇍ) DBJ/T18; and
(c) a highly sensitive strain sensor ( ৷ᏐᜊᏨ಻ᄃ) for foundation monitoring which meets the
requirements of the Code for Testing Building Foundation (ጘήਿਿᓾᏨ಻஝ᇍ) DBJ/T
15, the Standard Test Method for High-Strain Dynamic Testing of Piles (ٙ
) ASTM D4945-08, the Technical Code for Testing of Building Foundation Piles
(ጘਿᅸᏨ಻Ҧஔ஝ᇍ) JGJ 106-2014, the Code for Pile Dynamic Testing Instruments (ਿ
ᅸਗ಻ᄃ஝ᇍ) JG/T 3055-1999, the Technical Specification  of Dynamic Pile Tests for Highway
Engineering (ʮ༩ʈ೻ਿᅸਗ಻Ҧஔ஝೻ ) JTG/T F81-01-2004 and the Technical Code for
Building Pile Foundations (ጘᅸਿҦஔ஝ᇍ) JGJ 94-2008.
3. Approximately RMB 2.1 million  (equivalent to HK$ 2.3 million) will be used to acquire testing equipment
for replacing old ones, including:
(a) an automatic double channels thermal desorber ( ᕐஷ༸ΌІਗᆠ༆іᄃ) for measurement of toxic
element level in the air which meets the requirements of the Standard for Indoor Environmental
Pollution Control of Civil Building Engineering (છՓᅺ๟ ) GB
50325-2020, the Examination Methods for Public Places –  Part 2: Chemical Pollutants ( ʮ΍
ج ୋ2) GB/T 18204.2-2014 and the Standard Method for
Hygienic Examination of Formaldehyde in Air of Residential Areas –  Spectrophotometric Method
(ج ) GB/T 16129-1995;  and
(b) an universal testing machine ( ૰Ꮐຬঐ༊᜕ዚ) for testing the tensile strength and compressive
strength of materials which meets the requirements of the Test Methods of Steel for Reinforcement
of Concrete () GB/T 28900- 2022.


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FUTURE PLANS AND USE OF PROCEEDS
4. Approximately RMB 2.9 million  (equivalent to HK$ 3.1 million) will be used to acquire certain testing
equipment and materials to enhance our capability in providing testing and inspection services, including
but not limited to:
(a) a highly sensitive strain sensor (৷ᏐᜊᏨ಻ᄃ) for measuring the integrity and vertical compressive
bearing capacity of a pile  which meets the requirements of (i) the Technical Code of Testing of
Building Foundation piles (ጘਿᅸᏨ಻Ҧஔ஝ᇍJGJ 106-2014; and (ii) the Code for Design
of Building Foundation (ጘήਿਿᓾᏨ಻஝ᇍ) DBJ/T 15-60-2019;
(b) an UV spectrophotometer (ࠇܓand a fourier transform infrared spectroscopy ( ௩
̮Έᗅᄃ) for measuring the reflectance, heat transfer coefficient  and transmittance
properties of architectural glass, and an insula ting glass dew point meter (ᆨᚣᓃ಻༊ᄃ)
for measuring the dew point of insula ting glass, which meet the requirements of (i) the Glass in
Building – Determination of Light Transmittance, Solar Direct Transmittance, Total Solar Energy
Transmittance, Ultraviolet Transmittance and Related Glazing Factors (ᆨ ࢛
 ) GB/T
2680-2021; (ii) the Calculation Specification for Thermal Performance of Windows, Doors and
Glass Curtain-Walls (ၑ஝೻) JGJ/T 151-2008; (iii) the Standard for
Acceptance of Energy Efficient Building Construction (ʈሯඎ᜕ϗᅺ๟) GB
50411-2019; (iv) the Technical Specification for Application of Architectural Glass (ᆨ
Ꮠ͜Ҧஔ஝೻) JGJ 113-2015; (v) the Safety Glazing Materials in Building – Part 2: Tempered
Glass (ᆨ ୋ2ᆨ) GB 15763.2-2005; (vi) the Safety Glazing
Materials in Building – Part 3: Laminated Glass (ᆨ ୋ3ᆨ) GB
15763.3-2009, Flat Glass (ᆨ) GB 11614-2009; and (vii) the Insula ting Glass Unit٤
ᆨGB/T 11944-2012;
(c) a low background multi-channel y-ray spectrometer (ε༸ γঐᗅᄃ), a 1M³ climate chamber
for determination of formaldehyde emission (1M³ ᇌ) and a gas chromatograph (ं
Ѝᗅᄃ) and other measuring instrument for measurement of level of toxic elements in the air,
soil and construction materials, such as radon, formaldehyde, ammonia, benzene, toluene, xylene,
total volatile organic compounds (TVOC) and radionuclide which meet the following requirements:
(i) in respect of radon measurement, the Charcoal Canister Method for Measuring 222Rn
Exhalation Rate from Building Surface ( ) GB/T
16143-1995, the Standard Methods for Radon Measurement in Environ-Mental Air (ᐑ
) GB/T 14582-1993, the Standard for Indoor Environmental
Pollution Control of Civil Building Engineering (છՓᅺ๟)
GB 50325-2020 and the Standard for Measurement Method of Indoor Air Radon (܃
ᅺ๟T/CECS 569-2019;
(ii) in respect of formaldehyde and ammonia measurement, the Examination Methods for Public
Places –  Part 2: Chemical Pollutants (ج ୋ2)
GB/T 18204.2-2014, the Standard Method for Hygienic Examination of Formaldehyde in
Air of Residential Areas – Spectrophotometric  Method (Иਜɽंʕ͠⺂ሊ͛Ꮸ᜕
ج ) GB/T 16129-1995, the Indoor Air Pollution Inspection Method
for Buildings with Simple and Convenient Sampling Instrument (ݑ
 ) JG/T 498-2016, the Appendix B to the Standard for Indoor
Environmental Pollution Control of Civil Building Engineering (ʫᐑ
છՓᅺ๟ ፽B) GB 50325-2020 and the Indoor Decorating and Refurbishing
Materials – Limit of Formaldehyde Emission of Wood-Based Panels and Finishing Products
(ඎ) GB 18580-2017;


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FUTURE PLANS AND USE OF PROCEEDS
(iii)  in respect of benzene, toluene and xylene measurement, the Standards for Indoor Air
Quality (ंሯඎᅺ๟ ) GB/T 18883-2002, Examination Methods for Public
Places – Part 2: Chemical Pollutants (ج ୋ2)
GB/T 18204.2-2014, the Standard for Indoor Environmental Pollution Control of Civil
Building Engineering (છՓᅺ๟ ) GB 50325-2020 and
the Standard Method for Hygienic Examination of Benzene, Toluene and Xylene in Air of
Residential areas  – Gas Chromatography (ሊ͛Ꮸ᜕ᅺ
ج ) GB/T 11737-1989;
(iv) in respect of TVOC measurement, the Standards for Indoor Air Quality (ंሯඎ
ᅺ๟) GB/T 18883-2002, the Examination Methods for Public Places – Part 2: Chemical
Pollutants (ج ୋ2) GB/T 18204.2-2014, the
Standard for Indoor Environmental Pollution Control of Civil Building Engineering (͏
છՓᅺ๟ ) GB 50325-2020 and the Standard Method for
Hygienic Examination of Benzene, Toluene and Xylene in Air of Residential areas  – Gas
Chromatography (ج )
GB/T 11737-1989; and
(v) in respect of radionuclide measurement, the Limits of Radionuclides in Building Materials
(ඎ) GB 6566-2010;
(d) a microcomputer-controlled compression testing machine ( ฆዚછՓᏀɢ༊᜕ዚ) and other
measuring instrument for conducting compression testing on reinforced concrete with welding
and mechanical connection  which meets the requirements of (i) the Specification for Welding
and Acceptance of Reinforcing Steel Bars ( ፻ഊଔટʿ᜕ϗ஝೻) JGJ 18-2012; and (ii) the
Technical Specification for Steel Mechanical Connection ( ፻ഊዚ૛ஹટҦஔ஝೻ ) JGJ 107-
2016;
(e) a steel wire rope tester ( ፻ഏᇞ༊᜕ዚ) for measuring the breaking strength of a steel wire rope
which meets the requirements of the Test Methods of Steel for Prestressing Concrete ( ཫᏐɢ૿ኑ
) GB/T 21839- 2019, the Steel Strand for Prestressed Concrete (ཫᏐɢ૿ኑ
ɺ͜፻ഏᇞ) GB/T 5224- 2014 and the Unbonded Prestressing Steel Strand ( ೌῡഐཫᏐɢ፻ഏ
ᇞ) JG/T 161- 2004;
(f) a relaxation testing machine (ᕦύ༊᜕ዚ) for measuring the creep properties of a steel rope which
meets the requirements of the Metallic Material – Tensile Stress Relaxation – Method of Test (ږ
ࣘ ) GB/T 10120-2013;
(g) a low background multi-channel y-ray spectrometer (ε༸ γঐᗅᄃ) for measuring the
radio elements  of plasterboard  which meets the requirements of (i) the Mineral Wool Decorating
and Acoustic Ceilings () GB/T  25998-2010; (ii) Indoor Decorating and
Refurbishing Materials – Limit of Formaldehyde Emission of Wood-Based Panels and Finishing
Products (ࣘ  ඎ ) GB 18580-2001; (iii) the
Limits of Radionuclides in Building Materials (ඎ) GB 6566-2010; and
(iv) Thermal Insulation – Determination of Steady-State Thermal Resistance and Related Properties
– Guarded Hot Plate Apparatus (֛ ) GB/T
10294-2008; and
(h) other testing instrument for measuring the properties and performance of various construction
materials, including but not limited to inorganic binders, mortar, asphalt, concrete admixture,
concrete, fiber reinforced concrete, ceramic tiles, bricks, curb stones, insulation materials, wall
panel, aluminum, light steel-frame structure and plasterboard.


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FUTURE PLANS AND USE OF PROCEEDS
(2) Strengthening our existing market presence in Maoming and expanding our service footprint
into the 3rd to 5th tiers cities in W estern Guangdong
In order to strengthen our existing market presence in Maoming and expand our service footprint
into the 3rd to 5th tiers cities in Western Guangdong, we will (i) acquire a construction engineering
testing and inspection  company in Western Guangdong with a proven track record and an established
customer base;  and (ii) establish  a branch  office in Zhanjiang City, Guangdong Province. Our Directors
believe that acquiring a local company will give us access to expertise, suppliers, customer base and
geographic reach, which will enable our Company to effectively extend our geographical presence in
Western Guangdong. We estimated that the total investment cost for the said implementation plan will be
RMB20.1 million  (equivalent to HK$ 21.9 million) , of which RMB 13.9 million  (equivalent to HK$ 15.1
million) will be funded by the proceeds from the Share Offer and RMB6.2  million (equivalent to HK$6.8
million) will be funded by internal resources of our Company. Set out below is the expected timeline for
the aforementioned use of proceeds from the Share Offer.
Period Action plan
Use of net proceeds from
the Share Offer
(RMB’000) (HK$’000)
From the Listing Date to
the end of 2 H2024
– – –
1H2025 – – –
2H2025 Acquire a construction engineering testing
and inspection company in Western
Guangdong with established customer
base (Note 1)
8,265.7 9,001.1
1H2026 Set up and renovate the new branch office
in Zhanjiang City, Guangdong Province
287.2 312.8
Employ 10 additional engineers with the
required professional qualifications
(Note 2)
413.3 450.1
Purchase testing equipment for foundation
testing services (Note 3)
3,444.0 3,750.4
Purchase two transportation vehicles 826.6 900.1
Purchase office and electronic equipment 344.4 375.0
2H2026 Rental of the new branch office in
Zhanjiang City, Guangdong Province
80.6 87.8
Employ 5 additional engineers with the
required professional qualifications
(Note 2)
206.6 225.0

Total 13,868.4 15,102.3


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FUTURE PLANS AND USE OF PROCEEDS
Notes:
1. Approximately RMB8.3 million (equivalent to HK$9.0 million) will be used to settle part of the acquisition cost of
a construction engineering testing and inspection company. We would consider acquisition target that fulfills the
following criteria:
(a) is domiciled in Western Guangdong;
(b) recorded a revenue in the range of RMB10.0 million to RMB20.0 million (equivalent to HK$10.9 million to
HK$21.8 million) in the previous financial year;
(c) has sufficient working capital for business operation;
(d) has an adequate workforce and sufficient number of technical personnel to meet staffing requirements
of a foundation engineering inspection agency in the PRC (i.e. The acquisition target shall maintain not
less than four technical professionals with senior or intermediate professional title who have engaged in
the inspection of engineering piles for more than three years, and one of them is a certified geotechnical
engineer;
(e) has an established customer base consists of state-owned investment companies, relevant PRC government
institutions and PRC government administrative bureaus;
(f) is eligible to apply for the Specialised Qualification of foundation; and
(g) was not involved in any litigation or arbitration proceeding, or experienced any non-compliance, that would
have a material adverse effect on the business, financial condition or results of operation of the acquisition
target.
As of the Latest Practicable Date, we had not engaged in any commercial negotiation or entered into any letter of
intent or agreement for potential acquisitions, and had yet to identify any specific acquisition target. Our Company
does not have a specific preference for location of the acquisition target within Western Guangdong. However,
our Directors expected that the acquisition target will not be located in Zhanjiang City, Guangdong Province. Our
Directors were aware of not less than 10 companies that fulfill the abovementioned selection criteria in the market.
2. Approximately RMB0.6 million (equivalent to HK$0.7 million) will be used to employ 15 additional engineers who
(i) obtained an undergraduate degree or above in engineering (ii) possessed a Training Qualification Certificate of
Engineering Test and Appraisal (ᗇ) issued by Guangdong Construction Quality Security Test
and Appraisal Association (՘ึ ); and (iii) preferably has relevant work
experience. The monthly salary of each of them will be in the range from R MB8,000 to RMB10,000 (equivalent to
HK$8,700 to HK$10,900).
3. Approximately RMB 3.4 milli on (equivalent to HK$ 3.8 million) will be used to acquire  testing equipment for
conducting static load tests, including but not limited to one set of static load test reaction frame ( ᎑༱༊᜕ˀɢ
ݖthree sets of plate load frame (ݖa precast concrete sample component ( ૿ኑɺ༊෯ཫႡ࿴΁)
that weights 10,000 kN and a static load tester (ᄃ), which meet the requirements of the Code for
Testing of Building Foundation (ጘήਿਿᓾᏨ಻஝ᇍ) DBJ/T 15-60-2019.


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FUTURE PLANS AND USE OF PROCEEDS
(3) Diversifying our testing and inspection services offering  expanding into areas including food
and agricultural, transportation, and fire protection.
We will apply approximately RMB44.5 million  (equivalent to HK$ 48.5 million) to diversify our
testing and inspection services and expand into areas, including food and agricultural, transportation and
fire protection , of which RMB 18.7 million  (equivalent to HK$ 20.4 million ) will be funded by the proceeds
from the Share Offer, RMB 25.8 million  (equivalent to HK$ 28.1 million) will be funded by the internal
resources of our Company and the proceeds of the Pre-IPO Investment.  The competitive landscape of
food and agricultural, transportation, and fire protection testing and inspection  services in the Western
Guangdong is characterized by a fragmented competition pattern, displaying regional characteristics, and is
dominated by local testing and inspection service providers with higher public credibility.
See “Regulatory Overview  – Laws and Regulations Governing the Food Testing” and “Laws and
Regulations Governing the Agricultural Testing, Transportation Construction Testing and Fire Protection
Testing” in this prospectus  for details of the regulatory framework governing the new testing and
inspection services.
(i) Expansion into the food and agricultural testing services
Our Company plans to allocate RMB1 7.6 million (equivalent to HK$1 9.2 million) to expand
into the food and agricultural testing industry, of which RMB17.4 million (equivalent to HK$1 8.9
million) will be funded by the  Pre-IPO  Investment proceeds  and internal resources and RMB0.2
million (equivalent to HK$0 .3 million) will be funded by the net proceed from the Share Offer . In
preparation of our plan to expand into the food and agricultural testing industry, we have conducted
a feasibility study on our plan and believe we can capture the demand in the food and agricultural
testing industry based on the following reasons:
(a) according to the CIC Report, the total market size of the food and agricultural
testing industry in Maoming was RMB1 12.6 million in 2023  and is expected to reach
RMB205.6 million in 2028 , representing a CAGR of 12.8% from 2023  to 2028 . The
industry has demonstrated significant demand and rapid growth over the years.
In 2023, the total market size was RMB 112.6 million, of which the major market
players accounted for about 50% of the market share and the small players and unmet
demand accounted for about 50% of the market share. As such we believe that we can
capture the market share of the small players and unmet demand by leveraging our
competitive advantages detailed below;
(b) the food and agricultural testing market in Maoming is dominated by testing service
providers outside of the region. R ecognising the perishable nature of food and
agricultural products, our  Company intends to capture the local demand by taking
advantage of its close proximity to customers and offering timely testing services;


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FUTURE PLANS AND USE OF PROCEEDS
(c) as at the Latest Practicable Date, we have obtained the qualification approved by the
Guangdong AMR for carrying out certain food and agricultural product testing,  and
have seven technicians who are qualified to carry out food testing;
(d) through 20 years of experience in the construction engineering testing and inspection
field and being a state-owned  enterprise we have built a strong reputation and brand
recognition in Maoming. We believe  our customers  will have heightened trust and
reliability in our services; and
(e) the increase in awareness among consumers on quality and traceability of food and
agricultural products has resulted in surge in demand for testing services. To capitalize
on this opportunity, we will offer testing services to local agricultural and food
enterprises. This includes conducting tests to ensure the safety of food and agricultural
products and placing barcodes on product packaging to enhance traceability.
Set out below is the expected timeline for the aforementioned use of proceeds from the Share
Offer.
Period Action plan
Use of net proceeds from
the Share Offer
(RMB’000) (HK$’000)
From the Listing Date to
the end of 2H2024
Employ 3 additional technicians
with the required professional
qualifications (Note)
110.2 120.0
1H2025 Payment of staff cost of the 3
additional technicians (Note)
55.1 60.0
2H2025 – – –
1H2026 – – –
2H2026 – – –

Total 165.3 180.0


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FUTURE PLANS AND USE OF PROCEEDS
Notes: We plan to hire:
(a) two laboratory technicians who obtained an undergraduate degree or above in chemistry, each with
a monthly salary of approximately RMB10,000 (equivalent to HK$10,900) depending  on their
experience; and
(b) one head of technology with a monthly salary of approximately RMB20,000 (equivalent to
HK$21,800) who shall have intermediate or higher technical titles or equivalent abilities and is
either:
(i) a chemical doctoral degree holder with one year of relevant work experience;
(ii) a chemical master degree holder with three years of relevant work experience; or
(iii) a chemical bachelor degree holder with five years of relevant work experience.
(ii) Expansion into the transportation construction testing services
Our Company plans to allocate RMB1.9 million  (equivalent to HK$ 2.0 million) to expand
into the transportation construction testing industry, of which RMB 1.3 million  (equivalent to
HK$ 1.4 million) will be funded by the proceeds from the Share Offer and RMB 0.6 million
(equivalent to HK$ 0.6 million) will be funded by the internal resources of our Company. In
preparation of our plan to expand into the transportation testing industry, we have conducted a
feasibility study and believe we can capture the demand in the transportation construction testing
services based on the following reasons:
(a) according to the CIC Report, the total market size of the transportation construction
testing and inspection industry in Maoming was RMB 52.4 million in 2023  and is
expected to reach RMB 98.2 million in 2028 , representing a CAGR of 1 3.4% from
2023  to 2028 . Over the years, the industry has demonstrated strong demand and
market growth.
In 2023, the total market size was RMB 52.4 million, of which the major market
players accounted for about 70% of the market share and the small players and the
unmet demand accounted for the remaining 30% of the market share. We believe by
leveraging our competitive edges as discussed below we are able to capture the market
share of the small players and unmet demand;
(b) customers in transportation construction testing industry tend to engage local
companies due to the transportation costs and workforce involved in setting up the
equipment and inspection personnel at the testing site. Being a local company, our
Company can capitalize on this preference;
(c) the testing activities of transportation construction  testing are similar to that of
infrastructure and public roads testing. Our  Company can take advantage of its
expertise and experience in similar testing activities to provide reliable transportation
construction services to customers;


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FUTURE PLANS AND USE OF PROCEEDS
(d) save for the requirements on equipment, we have met other qualification requirements
of a transportation construction testing and inspection agency in the PRC.  We will
acquire the remaining equipment and apply for the relevant qualification certificate in
respect of transportation construction testing by end of 2024; and
(e) our Company has been deeply rooted in the field of construction engineering testing
and inspection for over 20 years and has built a good reputation and brand recognition
in Maoming. Many customers hold high regard for our testing capabilities and
expertise. Our Directors believe that if these customers are in need of transportation
testing services, it is likely that we will be their preferred service provider. In addition,
our status as a state-owned enterprise further strengthens the trust that our customers
place in our testing service capabilities.
Set out below is the expected timeline for the aforementioned use of proceeds from the Share
Offer.
Period Action plan
Use of net proceeds from
the Share Offer
(RMB’000) (HK$’000)
From the Listing Date to
the end of 2H2024
Acquire testing equipment (Note 1) 1,194.8 1,301.1
Employ 6 additional technicians
with the required professional
qualifications (Note 2)
19.3 21.0
1H2025 Payment of staff cost of the 6
additional technicians (Note 2)
9.6 10.5
2H2025 Employ 6 additional technicians
with the required professional
qualifications (Note 2)
28.9 31.5
1H2026 – – –
2H2026 Employ 6 additional technicians
with the required professional
qualifications (Note 2)
28.9 31.5

Total 1,281.5 1,395.6


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FUTURE PLANS AND USE OF PROCEEDS
Notes:
1. Approximately RMB1.2 million (equivalent to HK$1.3 million) will be used to acquire testing equipment,
including but not limited to:
(a) a concrete flexure testing machine (૿ኑɺҤұ༊᜕ዚ)  for testing the flexural strength of concrete
which meets the requirements of the Testing Methods of Cement and Concrete for Highway
Engineering (૿ኑɺ༊᜕஝೻ ) JTG 3420-2020;
(b) an automatic core cutting machine (ᅵʲጋɓ᜗ዚ)  for cutting core samples from concrete
which meets the requirements of the Testing Methods of Cement and Concrete for Highway
Engineering (૿ኑɺ༊᜕஝೻ ) JTG 3420-2020;
(c) a microcomputer controlled universal material testing machine (༊᜕ዚ)  for
conducting pull out test of joints connecting to metallic materials  which meets the requirements
of the Standard for Test Methods of Welded Joint of Steel Bars (ᅺ๟)
JGJ/T 27- 2014 and the Technical Specification for Mechanical Splicing of Steel Reinforcing Bars
(፻ഊዚ૛ஹટҦஔ஝೻) JGJ 107- 2016;
(d) a laser distance and weighing measurement device (಻ඎᄃ)  for measuring distance
and weights of joints connecting metallic materials  which meets the requirements of the Standard
for Test Methods of Welded Joint of Steel Bars (ᅺ๟) JGJ/T 27 -2014
and the Technical Specification for Mechanical Splicing of Steel Reinforcing Bars ( ፻ഊዚ૛ஹટ
Ҧஔ஝೻) JGJ 107- 2016; and
(e) a road material strength tester (༊᜕ᄃ ) for testing permeability coefficient
and unconfined compression strength of road materials  which meets the requirements of the
Specifications for Design of Highway Subgrades (஝ᇍ) JTG D30-2015 and the
Specifications for Design of Highway Asphalt Pavement (஝ᇍ) JTG D50-
2017.
2. Approximately RMB 86,800 (equivalent to HK$ 94,700) will be used to employ 18 additional testing and
inspection personnel who (a) obtained an undergraduate degree or above in engineering; (b) is an assistant
or hold an intermediate or senior technical title; and (c) has one to three years of experience in conducting
testing and inspections on bridges and undergrounds of highways, and national and provincial roads.  The
monthly salary of each of them will be in the range from RMB5,000 to RMB8,000 (equivalent to HK$5,400
to HK$8,700).


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FUTURE PLANS AND USE OF PROCEEDS
(iii) Expansion into the fire protection testing and inspection services
Our Company intends to enter into the fire protection testing and inspection industry by
allocating RMB 25.0 mill ion (equivalent to HK$ 27.2 million) to acquire a company with proven
track record and an established customer base in Western Guangdong, of which RMB17.2 million
(equivalent to HK$18.8 million) will be funded by the proceeds from the Share Offer and RMB7.8
million  (equivalent to HK$ 8.4 million) will be funded by the internal resources of our Company.
In preparation of our plan to expand into the fire protection testing industry, we have conducted a
feasibility study and believe we can capture the demand in the fire protection testing industry based
on the following reasons:
(a) According to the CIC Report, the total market size of the fire protection testing and
inspection industry in Western Guangdong  was RMB 51.1 million in 2023 and is
expected to reach RMB6 6.6 million in 2028, representing a CAGR of 5 .4% from 2023
to 2028 . Over the years, the industry has demonstrated steady growth and demand.
In 2023, the total market size was RMB 51.1 million, of which the major market
players  accounted for 75 % of the market share, and the small players and unmet
demand accounted for 25% of the market share . We believe that, in addition to the
market share we will gain through the acquisition target, we can capture further
demand by leveraging our competitive edges as detailed below.
The market growth rate of the fire protection testing and inspection industry is slower
compared to the other two fields that we intend to tap into, which is attributable to
limited demand drivers. The demand for the fire protection testing and inspection
services primarily comes from two sources. Firstly, during the construction phase,
the property developers/building owners are required to engage testing and inspection
agencies to carry fire protection testing before project acceptance. Secondly, annual
inspections are needed for buildings after they are put to use. Despite of the slower
market growth rate, expanding into the fire protection testing and inspection industry
enables us to provide a wider range of services to our customers, which is conducive
to establishing our Company as a comprehensive testing service platform;
(b) during the construction phase, the property developers/building owners are required to
engage testing and inspection agencies to carry out testing on construction engineering
and fire protection before completion of projects. Additionally, property management
companies, which are often subsidiaries  of property developers, and building owners
would engage inspection agencies to conduct  annual fire safety inspection on
buildings. Therefore, there is certain degree of overlap between the customers which
have demand for the construction engineering testing and inspection services and
fire protection testing and inspection services. As of 3 0 June 2024, 32 out of 1 96, or
16.3% , of our customers are property developers  which will be our target potential
customers in this new segment; and


--- page 383 ---
– 372 –
FUTURE PLANS AND USE OF PROCEEDS
(c) leveraging our Company’s prolonged presence in the construction engineering
testing and inspection industry with good reputation and brand recognition and our
background as a state-owned enterprise, we can endorse the fire protection testing and
inspection services provided by our acquisition target.
Set out below is the expected timeline for the aforementioned use of proceeds from the Share
Offer.
Period Action plan
Use of net proceeds from
the Share Offer
(RMB’000) (HK$’000)
From the Listing Date to
the end of 2 H2024
– – –
1H2025 – – –
2H2025 – – –
1H2026 – – –
2H2026 Acquire a fire protection testing
and inspection company with 3–5
years of track record and with
targeted business scale in Western
Guangdong Province (Note)
17,220.2 18,752.3

Total 17,220.2 18,752.3

Notes: We would consider acquisition target that fulfills the following criteria:
(a) has three to five years of track record;
(b) is within Western Guangdong Province;
(c) has sufficient working capital for business operation;
(d) maintain an adequate workforce and has sufficient number of technical personnel to meet staffing
requirements of a fire protection testing and inspection agency in the PRC (i.e. t he acquisition target
shall maintain  not less than (i) two registered fire engineers, of which no less than one Level 1
certified fire engineer; and (ii) six personnel who have obtained the national vocational qualification
certificate for fire protection facility operators, of which no less than two are above the intermediate
skill level);
(e) has an established customer base consists of property developers, building owners and property
management companies; and


--- page 384 ---
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FUTURE PLANS AND USE OF PROCEEDS
(f) was not involved in any litigation or arbitration proceeding, or experienced any non-compliance,
that would have a material adverse effect on the business, financial condition or results of operation
of the company.
As of the Latest Practicable Date, we had not engaged in any commercial negotiation or entered into any
letter of intent or agreement for potential acquisitions, and had yet to identify any specific acquisition target.
Our Directors were aware of not less than five companies that fulfill the abovementioned selection criteria
in the market.
(4) Upgrading our ERP system
We will use RMB4.0 million  (equivalent to HK$ 4.4 million) to acquire new enterprise resources
planning (“ERP”)  systems  in order to enhance our operational efficiency  of which RMB 2.8 million
(equivalent to HK$3.0 million) will be funded by the proceeds from the Share Offer and RMB1.2 million
(equivalent to HK$1.4 million) will be funded by the internal resources of our Company. Set out below is
the expected timeline for the aforementioned use of proceeds from the Share Offer.
Period Action plan
Use of net proceeds from
the Share Offer
(RMB’000) (HK$’000)
From the Listing Date to the
end of 2 H2024
– – –
Acquire new ERP system (Note) 1,377.6 1,500.2
1H2025 Acquire new ERP system (Note) 1,377.6 1,500.2
2H2025 – – –
1H2026 – – –
2H2026 – – –

Total 2,755.2 3,000.4

Note:
We plan to acquire new ERP systems to manage certain parts of the operations of our Company, including but not limited to
finance, procurement, sales management, inventory management, customer relationship management, project management
and human resources management.


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FUTURE PLANS AND USE OF PROCEEDS
BASES AND ASSUMPTIONS
Investors should note that our ability to achieve our business objectives and implementation plans
depends on a number of bases and assumptions, in particular:
• there will be no material changes in the existing political, legal, fiscal, social or economic
conditions in the PRC and any other places in which any member of our Company will carry
on business and provides services;
• we will have sufficient financial resources to meet the planned capital expenditure and
business development requirements during the period to which the business objectives relate;
• there will be no material changes in the prevailing laws (whether in the PRC or any other
part of the world), policies or industry or regulatory treatments relating to us, or in the
political, economic and market conditions in the places in which we operate or will operate
our business;
• we will retain our key staff in our management team;
• there will be no material changes in the bases or rates of taxation in the PRC;
• there will be no significant changes in our business relationship with our existing strategic
and business partners;
• there will be no significant changes in our business relationship with our major customers
and suppliers;
• the Share Offer will be completed in accordance with and as described in “Structure and
Conditions of the Share Offer” in this prospectus;
• there will be no material changes in the funding required for each of the scheduled
achievements as outlined under “– Implementation Plans” in this section;
• we will not be materially affected by the risk factors as set out in “Risk Factors” in this
prospectus; and
• we will be able to continue its operations in substantially the same manner as we have been
operating during the Track Record Period and we will be able to carry out the development
plans without disruptions adversely affecting its operations or business objectives in any
way.


--- page 386 ---
– 375 –
UNDERWRITING
PUBLIC OFFER UNDERWRITERS
Huajin Securities (International) Limited
Yue Xiu Securities Company Limited
Eddid Securities and Futures Limited
GLAM Capital Limited
Livermore Holdings Limited
Orient Securities (Hong Kong) Limited
UNDERWRITING ARRANGEMENTS AND EXPENSES
The Public Offer Underwriting Agreement
Public Offer
Public Offer Underwriting Agreement
Pursuant to the Public Offer Underwriting Agreement, our Company is initially offering for
subscription of 1,018,000 Public Offer Shares at the Offer Price under the Public Offer, on and subject to
the terms and conditions set forth in this prospectus. The Public Offer Underwriters have agreed on and
subject to the terms and conditions in the Public Offer Underwriting Agreement, to procure subscribers
for, or failing which they shall subscribe for, the Public Offer Shares.
The Public Offer Underwriting Agreement is subject to various conditions, which include, but
without limitation, the GEM Listing Committee granting listing of, and permission to deal in, our H Shares
in issue and to be issued as mentioned in this prospectus. In addition, the Public Offer Underwriting
Agreement is conditional on and subject to the Placing Underwriting Agreement having been executed,
becoming unconditional and not having been terminated.
Grounds for termination
The Joint Overall Coordinators may, for themselves and on behalf of the Public Offer Underwriters,
upon giving notice in writing to our Company made pursuant to the Public Offer Underwriting Agreement,
terminate the Public Offer Underwriting Agreement with immediate effect if any of the following events
occurs at or prior to 8:00 a.m. on the Listing Date:
(a) there has come to the notice of the Joint Overall Coordinators or any of the Public Offer
Underwriters:
(i) that any statement contained in any Offer Documents and/or 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 amendments thereto) (collectively, the “Relevant Documents”) was,


--- page 387 ---
– 376 –
UNDERWRITING
when it was issued, or has become, untrue, incorrect  in any respect, or misleading
or deceptive or that any forecast, expression of opinion, intention or expectation
expressed in any of the Relevant Documents is not, in the sole and absolute opinion of
the Joint Overall Coordinators (for themselves and on behalf of the Underwriters), fair
and honest and based on reasonable assumptions, when taken as a whole; or
(ii) that any matter has arisen or has been discovered which would or might, had it arisen
or been discovered immediately before the respective dates of the publication of the
Relevant Documents, constitute an omission therefrom; or
(iii)  any breach of any of the obligations imposed upon any party to Public Offer
Underwriting Agreement or the Placing Underwriting Agreement (in each case, other
than on the part of any of the Underwriters) which has or may have or will have a
material adverse effect on the Share Offer; or
(iv) any breach of, or any matter or event rendering untrue, incorrect, inaccurate or
misleading, any of the warranties under Public Offer Underwriting Agreement or the
Placing Underwriting Agreement; or
(v) any event, act or omission which gives or is likely to give rise to any material liability
of any of the Warrantors (as defined in the Public Offer Underwriting Agreement)
or the Controlling Shareholder  pursuant to the indemnity provision under the Public
Offer Underwriting Agreement or under the Placing Underwriting Agreement; or
(vi) any event that has or may have or will have a m aterial adverse effect on our Company
or the Share Offer; or
(vii)  the approval by the Listing Committee of the Stock Exchange of the listing of, and
permission to deal in, the H Shares (including any additional H Shares that may
be issued upon the exercise of the Offer Size Adjustment Option) is refused or not
granted, or is qualified (other than subject to customary conditions), on or before the
Listing Date, or if granted, the approval is subsequently withdrawn, qualified (other
than by customary conditions) or withheld; or
(viii) our Company withdraws any of the Relevant Documents or the Share Offer; or
(ix) any person (other than 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; or
(x) a portion of the orders placed or confirmed in the book-building process, at the time
the Placing Underwriting Agreement is entered into have been withdrawn, terminated
or cancelled, and the Joint Overall Coordinators, in their sole and absolute discretion,
concludes that it is therefore inadvisable or inexpedient or impracticable to proceed
with the Share Offer; or


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UNDERWRITING
(b) there shall develop, occur, exist or come into effect:
(i) any local, national, regional, international event or circumstance, or series of events or
circumstances in the nature of force majeure (including, without limitation, any acts of
government or orders of any courts, strikes, calamity, crisis, lock-outs, fire, explosion,
flooding, civil commotion, acts of war, outbreak or escalation of hostilities (whether
or not war is declared), acts of God, acts of terrorism, declaration of a local, regional,
national or international emergency, riot, public disorder, political change, economic
sanctions, withdrawal of trading privileges, state of emergency, outbreaks, escalation,
adverse mutation or aggravation of diseases (including, without limitation, contagious
coronavirus (COVID-19), Severe Acute Respiratory Syndrome (SARS), Middle East
Respiratory Syndrome (MERS), swine or avian influenza, H5N1, H1N1, H7N9, Ebola
virus and such related or mutated forms), pandemics or epidemics or interruption or
delay in transportation) in or affecting any of the United States, the United Kingdom,
the European Union, Hong Kong, the PRC, or any other jurisdictions relevant to our
Company or the Share Offer (collectively, the “Specific Jurisdictions”);
(ii) any change or development involving a prospective change, or any event or
circumstance or series of events or circumstances likely to result in any change
or development involving a prospective change, in any local, regional, national,
international, financial, economic, political, military, industrial, fiscal, legal
regulatory, currency, credit or market conditions (including, without limitation,
conditions in the stock and bond markets, money and foreign exchange markets, the
interbank markets and credit markets) in or affecting any Specific Jurisdictions; or
(iii)  any moratorium, suspension or restriction on trading in securities generally on
the Stock Exchange, the New York Stock Exchange, the London Stock Exchange,
the NASDAQ Global Market, the Shanghai Stock Exchange, the Shenzhen Stock
Exchange and the Beijing Stock Exchange; or
(iv) any new Laws, or any change or development involving a prospective change in
existing Laws, or any event or circumstance or series of events or circumstances
likely to result in any change or development involving a prospective change in
the interpretation or application of existing Laws by any court or other competent
authority, in each case, in or affecting any Specific Jurisdictions; or
(v) any general moratorium on commercial banking activities in Hong Kong (imposed
by the Financial Secretary or the Hong Kong Monetary Authority or other competent
Authority), New York (imposed at Federal or New York State level or other
competent Authority), London, the PRC, the European Union, or any of the Specific
Jurisdictions, or any disruption in commercial banking activities, foreign exchange
trading or securities settlement or clearance services or procedures or matters, in or
affecting any of the Specific Jurisdictions; or


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UNDERWRITING
(vi) the imposition of economic sanctions, in whatever form, directly or indirectly, by or
for any of the Specific Jurisdictions; or
(vii)  a change or development involving a prospective change in or affecting taxation or
exchange control (or the implementation of any exchange control), currency exchange
rates or foreign investment Laws (including, without limitation, a material devaluation
in the exchange rate of the Hong Kong dollar or the Renminbi against any foreign
currency) in or affecting any of the Specific 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) any material litigation or claim of any third party or investigations or actions being
announced, threatened or instigated against our Company, the Controlling Shareholder
or any of the Warrantors (as defined in the Public Offer Underwriting Agreement); or
(x) the chairman of our  Company or any executive 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
(xi) the chairman of our Company or any executive Director vacating his or her office; or
(xii) a Governmental authority or a political body or organisation in any Specific
Jurisdictions commencing any investigation or other action, or announcing an
intention to investigate or take other action, against any member of our Company, any
executive Director or non-executive Director;
(xiii)  the commencement by any governmental or regulatory body or organisation or self-
regulatory organisation of any action against any executive Director in his or her
capacity as such or an announcement by any governmental, regulatory body or
organisation that it intends to take any such action; or
(xiv)  save as disclosed in this prospectus, a contravention by our Company of the GEM
Listing Rules or any other Laws applicable to the Share Offer;
(xv) a prohibition on our Company for whatever reason from allotting, issuing or selling
the Offer Shares and/or the Offer Size Adjustment Shares pursuant to the terms of the
Share Offer; or
(xvi) non-compliance of this prospectus and the other Relevant Documents or any aspect of
the Share Offer with the GEM Listing Rules or any other l aws applicable to the Share
Offer; or


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UNDERWRITING
(xvii)  the issue or requirement to issue by our  Company of a supplement or amendment
to this prospectus and/or any other documents in connection with the Share Offer
pursuant to the Companies (Winding Up and Miscellaneous Provisions) Ordinance, the
GEM Listing Rules or any requirement or request of the Stock Exchange, the CSRC
and/or SFC; or
(xviii) that a petition or an order is presented for the winding-up or liquidation of our
Company or our Company makes any composition or arrangement with its creditors or
enters into a scheme of arrangement or any resolution is passed for the winding-up of
our Company or a provisional liquidator, receiver or manager is appointed to take over
all or part of the assets or undertaking of our Company or anything analogous thereto
occurs in respect of our Company; or
(xix)  a demand by any creditor for repayment or payment of any indebtedness of our
Company or in respect of which our Company is liable prior to its stated maturity; or
(xx) any loss or damage sustained by our  Company (howsoever caused and whether or
not the subject of any insurance or claim against any person), which in each case
individually or in aggregate in the sole and absolute opinion of the Joint Overall
Coordinators (for themselves and on behalf of the Public Offer Underwriters):
(a) has or is or will or may or could be expected to have a m aterial adverse effect;
or
(b) has or will or may have or could be expected to have a material adverse effect
on the success, marketability or pricing of the Share Offer or the level of
applications under the Public Offer or the level of interest under the Placing; or
(c) makes or will make or may make it inadvisable, inexpedient or impracticable
for any part of Public Offer Underwriting Agreement or the Share Offer to
proceed or to market the Share Offer; or
(d) has or will or may have the adverse effect of making any part of Public Offer
Underwriting Agreement (including underwriting) incapable of performance
in accordance with its terms or which prevents or delays the processing of
applications and/or payments pursuant to the Share Offer or pursuant to the
underwriting thereof.


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UNDERWRITING
UNDERTAKINGS GIVEN TO THE STOCK EXCHANGE PURSUANT TO THE GEM
LISTING RULES
Undertaking by our Company
Pursuant to Rule 17.29 of the GEM Listing Rules, we have undertaken to the Stock Exchange that,
save as pursuant to the Share Offer, no further H Shares or securities convertible into our equity securities
(whether or not of a class already listed) may be issued or sold or transferred out of treasury by us or form
the subject of any agreement to such an issue, or sale or transfer out of treasury by us within six months
from the Listing Date (whether or not such issue of H Shares or our securities , or sale or transfer of
treasury shares will be completed within six months from the commencement of dealing), except in certain
circumstances prescribed by Rule 17.29 of the GEM Listing Rules.
Undertaking by our Controlling Shareholder
Pursuant to Rule 13.16A(1) of the GEM Listing Rules, our Controlling Shareholder has undertaken
to the Stock Exchange and to our Company that except pursuant to the Share Offer  and for the
circumstances permitted pursuant to Rule 13.18 of the GEM Listing Rules, it will not and will procure that
the relevant registered holder(s) will not: (a) in the period commencing on the date of this prospectus and
ending on the date which is six months from the Listing Date, dispose of, nor enter into any agreement to
dispose of or otherwise create any options, rights, interests or encumbrances in respect of, any of the H
Shares or our securities in respect of which it is shown by this prospectus to be the beneficial owner; and
(b) in the period of six months commencing on the date on which the period referred to in the paragraph
(a) above expires, dispose of, nor enter into any agreement to dispose of or otherwise create any options,
rights, interests or encumbrances in respect of, any of the H Shares or our securities referred to in the
paragraph (a) above if, immediately following such disposal or upon the exercise or enforcement of such
options, rights, interests or encumbrances, it would cease to be a controlling shareholder of our Company.
Pursuant to Rule 13.19 of the GEM Listing Rules, our Controlling Shareholder has undertaken to the Stock
Exchange and to our Company that, it shall: (i) in the event that it pledges or charges any direct or indirect
interest in the H Shares or our securities 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, at any
time during the 12-month period from the Listing Date, inform us immediately thereafter, disclosing the
details specified in Rule 17.43(1) to (4) of the GEM Listing Rules; and (ii) having pledged or charged any
interest in the H Shares or our securities under (i) above, inform our Company immediately in the event
that it becomes aware that the pledgee or chargee has disposed of or intends to dispose of such interest and
of the number of H Shares or our securities affected.


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UNDERWRITING
UNDERTAKINGS PURSUANT TO THE PUBLIC OFFER UNDERWRITING
AGREEMENT
Undertaking by our Company
Pursuant to the Public Offer Underwriting Agreement, our Company has undertaken to each of
the Joint Sponsors, the Joint Overall Coordinators, the Joint Bookrunners, the Joint Lead Managers, the
Public Offer Underwriters and the Capital Market Intermediaries that except pursuant to the Share Offer
(including pursuant to the Offer Size Adjustment Option), during the period commencing on the date of
the Public Offer Underwriting Agreement and ending on, and including, the date that is six months after
the Listing Date (the “First Six-Month Period”), our Company will not without the prior written consent
of the Joint Sponsors and the Joint Overall Coordinators (for themselves and on behalf of the Public Offer
Underwriters) and unless in compliance with the requirements of the GEM Listing Rules:
(a) allot, issue, sell, accept subscription for, offer to allot, issue or sell, contract or agree to allot,
issue or sell, mortgage, charge, pledge, hypothecate, lend, grant or sell any option, warrant,
contract or right to subscribe for or purchase, grant or purchase any option, warrant, contract
or right to allot, issue or sell, or otherwise transfer or dispose of or create an Encumbrance
over, or agree to transfer or dispose of or create an Encumbrance over, either directly or
indirectly, conditionally or unconditionally, any Shares or other securities of our Company,
as applicable, or any interest in any of the foregoing (including, without limitation, any
securities convertible into or exchangeable or exercisable for or that represent the right to
receive, or any other warrants or other rights to purchase, any Shares), or deposit any Shares
or any other securities of our Company, as applicable, with a depositary in connection with
the issue of depositary receipts, or repurchase any Shares or other securities of our Company,
as applicable; or
(b) enter into any swap or other arrangement that transfers to another, in whole or in part, any of
the economic consequences of ownership of any Shares or other securities of our Company,
or any interest in any of the foregoing (including, without limitation, any securities
convertible into or exchangeable or exercisable for or that represent the right to receive, or
any warrants or other rights to purchase, any Shares or other securities of our Company); or
(c) enter into any transaction with the same economic effect as any transactions specified in (a)
or (b) above; or
(d) offer to or agree to or announce, or publicly disclose, any intention to effect any transaction
specified in (a), (b) or (c) above,
in each case, whether any of the transactions specified in (a), (b) or (c) above is to be settled by
delivery of the Shares or other securities of our Company, or in cash or otherwise (whether or not the issue
of such Shares or other shares or securities will be completed within the First Six-Month Period). In the
event that, during the period of six months immediately following the expiry of the First Six-Month Period


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UNDERWRITING
(the “Second Six-Month Period”), our Company enters into any of the transactions specified in (a), (b)
or (c) above or offers to or agrees to or announces, or publicly discloses, any intention to effect any such
transaction, our Company shall take all reasonable steps to ensure that it will not create a disorderly or
false market in any Shares or other securities of our Company.
Undertaking by our Controlling Shareholder
Our Controlling Shareholder has also undertaken to each of our Company, the Warranting Parties (as
defined in the Public Offer Underwriting Agreement), the Joint Sponsors, the Joint Overall Coordinators,
the Joint Bookrunners, the Joint Lead Managers,  the Public Offer Underwriters and the Capital Market
Intermediaries that, without the prior written consent of the Joint Sponsors and the Joint Overall
Coordinators (for themselves and on behalf of the Public Offer Underwriters) or unless in compliance with
the requirements of the GEM Listing Rules:
(a) at any time during the First Six-Month Period, it shall not, and shall procure that the relevant
registered holder(s), any nominee or trustee holding on trust for it and the companies
controlled by it (together, the “ Controlled Entities” ) shall not (i) sell, offer to sell, contract
or agree to sell, mortgage, charge, pledge, hypothecate, lend, grant or sell any option,
warrant, contract or right to purchase, grant or purchase any option, warrant, contract or
right to sell, or otherwise transfer or dispose of or create an encumbrance over, or agree to
transfer or dispose of or create an encumbrance over, either directly or indirectly (including
by way of altering the composition or classes of beneficiaries of any trust), conditionally
or unconditionally, any Shares or other securities of our Company or any interest therein
(including, without limitation, any securities convertible into or exchangeable or exercisable
for or that represent the right to receive, or any warrants or other rights to purchase, any
Shares or any such other securities of our Company or any interest in any of the foregoing),
beneficially owned by it directly or indirectly through its Controlled Entities (the “ Relevant
Securities” ), or (ii) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Relevant Securities,
or (iii) enter into or effect any transaction with the same economic effect as any of the
transactions referred to (i) or (ii) above, or (iv) offer to or agree to or announce any intention
to enter into or effect any of the transactions referred to in (i), (ii) or (iii) above, which any
of the foregoing transactions referred to in (i), (ii) or (iii) above is to be settled by delivery
of Shares or such other securities of our Company or in cash or otherwise (whether or not the
issue of such Shares or other securities will be completed within the First Six-Month Period);
(b) at any time during the Second Six-Month Period, it  shall not, and shall procure that the
Controlled Entities shall not, enter into any of the transactions referred to in (a)(i), (ii) or (iii)
above or offer to or agree to or announce any intention to enter into any such transaction if,
immediately following any sale, transfer or disposal or upon the exercise or enforcement of
any option, right, interest or encumbrance pursuant to such transaction, it would cease to be
a “controlling shareholder”  (as defined in the GEM Listing Rules) of our Company or would
together with the other Controlling Shareholders cease to be “controlling shareholders”  (as
defined in the GEM Listing Rules) of our Company;


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UNDERWRITING
(c) in the event that it enters into any of the transactions specified in (a)(i), (ii) or (iii) above
or offers to or agrees to or announce or publicly disclose any intention to effect any such
transaction within the Second Six-Month Period, it shall take all steps to ensure that it will
not create a disorderly or false market for any Shares or other securities of our Company; and
(d) it shall, and shall procure that the relevant registered holder(s) and other Controlled Entities
shall, comply with all the restrictions and requirements under the GEM Listing Rules on the
sale, transfer or disposal by it or by the registered holder(s) and/or other Controlled Entities
of any Shares or other securities of our Company.
Our Controlling Shareholder has also further undertaken to each of our Company, the Warranting
Parties (as defined in the Public Offer Underwriting Agreement) the Joint Sponsors, the Joint Overall
Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Public Offer Underwriters and the
Capital Market Intermediaries that within the period from the date by reference to which disclosure of its
shareholding in the Company is made in this prospectus and ending on the date which is twelve months
from the Listing Date, it will:
(a) when it pledges or charges any securities or interests in the Relevant Securities in favour of
an authorised institution pursuant to Rule 13.18(1) of the GEM Listing Rules, immediately
inform our Company and the Joint Sponsors in writing of such pledges or charges together
with the number of securities and nature of interest so pledged or charged; and
(b) when it receives indications, either verbal or written, from any pledgee or chargee that any
of the pledged or charged securities or interests in the securities of our  Company will be
sold, transferred or disposed of, immediately inform our Company and the Joint Sponsors in
writing of such indications.
PLACING
Placing Underwriting Agreement
In connection with the Placing, it is expected that our Company and Controlling Shareholder  will
enter into the Placing Underwriting Agreement with, among others, the Placing Underwriters, on terms
and conditions that are substantially similar to the Public Offer Underwriting Agreement as described
above and on the additional terms described below.
Under the Placing Underwriting Agreement, subject to the conditions set forth therein, the Placing
Underwriters are expected to procure subscribers and purchasers to subscribe for or purchase, or failing
which they shall subscribe for or purchase, the 9,161,000 Placing Shares initially being offered pursuant to
the Placing. It is expected that the Placing Underwriting Agreement may be terminated on similar grounds
as the Public Offer Underwriting Agreement. Potential investors shall be reminded that in the event that


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– 384 –
UNDERWRITING
the Placing Underwriting Agreement is not entered into, the Share Offer will not proceed. The Placing
Underwriting Agreement is conditional on and subject to the Public Offer Underwriting Agreement having
been executed, becoming unconditional and not having been terminated. It is expected that pursuant
to the Placing Underwriting Agreement, our Company and Controlling Shareholder  will make similar
undertakings as those given pursuant to the Public Offer Underwriting Agreement as described in the
paragraphs headed “Undertakings pursuant to the Public Offer Underwriting Agreement” in this section.
Our Company is expected to grant to the Joint Overall Coordinators  the Offer Size Adjustment
Option exercisable by the Joint Overall Coordinators  (for themselves and on behalf of the Placing
Underwriters) at any time before 6:00 p.m. on the business day before the date of announcement of the
results of application and the basis of the Public Offer Shares or otherwise it will lapse, to require our
Company to allot and issue up to an aggregate of 1,526,0 00 additional Placing Shares, representing
approximately 15.0% of the Offer Shares, at the Offer Price per Offer Share under the Share Offer, solely
to cover over allocations, if any, in the Placing.
COMMISSION AND EXPENSES
The Underwriters will receive an underwriting commission equal to 4.0% of the aggregate Offer
Price payable for the Offer Shares, including Offer Shares to be issued pursuant to the Offer Size
Adjustment Option (the “Fixed Fees”). Our Company may, at our sole and absolute discretion, pay to
any or all the Underwriters an incentive fee up to but not exceeding 2.0% of the Offer Price of all the
Offer Shares (including Offer Shares to be issued pursuant to the Offer Size Adjustment Option) (the
“Discretionary Fees”). The ratio of Fixed Fees and Discretionary Fees payable to all Underwriters is
therefore approximately 66.7:33.3. For unsubscribed Public Offer Shares reallocated to the Placing, we
will pay an underwriting commission at the rate applicable to the Placing and such commission will be
paid to the relevant Placing Underwriters (and not the Public Offer Underwriters).
No additional fee will be payable by our Company to the Underwriters. The Joint Sponsors will,
in addition, receive fees acting as the Joint Sponsors to the Listing and will be reimbursed for their
expenses. Based on the Offer Price of HK$9.5 per Offer Share (being the mid-point of the indicative range
of the Offer Price), the aggregate commission and fees payable to the Underwriters, together with Stock
Exchange listing fees, SFC transaction levy, AFRC transaction levy, Stock Exchange trading fee, legal
and other professional fees and printing and other expenses relating to the Share Offer are estimated to
amount to approximately HK$ 42.3 million in total, assuming that the Offer Size Adjustment Option is
not exercised at all. We will also pay for all expenses in connection with any exercise of the Offer Size
Adjustment Option.


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UNDERWRITING
SPONSOR’S AND PUBLIC OFFER UNDERWRITERS’ INTEREST IN OUR COMPANY
The Joint Sponsors will receive a documentation fee. The Underwriters will receive an underwriting
commission. Particulars of these underwriting commission and expenses are set forth under “ –
Commission and expenses” in this section.
We have appointed Yue Xiu Capital Limited as our compliance adviser pursuant to Rule 6A.19 of
the GEM Listing Rules for the period commencing on the Listing Date and ending on the date on which
we comply with Rule 18.03 of the GEM Listing Rules in respect of our financial results for the first full
financial year commencing after the Listing Date.
Save as disclosed above, none of the Joint Sponsors, the J oint Overall Coordinators and the Public
Offer Underwriters is interested legally or beneficially in shares of our Company or has any right or option
(whether legally enforceable or not) to subscribe for or purchase or to nominate persons to subscribe for or
purchase securities in our Company or has any interest in the Share Offer.
The Joint Sponsors satisfies the independence criteria applicable to sponsor set out in Rule 6A.07 of
the GEM Listing Rules.
MINIMUM PUBLIC FLOAT
Our Directors will ensure that there will be a minimum 25% of the total issued H Shares held in
public hands in accordance with Rule 11.23 of the GEM Listing Rules after completion of the Share Offer.


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STRUCTURE AND CONDITIONS OF THE SHARE OFFER
DETERMINING THE OFFER PRICE
The Offer Price is expected to be fixed by the Price Determination Agreement to be entered into
between the Joint Overall Coordinators  (for themselves and on behalf of the Underwriters) and our
Company on or around the Price Determination Date, when the market demand for the Offer Shares will
be ascertained. The Price Determination Date is currently expected to be on or before Wednesday , 4
September 2024, but in any event no later than 12:00 noon on Wednesday, 4 September 2024. If, for any
reason, the Offer Price is not agreed between us and the Joint Overall Coordinators (for themselves
and on behalf of the Underwriters) by that date or such later date as may be agreed between us and
the Joint Overall Coordinators (for themselves and on behalf of the Underwriters), the Share Offer
will not proceed and will lapse.
The Offer Price will not be more than HK$10.4 per Offer Share and is expected to be not less than
HK$8.6 per Offer Share. The Offer Price will fall within the Offer Price range as stated in this prospectus
unless otherwise announced on or before the Price Determination Date. Prospective investors should be
aware that the Offer Price to be determined on or around the Price Determination Date may be, but
not expected to be, lower than the indicative Offer Price range as stated in this prospectus.
Announcement of final Offer Price
The announcement of the final Offer Price, together with the indication of level of interests in the
Placing and  the level of applications in the Public Offer and the basis of allocation of the Public Offer
Shares is expected to be published on or before Thursday, 5 September 2024.
PRICE PAYABLE ON APPLICATION
The Offer Price will not be more than HK$ 10.4 per Offer Share and is expected to be not less
than HK$ 8.6 per Offer Share. Applicants under the Public Offer should pay, on application  (subject to
application channel), the maximum Offer Price of HK$ 10.4 per Offer Share plus 1.0% brokerage fee,
0.00565% Stock Exchange trading fee, 0.00015% AFRC transaction levy and 0.0027% SFC transaction
levy, amounting to a total of HK$5,252.44 per board lot of 500 Offer Shares.
If the Offer Price, as finally determined in the manner described above, is lower than the maximum
Offer Price of HK$10.4 per Offer Share, appropriate refund payments (including the related brokerage fee,
the Stock Exchange trading fee,  the SFC transaction levy and AFRC transaction levy attributable to the
excess application monies) will be made to applicants, without interest.
Further details are set out in “How to apply for Public Offer Shares” in this prospectus.


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STRUCTURE AND CONDITIONS OF THE SHARE OFFER
REDUCTION OF THE NUMBER OF OFFER SHARES AND/OR THE INDICATIVE
OFFER PRICE RANGE
The Joint Overall Coordinators (for themselves and on behalf of the Underwriters) may, where they
consider  appropriate, based on the level of interest expressed by prospective professional, institutional
and private investors during a book-building process, reduce the number of the Offer Shares and/or the
indicative Offer Price range below that stated in this prospectus at any time on or prior to the morning of
the last day for lodging applications under the Public Offer,  which is expected to be on or around Tuesday,
3 September  2024. In such a case, our Company will, as soon as practicable following the decision to
make such reduction, cause to be published on the website of the Stock Exchange at www.hkexnews.hk
and our Company’s website at www.xyjiance.cn  an announcement, cancel the offer and relaunch the offer
at the revised number of the Offer Shares and/or the revised Offer Price range and the requirements under
Rule 14.24 of the GEM Listing Rules (which include the issue of a supplemental prospectus or a new
prospectus (as appropriate)).
Upon issue of such an announcement and supplemental prospectus, the revised indicative Offer
Price range and/or number of Offer Shares will be final and conclusive and the Offer Price, if agreed upon
by the Joint Overall Coordinators  (for themselves and on behalf of the Underwriters) and our Company
will be fixed within such revised range. Such an announcement and supplemental prospectus will also
include confirmation or revision, as appropriate, of the working capital statement and the Share Offer
statistics as currently set out in this prospectus, and any other financial information which may change
materially as a result of such reduction.
In the absence of any such announcement so published, the number of Offer Shares will not be
reduced and/or the Offer Price, if agreed upon by the Joint Overall Coordinators (for themselves and on
behalf of the Underwriters) and our Company, will under no circumstances be set outside the offer price
range as stated in this prospectus.
Before submitting applications for Public Offer Shares, applicants should have regard to the
possibility that any announcement of a reduction in the indicative Offer Price range and/or number
of Offer Shares may not be made until Price Determination Date.


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STRUCTURE AND CONDITIONS OF THE SHARE OFFER
CONDITIONS OF THE SHARE OFFER
Acceptance of all applications for the Offer Shares is conditional upon, among others, the
satisfaction of all of the following conditions:
1. Listing
The GEM Listing Committee granting the approval of the listing of, and permission to deal
in, the H Shares in issue and the H Shares to be issued pursuant to the Share Offer and H Shares
which fall to be allotted and issued upon the exercise of the Offer Size Adjustment Option (and
such listing and permission not subsequently being revoked prior to the commencement of dealings
in the Shares on the Stock Exchange).
2. Underwriting Agreements
The obligations of the Underwriters under the Underwriting Agreements becoming and
remaining unconditional (including, if relevant, as a result of a waiver of any condition(s)) and such
obligations not being terminated in accordance with the terms of the Underwriting Agreements.
3. Price determination
The Offer Price having been determined and the execution of the Price Determination
Agreement on or around the Price Determination Date or such later date as may be agreed by our
Company and the Joint Overall Coordinators (for themselves and on behalf of the Underwriters).
If any of the conditions is not fulfilled or waived on or before the times specified above, the Share
Offer will lapse and the application money will be returned to the applicants, without interest. The terms
on which the application money will be returned to the applicants are set out in “How to apply for Public
Offer Shares – D. Despatch/collection of H Share Certificates and Refund of Application Monies” in this
prospectus.
THE SHARE OFFER
The Share Offer comprises the Placing  and the Public Offer. A total of initially 10,179,000 Offer
Shares (subject to the Offer Size Adjustment Option) will be made available under the Share Offer,
of which 9,161,000 Placing Shares (subject to reallocation and the Offer Size Adjustment Option),
representing approximately 90% of the total number of Offer Shares, will initially be conditionally placed
with selected professional, institutional and private investors under the Placing. The remaining 1,018,000
Public Offer Shares (subject to reallocation), representing approximately 10% of the total number of
Offer Shares, will initially be offered to members of the public in Hong Kong under the Public Offer. The


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STRUCTURE AND CONDITIONS OF THE SHARE OFFER
Public Offer is open to all members of the public in Hong Kong as well as to institutional and professional
investors. The Public Offer Underwriters have agreed to underwrite the Public Offer Shares under the
terms of the Public Offer Underwriting Agreement. The Placing Underwriters will underwrite the Placing
Shares pursuant to the terms of the Placing Underwriting Agreement. Further details of the underwriting
are set out in “Underwriting” in this prospectus. Investors may apply for Offer Shares under the Public
Offer or indicate an interest for Offer Shares under the Placing, but may not do both.
The Placing
Our Company is expected to offer initially 9,161,000 Placing Shares (subject to reallocation and
the Offer Size Adjustment Option) at the Offer Price under the Placing. The number of Placing Shares
expected to be initially available for application under the Placing represents approximately 90% of the
total number of Offer Shares being initially offered under the Share Offer. The Placing is expected to be
fully underwritten by the Placing Underwriters subject to the Offer Price being agreed on or before the
Price Determination Date.
It is expected that the Placing Underwriters or selling agents nominated by them, on behalf of
our Company, will conditionally place the Placing Shares at the Offer Price with selected professional,
institutional , private investors  and/or other investors . Professional and institutional 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.
Private investors applying through banks or other institutions who sought the Placing Shares in the Placing
may also be allocated the Placing Shares.
Allocation of the Placing Shares will be based on a number of factors, including the level and
timing of demand and whether or not it is expected that the relevant investor is likely to acquire further
H Shares and/or hold or sell its H Shares after the Listing. Such allocation is intended to result in a
distribution of the Placing Shares on a basis which would lead to the establishment of a solid shareholder
base to the benefit of our Company and the Shareholders as a whole. Investors to whom Placing Shares are
offered will be required to undertake not to apply for Offer Shares under the Public Offer.
Our Company, our Directors, the Joint Sponsors and the Joint Overall Coordinators (for themselves
and on behalf of the Underwriters) are required to take reasonable steps to identify and reject applications
under the Public Offer from investors who receive H Shares under the Placing, and to identify and reject
indications of interest in the Placing from investors who receive H Shares under the Public Offer. The
Placing is expected to be subject to the conditions as stated in the paragraphs headed “Conditions of the
Share Offer” in this section.


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STRUCTURE AND CONDITIONS OF THE SHARE OFFER
The Public Offer
Our Company is initially offering 1,018,000  Public Offer Shares for subscription (subject to
reallocation) by members of the public in Hong Kong under the Public Offer, representing approximately
10% of the total number of Offer Shares offered under the Share Offer. The Public Offer is fully
underwritten by the Public Offer Underwriters subject to the Offer Price being agreed on or before the
Price Determination Date. Applicants for the Public Offer Shares are required on application to pay the
maximum Offer Price of HK$ 10.4 per Offer  Share plus 1.0% brokerage fee, 0.00565% Stock Exchange
trading fee, 0.00015% AFRC transaction levy and 0.0027% SFC transaction levy.
The Public Offer is open to all members of the public in Hong Kong as well as to institutional
and professional investor. An applicant for H Shares under the Public Offer will be required to give an
undertaking and confirmation in the application submitted by him/her/it that he/she/it has not applied for
nor taken up any Offer Shares under the Placing nor otherwise participated in the Placing. Applicants
should note that if such undertaking and/or confirmation given by an applicant is breached and/or is untrue
(as the case may be), such applicant’s application under the Public Offer is liable to be rejected.
The total number of Offer Shares available under the Public Offer (after taking into account of any
reallocation) is to be divided into two pools for allocation purposes: Pool A and Pool B (with any odd lots
being allocated to P ool A). Accordingly, the maximum number of Public Offer Shares initially in Pool A
and Pool B will be 509,000 and 509,000, respectively. The Offer Shares in Pool A will be allocated on an
equitable basis to applicants who have applied for Offer Shares with an aggregate price of HK$5.0 million
(excluding the brokerage, SFC transaction levy, Stock Exchange trading fee and AFRC transaction levy
payable) or less. The Offer Shares in Pool B will be allocated on an equitable basis to applicants who have
applied for Offer Shares with an aggregate price of more than HK$5.0 million and up to a total value of
Pool B (excluding the brokerage, SFC transaction levy, Stock Exchange trading fee and AFRC transaction
levy payable).
Investors should be aware that applications in Pool A and applications in Pool B may receive
different allocation ratios. If Offer Shares in one (but not both) of the pools are under-subscribed, the
surplus Offer Shares will be transferred to the other pool to satisfy demand in that other pool and be
allocated accordingly. For the purpose of this paragraph only, the “price” for Offer Shares means the price
payable on application therefor (without regard to the Offer Price as finally determined). Applicants can
only receive an allocation of Offer Shares from either Pool A or Pool B but not from both pools.
Multiple applications or suspected multiple applications and any application made for more than
50% of the H Shares initially comprised in the Public Offer (i.e. 509,000 Public Offer Shares) are liable to
be rejected.
Allocation of the Public Offer Shares to investors under the Public Offer will be based solely on
the level of valid applications received under the Public Offer. When there is over-subscription under the
Public Offer, allocation of the Public Offer Shares may involve balloting, which would mean that some
applicants may be allotted more Public Offer Shares 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.


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STRUCTURE AND CONDITIONS OF THE SHARE OFFER
REALLOCATION OF THE OFFER SHARES BETWEEN PLACING AND PUBLIC
OFFER
The allocation of the Offer Shares between the Placing and the Public Offer is subject to
reallocation on the following basis:
(a) In the event that the Placing Shares are fully subscribed or oversubscribed under the Placing:
(i) if the Public Offer Shares are undersubscribed, the Joint Overall Coordinators  (for
themselves and on behalf of the Underwriters), at their sole and absolute discretion,
may reallocate all or any of the unsubscribed Public Offer Shares from the Public
Offer to the Placing;
(ii) if the Public Offer Shares are fully subscribed or oversubscribed and the number of
H Shares validly applied for under the Public Offer represents less than 15 times the
number of H Shares initially available for subscription under the Public Offer, then
up to 1,018,000 H Shares may be reallocated to the Public Offer from the Placing at
the discretion of the Joint Overall Coordinators, so that the total number of H Shares
available for subscription under the Public Offer will be increased to 2,036,000 H
Shares, representing twice  of Offer Shares initially available for subscription under
the Public  Offer (before any exercise of the Offer Size Adjustment Option), and the
final Offer Price shall be fixed at the low end of the indicated Offer Price range stated
in the prospectus according to Chapter 4.14 of the Guide;
(iii)  if the number of H Shares validly applied for under the Public Offer represents 15
times or more but less than 50 times the number of H Shares initially available for
subscription under the Public Offer, then H Shares will be reallocated to the Public
Offer from the Placing, so that the total number of H Shares available for subscription
under the Public Offer will be increased to 3,054,000 H Shares, representing
approximately 30% of the number of the Offer Shares initially available for
subscription under the Share Offer (before any exercise of the Offer Size Adjustment
Option);
(iv) if the number of H Shares validly applied for under the Public Offer represents 50
times or more but less than 100 times the number of H Shares initially available for
subscription under the Public Offer, then H Shares will be reallocated to the Public
Offer from the Placing, so that the total number of H Shares available for subscription
under the Public Offer will be increased to 4,072,000 H Shares, representing
approximately 40% of the number of the Offer Shares initially available for
subscription under the Share Offer (before any exercise of the Offer Size Adjustment
Option); and


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STRUCTURE AND CONDITIONS OF THE SHARE OFFER
(v) if the number of H Shares validly applied for under the Public Offer represents 100
times or more the number of H Shares initially available for subscription under the
Public Offer, then H Shares will be reallocated to the Public Offer from the Placing, so
that the total number of H Shares available for subscription under the Public Offer will
be increased to 5,089,500 H Shares, representing approximately 50% of the number of
the Offer Shares initially available for subscription under the Share Offer (before any
exercise of the Offer Size Adjustment Option).
(b) In the event that the Placing Shares are undersubscribed under the Placing:
(i) if the Public Offer Shares are undersubscribed, the Share Offer shall not proceed unless
fully underwritten by the Underwriters pursuant to the Underwriting Agreements; and
(ii) if the Public Offer Shares are fully subscribed or oversubscribed irrespective of the
number of times, then up to 1,018,000 H Shares may be reallocated to the Public Offer
from the Placing, so that the total number of H Shares available for subscription under
the Public Offer will be increased to 2,036,000 H Shares, representing twice of the
number of Public Offer Shares initially available under the Public Offer  (before any
exercise of the Offer Size Adjustment Option), and the final Offer Price shall be fixed
at the low end of the indicated Offer Price range stated in the p rospectus according to
Chapter 4.14 of the Guide.
In all cases save for (a)(i) and (b)(i) above, the number of Offer Shares allocated to the Placing will
be correspondingly reduced.
The Offer Shares to be offered in the Public Offer and the Placing may, in certain circumstances, be
reallocated as between these offerings at the discretion of the Joint Overall Coordinators (for themselves
and on behalf of the Underwriters). In accordance with the requirements set out in paragraph 4 of Practice
Note 6 of the GEM Listing Rules, if such reallocation is done other than pursuant to paragraph (a)(iii), (a)
(iv) or (a)(v) above, the Joint Overall Coordinators  (for themselves and on behalf of the Underwriters)
may, at their sole and absolute discretion, reallocate the Offer Shares initially allocated for the Placing
to the Public Offer to satisfy valid applications under the Public Offer, provided that the maximum total
number of Offer Shares that may be allocated to the Public Offer following such reallocation shall be not
more than double  of  the initial allocation to the Public Offer i.e. 2,036,000 Offer Shares, representing
twice of the number of the Offer Shares initially available for subscription under the Public Offer; and the
final Offer Price shall be fixed at the low end of the indicated Offer Price range stated in this prospectus (i.e.
HK$8.6 per Offer Share) according to Chapter 4.14 of the Guide.
Details of any reallocation of the Offer Shares between the Public Offer and the Placing will be
disclosed in the allotment results announcement of the Share Offer, which is expected to be published on
Thursday, 5 September 2024.


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STRUCTURE AND CONDITIONS OF THE SHARE OFFER
OFFER SIZE ADJUSTMENT OPTION
Our Company has granted the Offer Size Adjustment Option to the Placing Underwriters,
exercisable by the Joint Overall Coordinators (for themselves and on behalf of the Placing Underwriters)
at any time before 6:00 p.m. on the business day immediately before the date of the announcement of the
results of allocations and the basis of allocation of the Public Offer Shares, to require our Company to
allot and issue up to an aggregate of 1,526,0 00 additional Placing Shares, representing not more than 15%
of the number of the Offer Shares initially being offered under the Share Offer, on the same terms as those
applicable to the Share Offer. The Offer Size Adjustment Option will not be used for price stabilisation
purposes in the secondary market after listing of the H Shares on the Stock Exchange and is not subject
to the Securities and Futures (Price Stabilizing) Rules of the SFO (Chapter 571W of the Laws of Hong
Kong). Any such additional H Shares may be issued to cover any over-allocation in the Placing and in the
event that the Offer Size Adjustment Option is exercised, the Joint Overall Coordinators (for themselves
and on behalf of the Placing Underwriters) may decide to whom and proportions in which the additional H
Shares will be allotted. If the Offer Size Adjustment Option is exercised in full, the additional 1,526,0 00
H Shares and the total Offer Shares (inclusive of the shares of the Offer Size Adjustment Option) will
represent approximately 4 % and 33% , respectively, of our Company’s enlarged share capital immediately
after completion of the Share Offer and the exercise of the Offer Size Adjustment Option. The additional
net proceeds received from the exercise of the Offer Size Adjustment Option will be allocated pro rata in
accordance to the allocations as disclosed in “Future Plans and U se of P roceeds” in this prospectus.
Our Company will disclose in the announcement of the results of allocations and the basis of
allocation of the Public Offer Shares whether, and to what extent, the Offer Size Adjustment Option has
been exercised. In the event that the Offer Size Adjustment Option has not been exercised by the Joint
Overall Coordinators  (for themselves and on behalf of the Placing Underwriters) , our Company will
confirm in such announcement that the Offer Size Adjustment Option has lapsed and cannot be exercised
at any future date.


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HOW TO APPLY FOR PUBLIC OFFER SHARES
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.xyjiance.cn .
The contents of this prospectus are identical to the prospectus as registered with the Registrar of
Companies in Hong Kong pursuant to Section 342C of the Companies (Winding Up and Miscellaneous
Provisions) Ordinance.
A. APPLICATION FOR 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 White Form eIPO 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,  a Supervisor or any of his/her close associates.
2. Application Channels
The Public Offer period will begin at 9:00 a.m. on Monday, 26 August 2024 and end at
12:00 noon on Tuesday, 3 September 2024 (Hong Kong time).


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HOW TO APPLY FOR PUBLIC OFFER SHARES
To apply for Public Offer Shares, you may use one of the following application channels:
Application Channel Platform Target Investors Application Time
White Form eIPO
service
White Form eIPO service at
www.eipo.com.hk
Applicants who would like to
receive a physical H Share
certificate. Public Offer
Shares successfully applied
for will be allotted and issued
in your own name
From 9:00 a.m. on Monday,
26 August 2024 to 11:30 a.m.
on Tuesday, 3 September
2024, Hong Kong time
The latest time for completing
full payment of application
monies will be 12:00 noon on
Tuesday, 3 September 2024,
Hong Kong time
HKSCC EIPO
channel
Your broker or custodian who
is a HKSCC Participant will
submit electronic application
instructions on your behalf
through HKSCC’s FINI
system in accordance with
your instruction
Applicants who would not  like
to receive a physical H 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 White Form eIPO  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 White Form eIPO  service, once you complete payment in
respect of any application instructions given by you or for your benefit through the White Form
eIPO 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 authoris ed to give
those instructions as an agent.


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HOW TO APPLY FOR PUBLIC OFFER SHARES
For the avoidance of doubt, giving an application instruction under the White Form eIPO
service more than once and obtaining different application reference numbers without effecting full
payment in respect of a particular reference number will not constitute an actual application.
If you apply through the White Form eIPO service, you are deemed to have authoris ed the
White Form eIPO  Service Provider to apply on the terms and conditions in this prospectus, as
supplemented and amended by the terms and conditions of the White Form eIPO 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 authoris ed 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.


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HOW TO APPLY FOR PUBLIC OFFER SHARES
3. Information Required to Apply
You must provide the following information with your application:
For Individual/Joint 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.  Hong Kong Identity Cards
(“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.  Legal Entity Identifier (“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 White Form eIPO  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 Public Offer Shares. Similarly
for corporate applicants, a LEI number must be used if an entity has a LEI certificate.


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HOW TO APPLY FOR PUBLIC OFFER SHARES
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) , 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 applicants on FINI is capped at 4 in accordance with market practice.
5. If you are applying as a nominee, you must provide: (i) the full name (as shown on the identity document),
the identity document’s issuing country or jurisdiction, the identity document type; and (ii), the identity
document number, for each of the beneficial owners or, in the case(s) of joint beneficial owners, for each
joint beneficial owner. If you do not include this information, the application will be treated as being made
for your benefit.
6. If you are applying as an unlisted company and (i) the principal business of that company is dealing in
securities; and (ii) you exercise statutory control over that company, then the application will be treated as
being for your benefit and you should provide the required information in your application as stated above.
“Unlisted company” means a company with no equity securities listed on the Stock Exchange or any other
stock exchange.
“Statutory control” means you:
• control the composition of the board of directors of the company;
• control more than half of the voting power of the company; or
• hold more than half of the issued share capital of the company (not counting any part of it which
carries no right to participate beyond a specified amount in a distribution of either profits or
capital).
For those applying through HKSCC EIPO  channel, and making an application under a
power of attorney, we and the Joint Overall Coordinators , 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.


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HOW TO APPLY FOR PUBLIC OFFER SHARES
4. Permitted Number of Public Offer Shares for Application
Board lot size : 500 H Shares
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$10.4 per Offer Share.
If you are applying through the HKSCC EIPO channel,
you are required to pre-fund your application based on
the amount specified by your broker or custodian, as
determined based on the applicable laws and regulations
in Hong Kong.
By instructing your broker or custodian to apply for the
Public Offer Shares on your behalf through the HKSCC
EIPO  channel, you (and, if you are joint applicants,
each of you jointly and severally) are deemed to have
instructed and authoris ed 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 White Form eIPO
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.


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– 400 –
HOW TO APPLY FOR PUBLIC OFFER SHARES
No. of
Public
Offer Shares
applied for
Amount
payable (2)
on
application
No. of
Public
Offer Shares
applied for
Amount
payable (2)
on
application
No. of
Public
Offer Shares
applied for
Amount
payable (2)
on
application
No. of
Public
Offer Shares
applied for
Amount
payable (2)
on
application
HK$ HK$ HK$ HK$
500 5,252.44 5,000 52,524.42 30,000 315,146.52 100,000 1,050,488.40
1,000 10,504.89 6,000 63,029.30 35,000 367,670.95 150,000 1,575,732.60
1,500 15,757.32 7,000 73,534.19 40,000 420,195.35 200,000 2,100,976.80
2,000 21,009.77 8,000 84,039.07 45,000 472,719.78 250,000 2,626,221.00
2,500 26,262.21 9,000 94,543.96 50,000 525,244.20 300,000 3,151,465.20
3,000 31,514.65 10,000 105,048.85 60,000 630,293.05 350,000 3,676,709.40
3,500 36,767.09 15,000 157,573.25 70,000 735,341.88 400,000 4,201,953.60
4,000 42,019.53 20,000 210,097.68 80,000 840,390.72 450,000 4,727,197.80
4,500 47,271.97 25,000 262,622.10 90,000 945,439.55 509,000 (1) 5,346,985.96
(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) and the SFC transaction levy, the Stock Exchange trading fee and AFRC transaction levy
are paid to the Stock Exchange (in the case of the SFC transaction levy, collected by the Stock Exchange on behalf
of the SFC; and in the case of the AFRC transaction levy, collected by the Stock Exchange on behalf of the AFRC).
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 “– 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.


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HOW TO APPLY FOR PUBLIC OFFER SHARES
Multiple applications made either through (i) the White Form eIPO  service, (ii) HKSCC
EIPO channel, or (iii) both channels concurrently are prohibited and will be rejected. If you have
made an application through the White Form eIPO service or HKSCC EIPO channel, you or the
person(s) for whose benefit you have made the application shall not apply for any Placing Shares.
6. Terms and Conditions of a n Application
By applying for Public Offer Shares through the White Form eIPO  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 authoris e us and/or the
Joint Overall Coordinators , as our agents, to execute any documents for you and to
do on your behalf all things necessary to register any Public Offer Shares allocated to
you in your name or in the name of HKSCC Nominees as required by the Articles of
Association, and (if you are applying through the HKSCC EIPO channel) to deposit
the allotted Public Offer Shares directly into CCASS for the credit of your designated
HKSCC Participant’s stock account on your behalf;
(ii) confirm that you have read and understand the terms and conditions and application
procedures set out in this prospectus  and the designated website of the White Form
eIPO service (or as the case may be, the agreement you entered into with your broker
or custodian), and agree to be bound by them;
(iii)  (if you are applying through the HKSCC EIPO  channel) agree to the arrangements,
undertakings and warranties under the participant agreement between your broker or
custodian and HKSCC and observe the General Rules of HKSCC and the HKSCC
Operational Procedures for giving application instructions to apply for Public Offer
Shares;
(iv) confirm that you are aware of the restrictions on offers and sales of shares set out in
this prospectus and they do not apply to you, or the person(s) for whose benefit you
have made the application;


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HOW TO APPLY FOR PUBLIC OFFER SHARES
(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 our Company, the Joint Sponsors, the Joint Overall Coordinators , the Joint
Bookrunners, the Joint Lead Managers, the Underwriters and any of their or our
Company’s respective directors, officers, employees, partners, agents, advisors and any
other parties involved in the Share Offer (collectively, the “Relevant Persons”), the H
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 H 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 “– 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 (WUMP) 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 H Share Registrar by way of publication of the results at the time and in the
manner as specified in “– B. Publication of Results” in this section;
(x) confirm that you are aware of the situations specified in “– 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;


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HOW TO APPLY FOR PUBLIC OFFER SHARES
(xii) agree to comply with the Companies Ordinance, the Companies (WUMP) 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 our  Company, any of the directors, chief
executives, substantial shareholder(s) or existing shareholder(s) of our 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 our Company, any
of the directors, chief executives, substantial shareholder(s) or existing shareholder(s)
of our 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 Joint Overall Coordinators  will rely on
your declarations and representations in deciding whether or not to allocate any Public
Offer Shares to you and that you may be prosecuted for making a false declaration;
(xvi) agree to accept Public Offer Shares applied for or any lesser number allocated to you
under the application;
(xvii)  declare and represent that this is the only application made and the only application
intended by you to be made to benefit you or the person for whose benefit you are
applying;
(xviii)  (if the application is made for your own benefit) warrant that no other application has
been or will be made for your benefit by giving electronic application instructions to
HKSCC directly or indirectly or through the application channel of the White Form
eIPO Service Provider or by anyone 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.


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HOW TO APPLY FOR PUBLIC OFFER SHARES
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 the White Form eIPO service or HKSCC EIPO channel:
Website The designated results of allocations website
at www.iporesults.com.hk  (alternatively:
www.eipo.com.hk/eIPOAllotment ) with a
“search by ID” function on a 24-hour basis.
The full list of (i) wholly or partially
successful applicants using the White
Form eIPO  service and HKSCC EIPO
channel, and (ii) the number of Public
Offer Shares conditionally allotted
to them, among other things, will be
displayed on the “Allotment Results”
page of the White Form eIPO  service at
www.iporesults.com.hk  (alternatively:
www.eipo.com.hk/eIPOAllotment ).
The Stock Exchange’s website at
www.hkexnews.hk  and our website at
www.xyjiance.cn  which will provide links
to the above mentioned websites of the H
Share Registrar.
from 11:00 p.m. on Thursday,
5 September 2024 to 12:00 midnight on
Wednesday, 11 September  2024 (Hong
Kong time)
No later than 11:00 p.m. on Thursday,
5 September 2024 (Hong Kong time).
Telephone +852 2862 8555 – the allocation results
telephone enquiry line provided by the H
Share Registrar
between 9:00 a.m. and 6:00 p.m.
from Friday, 6 September  2024 to
Wednesday, 11 September  2024 (Hong
Kong time) ( except for Saturday, Sunday
and public holidays in Hong Kong)
For those applying through HKSCC EIPO channel, you may also check with your broker or
custodian from 6:00 p.m. on Wednesday, 4 September 2024 (Hong Kong time)


--- page 416 ---
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HOW TO APPLY FOR PUBLIC OFFER SHARES
HKSCC Participants can log into FINI and review the allotment result from 6:00 p.m.
on Wednesday, 4 September  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.xyjiance.cn  by no later than 11:00 p.m. on Thursday, 5 September 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 (WUMP) Ordinance.
2. If we or our agents exercise our discretion to reject your application:
We, the Joint Overall Coordinators , the H Share Registrar and their respective agents and
nominees have full discretion to reject or accept any application, or to accept only part of any
application, without giving any reasons.
3. If the allocation of Public Offer Shares is void:
The allocation of Public Offer Shares will be void if the Stock Exchange does not grant
permission to list the H 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.


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HOW TO APPLY FOR PUBLIC OFFER SHARES
4. If:
• you make multiple applications or suspected multiple applications. You may refer to “–
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 Joint Overall Coordinators  believe that by accepting your application, it or
we would violate applicable securities or other laws, rules or regulations.
5. If there is money settlement failure for allotted Shares:
Based on the arrangements between HKSCC Participants and HKSCC, HKSCC Participants
will be required to hold sufficient application funds on deposit with their designated bank before
balloting. After balloting of Public Offer Shares, the r eceiving bank will collect the portion of these
funds required to settle each HKSCC Participant’s actual Public  Offer Share allotment from their
designated bank.
There is a risk of money settlement failure.  In the extreme event of money settlement
failure by a HKSCC Participant (or its designated bank), who is acting on your behalf in settling
payment for your allotted shares, HKSCC will contact the defaulting HKSCC Participant and its
designated bank to determine the cause of failure and request such defaulting HKSCC Participant to
rectify or procure to rectify the failure.
However, if it is determined that such settlement obligation cannot be met, the affected
Public Offer Shares will be reallocated to 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 H Share Registrar and HKSCC is or will
be liable if Public Offer Shares are not allocated to you due to the money settlement failure.


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HOW TO APPLY FOR PUBLIC OFFER SHARES
D. DESPATCH/COLLECTION OF H SHARE CERTIFICATES AND REFUND OF
APPLICATION MONIES
You will receive one H 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 H Share
certificates will be deposited into CCASS as described below).
No temporary document of title will be issued in respect of the H Shares. No receipt will be issued
for sums paid on application.
H Share certificates will only become valid evidence of title  at 8:00 a.m. on Friday, 6 September
2024 (Hong Kong time), provided that the Share Offer has become unconditional and the right of
termination described in “Underwriting” in this prospectus has not been exercised. Investors who trade
Shares prior to the receipt of H Share certificates or the H Share certificates becoming valid do so entirely
at their own risk.
The right is reserved to retain any H Share certificate(s) and (if applicable) any surplus application
monies pending clearance of application monies.


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HOW TO APPLY FOR PUBLIC OFFER SHARES
The following sets out the relevant procedures and time:
White Form eIPO service HKSCC EIPO channel
Despatch/collection of H Share certificate 1
For physical share
certificates of equal or
over 100,000 Offer
Shares issued under
your own name
Collection in person at the H Share
Registrar, Computershare Hong Kong
Investor Services Limited, at Shops
1712–1716, 17th Floor, Hopewell
Centre, 183 Queen’s Road East, Wan
Chai, Hong Kong
Time: from 9:00 a.m. to 1:00 p.m.
on Friday, 6 September  2024 (Hong
Kong time)
If you are an individual, you must
not authoris e any other person
to collect for you. If you are a
corporate applicant, your authoris ed
representative must bear a letter of
authorization from your corporation
stamped with your corporation’s chop
Both individuals and authoris ed
representatives must produce, at
the time of collection, evidence of
identity acceptable to the H Share
Registrar
Note: If you do not collect your H Share
certificate(s) personally within the
time above, it/they will be sent to the
address specified in your application
instructions by ordinary post at your
own risk
H 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
Note:
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
Thursday, 5 September 2024 rendering it impossible for the relevant H Share certificates to be dispatched to HKSCC
in a timely manner, our  Company shall procure the H Share Registrar to arrange for delivery of the supporting
documents and H Share certificates in accordance with the contingency arrangements as agreed between them. You
may refer to “– E. Severe Weather Arrangements” in this section.


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HOW TO APPLY FOR PUBLIC OFFER SHARES
White Form eIPO service HKSCC EIPO channel
For physical share
certificates of less than
100,000 Offer Shares
issued under your own
name
Your H Share certificate(s) will be
sent to the address specified in your
application instructions by ordinary
post at your own risk
Time: Thursday, 5 September 2024
Refund mechanism for surplus application monies paid by you
Date Friday, 6 September 2024 Subject to the arrangement between
you and your broker or custodian
Responsible party H Share Registrar Your broker or custodian
Application monies paid
through single bank
account
White Form  e-Refund  payment
instructions payment instructions to
your designated bank account
Your broker or custodian will arrange
refund to your designated bank
account subject to the arrangement
between you and it
Application monies paid
through multiple bank
accounts
Refund cheque(s) will be despatched
to the address as specified in your
application instructions by ordinary
post at your own risk


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HOW TO APPLY FOR PUBLIC OFFER SHARES
E. SEVERE WEATHER ARRANGEMENTS
The Opening and Closing of the Application Lists
The application lists will not open or close on Tuesday, 3 September 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 Tuesday ,
3 September 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 “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.xyjiance.cn  of the revised timetable.
If a Severe Weather Signal is hoisted on Thursday, 5 September 2024, the H Share Registrar
will make appropriate arrangements for the delivery of the share certificates to the CCASS
Depository’s service counter so that they would be available for trading on Friday, 6 September
2024, and for physical share certificates of less than 100,000 Public 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 Thursday, 5 September 2024 or on
Friday, 6 September 2024) .
If a Severe  Weather Signal is hoisted on Friday , 6 September  2024, for physical share
certificates of equal or over 100,000 Public Offer Shares issued under your own name, you may
collect your share certificates from the H Share Registrar’s office after the Severe Weather Signal is
lowered or cancelled (e.g. in the afternoon of Friday, 6 September 2024 or on Monday, 9 September
2024).


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HOW TO APPLY FOR PUBLIC OFFER SHARES
Prospective investors should be aware that if they choose to receive physical H
Share certificates issued in their own name, there may be a delay in receiving the H Share
certificates.
F. ADMISSION OF THE H SHARES INTO CCASS
If the Stock Exchange grants the listing of, and permission to deal in, the H Shares on the Stock
Exchange and we comply with the stock admission requirements of HKSCC, the H Shares will be accepted
as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the date
of commencement of dealings in the Shares or any other date HKSCC chooses. Settlement of transactions
between Exchange Participants is required to take place in CCASS on the second settlement day after any
trading day.
All activities under CCASS are subject to the General Rules of HKSCC and HKSCC Operational
Procedures in effect from time to time.
All necessary arrangements have been made enabling the H 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 p ersonal information collection statement applies to any personal data collected and
held by our Company, the H Share Registrar, the receiving bank(s) and the Relevant Persons about you in
the same way as it applies to personal data about applicants other than HKSCC Nominees. This personal
data may include client identifier(s) and your identification information. By giving application instructions
to HKSCC, you acknowledge that you have read, understood and agree to all of the terms of the p ersonal
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 our  Company and the H 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 our Company or its agents and the H 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 H Share Registrar.


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– 412 –
HOW TO APPLY FOR PUBLIC OFFER SHARES
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 our Company
or the H 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 H Share certificate(s) to which you are entitled.
It is important that applicants for and holders of Public Offer Shares inform our Company
and the H 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 check and White Form 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 our 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 our Company and its subsidiaries;
• compiling statistical information and profiles of the holder of the Shares;
• disclosing relevant information to facilitate claims on entitlements; and


--- page 424 ---
– 413 –
HOW TO APPLY FOR PUBLIC OFFER SHARES
• any other incidental or associated purposes relating to the above and/or to enable our
Company and the H 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 our Company and the H Share Registrar relating to the applicants for
and holders of Public Offer Shares will be kept confidential but our  Company and the H Share
Registrar may, to the extent necessary for achieving any of the above purposes, disclose, obtain
or transfer (whether within or outside Hong Kong) the personal data to, from or with any of the
following:
• our Company’s appointed agents such as financial advisers, receiving bank(s)  and
overseas principal share registrar;
• HKSCC or HKSCC Nominees, who will use the personal data and may transfer the
personal data to the H Share Registrar for the purposes of providing its services or
facilities or performing its functions in accordance with its rules or procedures and
operating FINI and CCASS (including where applicants for the Public Offer Shares
request a deposit into CCASS);
• any agents, contractors or third-party service providers who offer administrative,
telecommunications, computer, payment or other services to our Company or the H
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
Our Company and the H Share Registrar will keep the personal data of the applicants and
holders of Public Offer Shares for as long as necessary to fulfill 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).


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HOW TO APPLY FOR PUBLIC OFFER SHARES
6. Access to and correction of personal data
Applicants for and holders of Public Offer Shares have the right to ascertain whether our
Company or the H Share Registrar hold their personal data, to obtain a copy of that data, and to
correct any data that is inaccurate. Our Company and the H 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 our Company and the H Share Registrar, at their registered address
disclosed in “Corporate information” in this prospectus or as notified from time to time, for the
attention of the joint company secretaries, or the H Share Registrar for the attention of the privacy
compliance officer.


--- page 426 ---
– I-1 –
APPENDIX I  ACCOUNTANT’S REPORT
The following is the text of a report set out on pages I- 1 to I- 3, received from the Company’s
reporting accountant, PricewaterhouseCoopers, Certified Public Accountants, Hong Kong, for the
purpose of incorporation in this prospectus. It is prepared and addressed to the directors of the Company
and to the Joint Sponsors pursuant to the requirements of HKSIR 200 Accountants ’ Reports on Historical
Financial Information in Investment Circulars issued by the Hong Kong Institute of Certified Public
Accountants.
ACCOUNTANT’S REPORT ON HISTORICAL FINANCIAL INFORMATION TO THE
DIRECTORS OF GUANGDONG SYNTRUST GK  TESTING AND CERTIFICATION
TECH  SERVICE CENTER CO., LTD. AND HUAJIN CORPORATE FINANCE
(INTERNATIONAL) LIMITED AND YUE XIU CAPITAL LIMITED
Introduction
We report on the historical financial information of Guangdong Syntrust GK  Testing a nd
Certification Tech Service Center Co., Ltd. (the “Company”) set out on pages I-4  to I-5 7, which comprises
the balance sheets as at 31 December 2021 , 2022 and 2023 and 30 June 2024, and the statements of
comprehensive income, the statements of changes in equity and the statements of cash flows for each of
the years ended 31 December 2021 , 2022 and 2023 and the six months ended 30 June 2024  (the “Track
Record Period”) and material accounting policy information and other explanatory information (together,
the “Historical Financial Information”). The Historical Financial Information set out on pages I- 4 to
I-57 forms an integral part of this report, which has been prepared for inclusion in the prospectus of the
Company dated 26 August 2024 (the “Prospectus”) in connection with the initial listing of H shares of the
Company on GEM of The Stock Exchange of Hong Kong Limited.
Directors’ responsibility for the Historical Financial Information
The directors of the Company are responsible for the preparation of Historical Financial
Information that gives a true and fair view in accordance with the basis of preparation set out in Note 2 to
the Historical Financial Information, and for such internal control as the directors determine is necessary
to enable the preparation of Historical Financial Information that is free from material misstatement,
whether due to fraud or error.


--- page 427 ---
– I-2 –
APPENDIX I  ACCOUNTANT’S REPORT
Reporting accountant’s responsibility
Our responsibility is to express an opinion on the Historical Financial Information and to report our
opinion to you. We conducted our work in accordance with Hong Kong Standard on Investment Circular
Reporting Engagements 200, Accountants ’ Reports on Historical Financial Information in Investment
Circulars issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”). This standard
requires that we comply with ethical standards and plan and perform our work to obtain reasonable
assurance about whether the Historical Financial Information is free from material misstatement.
Our work involved performing procedures to obtain evidence about the amounts and disclosures
in the Historical Financial Information. The procedures selected depend on the reporting accountant’s
judgement, including the assessment of risks of material misstatement of the Historical Financial
Information, whether due to fraud or error. In making those risk assessments, the reporting accountant
considers internal control relevant to the entity’s preparation of Historical Financial Information that
gives a true and fair view in accordance with the basis of preparation 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, as well as evaluating the overall presentation of the Historical Financial
Information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Opinion
In our opinion, the Historical Financial Information gives, for the purposes of the accountant’s
report, a true and fair view of the financial position of the Company as at 31 December 2021,  2022 and
2023 and 30 June 2024 and of its financial performance and its cash flows for the Track Record Period in
accordance with the basis of preparation set out in Note 2 to the Historical Financial Information.
Review of stub period comparative financial information
We have reviewed the stub period comparative financial information of the Company which
comprises the statement of comprehensive income, the statement of changes in equity and the statement
of cash flows for the six months ended 30 June 2023 and other explanatory information (the “Stub Period
Comparative Financial Information”). The directors of the Company are responsible for the preparation of
the Stub Period Comparative Financial Information in accordance with the basis of preparation set out in
Note 2 to the Historical Financial Information. Our responsibility is to express a conclusion on the Stub
Period Comparative Financial Information based on our review. We conducted our review in accordance
with Hong Kong Standard on Review Engagements 2410, Review of Interim Financial Information
Performed by the Independent Auditor of the Entity issued by the HKICPA. A review consists of making
inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical


--- page 428 ---
– I-3 –
APPENDIX I  ACCOUNTANT’S REPORT
and other review procedures. A review is substantially less in scope than an audit conducted in accordance
with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we
would become aware of all significant matters that might be identified in an audit. Accordingly, we do not
express an audit opinion. Based on our review, nothing has come to our attention that causes us to believe
that the Stub Period Comparative Financial Information, for the purposes of the accountant’s report, is
not prepared, in all material respects, in accordance with the basis of preparation set out in Note 2 to the
Historical Financial Information.
Report on matters under the Rules Governing the Listing of Securities on GEM of The Stock
Exchange of Hong Kong Limited (the “Listing Rules”) and the Companies (Winding Up and
Miscellaneous Provisions) Ordinance
Adjustments
In preparing the Historical Financial Information, no adjustments to the Underlying Financial
Statements as defined on page I-4  have been made.
Dividends
We refer to Note 12 to the Historical Financial Information which contains information about the
dividends paid by the Company in respect of the Track Record Period.
No statutory financial statements for the Company
No statutory financial statements have been prepared for the Company since its date of
incorporation.
PricewaterhouseCoopers
Certified Public Accountants
Hong Kong, 26 August 2024


--- page 429 ---
– I-4 –
APPENDIX I  ACCOUNTANT’S REPORT
I. HISTORICAL FINANCIAL INFORMATION OF THE COMPANY
Preparation of Historical Financial Information
Set out below is the Historical Financial Information which forms an integral part of this
accountant’s report.
The financial statements of the Company for the Track Record Period, on which the Historical
Financial Information is based, were audited by PricewaterhouseCoopers in accordance with Hong Kong
Standards on Auditing issued by the HKICPA (“Underlying Financial Statements”).
The Historical Financial Information is presented in Renminbi (“RMB”) and all values are rounded
to the nearest thousand (RMB’000) except when otherwise indicated.


--- page 430 ---
– I-5 –
APPENDIX I  ACCOUNTANT’S REPORT
(a) Statements of Comprehensive Income
Year ended 31 December Six months ended 30 June
2021 2022 2023 2023 2024
Note RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Revenue 6 39,781 19,966 41,500 16,329 22,830
Cost of sales 7 (9,605) (8,472) (11,719) (5,494) (6,658)

Gross profit 30,176 11,494 29,781 10,835 16,172
General and administrative expenses 7 (4,726) (6,383) (10,157) (3,703) (5,485)
Research and development expenses 7 – – (113) – (280)
Net impairment losses on financial
assets 3.1(b) (2,121) (1,380) (1,317) (1,589) (127)
Other income 548 417 620 317 60
Other losses – (13) (931) – (84)

Operating profit 23,877 4,135 17,883 5,860 10,256

Finance income 9 100 97 70 33 49
Finance costs 9 (254) (281) (219) (142) (488)

Finance costs – net 9 (154) (184) (149) (109) (439)

Profit before income tax 23,723 3,951 17,734 5,751 9,817
Income tax expense 10 (5,986) (1,039) (4,480) (1,467) (2,474)

Net profit 17,737 2,912 13,254 4,284 7,343


Other comprehensive income,
net of tax – – – – –

Total comprehensive income 17,737 2,912 13,254 4,284 7,343

Earnings per share attributable to
ordinary equity holders of the
Company
– Basic and diluted (expressed in
 RMB per share) 11 0.89 0.15 0.64 0.21 0.31


--- page 431 ---
– I-6 –
APPENDIX I  ACCOUNTANT’S REPORT
(b) Balance sheets
As at 31 December
As at
30 June
2021 2022 2023 2024
Note RMB’000 RMB’000 RMB’000 RMB’000
ASSETS
Non-current assets
Property, plant and equipment 13 3,949 4,812 4,225 15,906
Right-of-use assets 14 1,953 2,974 1,688 37,362
Deferred tax assets 15 2,301 2,462 3,040 3,303
Intangible assets 79 69 116 339
Other receivables and prepayments 18 4,187 3,976 3,025 2,985

12,469 14,293 12,094 59,895

Current assets
Contract fulfilment costs 16 820 2,053 1,390 2,440
Inventory – – – 233
Trade and other receivables and
prepayments 18 36,599 35,843 46,201 55,304
Cash and cash equivalents 19 35,846 32,221 59,145 42,459

73,265 70,117 106,736 100,436

Total assets 85,734 84,410 118,830 160,331

EQUITY
Paid-in capital 20 489 1,820 – –
Share capital 20 – – 23,750 23,750
Reserves 21 910 910 58,504 58,504
Retained earnings 65,589 66,601 20,331 27,674

Total equity 66,988 69,331 102,585 109,928


--- page 432 ---
– I-7 –
APPENDIX I  ACCOUNTANT’S REPORT
As at 31 December
As at
30 June
2021 2022 2023 2024
Note RMB’000 RMB’000 RMB’000 RMB’000
LIABILITIES
Non-current liabilities
Lease liabilities 14 4,995 5,786 1,494 37,119

4,995 5,786 1,494 37,119

Current liabilities
Trade payables 22 105 738 612 492
Contract liabilities 6 750 1,060 1,394 1,232
Lease liabilities 14 391 693 508 1,483
Current income tax liabilities 7,652 2,016 3,267 994
Other payables and accruals 23 4,853 4,786 8,970 9,083

13,751 9,293 14,751 13,284

Total liabilities 18,746 15,079 16,245 50,403

Total equity and liabilities 85,734 84,410 118,830 160,331


--- page 433 ---
– I-8 –
APPENDIX I  ACCOUNTANT’S REPORT
(c) Statements of Changes in Equity
Paid-in
capital
Share
capital Reserves
Retained
earnings Total
Note RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Balance at 1 January 2021 489 – 910 49,752 51,151
Profit for the year – – – 17,737 17,737

Total comprehensive income – – – 17,737 17,737

Distribution of dividends 12 – – – (1,900) (1,900)

Transactions with owners of
the Company – – – (1,900) (1,900)

Balance at 31 December 2021 489 – 910 65,589 66,988

Balance at 1 January 2022 489 – 910 65,589 66,988
Profit for the year – – – 2,912 2,912

Total comprehensive income – – – 2,912 2,912

Distribution of dividends 12 – – – (1,900) (1,900)
Capital contribution from an
equity holder 20 1,331 – – – 1,331

Transactions with owners of
the Company 1,331 – – (1,900) (569)

Balance at 31 December 2022 1,820 – 910 66,601 69,331


--- page 434 ---
– I-9 –
APPENDIX I  ACCOUNTANT’S REPORT
Paid-in
capital
Share
capital Reserves
Retained
earnings Total
Note RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Balance at 1 January 2023 1,820 – 910 66,601 69,331
Profit for the year – – – 13,254 13,254

Total comprehensive income – – – 13,254 13,254

Transfer from retained earnings
to reserves 21 – – 57,370 (57,370) –
Transfer from capital reserves
to paid-in capital 20, 21 2,930 – (2,930) – –
Paid-in capital contribution
from an equity holder 20, 21 250 – 4,750 – 5,000
Conversion into a joint stock
company 20, 21 (5,000) 20,000 (14,171) (829) –
Share capital contribution from
an equity holder 20, 21 – 3,750 11,250 – 15,000
Appropriation to statutory
reserves 21 – – 1,325 (1,325) –

Transactions with owners of
the Company (1,820) 23,750 57,594 (59,524) 20,000

Balance at 31 December 2023 – 23,750 58,504 20,331 102,585

Balance at 1 January 2024 – 23,750 58,504 20,331 102,585
Profit for the period – – – 7,343 7,343

Total comprehensive income – – – 7,343 7,343

Balance at 30 June 2024 – 23,750 58,504 27,674 109,928

Unaudited:
Balance at 1 January 2023 1,820 – 910 66,601 69,331
Profit for the period – – – 4,284 4,284

Total comprehensive income – – – 4,284 4,284

Balance at 30 June 2023 1,820 – 910 70,885 73,615


--- page 435 ---
– I-10 –
APPENDIX I  ACCOUNTANT’S REPORT
(d) Statements of Cash Flows
Year ended 31 December Six months ended 30 June
2021 2022 2023 2023 2024
Note RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Cash flows from operating activities
Cash generated from operations 24 13,050 4,891 25,421 1,052 6,601
Income tax paid (5,012) (6,836 ) (3,807) (1,168) (5,010)
Interest received 100 97 328 33 49

Net cash generated from/(used in)
operating activities 8,138 (1,848) 21,942 (83) 1,640

Cash flows from investing activities
Purchase of property, plant and
equipment (1,192) (1,511) (4,536) (1,095) (11,692)
Purchase of intangible assets (35) – (56) – (237)
Decrease in amounts due from
immediate holding company – 436 – – –
Increase in amounts due from a related
party 27(b) – – (7,850) (7,850) –
Decrease in amounts due from a
related party 27(b) – – 7,850 – –
Receipt of rental fee in relation to
sublease 345 80 – – –

Net cash used in investing activities (882) (995) (4,592) (8,945) (11,929)

Cash flows from financing activities
Distribution of dividends 12 (1,900) (1,900) – – –
Proceeds of capital contribution from
equity holders 20(a), 21 (c) – 1,331 20,000 – –
Principal elements and interest
elements of lease payments 14 (532) (213) (386) (386) (192)
Payments of listing expenses to be
deducted against equity – – (10,040) – (6,205)

Net cash ( used in)/generated from
financing activities (2,432) (782) 9,574 (386) (6,397)

Net increase/(decrease) in cash and
cash equivalents 4,824 (3,625) 26,924 (9,414) (16,686)
Cash and cash equivalents at beginning
of the year/period 31,022 35,846 32,221 32,221 59,145

Cash and cash equivalents at end of
the year/period 35,846 32,221 59,145 22,807 42,459


--- page 436 ---
– I-11 –
APPENDIX I  ACCOUNTANT’S REPORT
II. NOTES TO THE HISTORICAL FINANCIAL INFORMATION
1. GENERAL INFORMATION
Guangdong Syntrust GK  Testing and Certification Tech  Service Center Co., Ltd. (the “Company”) is a state-owned
enterprise incorporated in Guangdong Province of the People’s Republic of China (the “PRC”). The Company was established as a
joint-stock cooperative enterprise on 28 March 2000. The Company was converted into a limited liability company in July 2023 and
was further converted into a joint stock company with limited liability  in October 2023 . The address of the Company’s registered
office is Floor 1, Building A, Xinyi Construction Bureau Courtyard, Maoming City, Guangdong Province.
The Company is principally engaged in providing testing services and inspection services for construction projects,
construction materials and food in the People’s Republic of China (the “PRC”) (the “Listing Business”). The Company’s immediate
holding company is Xinyi City Construction Engineering Quality and Safety Affairs Center (“Xinyi City CEQS Center”), a public
institution of the Xinyi City People’s Government under the Xinyi City Bureau of Housing and Urban-Rural Development.
2. BASIS OF PREPARATION
(i) Compliance with HKFRS
The Historical Financial Information of the Company has been prepared in accordance with principal accounting
policies as set out below which are in accordance with Hong Kong Financial Reporting Standards (“HKFRS”) issued by
the HKICPA. The principal accounting policies have been consistently applied to all the years presented, unless otherwise
stated.
The preparation of financial statements in conformity with HKFRSs requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting
policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are
significant to the Historical Financial Information are disclosed in Note 4.
(ii) Accounting policies
The material accounting policies applied in the preparation of the financial information has been consistently applied
to all the years presented, unless otherwise stated.
Other than those material accounting policies information as disclosed in the notes to the relevant financial line
items or transactions in this Historical Financial Information, a summary of the other accounting policies information has
been set out in Note 30  to this Historical Financial information.


--- page 437 ---
– I-12 –
APPENDIX I  ACCOUNTANT’S REPORT
New and amended standards adopted by the Company
In preparation of the Historical Financial Information, all of the new standards, amendments to standards
and interpretations that are effective during the Track Record Period have been adopted by the Company consistently
throughout the Track Record Period.
The following new standards, amendments to accounting standards and interpretations have been issued but
are not effective for the Track Record Period and have not been early adopted by the Company:
Effective for
accounting periods
beginning on or after
HKAS 21 (Amendments) Lack of Exchangeability 1 January 2025
HKFRS 9 and HKFRS 7
(Amendments)
Amendments to the C lassification and
Measurement of Financial Instruments
1 January 2026
HKFRS 18 Presentation and Disclosure in Financial
Statements
1 January 2027
HKFRS 19 Subsidiaries without Public Accountability
Disclosures
1 January 2027
HKFRS 10 and HKAS 28
(Amendments)
Sale or Contribution of Assets between an
Investor and its Associate or Joint venture
To be determined
The Company has already commenced an assessment of the impact of these new and amended standards and has
concluded on a preliminary basis that adoption of these new and amended standards is not expected to have significant
impact on the financial performance and position of the Company when they become effective.
3 FINANCIAL RISK MANAGEMENT
3.1 Financial risk factors
The Company’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk and
interest rate risk), credit risk and liquidity risk. The Company has no significant interest-bearing liabilities during the Track
Record Period. The fair value interest rate risk that arises from financial assets and liabilities carried at fixed rates is not
significant for the Company.
The Company’s overall risk management programme focuses on the unpredictability of financial markets and seeks
to minimise potential adverse effects on the Company’s financial performance. Risk management is carried out by the
financial department under policies approved by the senior management of the Company.


--- page 438 ---
– I-13 –
APPENDIX I  ACCOUNTANT’S REPORT
(a) Foreign exchange risk
The Company’s normal operating activities are principally conducted in RMB. The Company collects all of
its revenue in RMB and most of its expenditures are also denominated in RMB. The foreign exchange risk mainly
arises from the exposure of RMB against Hong Kong dollars (“ HKD”) and United State dollars  (“USD”) for certain
other payables for listing expenses.  Amount of approximately RMB3,971,000 (2023: RMB4,371,000, 2022: nil and
2021: nil)  were denominated in HKD and no other payables for listing expenses w as denominated in USD as at 30
June 2024 (2023: RMB196,000, 2022: nil and 2021: nil).
The Company currently does not have a foreign currency hedging policy. However, the management
monitors foreign exchange exposure and will consider hedging significant foreign currency exposure should the
need arises.
As at 30 June 2024, if RMB had strengthened/weakened by 5 percent against HKD and USD with all
other variables held constant, post-tax profit for the year would have been approximately RMB149,000 (2023:
RMB171,000, 2022: nil and 2021: nil ) higher/lower, mainly as a result of the net foreign exchange gains on
translation of monetary liabilities denominated in HKD and USD.
(b) Credit risk
The Company is exposed to credit risk in relation to its trade receivables, other receivables and cash and
cash equivalents. The carrying amounts of trade receivables, other receivables and cash and cash equivalents
represent the Company’s maximum exposure to credit risk in relation to financial assets. The Company does not
hold any collateral or other credit enhancements to cover its credit risks associated with its financial assets.
To manage this risk, cash at banks are placed with reputable financial institutions in the PRC. For trade
receivables and other receivables, the management of the Company has monitoring procedures to ensure that follow-
up action is taken to recover overdue debts. In addition, the Company reviews the recoverability of these receivables
at the end of each reporting period to ensure that adequate impairment losses are made for irrecoverable amounts.
The credit quality of customers is assessed after taking into account the customers’ financial position and past
experience with the customers.
Impairment of financial assets
The Company has the following types of financial assets that are subject to the expected credit loss
model:
•  Trade receivables;
•  Other receivables;
•  Cash and cash equivalents.


--- page 439 ---
– I-14 –
APPENDIX I  ACCOUNTANT’S REPORT
(i) Trade receivables
The Company applies the simplified approach prescribed by HKFRS9 to measure expected credit
losses which uses a lifetime expected losses allowance for all trade receivables.
Significant customers with different credit risk profiles and higher risk of default (mainly comprised
material receivables with substantial delayed settlement and without collateral) are assessed on an
individual basis. The individual assessment focused on the customer payment history and current and future
ability for payment taking into account the information specific to the customer. Individually impaired trade
receivables represented customers with higher credit risk profile.
To measure the expected credit losses, except for those individual receivables which loss allowance
has been provided for, trade receivables have been grouped based on shared credit risk characteristics
and aging periods. Future cash flows for each group of receivables are estimated on the basis of historical
default rates, adjusted to reflect the effects of existing market conditions as well as forward looking
information on macroeconomic factors affecting the ability of the customers to settle the receivables.
As at 31 December 2021 , 2022 and 2023 and 30 June 2024, the expected loss rate for certain
customers who were in bankruptcy, liquidation, insolvency or in other situations with higher default risk are
assessed specifically by the directors as follows.
As at 31 December 2021
Expected credit loss rates 90.48%
Gross carrying amount (RMB’000) 5,105
Loss allowance provision (RMB’000) 4,619

As at 31 December 2022
Expected credit loss rates 90.68%
Gross carrying amount (RMB’000) 5,215
Loss allowance provision (RMB’000) 4,729

As at 31 December 2023
Expected credit loss rates 99.64%
Gross carrying amount (RMB’000) 9,094
Loss allowance provision (RMB’000) 9,061

As at 30 June 2024
Expected credit loss rates 100.00%
Gross carrying amount (RMB’000) 8,810
Loss allowance provision (RMB’000) 8,810


--- page 440 ---
– I-15 –
APPENDIX I  ACCOUNTANT’S REPORT
As at 31 December 2021 , 2022 and 2023 and 30 June 2024, the loss allowance provision for the
trade receivables (excluding trade receivables subject to specific expected loss rate) was determined as
follows. The expected credit losses below also incorporated forward looking information.
Within
1 year
Between
1 and 2
years
Between
2 and 3
years
Between
3 and 4
years
Over
4 years Total
As at 31 December 2021
Expected credit loss rates 7.76% 11.68% 21.07% 32.21% 100.00% 11.30%
Gross carrying amount
(RMB’000) 21,233 11,900 5,813 357 71 39,374
Loss allowance provision
(RMB’000) 1,648 1,390 1,225 115 71 4,449

As at 31 December 2022
Expected credit loss rates 7.58% 13.09% 17.66 % 31.78% 100.00% 14.36%
Gross carrying amount
(RMB’000) 14,071 11,563 10,304 3,697 133 39,768
Loss allowance provision
(RMB’000) 1,067 1,514 1,820 1,175 133 5,709

As at 31 December 2023
Expected credit loss rates 7.12% 13.25% 19.58% 35.34% 100.00% 8.67%
Gross carrying amount
(RMB’000) 27,307 3,102 1,083 566 13 32,071
Loss allowance provision
(RMB’000) 1,943 411 212 200 13 2,779

As at 30 June 2024
Expected credit loss rates 7.22% 13.29% 21.60% 38.53% 100.00% 8.76%
Gross carrying amount
(RMB’000) 31,019 3,394 1,023 571 25 36,032
Loss allowance provision
(RMB’000) 2,241 451 221 220 25 3,158


--- page 441 ---
– I-16 –
APPENDIX I  ACCOUNTANT’S REPORT
(ii) Other financial assets at amortised cost
Credit risk also arises from cash and cash equivalents and other receivables. The carrying amount
of each class of these financial assets represents the Company’s maximum exposure to credit risk in relation
to the corresponding class of financial assets.
To manage risk arising from cash and cash equivalents, the Company mainly transacts with state-
owned or reputable financial institutions in the PRC. There has been no recent history of default in relation
to these financial institutions. These instruments are considered to have low credit risk because they have a
low risk of default and the counterparty has a strong capacity to meet its contractual cash flow obligations
in the near term. Therefore, as at 31 December 2021,  2022 and 2023 and 30 June 2024, the expected credit
loss of cash and cash equivalents is assessed to be immaterial.
For impairment on other receivables, it is measured as either 12-months expected credit losses or
lifetime expected credit loss, depending on whether there has been significant increase in credit risk since
initial recognition (stage 1). Once there is a significant increase in credit risk, lifetime expected credit losses
shall be assessed (stage 2). Once it is credit impaired (e.g. default), lifetime expected credit losses shall still
be assessed (stage 3).
Significant increase in credit risk
The Company considers the probability of default upon initial recognition of an asset and
whether there has been a significant increase in credit risk on an ongoing basis throughout each
reporting period. To assess whether there is a significant increase in credit risk, the Company
compares the risk of a default occurring on the asset as at the end of reporting period with the risk
of default as at the date of initial recognition. It considers available reasonable and supportive
forwarding looking adjustment factors. Especially the following indicators are incorporated:
• internal credit rating
• external credit rating (as far as available)
• actual or expected significant adverse changes in business, financial or economic
conditions that are expected to cause a significant change to the borrower’s ability
to meet its obligations
• actual or expected significant changes in the operating results of the borrower
• significant increases in credit risk on other financial instruments of the same
borrower
• significant changes in the value of the collateral supporting the obligation or in the
quality of third-party guarantees or credit enhancements
• significant changes in the expected performance and behaviour of the borrower,
including changes in the payment status of borrowers in the Company and changes
in the operating results of the borrower.
Regardless of the analysis above, a significant increase in credit risk is presumed if a debtor
is more than 30 days past due in making a contractual payment. A default on a financial asset is
when the counterparty fails to make contractual payments within 90 days of when they fall due.


--- page 442 ---
– I-17 –
APPENDIX I  ACCOUNTANT’S REPORT
The expected credit loss for other receivables from a third party as at 31 December 2021,
2022 and 2023 and 30 June 2024 was classified into stage 3 and measured on a lifetime basis as the
receivable had been long past due.
As at 31 December
As at
30 June
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Other receivables from a third
party
Gross carrying amount 633 559 559 559
Expected loss rate 84.20% 100% 100% 100%
Loss allowance provision 533 559 559 559

All the Company’s other receivables, excluding the above amounts due from a third party
subject to specific expected lose rate, as at 31 December 2021,  2022 and 2023 and 30 June 2024
were classified into stage 1 and their expected credit losses were measured on a 12-month basis as
there has been no significant increase in credit risk since initial recognition.
As at 31 December
As at
30 June
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Other receivables (excluding
receivables due from a third
party)
Gross carrying amount 5,309 4,829 548 404
Expected loss rate 2.02% 1.88% 1.09% 1.24%
Loss allowance provision 107 91 6 5

404
1.24%
5


--- page 443 ---
– I-18 –
APPENDIX I  ACCOUNTANT’S REPORT
As at 31 December 2021,  2022 and 2023 and 30 June 2024, the loss allowance provision for
trade and other receivables reconciles to the opening loss allowance for that provision as follows:
Trade
receivables
Other
receivables Total
RMB’000 RMB’000 RMB’000
As at 1 January 2021 7,031 556 7,587
Net impairment losses recognised on
financial assets 2,037 84 2,121

As at 31 December 2021 9,068 640 9,708

As at 1 January 2022 9,068 640 9,708
Net impairment losses recognised on
financial assets 1,370 10 1,380

As at 31 December 2022 10,438 650 11,088

As at 1 January 2023 10,438 650 11,088
Net impairment losses recognised on
financial assets/(Reversal) 1,402 (85) 1,317

As at 31 December 2023 11,840 565 12,405

As at 1 January 2024 11,840 565 12,405
Net impairment losses recognised on
financial assets/(Reversal) 128 (1) 127

As at 30 June 2024 11,968 564 12,532

As at 31 December 2021 , 2022 and 2023 and 30 June 2024, the gross carrying amount
of trade and other receivables was RMB50,421,000, RMB50,371,000 and RMB 42,272,000 and
RMB45,805,000, respectively, which represented the maximum exposure to credit loss as at the
respective balance sheet dates.
(c) Liquidity risk
Liquidity risk is the risk that the Company is unable to meet its obligations when they fall due, resulting
from amount and maturity mismatches of assets and liabilities.
Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents and the
availability of funding. Due to the nature of the underlying businesses, the Company’s management responsible for
treasury function aims to maintain flexibility in funding by keeping sufficient cash available.


--- page 444 ---
– I-19 –
APPENDIX I  ACCOUNTANT’S REPORT
The table below analyses the Company’s financial liabilities into relevant maturity groupings based on the
remaining periods at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are
the contractual undiscounted cash flows.
Contractual maturities of
financial liabilities
Within
1 year
Between
1 and 2
years
Between
2 and 5
years
Between
5 and 10
years
Over
10 years Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at 31 December 2021
Trade payables 105 – – – – 105
Other payables and accruals
(excluding non-financial
liabilities) 301 – – – – 301
Lease liabilities (including
interests to be paid) 629 558 2,047 3,172 325 6,731

1,035 558 2,047 3,172 325 7,137

As at 31 December 2022
Trade payables 738 – – – – 738
Other payables and accruals
(excluding non-financial
liabilities) 1,345 – – – – 1,345
Lease liabilities (including
interests to be paid) 973 900 2,826 3,097 – 7,796

3,056 900 2,826 3,097 – 9,879

As at 31 December 2023
Trade payables 612 – – – – 612
Other payables and accruals
(excluding non-financial
liabilities) 6,317 – – – – 6,317
Lease liabilities (including
interests to be paid) 588 411 1,164 65 – 2,228

7,517 411 1,164 65 – 9,157

As at 30 June 2024
Trade payables 492 – – – – 492
Other payables and accruals
(excluding non-financial
liabilities) 7,074 – – – – 7,074
Lease liabilities (including
interests to be paid) 3,324 3,145 9,222 17,341 27,031 60,063

 10,890  3,145  9,222  17,341  27,031 67,629


--- page 445 ---
– I-20 –
APPENDIX I  ACCOUNTANT’S REPORT
3.2 Capital management
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going
concern in order to provide returns for shareholder and benefits for other stakeholders and to maintain an optimal capital
structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to the
shareholder, return capital to shareholder, issue new shares or sell assets to reduce debt.
The Company monitors capital using a gearing ratio, which is net debt divided by capital plus net debt. Net debt
includes trade payables, other payables and accruals, less cash and cash equivalents. Capital represents equity attributable
to owners of the Company. The gearing ratio is not applicable when the amount of cash and cash equivalents is higher than
gross debt. The net surplus at the end of the Track Record Period is calculated as follows:
As at 31 December As at 30 June
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Trade payables 105 738 612 492
Other payables and accruals 4,853 4,786 8,970 9,083
Less: Cash and cash equivalents (35,846) (32,221) (59,145) (42,459)

Net surplus (30,888) (26,697) (49,563) (32,884)
Equity attributable to owners of the
Company 66,988 69,331 102,585 109,928

3.3 Fair value estimation
The Company analyses its financial instruments’ fair value by level of the inputs to valuation techniques used to
measure fair value. Such inputs are categorised into three levels within a fair value hierarchy as follows:
• Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
• Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).
• Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs)
(level 3).
The Company’s financial instruments including trade receivables, cash and cash equivalents. other receivables, trade
payables and other payables are not measured at fair value and are measured at amortised cost in the balance sheet.
For these instruments, the fair values are not materially different from their carrying amounts since either the
interest receivable is close to current market rates or the instruments are short-term in nature.


--- page 446 ---
– I-21 –
APPENDIX I  ACCOUNTANT’S REPORT
4 CRITICAL  ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of Historical Financial Information requires the use of accounting estimates which, by definition, will
seldom equal the actual results. Management also needs to exercise judgment in applying the Company’s accounting policies. The
estimates and judgments that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities
are addressed below.
Estimates and judgments are continually evaluated. They are based on historical experience and other factors, including
expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the
circumstances.
(a) Provision for expected losses of financial assets
The loss allowances for financial assets are based on assumptions about risk of default and expected loss rates. The
Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the
Company’s past history, existing market conditions as well as forward-looking estimates at the end of each reporting period.
Details of the key assumptions and inputs used are disclosed in the tables in note 3.1(b ).
5 SEGMENT INFORMATION
The Company’s business activities, for which discrete financial statements are available, are regularly reviewed and
evaluated by the chief operating decision-maker (“CODM”). The CODM, who is responsible for allocating resources and assessing
performance of the operating segment, has been identified as the general manager of the Company. As a result of this evaluation,
the CODM considers that the Company’s operations are operated and managed as a single segment. Accordingly, no segment
information is presented.
During the Track Record Period, the operating of the Company is domiciled in the PRC and the Company’s revenue was
attributable to the market in the PRC.
As at 31 December 2021,  2022 and 2023 and 30 June 2024, the Company’s non-current assets were all located in the PRC.
6 REVENUE
Year ended 31 December Six months ended 30 June
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Revenue from contracts with customers:
– Testing services 38,470 15,402 36,026 15,209 21,538
– Inspection services 1,311 4,564 5,474 1,120 1,292

39,781 19,966 41,500 16,329 22,830

Timing of revenue recognition:
– At point in time 38,470 15,402 36,026 15,209 21,538
– Over time 1,311 4,564 5,474 1,120 1,292

39,781 19,966 41,500 16,329 22,830


--- page 447 ---
– I-22 –
APPENDIX I  ACCOUNTANT’S REPORT
Revenue from transactions with external customers amounting to approximately 10% or more of the Company’s revenue are as
follows:
Year ended 31 December Six months ended 30 June
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Customer A 5,078 N/A* N/A* N/A* N/A*
Customer B N/A* 3,671 N/A* N/A* N/A*
Customer C N/A* N/A* 4,470 N/A* N/A*
Customer D N/A* N/A* N/A* 1,882 N/A*
Customer E N/A* N/A* N/A* N/A* 2,882
Customer F N/A* N/A* N/A* N/A* 2,799
Note*: The customer contributed less than 10% of total revenue for the corresponding year.
(a) Accounting policies of revenue recognition
The Company generates revenue primarily from the provision of testing services (Note 6(a)(i)) and inspection
services (Note 6(a)(ii)). The Company enters into contracts that may involve multiple performance obligations among which
the Company allocates the transaction price on the basis of the standalone selling prices of each performance obligation.
Standalone selling prices are generally determined based on the prices charged to customers. If it is not directly observable,
the standalone selling price is estimated using expected cost plus a margin or adjusted market assessment approach,
depending on the availability of observable information, the data utilised, and considering the Company’s pricing policies
and practices in making pricing decisions.
Revenue from contracts with customers is recognised when control of goods or services is transferred to the
customers at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those
goods or services. Depending on the terms of the contract and the laws that apply to the contract, control of the goods and
services may be transferred over time or at a point in time. Control of the goods and services is transferred over time if the
Company’s performance:
• provides all of the benefits received and consumed simultaneously by the customer;
• creates or enhances an asset that the customer controls as the Company performs; or
• does not create an asset with an alternative use to the Company and the Company has an enforceable right to
payment for performance completed to date.
If control of the goods and services transfers over time, revenue is recognised over the period of the contract by
reference to the progress towards complete satisfaction of that performance obligation. Otherwise, revenue is recognised at a
point in time when the customer obtains control of the goods and services.
A contract asset is the Company’s right to consideration in exchange for goods and services that the Company has
transferred to a customer. A trade receivable is recorded when the Company has an unconditional right to consideration. A
right to consideration is unconditional if only the passage of time is required before payment of that consideration is due.


--- page 448 ---
– I-23 –
APPENDIX I  ACCOUNTANT’S REPORT
If a customer pays consideration or the Company has a right to an amount of consideration that is unconditional,
before the Company transfers a good or service to the customer, the Company presents the contract liability when the
payment is made or a receivable is recorded, whichever is earlier. A contract liability is the Company’s obligation to transfer
goods or services to a customer for which the Company has received consideration, or an amount of consideration is due,
from the customer.
(i) Testing services
The Company performs testing services for foundation, building structure, construction materials,
infrastructure and public roads and food. The performance obligation is satisfied upon completion of the promised
services.
(ii) Inspection services
The Company also provides inspection services. Such services are satisfied over time as the customer
simultaneously receives and consumes the benefits provided by the Company’s performance as the Company
performs. Revenue is recognised for these services based on the stage of completion of the contract using output
method.
(b) Contract liabilities
The Company has recognised the following revenue-related contract liabilities:
As at 31 December As at 30 June
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Testing services 729 1,060 1,394 1,232
Inspection services 21 – – –

750 1,060 1,394 1,232

Contract liabilities represent cash received from customers in advance for which the goods and services are yet to be
delivered. A major portion of contract liabilities at the beginning of the year will be recognised into revenue next year.
(c) Unsatisfied performance obligations
At 31 December 2021 , 2022 and 2023 and 30 June 2024, the unsatisfied performance obligations are part of the
contracts that has an original expected duration of one year or less. As permitted under HKFRS 15, the transaction price
allocated to these unsatisfied performance obligations is not disclosed.


--- page 449 ---
– I-24 –
APPENDIX I  ACCOUNTANT’S REPORT
7 EXPENSES BY NATURE
Year ended 31 December Six months ended 30 June
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Employee benefit expenses (Note (8)) 9,574 10,607  13,114 5,862 6,755
Depreciation and amortisation 1,257 1,317 1,891 1,004 1,623
Testing materials and services purchased
and used 1,538 959 1,126 629 831
Office expenses 905 978 1,502 646 827
Repair and maintenance costs 448 307 398 187 199
Listing expenses – – 1,779 – 887
Professional service fee 57 322 1,237 657 978
Taxes and surcharges 252 185 312 132 71
Others 300 180 630 80 252


14,331 14,855 21,989 9,197 12,423

8 EMPLOYEE BENEFIT EXPENSES
Year ended 31 December Six months ended 30 June
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Wages, salaries and bonuses 6,580 7,656 8,964 3,908 4,636
Pension costs – defined contribution plans,
housing funds, medical insurances and
other social insurances (Note (a)) 2,563 2,364 3,621 1,672 1,778
Other employee benefits (Note (b)) 431 587 529 282 341

9,574 10,607 13,114 5,862 6,755

(a) Pension costs – defined contribution plans, housing funds, medical insurances and other social insurances
Full time employees of the Company in the PRC are members of a state-managed retirement benefit schemes
operated by the PRC G overnment. The Company is required to contribute a specified percentage of payroll costs, subject to
certain ceiling, as determined by local government authority to the pension costs – defined contribution plans, housing funds,
medical insurances and other social insurances to fund the benefits. The Company’s liabilities in respect of benefits schemes
are limited to the contribution payable in each year.
No forfeited contributions were utilised during the Track Record Period to offset the Company’s contribution to the
abovementioned retirement benefit schemes.


--- page 450 ---
– I-25 –
APPENDIX I  ACCOUNTANT’S REPORT
(b) Other employee benefits
Other employee benefits mainly include termination benefits, holiday benefits, insurance benefits, and others.
(c) Five highest paid individuals
The five individuals whose emoluments were the highest in the Company for the years ended 31 December 2021,
2022 and 2023 and the six months ended 30 June 2023 and 2024 included nil, nil,  3, nil and 2 directors , respectively, whose
emoluments are reflected in the analysis shown in note 28 . The emoluments of the remaining individuals during the years/
periods are as follows:
Year ended 31 December Six months ended 30 June
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Wages, salaries and bonuses 630 765 276 341 385
Pension costs – defined
contribution plans, housing
funds, medical insurances and
other social insurances 296 198 126 163 123
Other employee benefits 63 69 25 40 37

989 1,032 427 544 545

The emoluments of these remaining individuals of the Company fell within the following bands:
Year ended 31 December Six months ended 30 June
2021 2022 2023 2023 2024
(Unaudited)
Emoluments bands (in Hong Kong
Dollars (“HKD”))
Nil to HKD500,000 5 5 2 5 3

During the Track Record Period, no emolument was paid by the Company to any of the five highest paid individuals
above as an inducement to join, upon joining the Company, leave the Company or as compensation for loss of office.


--- page 451 ---
– I-26 –
APPENDIX I  ACCOUNTANT’S REPORT
9 FINANCE COSTS – NET
Year ended 31 December Six months ended 30 June
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Finance income
Interest income from bank deposits 100 97 70 33 49
Finance costs
Interest expenses on lease liabilities (254) (281) (219) (142) (488)

Finance costs – net (154) (184) (149) (109) (439)

10 INCOME TAX EXPENSE
The Company was incorporated in the PRC. Enterprise income tax (“EIT”) was made on the estimated assessable profits of
the Company and was calculated in accordance with the relevant regulations of the PRC after considering the available tax benefits
from refunds and allowances. The general PRC EIT rate is 25% during the Track Record Period.
The income tax expenses of the Company for the Track Record Period are analysed as below.
Year ended 31 December Six months ended 30 June
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Current income tax expenses 6,693 1,200 5,058 1,694 2,737

Deferred income tax credit (Note 15) (707) (161) (578) (227) (263)

5,986 1,039 4,480 1,467 2,474

The income tax expense for the Track Record Period can be reconciled to the profit before income tax as follows:
Year ended 31 December Six months ended 30 June
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Profit before income tax 23,723 3,951 17,734 5,751 9,817

Tax calculated at tax rates applicable to
profit in the respective tax jurisdictions 5,931 988 4,434 1,438 2,454
– Expenses not deductible for tax purposes 55 51 46 29 20

Income tax expenses 5,986 1,039 4,480 1,467 2,474


--- page 452 ---
– I-27 –
APPENDIX I  ACCOUNTANT’S REPORT
11 EARNINGS PER SHARE
Year ended 31 December Six months ended 30 June
2021 2022 2023 2023 2024
(Unaudited)
Profit attributable to owners of the
Company (RMB’000) 17,737 2,912 13,254 4,284 7,343
Weighted average number of ordinary
shares outstanding (Note (a) and (c)) 20,000,000 20,000,000 20,575,342 20,000,000 23,750,000

Basic and diluted earnings per share
(in RMB) 0.89 0.15 0.64 0.21 0.31

(a) In October 2023, the Company was converted into a joint stock company with limited liability under the Company
Law of the PRC.  By reference to the Company’s net asset value as at 31 July 2023, the Company issued 20,000,000
ordinary shares at a par value of RMB1 each. For the purpose of calculation of earnings  per shares issued during the
Track Record Period, ordinary shares issued pursuant to the conversion were treated as if they had been issued at the
beginning of year ended 31 December 2021.
(b) Diluted earnings  per share is calculated by adjusting the weighted average number of ordinary shares outstanding
to assume conversion of all dilutive potential ordinary shares. The Company  had no potential ordinary shares
outstanding during t he Track Record Period . Therefore, diluted earnings  per share was the same as the basic earnings
per share.
(c) In November 2023, the Company increased its share capital from RMB20,000,000 to RMB23,750,000 by issuing
3,750,000 new shares to Xinyi Xinhui for a cash consideration of RMB15,000,000. Upon the completion of such
capital injection, the Company was owned as to 80% by Xinyi City CEQS Center and 20% by Xinyi Xinhui,
respectively.
12 DIVIDENDS
Dividend distribution to the Company’s shareholder is recognised as a liability in the Company’s financial statements in the
period in which the dividends are approved by the Company’s shareholder or directors, where appropriate.
In May 2021 and September 2021, cash dividends  of RMB1,900,000 in total were declared and paid. In March 2022, a cash
dividend of RMB1,900,000 was declared and paid.


--- page 453 ---
– I-28 –
APPENDIX I  ACCOUNTANT’S REPORT
13 PR OPERTY, PLANT AND EQUIPMENT
Machinery
equipment
Leasehold
improvements
Office
equipment Vehicles Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Year ended 31 December 2021
Opening net book amount 2,837 374 201 70 3,482
Additions 956 218 249 – 1,423
Depreciation charge (684) (141) (105) (26) (956)

Closing net book amount 3,109 451 345 44 3,949

As at 31 December 2021
Cost 8,653 840 727 830 11,050
Accumulated depreciation (5,544) (389) (382) (786) (7,101)

Net book amount 3,109 451 345 44 3,949

Year ended 31 December 2022
Opening net book amount 3,109 451 345 44 3,949
Additions 1,249 316 139 296 2,000
Disposal (13) – – – (13)
Depreciation charge (750) (189) (151) (34) (1,124)

Closing net book amount 3,595 578 333 306 4,812

As at 31 December 2022
Cost 9,826 1,156 850 1,126 12,958
Accumulated depreciation (6,231) (578) (517) (820) (8,146)

Net book amount 3,595 578 333 306 4,812

Year ended 31 December 2023
Opening net book amount 3,595 578 333 306 4,812
Additions 398 – 130 263 791
Disposal (1) (37) – – (38)
Depreciation charge (953) (161) (161) (65) (1,340)

Closing net book amount 3,039 380 302 504 4,225

As at 31 December 2023
Cost 10,179 534 965 1,389 13,067
Accumulated depreciation (7,140) (154) (663) (885) (8,842)

Net book amount 3,039 380 302 504 4,225


--- page 454 ---
– I-29 –
APPENDIX I  ACCOUNTANT’S REPORT
Machinery
equipment
Leasehold
improvements
Office
equipment Vehicles Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Six months ended 30 June 2024
Opening net book amount 3,039 380 302 504 4,225
Additions 12,121 299 31 297 12,748
Depreciation charge (874) (55) (81) (57) (1,067)

Closing net book amount 14,286 624 252 744 15,906

As at 30 June 2024
Cost  22,300  833  996  1,686  25,815
Accumulated depreciation  (8,014)  (209)  (744)  (942)  (9,909)

Net book amount  14,286  624  252  744  15,906

Unaudited:
Six months ended 30 June 2023
Opening net book amount 3,595 578 333 306 4,812
Additions 349 – 26 – 375
Depreciation charge (481) (101) (87) (28) (697)

Closing net book amount 3,463 477 272 278 4,490

As at 30 June 2023
Cost 10,175 1,156 876 1,126 13,333
Accumulated depreciation (6,712) (679) (604) (848) (8,843)

Net book amount 3,463 477 272 278 4,490

Depreciation has been charged to the following categories in the statements of comprehensive income and balance sheet as
follows:
Year ended 31 December Six months ended 30 June
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Cost of sales 820 725 877 464 743
Administrative expenses 51 127 196 103 155
Research and development expenses – – 1 – 1
Contract fulfilment cost 85 272 266 130 168

956 1,124 1,340 697 1,067


--- page 455 ---
– I-30 –
APPENDIX I  ACCOUNTANT’S REPORT
Depreciation of property, plant and equipment is calculated using the straight-line method to allocate their costs, net of their
residual values, over their estimated useful lives or, in case of leasehold improvements, the lease term if shorter, as follows:
Machinery equipment 3–10 years
Vehicles 5 years
Office equipment 3–5 years
Leasehold improvements Shorter of their useful life or the lease term
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
Property, plant and equipment are stated at historical cost less depreciation and impairment losses (if any). Historical cost
includes expenditures that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it
is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured
reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs
and maintenance are charged to profit or loss during the reporting period in which they are incurred.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater
than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount and are recognised in other
gains/(losses) in the statements of comprehensive income.
14 LEASE
(a) Amounts recognised in the balance sheets
Right-of-use assets
Land use rights Properties Total
RMB’000 RMB’000 RMB’000
As at 1 January 2021 1,127 – 1,127
Additions – 1,048 1,048
Depreciation charge (97) (125) (222)

As at 31 December 2021 1,030 923 1,953

As at 1 January 2022 1,030 923 1,953
Additions – 1,421 1,421
Depreciation charge (97) (303) (400)

As at 31 December 2022 933 2,041 2,974

As at 1 January 2023 933 2,041 2,974
Depreciation charge (64) (353) (417)
Termination of the lease (14(c)) (869) – (869)

As at 31 December 2023 – 1,688 1,688


--- page 456 ---
– I-31 –
APPENDIX I  ACCOUNTANT’S REPORT
Land use rights Properties Total
RMB’000 RMB’000 RMB’000
As at 1 January 2024 – 1,688 1,688
Additions (Note27(b)(i)) – 36,304 36,304
Depreciation charge – (630) (630)

As at 30 June 2024 – 37,362 37,362

Unaudited:
As at 1 January 2023 933 2,041 2,974
Depreciation charge (48) (177) (225)

As at 30 June 2023 885 1,864 2,749

Lease liabilities
As at 31 December As at 30 June
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Lease liabilities
Current 391 693 508 1,483
Non-current 4,995 5,786 1,494 37,119

5,386 6,479 2,002 38,602

(b) Amounts recognised in the statements of comprehensive income and the balance sheets
Year ended 31 December Six months ended 30 June
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Depreciation charged to administrative
expenses – 153 203 101 324
Depreciation charged to cost of sales 222 247 214 124 269
Depreciation charged to research and
development expenses – – – – 21
Depreciation changes in contract
fulfilment cost – – – – 16

Total depreciation charge of
right-of-use assets 222 400 417 225 630

Interest expenses (included in
finance costs) 254 281 219 142 488


--- page 457 ---
– I-32 –
APPENDIX I  ACCOUNTANT’S REPORT
In August 2023, the Company early terminated certain lease of land use right and a loss amounting to RMB869,000
was recognised. For details, please refer to Note 14(c).
There are no short-term leases during the years ended 31 December 2021,  2022 and 2023 and the six months ended
30 June 2023 and 2024.
The total cash outflows for leases for the years ended 31 December 2021,  2022 and 2023 and the six months ended
30 June 2023 and 2024 are as below:
Year ended 31 December Six months ended 30 June
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Principal elements of lease payments
(presented as financing cash flow) 484 127 290 337 150
Related interest paid (presented as
financing cash flow) 48 86 96 49 42

532 213 386 386 192

The weighted average incremental borrowing rate applied to the lease liabilities was 4.9%, respectively, for the
years ended 31 December 2021,  2022 and 2023 and the six months ended 30 June 2023 and 2024.
(c) The Company’s leasing activities and how these are accounted for
In July 2016, the Company subleased certain land use right with a remaining lease term of 16 .2 years to a third
party. Such sublease is classified as finance lease as the sublease term of the land use right equals to the remaining term of
the corresponding head leases. On the commencement date of the sublease of the land use right, the Company derecognised
the right-of-use asset of RMB3,123,000 and recognised a lease payments receivable of RMB4,994,000 accordingly, being
the present value of the lease payments as agreed. As at 31 December 2021 and 2022, the lease payments receivable of
the subleased land use right amounted to RMB4,388,000 and RMB4,189,000, respectively (Note 18). In August 2023, the
Company entered a termination agreement for the aforementioned land use right with the lessor in the head lease and the
lessee in the sublease. Upon the termination, the Company derecognised right-to-use assets of RMB869,000, lease liabilities
of RMB3,914,000, and lease payments receivable of RMB3,914,000. A loss amounting to RMB869,000 was recognised as
other losses due to such early termination of the lease.
In July 2017, the Company subleased a property with a remaining lease term of 4.7 years to a third party. Such
sublease is classified as finance lease as the sublease term of the property equals to the remaining term of the corresponding
head leases. On the commencement date of the sublease of the property, the Company derecognised the right-of-use asset of
RMB1,430,000 and recognised a lease payments receivable of RMB2,073,000 accordingly, being the present value of the
lease payments as agreed. As at 31 December 2021,  2022 and 2023 and 30 June 2024 the lease payments receivable of the
subleased property amounted to RMB633,000,  RMB559,000 and RMB559,000 and RMB559,000, respectively (Note 18).


--- page 458 ---
– I-33 –
APPENDIX I  ACCOUNTANT’S REPORT
15 DEFERRED INCOME TAX
(a) The analysis of deferred tax assets and deferred tax liabilities is as follows:
As at 31 December As at 30 June
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Deferred tax assets 4,044 4,392 3,602 12,783
Set-off of deferred tax liabilities (1,743) (1,930) (562) (9,480)

2,301 2,462 3,040 3,303

Deferred tax liabilities (1,743) (1,930) (562) (9,480)
Set-off of deferred tax assets 1,743 1,930 562 9,480

– – – –

The net movements on the deferred tax assets – net are as follows:
Year ended 31 December Six months ended 30 June
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
At the beginning of the year/period 1,594 2,301 2,462 2,462 3,040
Tax credit to profit or loss (Note 10) 707 161 578 227 263

At the end of the year/period 2,301 2,462 3,040 2,689 3,303


--- page 459 ---
– I-34 –
APPENDIX I  ACCOUNTANT’S REPORT
(b) The movements in deferred tax assets and liabilities during the years ended 31 December 2021,  2022 and 2023 and
the six months ended 30 June 2023 and 2024, without taking into consideration the offsetting of balances within the
same tax jurisdiction, are as follows:
Deferred tax assets Deferred tax liabilities
Provision
 for credit
loss of trade
 receivables
and other
receivables
Payroll
 accrual
Lease
liabilities
Right-
of-use
assets
Lease
 payments
receivable Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at 1 January 2021 1,897 128 1,254 (282) (1,403) 1,594
Tax credited/(charged) to
profit or loss 530 143 92 (206) 148 707

As at 31 December 2021 2,427 271 1,346 (488) (1,255) 2,301

As at 1 January 2022 2,427 271 1,346 (488) (1,255) 2,301
Tax credited/(charged) to
profit or loss 345 (271) 274 (255) 68 161


As at 31 December 2022 2,772 – 1,620 (743) (1,187) 2,462

As at 1 January 2023 2,772 – 1,620 (743) (1,187) 2,462
Tax credited/(charged) to
profit or loss 329 – (1,119) 321 1,047 578

As at 31 December 2023 3,101 – 501 (422) (140) 3,040

As at 1 January 2024 3,101 – 501 (422) (140) 3,040
Tax credited/(charged) to
profit or loss 32 – 9,149 (8,918) – 263

As at 30 June 2024 3,133 – 9,650 (9,340) (140) 3,303

Unaudited
As at 1 January 2023 2,772 – 1,620 (743) (1,187) 2,462
Tax credited/(charged) to
profit or loss 397 – (160) 56 (66) 227

As at 30 June 2023 3,169 – 1,460 (687) (1,253) 2,689


--- page 460 ---
– I-35 –
APPENDIX I  ACCOUNTANT’S REPORT
16 CONTRACT FULFILMENT COSTS
As at 31 December As at 30 June
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Contract fulfilment costs 820 2,053 1,390 2,440

As at 31 December 2021 , 2022 and 2023 and 30 June 2024, the balance of contract fulfilment costs represents the asset
recognised in relation to costs to fulfil contracts for testing services.
The costs incurred to fulfil a contract with a customer are capitalised as an asset if all of the following criteria are met:
(a) The costs relate directly to a contract or to an anticipated contract that the entity can specifically identify;
(b) The costs generate or enhance resources of the entity that will be used in satisfying (or in continuing to satisfy)
performance obligations in the future; and
(c) The costs are expected to be recovered.
The capitalised contract costs are charged to profit or loss on a systematic basis that is consistent with the transfer to the
customer of the goods or services to which asset relates.
An impairment loss will be recognised in profit or loss to the extent that the carrying amount of contract fulfilment costs
exceeds:
(a) the remaining amount of consideration expected to receive in exchange for the goods or services to which the
contract cost relates; less
(b) The cost that relate directly to providing those goods or services and that have not been recognised as expenses.


--- page 461 ---
– I-36 –
APPENDIX I  ACCOUNTANT’S REPORT
17 FI NANCIAL INSTRUMENTS BY CATEGORY
As at 31 December As at 30 June
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Financial assets
Financial assets at amortised cost:
Trade receivables (Note 18) 35,411 34,545 29,325 32,874
Other receivables (excluding non-financial assets)
(Note 18) 5,302 4,738 542 399
Cash and cash equivalents (Note 19) 35,846 32,221 59,145 42,459

76,559 71,504 89,012 75,732

Financial liabilities
Financial liabilities at amortised cost:
Trade payables (Note 22) 105 738 612 492
Other payables and accruals (excluding non-financial
liabilities) (Note 23) 301 1,345 6,317 7,074
Lease liabilities (Note 14) 5,386 6,479 2,002 38,602

5,792 8,562 8,931 46,168


--- page 462 ---
– I-37 –
APPENDIX I  ACCOUNTANT’S REPORT
18 TRADE AND OTHER RECEIVABLES AND PREPAYMENTS
As at 31 December As at 30 June
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Trade receivables (Note (a)) 44,479 44,983 41,165 44,842
Less:  provision for credit loss of trade receivables
(Note 3.1(b)(i)) (9,068) (10,438) (11,840) (11,968)


35,411 34,545 29,325 32,874

Other receivables (Note (b))
Lease payments receivable (Note (c)) 5,021 4,748 559 559
Amounts  due from related parties (Note (27c)) 436 – – –
Others 485 640 548 404

5,942 5,388 1,107 963
Less:  allowance for credit loss of other receivables
(Note 3.1(b )(ii)) (640) (650) (565) (564)

5,302 4,738 542 399

Prepayments
Prepayments for property, plant and equipment – – 3,025 2,337
Prepayments for professional services fee – 450 450 1,126
Prepayments for listing expenses – – 133 50
Others 73 86 207 202

73 536 3,815 3,715
Deferred listing expenses – – 15,544 21,301

Less:  Non-current portion of other receivables and
prepayments (4,187) (3,976) (3,025) (2,985)

36,599 35,843 46,201 55,304


--- page 463 ---
– I-38 –
APPENDIX I  ACCOUNTANT’S REPORT
(a) As at 31 December 2021,  2022 and 2023 and 30 June 2024, the aging analysis of trade receivables based on the
dates when the trade receivables are recognised is as follows:
As at 31 December As at 30 June
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Within 1 year 22,544 14,146 27,950 31,302
1 year to 2 years 13,339 12,908 3,852 4,707
2 years to 3 years 6,985 11,743 3,327 2,997
3 years to 4 years 562 4,870 2,644 3,114
Over 4 years 1,049 1,316 3,392 2,722

44,479 44,983 41,165 44,842

As at 31 December 2021,  2022 and 2023 and 30 June 2024, trade receivables were all denominated in RMB and the
fair value of trade receivables approximated their carrying amount.
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of
business. If collection of trade receivables is expected in one year or less (or in the normal operating cycle of the
business if longer), they are classified as current assets. If not, they are presented as non-current assets.
Trade receivables are recognised initially at the amount of consideration that is unconditional unless they contain
significant financing components, when they are recognised at fair value. The Company holds the trade receivables
with the objective of collecting the contractual cash flows and therefore measures them subsequently at amortised
cost using the effective interest method.
The Company applies the simplified approach to provide for expected credit losses prescribed by HKFRS 9. For
details, please refer to Note 3.1(b ).
(b) The Company applies three-stage general approach to provide for expected credit losses prescribed by HKFRS 9.
For details, please refer to Note 3.1(b ).
(c) As at 31 December 2021,  2022 and 2023 and 30 June 2024, the lease payments receivable of approximately
RMB5,021,000, RMB4,748,000 and RMB559,000 and RMB559,000 arose from certain property and land use right
subleased by the Company (Note 14).
On 31 August 2023, the Company early terminated the sublease for the land use right. For details, please refer to
Note 14(c).
19 CASH AND CASH EQUIVALENTS
As at 31 December As at 30 June
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Cash at banks and cash on hands denominated
in RMB 35,846 32,221 59,145 42,459


--- page 464 ---
– I-39 –
APPENDIX I  ACCOUNTANT’S REPORT
20 PAID- IN CAPITAL AND SHARE CAPITAL
Paid-in capital
Note RMB’000
As at 1 January 2021 and 31 December 2021 489
Capital contribution from an equity holder (a) 1,331

As at 31 December 2022 1,820

As at 1 January 2023 1,820
Transfer from capital reserves 21(c) 2,930
Capital contribution from an equity holder 21(c) 250
Conversion into a joint stock company (5,000)

As at 31 December 2023 –

Number of shares Share capital
Note RMB’000
As at 1 January 2023 – –
Conversion into a joint stock company 21(b) 20,000 20,000
Capital contribution from a shareholder 21(c) 3,750 3,750

As at 31 December 2023 and 30 June 2024 23,750 23,750

(a) In December 2022, a cash capital contribution of RMB1,331,000 was injected by Xinyi City CEQS Center.
21 RESERVES
Share
premium
Capital
reserves
Statutory
reserves Total
RMB’000 RMB’000 RMB’000 RMB’000
Note (a)
As at 1 January 2021, 31 December 2021 and 2022 – – 910 910

As at 1 January 2023 – – 910 910
Transfer from retained earnings to reserves (Note (b)) – 58,280 (910) 57,370
Transfer to paid-in capital (Note (c)) – (2,930) – (2,930)
Capital contribution from an equity holder (Note (c)) – 4,750 – 4,750
Conversion into a joint stock company (Note (b)) 46,072 (60,100) (143) (14,171)
Capital contribution from an equity holder (Note (c)) 11,250 – – 11,250
Appropriation to statutory reserves – – 1,325 1,325

As at 31 December 2023 and 30 June 2024 57,322 – 1,182 58,504


--- page 465 ---
– I-40 –
APPENDIX I  ACCOUNTANT’S REPORT
(a) In accordance with the PRC Company Law, the Company is required to appropriate 10% of its profits after tax, as
determined in accordance with relevant accounting principles generally accepted in the PRC and other applicable
regulations, to the statutory reserve until such reserve reaches 50% of its registered capital. The appropriation to
the reserve must be made before any distribution of dividends to equity holders of the Company. The statutory
reserve can be used to offset losses carried forward from previous years, if any, and part of the statutory reserve
can be capitalised as the company capital provided that the amount of the remaining balance of reserve after the
capitalisation shall not be less than 25% of its capital.
(b) In July 2023, the Company was converted into a limited liability company. According to the resolution of
the shareholder, certain retained earnings and statutory reserves of the Company amounting to approximately
RMB58,280,000 were transferred to capital reserves.
In October 2023, the Company was converted into a joint stock company with limited liability under the Company
Law of the PRC. By reference to the net assets of the Company as at 31 July 2023 amounting to approximately
RMB66,072,000, the Company issued 20,000,000 ordinary shares at RMB1 each, the excess of net assets over
nominal value of the ordinary shares was credited to the share premium.
(c) In July 2023, the Company increased its paid-in capital by  RMB2,930,000 by way of capitalis ation of capital
reserves of the Company.
In July 2023, Xinyi Xinhui State-owned Capital Investment Group Co., Ltd. (“Xinyi Xinhui”) made an capital
contribution in terms of cash of RMB5,000,000 to the Company, of which RMB250,000 was recognised as paid-in
capital and RMB4,750,000 was recognised to capital reserve of the Company.
In November 2023, Xinyi Xinhui made an capital contribution, in terms of cash, of RMB15,000,000 to the
Company, of which RMB3,750,000 was recognised as share capital and RMB11,250,000 was recognised to share
premium of the Company.
22 TRADE PAYABLES
As at 31 December As at 30 June
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Trade payables 105 738 612 492

The carrying amount of trade payables approximated as their fair value due to their short-term maturity in nature.
At 31 December 2021 , 2022 and 2023 and 30 June 2024, the aging of trade payables based on the date of the goods and
services received is as follows:
As at 31 December As at 30 June
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Within 1 year 105 738 489 492
1 year to 2 years – – 123 –

105 738 612 492


--- page 466 ---
– I-41 –
APPENDIX I  ACCOUNTANT’S REPORT
23 OTHER PAYABLES AND ACCRUALS
As at 31 December As at 30 June
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Salaries and welfare payables 1,617 1,616 998 608
Tax payables 2,935 1,825 1,655 1,401
Accruals for listing expenses – – 5,661 6,029
Payables for property, plant and equipment 231 720 – 368
Other payables 70 625 656 677

4,853 4,786 8,970 9,083

(a) As at 31 December 2021,  2022 and 2023 and 30 June 2024, the carrying amounts of other payables and accruals
approximated their fair values.
(b) Trade and other payables were denominated in the following currencies:
As at 31 December As at 30 June
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
– RMB 4,853 4,786 4,403 5,112
– HKD – – 4,371 3,971
– USD – – 196 –

4,853 4,786 8,970 9,083


--- page 467 ---
– I-42 –
APPENDIX I  ACCOUNTANT’S REPORT
24 CASH FLOW INFORMATION
(a) Cash generated from operations
Reconciliation of profit before income tax to cash generated from operations is as follows:
Year ended 31 December Six months ended 30 June
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Profit before income tax 23,723 3,951 17,734 5,751 9,817
Adjustments for:
– Depreciation and amortisation (Note 7) 1,257 1,317 1,891 1,004 1,623
– Changes of provision for credit
loss of trade receivables (Note 3.1(b )) 2,037 1,370 1,402 1,792 128
– Changes of provision for credit
loss of other receivables (Note 3.1(b )) 84 10 (85) (203) (1)
– Finance costs – net (Note 9) 154 184 149 109 439
– Other losses on the disposal of
property, plant and equipment – 13 38 – –
– Other losses on the disposal of right-
of-use assets – – 869 – –
– Other income – – (258) (117) –

Operating cashflow before changes in
working capital and taxes paid 27,255 6,845 21,740 8,336 12,006
Change in operating assets and liabilities:
– Contract fulfilment costs and inventory 405 (1,016) 538 354 (1,195)
– Trade receivables (Note 18) (13,845) (504) 3,818 (7,681) (3,677)
– Prepayments and other receivables
(Note 18) (155) (821) (126) 791 (443)
– Trade payables (Note 22) (503) 633 (126) (294) (120)
– Contract liabilities (Note 6) (408) 310 334 39 (162)
– Other payables and accruals
(Note 23) 301 (556) (757) (493) 192

Cash generated from operations 13,050 4,891 25,421 1,052 6,601


--- page 468 ---
– I-43 –
APPENDIX I  ACCOUNTANT’S REPORT
(b) Non-cash investing and financing activities
For the years ended 31 December 2021, 2022 and 2023 and the six months ended 30 June 2023 and 2024, the
lease payments for the subleased land use right of RMB396,000, RMB396,000 and RMB396,000 and RMB396,000 and
nil, respectively, were directly transferred to the lessor in the head lease by the lessee of sublease. Such transaction was
accounted for as non-cash transaction as neither investing cash flows in relation to the receipt of the lease payments
receivable in the sublease were generated nor financing cash flows in relation to the payments of the lease liabilities in the
head lease were incurred by the Company.
(c) Reconciliation of liabilities arising from financing activities
Lease liabilities
RMB’000
Balance as at 1 January 2021 (5,012)
Additions (1,048)
Financing cash flows 532
Interest expenses on lease liabilities (254)
Non-cash transactions (Note 24(b)) 396

Balance as at 31 December 2021 (5,386)

Balance as at 1 January 2022 (5,386)
Additions (1,421)
Financing cash flows 213
Interest expenses on lease liabilities (281)
Non-cash transactions (Note 24(b)) 396

Balance as at 31 December 2022 (6,479)

Balance as at 1 January 2023 (6,479)
Financing cash flows 386
Interest expenses on lease liabilities (219)
Termination of the lease (Note 14(c)) 3,914
Non-cash transactions (Note 24(b)) 396

Balance as at 31 December 2023 (2,002)


--- page 469 ---
– I-44 –
APPENDIX I  ACCOUNTANT’S REPORT
Lease liabilities
RMB’000
Balance as at 1 January 2024 (2,002)
Additions (36,304)
Financing cash flows 192
Interest expenses on lease liabilities (488)

Balance as at 30 June 2024 (38,602)

Unaudited:
Balance as at 1 January 2023 (6,479)
Financing cash flows 386
Interest expenses on lease liabilities (142)
Non-cash transactions (Note 24(b)) 396

Balance as at 30 June 2023 (5,839)

25 COMMITMENTS
Significant capital expenditure contracted for as at 31 December 2021,  2022 and 2023 and 30 June 2024 but not recognised as
liabilities was as follows:
As at 31 December As at 30 June
2021 2022 2023 2024
Property, plant and equipment – – 4,439 1,385

26 CONTINGENCIES
As at 31 December 2021, 2022 and 2023 and 30 June 2024, the Company did not have any significant contingent liabilities.


--- page 470 ---
– I-45 –
APPENDIX I  ACCOUNTANT’S REPORT
27 RELATED PARTY TRANSACTIONS
The following is a summary of the transactions carried out between the Company and its related parties during the Track
Record Period, and balances with related party transactions as at 31 December 2021,  2022 and 2023 and 30 June 2024.
(a) Name and relationship with related parties
The following companies are related parties of the Company that had significant balances and/or transactions with
the Company as at/or during the Track Record Period.
Name Relationship
Xinyi City Construction Engineering Quality and Safety
Affairs Center
Immediate holding company
Xinyi Xinjian Urban and Transportation Investment
Development Co., Ltd.
Entity controlled by the PRC Government
Xinyi Municipal Government Investment Project
Construction Center
Entity controlled by the PRC Government
Xinyi Xinye Industry and Industrial Park Investment Co., Ltd Entity controlled by the PRC Government
Guangdong Xinyi Kaiyuan Co., Ltd Entity controlled by the PRC Government
Xinyi Third People's Hospital Entity controlled by the PRC Government
Xinyi Vocational and Technical School Entity controlled by the PRC Government
Xinyi Twelfth Primary School Entity controlled by the PRC Government
Xinyi Beijie Town Central Primary School Entity controlled by the PRC Government
Xinyi Sixth Middle School Entity controlled by the PRC Government
Xinyi Sixth Primary School Entity controlled by the PRC Government
Xinyi Qianpai Town Central Kindergarten Entity controlled by the PRC Government
Guangxi Construction Engineering Group third construction
engineering Co., Ltd.
Entity controlled by the PRC Government
Gaozhou Construction Engineering Trade Service Center Entity controlled by the PRC Government
China Construction Fifth Engineering Division Corp., Ltd. Entity controlled by the PRC Government
Guangzhou Municipal Affairs Group Limited Entity controlled by the PRC Government
China MCC20 Group Corp., Ltd. Entity controlled by the PRC Government
Maoming Xinyi Construction Engineering Company Entity controlled by the PRC Government
Xinyi City Xinhua Agriculture, Culture and Tourism
Investment and Development Co., Ltd.
Entity controlled by the PRC Government
Xinyi People’s Hospital Entity controlled by the PRC Government
Guangdong Tianyi Cold Chain Logistics Co., Ltd. Entity controlled by the PRC Government
Xinyi Market Supervision and Administration Bureau PRC government administrative bureau
Xinyi Municipal Civil Affairs Bureau PRC government administrative bureau
Xinyi Education Bureau PRC government administrative bureau
Xinyi Public Security Bureau PRC government administrative bureau
Pingtang Town People's Government of Xinyi City PRC government administrative bureau
Xinyi City Zhushan Bridge Demolition and Reconstruction
Project Management Office
PRC government administrative bureau
Xinyi City Bureau of Housing and Urban-Rural Development PRC government administrative bureau


--- page 471 ---
– I-46 –
APPENDIX I  ACCOUNTANT’S REPORT
(b) Significant related party transactions
Year ended 31 December Six months ended 30 June
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Addition of right-of-use assets
– PRC government administrative
bureaus (note (i)) 1,048 1,421 – – –
– An entity controlled by PRC
government – – – – 36,304

Interest expenses on lease liabilities
– PRC government administrative
bureaus (note (i)) 36 86 96 49 42
– An entity controlled by PRC
government – – – – 447

Interest income on other receivables
– An entity controlled by the PRC
Government (note (iv)) – – 258 117 –

Provision of services
– Immediate holding company
(note (ii)) –* – 85 4 43
– PRC government administrative
bureaus and e ntities controlled by
the PRC Government (note (iii)) 2,305 8,550 15,600 6,818 9,753

2,305 8,550 15,685 6,822 9,796

* represents that the amount is less than RMB1,000 for respective year.
(i) The Company leases office premises from Xinyi City Bureau of Housing and Urban-Rural Development.
The monthly rents payable by the Company during the leasing terms are determined with reference to the
prevailing market prices.
In April 2024, the Company entered into a lease agreement with Xinyi Xinye Industry and Industrial Park
Investment Co., Ltd, with a lease term of 20 years from April 2024. The leased properties will be used for
offices and laboratories.
(ii) The Company provided testing services to the immediate holding company. The transaction price of the
services is determined with reference to the prevailing market prices.
(iii) The Company provided testing services and inspection services to certain PRC g overnment administrative
bureaus and entities controlled by the PRC Government. The transaction price of the services is determined
with reference to the prevailing market prices.


--- page 472 ---
– I-47 –
APPENDIX I  ACCOUNTANT’S REPORT
(iv) A loan with principal of RMB3,750,000 and a loan with principal of RMB4,100,000 were granted to the
constructor of the new office building of the Company in January 2023 and March 2023, respectively. The
loans are unsecured and bearing interest of 4.35% per annum. The loan interest inclusive of the related tax
for the year ended 31 December 2023 amounted to RMB258,000. In December 2023, the loans and interest
were fully repaid.
(c) Significant balances with related parties
As at 31 December As at 30 June
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Trade nature
Lease liabilities (note (i))
– PRC government administrative bureaus 936 2,292 2,002 1,852
– An entity controlled by PRC government – – – 36,750

936 2,292 2,002 38,602

Trade receivables (note (i), (ii))
– Immediate holding company – – 2 –
– PRC government administrative bureaus
and entities controlled by the PRC
Government 11,393 21,926 11,800 19,349

11,393 21,926 11,802 19,349

Contract liabilities (note(i), (ii))
– Entities controlled by the PRC Government – – – 271

Prepayments (note(i), (ii), (iii))
– Entities controlled by the PRC Government – – 2,798 –

Non-trade nature
Other receivables
– Immediate holding company (note (iv )) 436 – – –

(i) The balances of lease liabilities, trade receivables,  contract liabilities and prepayments were trade in nature
and unsecured.
(ii) The balances of trade receivables,  contract liabilities and prepayments were interest free.
(iii) As at 31 December 2023, the balances was a prepayment for the purchase of equipments.
(iv) The balance as at 31 December 2021 was non-trade in nature, unsecured and interest free. The amount due
from immediate holding company was repaid in December 2022.


--- page 473 ---
– I-48 –
APPENDIX I  ACCOUNTANT’S REPORT
(d)  Key management’s compensation
Compensation for key management is set out as follows.
Year ended 31 December Six months ended 30 June
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Wages, salaries and bonuses 626 820 865 452 625
Pension costs – defined contribution
plans, housing funds, medical
insurances and other social
insurances 272 268 398 219 248
Other employee benefits 61 94 74 48 75

959 1,182 1,337 719 948

As at 31 December 2021 , 2022 and 2023 and 30 June 2024, the balance of the above compensation for key
management is RMB118,000, RMB174,000 and RMB113,000 and RMB80,000, respectively.
(e)  Other individually insignificant transactions with government-related entities
The Company has certain transactions with PRC government administrative bureaus and entities controlled by
the PRC Government including testing services and inspection services. Apart from the transactions disclosed above, the
transactions with PRC government administrative bureaus and other entities controlled by the PRC G overnment which are
collectively, but not individually, significant account for approximately 12.77% , 1.78% and 6.79% and 6.53% and 5.25%
of the total revenue of the Company during the year ended 31 December 2021,  2022 and 2023 and the six months ended 30
June 2023 and 2024, respectively.
These transactions are conducted in the ordinary course of the Company’s business on terms comparable to those
with other entities that are not controlled by the PRC Government.


--- page 474 ---
– I-49 –
APPENDIX I  ACCOUNTANT’S REPORT
28 BENEFITS AND INTERESTS OF DIRECTORS
During the year ended 31 December 2021 and 2022 and six months ended 30 June 2023, there is no director appointed for
the Company.
The directors received emoluments from the Company (including the emoluments in their role as senior management and
employee before their appointment as directors) for the year/period ended 31 December 2023 and 30 June 2024 as follows:
Wages,
salaries and
 bonuses
Pension
costs – defined
contribution
plans, housing
funds, medical
insurances and
 other social
insurances
Other
employee
benefits Total
RMB’000 RMB’000 RMB’000 RMB’000
For the year ended 31 December 2023
Executive directors:
Mr. Lai Feng (note (i)) 156 71 17 244
Ms. Mai Jiayu (note (i)) 131 61 10 202
Mr. Huang Fei (note (ii)) 141 69 15 225
Mr. Zhang Xihua (note (ii)) 131 60 8 199
Non-executive directors
Ms. Zou Chan (note (i)) 127 59 9 195
Mr. Chen Guangfu (note (iii)) – – – –

686 320 59 1,065

For six months ended 30 June 2024
Executive directors:
Mr. Lai Feng (note (i)) 75 36 13 124
Ms. Mai Jiayu (note (i)) 72 29 8 109
Mr. Huang Fei (note (ii)) 68 33 10 111
Mr. Zhang Xihua (note (ii)) 72 30 9 111
Non-executive directors
Ms. Zou Chan (note (i)) 59 28 8 95
Mr. Chen Guangfu (note (iii)) – – – –

346 156 48 550


--- page 475 ---
– I-50 –
APPENDIX I  ACCOUNTANT’S REPORT
(i) Mr. Lai Feng, Ms. Mai Jiayu and Ms. Zou Chan were appointed as director since 7 July 2023.
(ii) Mr. Huang Fei and Mr. Zhang Xihua were appointed as director since 26 October 2023.
(iii)  Mr. Chen Guangfu were appointed as director since 26 October 2023. The emoluments of the Mr. Chen Guangfu
in relation to his services rendered for the Company since his appointment were borne by the immediate holding
company. His emoluments were not allocated to the Company as the management of the Company considers there is
no reasonable basis of allocation.
(a) Directors’ retirement and termination benefits
During the Track Record Period, there were no termination benefit nor no additional retirement benefit received by
the directors except for the attributions to a retirement benefit scheme in accordance with the rules and regulations in the
PRC.
(b) Consideration provided to the third parties for making available directors’ services
During the Track Record Period, the Company did not pay consideration to any third parties for making available
directors’ services.
(c) Information about loans, quasi-loans and other dealings in favor of directors, controlled bodies corporate by
and connected entities with such directors
During the Track Record Period, there were no loans, quasi-loans and other dealings entered into by the Company or
subsidiaries undertaking of the Company, where applicable, in favor of director.
(d) Directors’ material interests in transactions, arrangements or contracts
No significant transactions, arrangements and contracts in relation to the Company’s business to which the Company
was a party and in which a director of the Company had a material interest, whether directly or indirectly, subsisted as at 31
December 2021 and 2022 and 2023 and 30 June 2024 or at any time during the Track Record Period.
29 EVENT OCCURRING AFTER THE REPORTING PERIOD
There are no other significant events after the end of the Track Record Period and up to the date of this report, which may
result in adjustments or additional disclosure to be made in this Historical Financial Information.


--- page 476 ---
– I-51 –
APPENDIX I  ACCOUNTANT’S REPORT
30 SUMMARY OF OTHER POTENTIALLY MATERIAL A CCOUNTING POLICIES
30.1 Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of the Company are measured using the currency of the primary
economic environment in which the entity operates (“the functional currency”). The financial statements are
presented in RMB, which is the Company’s functional currency and presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the
dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and
from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates
are generally recognised in profit or loss.
The Company’s foreign exchange gains and losses are presented in the statement of profit or loss on a net
basis within other gains/(losses).
30.2 Impairment of non-financial assets
Non-financial assets are tested for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal
and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash flows which are largely independent of the cash inflows from other assets or groups of assets
(cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible
reversal of the impairment at each reporting period.
30.3 Financial assets
(a) Classification
The Company classifies its financial assets in the following measurement categories:
• those to be measured subsequently at fair value (either through other comprehensive income (“OCI”)
or through profit or loss), and
• those to be measured at amortised cost.
The classification depends on the entity’s business model for managing the financial assets and the
contractual terms of the cash flows.
If collection of the amounts is expected in one year or less, they are classified as current assets, otherwise,
they are presented as non-current assets.
The Company’s financial assets comprise trade receivables, other receivables and cash and cash equivalents
which are measured at amortised cost.


--- page 477 ---
– I-52 –
APPENDIX I  ACCOUNTANT’S REPORT
(b) Recognition and derecognition
Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the
Company commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash
flows from the financial assets have expired or have been transferred and the Company has transferred substantially
all the risks and rewards of ownership.
(c) Measurement
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a
financial asset not at fair value through profit or loss (“FVPL”), transaction costs that are directly attributable to the
acquisition of the financial asset.
Debt instruments
Subsequent measurement of debt instruments depends on the Company’s business model for
managing the asset and the cash flow characteristics of the asset. The Company held debt instruments
classified as financial assets at amortised costs.
• Amortised cost: Assets that are held for collection of contractual cash flows where those
cash flows represent solely payments of principal and interest are measured at amortised
cost. Interest income from these financial assets is included in finance income using the
effective interest rate method. Any gain or loss arising on derecognition is recognised
directly in profit or loss and presented in other gains/(losses). Impairment losses are
presented as separate line item in the statement of profit or loss.
(d) Impairment of financial assets
The Company assesses on a forward-looking basis the expected credit losses associated with its financial
assets carried at amortised cost. The impairment methodology applied depends on whether there has been a
significant increase in credit risk. Note 3.1 details how the Company determines whether there has been a significant
increase in credit risk.
For trade receivables, the Company applies the simplified approach permitted by HKFRS 9, which requires
expected lifetime losses to be recognised from initial recognition of the receivables.
Impairment of other receivables are measured as either 12-month expected credit losses or lifetime expected
losses method, depending on whether there has been a significant increase in credit risk since initial recognition. If a
significant increase in credit risk of a receivable has occurred since initial recognition, then impairment is measured as
lifetime expected credit losses.
30.4 Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheets where the Company
currently has a legally enforceable right to offset the recognised amounts, and there is an intention to settle on a net basis
or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future
events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the
company or the counterparty.


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APPENDIX I  ACCOUNTANT’S REPORT
30.5 Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand,
deposits held at call with financial institutions.
30.6 Paid-in capital/share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown
in equity as a deduction, net of tax, from the proceeds.
30.7 Current and deferred income tax
The income tax expense or credit for the period is the tax payable on the current year’s taxable income based on
the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to
temporary differences and to unused tax losses.
(a) Current income tax
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted
at the end of the reporting period in the countries where the Company and associates operate and generate taxable
income. Management periodically evaluates positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation and considers whether it is probable that a taxation authority
will accept an uncertain tax treatment. The Company measures its tax balances either based on the most likely
amount or the expected value, depending on which method provides a better prediction of the resolution of the
uncertainty.
(b) Deferred income tax
Deferred income tax is provided in full, using the liability method, on temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However,
deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax
is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business
combination that at the time of the transaction affects neither accounting nor taxable profit or loss and does not give
rise to equal taxable and deductible temporary differences. Deferred income tax is determined using tax rates (and
laws) that have been enacted or substantively enacted by the end of the reporting period and are expected to apply
when the related deferred tax asset is realised or the deferred tax liability is settled.
Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to
utilise those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax
assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and
tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net
basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised
in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive
income or directly in equity, respectively.


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– I-54 –
APPENDIX I  ACCOUNTANT’S REPORT
30.8 Employee benefits
(a) Short-term obligations
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 balance sheets.
(b) Pension costs – defined contribution plans
The Company contributes on a monthly basis to a defined contribution plan organised by the relevant
governmental authorities based on certain percentages of the salaries of the employees, subject to certain ceiling.
The Company’s liability in respect of these plans is limited to the contributions payable in each period. Other than
the monthly contributions, the Company has no further payment obligations once the contributions have been paid.
The Company’s contributions to the defined contribution retirement scheme are expensed as incurred.
(c) Bonus plans
The expected cost of bonuses is recognised as a liability when the Company has a present legal or
constructive obligation for payment of bonus as a result of services rendered by employees and a reliable estimate of
the obligation can be made. Liabilities for bonus plans are expected to be settled within 1 year and are measured at
the amounts expected to be paid when they are settled.
(d) Housing funds, medical insurances and other social insurance
The employees of the Company are entitled to participate in various government-supervised housing funds,
medical insurance and other employee social insurance plan. The Company contributes on a monthly basis to these
funds based on certain percentages of the salaries of the employees, subject to certain ceiling. The Company’s
liability in respect of these funds is limited to the monthly contributions payable in each period. Contributions to the
housing funds, medical insurances and other social insurances are expensed as incurred.
(e) Termination benefits
Termination benefits are payable when employment is terminated by the Company before the normal
retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. The Company
recognises termination benefits at the earlier of the following dates: (a) when the Company can no longer withdraw
the offer of those benefits; and (b) when the entity recognises costs for a restructuring that is within the scope of
HKAS 37 and involves the payment of terminations benefits. In the case of an offer made to encourage voluntary
redundancy, the termination benefits are measured based on the number of employees expected to accept the offer.
Benefits falling due more than 12 months after the end of the reporting period are discounted to present value.


--- page 480 ---
– I-55 –
APPENDIX I  ACCOUNTANT’S REPORT
30.9 Related parties
A party is considered to be related to the Company if:
(a)  The party is a person or a close member of that person’s family and that person
• has control or joint control over the Company;
• has significant influence over the Company; or
• is a member of the key management personnel of the Company or of a parent of the Company.
(b)  The party is an entity where any of the following conditions applies:
• the entity and the Company are members of the same group;
• one entity is an associate or joint venture of the other entity (or of a parent, subsidiary or fellow
subsidiary of the other entity);
• the entity and the Company are joint ventures of the same third party;
• one entity is a joint venture of a third entity and the other entity is an associate of the third entity;
• the entity is a post-employment benefit plan for the benefit of employees of either the Company or
an entity related to the Company;
• the entity is controlled or jointly controlled by a person identified in Note (a);
• a person identified in Note (a) has significant influence over the entity or is a member of the key
management personnel of the entity (or of a parent of the entity); or
• the entity, or any member of a group of which it is a part, provides key management personnel
services to the Company or to the parent of the Company.
The Company has certain related party transactions and outstanding balances with government-related
entities, which are controlled, jointly controlled or significantly influenced by the PRC Government.
30.10 Earnings per share
(a) Basic earnings per share
Basic earnings per share is calculated by dividing:
• the profit attributable to owners of the Company, excluding any costs of servicing equity other than
ordinary shares, and
• by the weighted average number of ordinary shares outstanding during the financial year, adjusted
for bonus elements in ordinary shares issued during the year and excluding treasury shares.


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– I-56 –
APPENDIX I  ACCOUNTANT’S REPORT
(b) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take
into account:
• the after income tax effect of interest and other financing costs associated with dilutive potential
ordinary shares, and
• the weighted average number of additional ordinary shares that would have been outstanding
assuming the conversion of all dilutive potential ordinary shares.
30.11 Leases
The Company as a lessee under operating lease
The Company leases properties and land use right. Rental contracts are typically made for fixed periods of 5
year to 18.5 years. Lease terms are negotiated on an individual basis and contain different terms and conditions. The
lease agreements do not impose any covenants other than the security interests in the leased assets that are held by
the lessor. Leased assets may not be used as security for borrowing purposes.
Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset
is available for use by the Company. Contracts may contain both lease and non-lease components. However, for
leases for which the Company is a lessee, it has elected not to separate lease and non-lease components and instead
accounts for these as a single lease component. Right-of-use assets are generally depreciated over the shorter of
the asset's useful life and the lease term on a straight-line basis. If the Company is reasonably certain to exercise a
purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities
include the net present value of the following lease payments:
• fixed payments (including in-substance fixed payments), less any lease incentives receivable
• variable lease payment that are based on an index or a rate, initially measured using the index or
rate as at the commencement date
• amounts expected to be payable by the lessee under residual value guarantees
• the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and
• payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that
option.
Lease payments to be made under reasonably certain extension options are also included in the measurement
of the liability.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit
or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the
liability for each period.


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– I-57 –
APPENDIX I  ACCOUNTANT’S REPORT
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily
determined, which is generally the case for leases in the Company, the lessee’s incremental borrowing rate is used,
being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar
value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.
Right-of-use assets are measured at cost comprising the following:
• the amount of the initial measurement of lease liability
• any lease payments made at or before the commencement date less any lease incentives received
• any initial direct costs, and restoration costs.
Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line
basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less without a
purchase option.
The Company as a sublease lessor
Sublease is a transaction for which an underlying asset is re-leased by a lessee (“sublease lessor”) to a third
party, and the lease (“head lease”) between the head lessor and lessee remains in effect. In classifying a sublease, a
sublease lessor shall classify the sublease as a finance lease or an operating lease as follows:
• if the head lease is a short-term lease that the entity, as a lessee, has accounted for the lease
payments associated with those leases as an expense on either a straight-line basis over the lease
term or another systematic basis, the sublease shall be classified as an operating lease.
• otherwise, the sublease shall be classified by referenced to the right-of-use asset arising from the
head lease as finance lease or operating lease.
When the sublease is classified as a finance lease, finance income shall be recognised over the lease term,
based on a pattern reflecting a constant periodic rate of return on the sublease lessor’s net investment in the lease.
When the sublease is classified as an operating lease, lease payments from operating leases shall be recognised as
income on either a straight-line basis or another systematic basis that is more representative of the pattern in which
benefit from the use of the underlying asset is diminished.
30.12 Dividend distribution
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the
discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.
30.13 Intangible assets
The intangible assets of the Company are computer software, which are initially recognised and measured at costs
incurred to acquire and bring them to use. The Company’s software are amortised on a straight line basis over their estimated
useful lives of 3 or 10 years.
III. SUBSEQUENT FINANCIAL STATEMENTS
No audited financial statements have been prepared by the Company in respect of any period
subsequent to 30 June 2024 and up to the date of this report. No dividend or distribution has been declared
or made by the Company in respect of any period subsequent to 30 June 2024.


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– II-1 –
APPENDIX II  UNAUDITED PRO FORMA FINANCIAL INFORMATION
The information set out in this Appendix II does not form part of the Accountant’s Report from
PricewaterhouseCoopers, Certified Public Accountants, Hong Kong, the reporting accountant of the
Company, as set out in Appendix I to this prospectus, and is included herein for illustrative purpose only.
The unaudited pro forma financial information should be read in conjunction with the section
entitled “Financial Information” in this prospectus and the Accountant’s Report set out in Appendix I  to
this prospectus.
A. UNAUDITED PRO FORMA STATEMENT OF ADJUSTED NET TANGIBLE
ASSETS
The following unaudited  pro forma statement of adjusted net tangible assets of the Company
prepared in accordance with Rule 7.31 of the Listing Rules is for illustrative purposes only, and is set out
below to illustrate the effect of the Share Offer on the net tangible assets of the Company attributable to
the owners of the Company as at 30 June 2024 as if the Share Offer had taken place on 30 June 2024.
The unaudited pro forma statement of adjusted net tangible assets has been prepared for illustrative
purposes only and because of its hypothetical nature, it may not give a true picture of the net tangible assets
of the Company had the Share Offer been completed as at 30 June 2024 or any future date. It is prepared
based on the net tangible assets of the Company attributable to the owners of the Company as at 30 June
2024 as derived from the Accountant’s Report, set out in Appendix I to this prospectus and adjusted as
described below.
Audited Net
Tangible
Assets of
the Company
Attributable
to Owners of
the Company
as at
30 June 2024
Estimated
Net Proceeds
from the
Share Offer
Unaudited
Pro Forma
Adjusted Net
Tangible
Assets
Attributable
to Owners of
the Company
as at
30 June 2024
Unaudited Pro Forma
Adjusted Net Tangible
Assets per Share
Note 1 Note 2 Note 3 Note 4
RMB’000 RMB’000 RMB’000 RMB HK$
Based on an Offer Price of
HK$8.60 per H Share 109,589 44,714 154,303 4.55 4.95
Based on an Offer Price of
HK$10.40 per H Share 109,589 60,530 170,119 5.01 5.46


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– II-2 –
APPENDIX II  UNAUDITED PRO FORMA FINANCIAL INFORMATION
Notes:
1. The audited net tangible assets attributable to owners of the Company as at 30 June 2024 is extracted from the
historical financial information contained in the Accountant’s Report set forth in Appendix I to this prospectus,
which is based on the audited net assets of the Company attributable to the owners of the Company as at 30 June
2024 of approximately RMB109,928,000 with an adjustment for the intangible assets attributable to owners of the
Company as at 30 June 2024 of approximately RMB339,000.
2. The estimated net proceeds from the Share Offer  are based on the Offer Price range of HK$ 8.60 per H Share and
HK$10.40 per H Share, respectively after deduction of the underwriting fees and other related expenses paid/payable
by the Company, excluding listing expenses of approximately RMB2,666,000 which has been accounted for in the
statements of comprehensive income up to 30 June 2024. It does not take account of any Shares which may be issued
upon the exercise of the Offer Size Adjustment Option.
3. The unaudited pro forma adjusted net tangible assets per Share is arrived at after adjustments referred to in the
preceding paragraphs and on the basis that 33,929,000 Shares were in issue assuming that the Share Offer had been
completed on 30 June 2024 without taking into account of any Shares which may be issued upon the exercise of the
Offer Size Adjustment Option.
4. For the purpose of this unaudited pro forma adjusted net tangible assets, the balances stated in Renminbi are
converted into Hong Kong dollars at a rate of RMB1.00 to HK$1.08897. No representation is made that Renminbi
amounts have been, could have been or may be converted to Hong Kong dollars, or vice versa, at that rate.
5. No adjustment has been made to the unaudited pro forma adjusted net tangible assets of the Company to reflect any
trading results or other transactions of the Company entered into subsequent to 30 June 2024.


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– II-3 –
APPENDIX II  UNAUDITED PRO FORMA FINANCIAL INFORMATION
REPORT ON PRO FORMA FINANCIAL INFORMATION
The following  is the text of a report received from PricewaterhouseCoopers, Certified Public
Accountants, Hong Kong, for the purpose of incorporation in this prospectus.
INDEPENDENT REPORTING ACCOUNTANT’S ASSURANCE REPORT ON THE
COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION
To the Directors of Guangdong Syntrust GK Testing and Certification Tech Service Center Co., Ltd.
We have completed our assurance engagement to report on the compilation of unaudited pro
forma financial information of Guangdong Syntrust GK Testing and Certification Tech Service Center
Co., Ltd. (the “Company”) 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 net tangible assets of the Company as at 30 June 2024, and related notes (the “Unaudited Pro
Forma Financial Information”) as set out on pages II- 1 to II- 2 of the Company’s prospectus dated
26 August 2024, in connection with the proposed initial public offering of H Shares of the Company (the
“Prospectus”). The applicable criteria on the basis of which the Directors have compiled the Unaudited
Pro Forma Financial Information are described on pages II- 1 to II- 2 of the Prospectus.
The Unaudited Pro Forma Financial Information has been compiled by the Directors to illustrate the
impact of the proposed initial public offering on the Company’s financial position as at 30 June 2024 as if
the proposed initial public offering had taken place at 30 June 2024. As part of this process, information
about the Company’s financial position has been extracted by the Directors from the Company’s financial
information for the six months ended 30 June 2024, on which an accountant’s report has been published.
Directors’ Responsibility for the Unaudited Pro Forma Financial Information
The Directors are responsible for compiling the Unaudited Pro Forma Financial Information in
accordance with paragraph 7.31 of the Rules Governing the Listing of Securities on GEM of The Stock
Exchange of Hong Kong Limited (the “Listing Rules”) and with reference to Accounting Guideline 7,
Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars,  (“AG 7”) issued
by the Hong Kong Institute of Certified Public Accountants (“HKICPA”).


--- page 486 ---
– II-4 –
APPENDIX II  UNAUDITED PRO FORMA FINANCIAL INFORMATION
Our Independence and Quality Management
We have complied with the independence and other ethical requirements of the Code of Ethics for
Professional Accountants issued by the HKICPA, which is founded on fundamental principles of integrity,
objectivity, professional competence and due care, confidentiality and professional behaviour.
Our firm applies Hong Kong Standard on Quality Management (HKSQM) 1, Quality Management
for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services
Engagements, issued by the HKICPA, which requires the firm to design, implement and operate a system
of quality management including policies or procedures regarding compliance with ethical requirements,
professional standards and applicable legal and regulatory requirements.
Reporting Accountant’s Responsibilities
Our responsibility is to express an opinion, as required by paragraph 7.31(7) of the Listing Rules,
on the Unaudited Pro Forma Financial Information and to report our opinion to you. We do not accept any
responsibility for any reports previously given by us on any financial information used in the compilation
of the Unaudited Pro Forma Financial Information beyond that owed to those to whom those reports were
addressed by us at the dates of their issue.
We conducted our engagement in accordance with Hong Kong Standard on Assurance Engagements
3420, Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included
in a Prospectus, issued by the HKICPA. This standard requires that the reporting accountant plans and
performs procedures to obtain reasonable assurance about whether the Directors have compiled the
Unaudited Pro Forma Financial Information in accordance with paragraph 7.31 of the Listing Rules and
with reference to AG 7 issued by the HKICPA.
For purposes of this engagement, we are not responsible for updating or reissuing any reports or
opinions on any historical financial information used in compiling the Unaudited Pro Forma Financial
Information, nor have we, in the course of this engagement, performed an audit or review of the financial
information used in compiling the Unaudited Pro Forma Financial Information.
The purpose of unaudited pro forma financial information included in a prospectus is solely to
illustrate the impact of a significant event or transaction on unadjusted financial information of the entity
as if the event had occurred or the transaction had been undertaken at an earlier date selected for purposes
of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the proposed
initial public offering at 30 June 2024 would have been as presented.


--- page 487 ---
– II-5 –
APPENDIX II  UNAUDITED PRO FORMA FINANCIAL INFORMATION
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 accountant’s judgment, having regard to the
reporting accountant’s understanding of the nature of the company, the event or transaction in respect of
which the unaudited pro forma financial information has been compiled, and other relevant engagement
circumstances.
The engagement also involves evaluating the overall presentation of the unaudited pro forma
financial information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Our work has not been carried out in accordance with auditing standards or other standards and
practices generally accepted in the United States of America or auditing standards of the Public Company
Accounting Oversight Board (United States) or standards and practices of any professional body in any
other overseas jurisdiction and accordingly should not be relied upon as if it had been carried out in
accordance with those standards and practices.
Opinion
In our opinion:
(a) the Unaudited Pro Forma Financial Information has been properly compiled by the Directors
on the basis stated;
(b) such basis is consistent with the accounting policies of the Company; 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 Listing Rules.
PricewaterhouseCoopers
Certified Public Accountants
Hong Kong, 26 August 2024


--- page 488 ---
– III-1 –
APPENDIX III  TAXATION AND FOREIGN EXCHANGE
HONG KONG TAXATION
Dividend Taxation
Under the current practice of the Inland Revenue Department of Hong Kong, no tax is payable in
Hong Kong in respect of dividends paid by us.
Capital Gains and Profit Tax
No tax is imposed in Hong Kong in respect of capital gains from the sale of H shares. However,
trading gains from the sale of the H Shares by persons carrying on a trade, profession or business in Hong
Kong, where such gains are derived from or arise in Hong Kong from such trade, profession or business
will be subject to Hong Kong profits tax, which is currently imposed at the maximum rate of 16.5%
on corporations and at the maximum rate of 15% on unincorporated businesses. Certain categories of
taxpayers (for example, financial institutions, insurance companies and securities dealers) are likely to
be regarded as deriving trading gains rather than capital gains unless these taxpayers can prove that the
investment securities are held for long-term investment purposes.
Trading gains from sales of H Shares effected on the Stock Exchange will be considered to be
derived from or arise in Hong Kong. Liability for Hong Kong profits tax would thus arise in respect of
trading gains from sales of H Shares effected on the Stock Exchange realized by persons carrying on a
business of trading or dealing in securities in Hong Kong.
Stamp Duty
Hong Kong stamp duty, currently charged at the ad valorem rate of 0.1% on the higher of the
consideration for or the market value of the H Shares, will be payable by the purchaser on every purchase
and by the seller on every sale of the Hong Kong securities, including H Shares (in other words, a total
of 0.2% is currently payable on a typical sale and purchase transaction involving H Shares). In addition,
a fixed duty of HK$5.00 is currently payable on any instrument of transfer of H Shares. Where one of the
parties is a resident outside Hong Kong and does not pay the ad valorem duty due by it, the duty not paid
will be assessed on the instrument of transfer (if any) and will be payable by the transferee. If no stamp
duty is paid on or before the due date, a penalty of up to ten times the duty payable may be imposed.
Estate Duty
Pursuant to the Revenue (Abolition of Estate Duty) Ordinance 2005, estate duty ceased to be
chargeable in Hong Kong in respect of the estates of persons dying on or after 11 February 2006.


--- page 489 ---
– III-2 –
APPENDIX III  TAXATION AND FOREIGN EXCHANGE
TAXATION OF OUR COMPANY IN HONG KONG
Our Directors do not consider that any of our Company’s income is derived from or arose in Hong
Kong for the purpose of Hong Kong taxation. Our Company will therefore not be subject to Hong Kong
taxation.
TAXATION OF SECURITY HOLDERS
The taxation of income and capital gains of holders of H Shares is subject to the PRC  and of
jurisdictions in which holders of H Shares are residents or otherwise subject to tax. The following
summary of certain relevant taxation provisions is based on current effective laws and practices, and
no predictions are made about changes or adjustments to relevant laws or policies, and no legal or tax
comments or suggestions will be made accordingly. The discussion has no intention to deal with all
possible tax consequences resulting from the investment in H Shares, nor does it take into account the
specific circumstances of any particular investor, some of which may be subject to special regulations.
Accordingly, you should consult your own tax advisor regarding the tax consequences of an investment
in H Shares. The discussion is based upon laws and relevant interpretations in effect as of the date of this
prospectus, which is fully subject to change or adjustment and may have retrospective effect.
No issues on PRC or Hong Kong taxation other than income tax, capital appreciation and profit
tax, business tax/appreciation tax, stamp duty and estate duty were referred in the discussion. Prospective
investors are urged to consult their financial advisors regarding the PRC, Hong Kong and other tax
consequences of owning and disposing of H Shares.
THE PRC TAXATION
Taxation on Dividends
Individual Investor
Pursuant to the Individual Income Tax Law of the PRC (), which
was promulgated on 10 September 1980 and most recently amended on 31 August 2018 by the Standing
Committee of the NPC, and came into effect on 1 January 2019, and the Implementation Provisions of
the Individual Income Tax Law of the PRC (ૢԷ), which was
most recently amended by the State Council on 18 December 2018 and came into effect on 1 January
2019 (collectively the “IIT Law”), dividends distributed by PRC enterprises are generally subject to
a withholding individual income tax levied at a flat rate of 20%. Moreover, pursuant to the Notice on
Issues Concerning Differentiated Individual Income Tax Policies for Dividends and Bonuses of Listed
Companies () issued by the MOF  (the
“MOF”), the STA and CSRC (the “CSRC”) on 7 September 2015, where an individual acquires stocks of
a listed enterprise from public offering of the enterprise or from the stock transfer market and holds the
stocks for more than one year, the income from dividends distributed by the enterprise shall be exempt
from individual income tax for the time being; if the individual holds the stocks for one month or less,


--- page 490 ---
– III-3 –
APPENDIX III  TAXATION AND FOREIGN EXCHANGE
the income from dividends distributed by the enterprise shall be fully taxable; if the individual holds the
stocks for one month to one year (one year inclusive), 50% of the income from dividends distributed by
the enterprise shall be taxable; the aforesaid income is subject to an individual income tax at a flat rate of
20%.
For a foreign individual who is not a resident of the PRC, the receipt of dividends from an enterprise
in the PRC is normally subject to a withholding individual income tax of 20% unless specifically exempted
by the tax authority of the State Council or reduced by relevant tax treaty. Indeed, the withholding tax rate
for dividends of non-resident individuals may be lower than 20% under certain circumstances. However,
pursuant to the Circular of the MOF and the STA on Issues Concerning Individual Income Tax Policies
(), the income received by individual
foreigners from dividends and bonuses of a foreign-invested enterprise is exempt from individual income
tax for the time being. On 3 February 2013, the State Council approved and promulgated the Notice of the
State Council on Approving and Relaying the Several Opinions of the National Development and Reform
Commission and Other Departments  to Deepen the Reform of System of Income Distribution ( ਷ਕ৫
). On 8 February 2013, the General
Office of the State Council promulgated the Circular Concerning Allocation of Key Works to Deepen the
Reform of System of Income Distribution (ஷ
). Pursuant to these two documents, the PRC Government is planning to cancel foreign individuals’
tax exemption for dividends obtained from foreign-invested enterprises, and the MOF and the STA should
be responsible for making and implementing details of such plan. However, relevant implementation rules
or regulations have not been promulgated by the MOF and the STA.
Pursuant to the Notice of the STA on Issues Concerning Taxation and Administration of Individual
Income Tax After the Repeal of the Document (Guo Shui Fa [1993] No. 45) (਷
೼೯[1993]045) issued by the STA on 28 June 2011,
domestic non-foreign-invested enterprises issuing shares in Hong Kong may, when distributing dividends
to overseas resident individuals in the jurisdiction of the tax treaty, normally withhold individual income
tax at the rate of 10%. For the individual holders of H Shares receiving dividends who are citizens of
countries that have entered into a tax treaty with the PRC with tax rates lower than 10%, the non-foreign-
invested enterprise whose shares are listed in Hong Kong may apply on behalf of such holders for
enjoying the lower preferential tax treatments, and, upon approval by the tax authorities, the excessive
withholding amount will be refunded. For the individual holders of H Shares receiving dividends who
are citizens of countries that have entered into a tax treaty with the PRC with tax rates higher than 10%
but lower than 20%, the non-foreign-invested enterprise is required to withhold the tax at the agreed rate
under the treaties, and no application procedures will be necessary. For the individual holders of H Shares
receiving dividends who are citizens of countries without taxation treaties with the PRC or are under other
situations, the non-foreign-invested enterprise is required to withhold the tax at a rate of 20%.


--- page 491 ---
– III-4 –
APPENDIX III  TAXATION AND FOREIGN EXCHANGE
Pursuant 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 (τર)
signed by the Central People’s Government of Mainland of China and the Government of the Hong Kong
Special Administrative Region on 21 August 2006, the PRC Government may impose tax on dividends
paid by a PRC company to a Hong Kong resident (including natural person and legal entity), but such tax
shall not exceed 10% of the total amount of dividends payable. If a Hong Kong resident directly holds
25% or more of the equity interests in a PRC company and the Hong Kong resident is the beneficial owner
of the dividends and meets other conditions, such tax shall not exceed 5% of the total amount of dividends
payable by the PRC company. 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 (ᅄ೼
) issued by The STA and effective on 6 December 2019 provides that
such provisions shall not apply to arrangements or transactions made for one of the primary purposes of
obtaining such tax benefits.
Enterprise Investors
In accordance with the Enterprise Income Tax Law of the PRC (੻೼
) issued by NPC on 16 March 2007 and latest amended on 29 December 2018 and the Implementation
Provisions of the EIT Law, a non-resident enterprise is generally subject to a 10% EIT on PRC-sourced
income (including dividends received from a PRC resident enterprise), if it does not have an establishment
or premise in the PRC or has an establishment or premise in the PRC but its PRC-sourced income has no
real connection with such establishment or premise. The aforesaid income tax payable for non-resident
enterprises are deducted at source, where the payer of the income is required to withhold the income
tax from the amount to be paid to the non-resident enterprise. The withholding tax may be reduced or
eliminated under an applicable treaty for the avoidance of double taxation. Notice of the STA on the Issues
concerning Withholding the Enterprise Income Tax on the Dividends Paid by Chinese Resident Enterprises
to H-share Holders Which Are Overseas Non-resident Enterprises (͏ΆุΣ
ྤ̮H ), which was promulgated by
the STA and came into effect on 6 November 2008, further clarified that a PRC-resident enterprise must
withhold corporate income tax at a rate of 10% on the dividends of 2008 and onwards that it distributes
to overseas non-resident enterprise shareholders of H Shares. The Reply of the Imposition of Enterprise
Income Tax on B-share and Other Dividends of Non-resident Enterprises (͏Άุ՟੻Bٰ
ҭᔧ) that was promulgated by the STA on 24 July 2009, further
provides that any Chinese resident enterprise listed on any overseas stock exchange must withhold EIT
at a rate of 10% on dividends distributed to non-Chinese resident enterprise shareholders. Such tax rates
may be further changed pursuant to the tax treaty or agreement that China has concluded with a relevant
jurisdiction, where applicable.


--- page 492 ---
– III-5 –
APPENDIX III  TAXATION AND FOREIGN EXCHANGE
Pursuant 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 (τર)
signed by the Central People’s Government of Mainland of China and the Government of the Hong Kong
Special Administrative Region on 21 August 2006, the PRC Government may impose tax on dividends
paid by a PRC company to a Hong Kong resident (including natural person and legal entity), but such tax
shall not exceed 10% of the total amount of dividends payable. If a Hong Kong resident directly holds
25% or more of the equity interests in a PRC company and the Hong Kong resident is the beneficial owner
of the dividends and meets other conditions, such tax shall not exceed 5% of the total amount of dividends
payable by the PRC company. 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 (ᅄ೼
) issued by the STA and effective on 6 December 2019 provides that
such provisions shall not apply to arrangements or transactions made for one of the primary purposes of
obtaining such tax benefits.
Tax Treaties
Non-resident investors residing in jurisdictions which have entered into treaties or adjustments for
the avoidance of double taxation with the PRC might be entitled to a reduction of the Chinese corporate
income tax imposed on the dividends received from PRC companies. The PRC currently has entered into
Avoidance of Double Taxation Treaties or Arrangements with a number of countries and regions including
Hong Kong Special Administrative Region, Macau Special Administrative Region, Australia, Canada,
France, Germany, Japan, Malaysia, the Netherlands, Singapore, the United Kingdom and the United
States. Non-PRC resident enterprises entitled to preferential tax rates in accordance with the relevant
taxation treaties or arrangements are required to apply to the Chinese tax authorities for a refund of the
corporate income tax in excess of the agreed tax rate, and the refund application is subject to approval by
the Chinese tax authorities.
Pursuant to the Administrative Measures on Entitlement of Non-resident Taxpayers to Preferential
Treatment under Tax Treaties (), which was promulgated by the
STA on 14 October 2019 and became effective on 1 January 2020, non-resident taxpayers are entitled
to preferential treatment under the tax treaties through self-determination, self-declaration and keeping
and documenting relevant information for inspection. Where a non-resident taxpayer self-assesses and
concludes that it satisfies the criteria for claiming treaty benefits, it may enjoy treaty benefits at the time
of tax declaration or at the time of withholding declaration through a withholding agent, simultaneously
gather and retain the relevant materials pursuant to the regulations for future inspection, and be subject to
subsequent administration by tax authorities.


--- page 493 ---
– III-6 –
APPENDIX III  TAXATION AND FOREIGN EXCHANGE
Taxation on Share Transfer
Value-added Tax and Local Additional Tax
Pursuant to the Notice on Fully Implementing the Pilot Reform for the Transition from Business
Tax to Value-added Tax () (the “Circular 36”), which was
implemented on 1 May 2016, entities and individuals engaged in the services sale in the PRC are subject
to VAT and “engaged in the services sale in the PRC” means that the seller or buyer of the taxable services
is located in the PRC. Circular 36 also provides that transfer of financial products, including transfer of
the ownership of marketable securities, shall be subject to VAT at 6% on the taxable revenue (which is the
balance of sales price upon deduction of purchase price), for a general or a foreign VAT taxpayer.
At the same time, VAT payers are also required to pay urban maintenance and construction tax,
education surtax and local education surcharge.
Income Tax
Individual Investors
According to the IIT Law, gains on the transfer of equity interests in the PRC resident enterprises
are subject to individual income tax at a rate of 20%. Pursuant to the Circular on Declaring that Individual
Income Tax Continues to be Exempted over Income of Individuals from the Transfer of Shares (ࡈ׵
) issued by the STA on 30 March 1998, from 1 January
1997, income of individuals from transfer of the shares of listed enterprises continues to be exempted from
individual income tax. The STA has not expressly stated whether it will continue to exempt tax on income
of individuals from transfer of the shares of listed enterprises in the latest amended Individual Income Tax
Law.
However, on 31 December 2009, the MOF, STA and CSRC jointly issued the Circular on Related
Issues on Levying Individual Income Tax over the Income Received by Individuals from the Transfer of
Listed Shares Subject to Sales Limitation (ٙ
), which came into effect on 1 January 2010, which states that individuals’ income from the transfer
of listed shares obtained from the public offering of listed companies and transfer market on the Shanghai
Stock Exchange and the Shenzhen Stock Exchange shall continue to be exempted from individual income
tax, except for the relevant shares which are subject to sales restriction (as defined in the Supplementary
Notice on Issues Concerning the Levy of Individual Income Tax on Individuals’ Income from the Transfer
of Restricted Stocks of Listed Companies (੻೼Ϟᗫਪ
) jointly issued and implemented by such departments on 10 November 2010). As of the
Latest Practicable Date, no aforesaid provisions have expressly provided that individual income tax shall
be levied from non-Chinese resident individuals on the transfer of shares in PRC resident enterprises listed
on overseas stock exchanges.


--- page 494 ---
– III-7 –
APPENDIX III  TAXATION AND FOREIGN EXCHANGE
Enterprise Investors
In accordance with the EIT Law, a non-resident enterprise is generally subject to corporate income
tax at the rate of a 10% on PRC-sourced income, including gains derived from the disposal of equity
interests in a PRC resident enterprise, if it does not have an establishment or premise in the PRC or has
an establishment or premise in the PRC but its PRC-sourced income has no real connection with such
establishment or premise. Such income tax payable for non-resident enterprises are deducted at source,
where the payer of the income is required to withhold the income tax from the amount to be paid to
the non-resident enterprise. Such tax may be reduced or exempted pursuant to relevant tax treaties or
agreements on avoidance of double taxation.
Tax policies for Shanghai – Hong Kong Stock Connect
On 31 October 2014, the MOF, the STA and the CSRC jointly promulgated the Circular on the
Relevant Taxation Policy for the Pilot Programme of an Interconnection Mechanism for Transactions in
the Shanghai and Hong Kong Stock Markets (ഄ
) (the “ Shanghai – Hong Kong Stock Connect Taxation Policy ”). Pursuant to the Shanghai –
Hong Kong Stock Connect Taxation Policy, the income from the transfer price difference obtained by
corporate investors of the mainland of China investing in stocks listed on the Stock Exchange through
Shanghai – Hong Kong Stock Connect is included in their total income and EIT is levied on such income
in accordance with the law. The income from dividends and bonus obtained by corporate investors of
the mainland of China investing in stocks listed on the Stock Exchange through Shanghai – Hong Kong
Stock Connect is included in their total income. The EIT is levied on such income in accordance with the
law. Among them, EIT will be exempt according to law for income from dividends and bonus obtained
by resident enterprises of the Mainland of China that hold H-shares for at least 12 consecutive months.
The H-share companies do not need to withhold tax on the income from dividends and bonus obtained by
corporate investors of the Mainland of China. The tax payable shall be declared and paid by the enterprises
themselves.
Pursuant to the Announcement on Continued Implementation of Individual Income Tax Policies
Relating to Interconnection Mechanism for Transactions in Shanghai – Hong Kong Stock Markets and
Shenzhen – Hong Kong Stock Markets and Mutual Recognition of Funds Between the Mainland of China
and the Hong Kong Special Administrative Region (ʝᑌʝஷዚ
ʮѓ) that was issued on 4 December 2019 and already
expired, from 5 December 2019 to 31 December 2022, the income from the transfer price difference
obtained by individual investors of the mainland of China investing in stocks listed on the Stock Exchange
through Shanghai-Hong Kong Stock Connect is exempt from individual income tax. For dividends and
bonus obtained by individual investors of the Mainland of China investing in H-shares listed on the Stock
Exchange through Shanghai – Hong Kong Stock Connect, the H-share companies shall apply to China
Securities Depository and Clearing Corporation Limited (the “CSDCC”) for provision by the CSDCC
to the H-share companies the register of individual investors of the Mainland of China. The H-share
companies shall withhold individual income tax at a rate of 20%. According to the Announcement on the
Extension of Relevant Preferential Policies for Individual Income Tax (੻೼Ꮄ
ʮ ѓ) issued by MOF and the STA on 16 January 2023 and the Announcement on Continuing


--- page 495 ---
– III-8 –
APPENDIX III  TAXATION AND FOREIGN EXCHANGE
the Individual Income Tax Policy for the Shanghai-Hong Kong and Shenzhen-Hong Kong Connect
Mechanisms and the Mutual Recognition of Funds between Mainland China and Hong Kong (ᚃ
ʮѓ ) issued
by MOF, the STA and the CSRC on 21 August 2023, the above-mentioned individual income tax policy
shall continue to apply during the period from 1 January 2023 to 31 December 2027.
Tax policies for Shenzhen – Hong Kong Stock Connect
On 5 November 2016, the MOF, the STA and the CSRC jointly issued the Circular on the Relevant
Taxation Policy for the Pilot Programme of an Interconnection Mechanism for Transactions in the
Shenzhen and Hong Kong Stock Markets (ٙ
) (the “Shenzhen – Hong Kong Stock Connect Taxation Policy”). Pursuant to the Shenzhen –
Hong Kong Stock Connect Taxation Policy, the income from the transfer price difference obtained by
corporate investors of the mainland of China investing in stocks listed on the Stock Exchange through
Shenzhen – Hong Kong Stock Connect is included in their total income. The EIT is levied on such income
in accordance with the law. The income from dividends and bonus obtained by corporate investors of the
Mainland of China investing in stocks listed on the Stock Exchange through Shenzhen – Hong Kong Stock
Connect is included in their total income. The EIT is levied on such income in accordance with the law.
EIT is exempt according to law for income from dividends and bonus obtained by resident enterprises of
the Mainland of China that hold H-shares for at least 12 consecutive months. The H-share companies do
not need to withhold tax on the income from dividends and bonus obtained by corporate investors of the
Mainland of China. The tax payable shall be declared and paid by the enterprises themselves.
Pursuant to the Announcement on Continued Implementation of Individual Income Tax Policies
Relating to Interconnection Mechanism for Transactions in Shanghai – Hong Kong Stock Markets and
Shenzhen – Hong Kong Stock Markets and Mutual Recognition of Funds Between the Mainland of China
and the Hong Kong Special Administrative Region (ʝᑌʝஷ
ʮѓ ) that came into effect on 5 December 2019
and already expired, from 5 December 2019 to 31 December 2022, the income from the transfer price
difference obtained by individual investors of the mainland of China investing in stocks listed on the
Stock Exchange through Shenzhen – Hong Kong Stock Connect are exempt from individual income tax.
For dividends and bonus obtained by individual investors of the Mainland of China investing in H-shares
listed on the Stock Exchange through Shenzhen – Hong Kong Stock Connect, the H-share companies
shall apply to the CSDCC for provision by the CSDCC to the H-share companies the register of individual
investors of the Mainland of China, and the H-share companies shall withhold individual income tax at a
rate of 20%.
Pursuant to the Announcement on the Extension of Relevant Preferential Individual Income Tax
Policies (ʮѓ) that came into effect on 16 January 2023
and the Announcement on Continuing the Individual Income Tax Policy for the Shanghai-Hong Kong
and Shenzhen-Hong Kong Connect Mechanisms and the Mutual Recognition of Funds between Mainland
China and Hong Kong (ʝႩϞ
ʮѓ) issued by MOF, the STA and the CSRC on 21 August 2023, the preferential
IIT policies stated in the Announcement on Continued Implementation of Individual Income Tax Policies


--- page 496 ---
– III-9 –
APPENDIX III  TAXATION AND FOREIGN EXCHANGE
Relating to Interconnection Mechanism for Transactions in Shanghai – Hong Kong Stock Markets and
Shenzhen – Hong Kong Stock Markets and Mutual Recognition of Funds Between the Mainland of China
and the Hong Kong Special Administrative Region shall continue to be in effect from 1 January 2023 to
31 December 2027.
Stamp Duty
Pursuant to the Stamp Duty Law of the PRC () promulgated on 10 June
2021 which took effect on 1 July 2022, the entities and individuals that conclude taxable certificates, or
conduct securities transactions within the territory of the PRC shall be taxpayers of stamp tax, and shall
pay stamp tax in accordance with the provisions of this law; where entities or individuals, outside the
territory of the PRC, conclude taxable certificates that are used within the territory of the PRC, they shall
pay stamp tax in accordance with the provisions of this law. Thus the requirements of the stamp duty
imposed on the transfer of shares of PRC listed companies shall not apply to the acquisition and disposal
of H Shares by non-PRC investors outside of the PRC.
Estate Duty
As of the date of this prospectus, no estate duty has been levied in the PRC under the PRC laws.
FOREIGN EXCHANGE
The lawful currency of the PRC is Renminbi, which is currently subject to foreign exchange control
and cannot be freely converted into foreign currency. The SAFE, with the authorization of the People’s
Bank of China (the “PBOC ”), is empowered with the functions of administering all matters relating to
foreign exchange, including the enforcement of foreign exchange control regulations. The Regulations
on Foreign Exchange Control of the PRC ( ʕശɛ͏΍ձ਷̮ි၍ଣૢԷ) which was promulgated by
the State Council on 29 January 1996, implemented on 1 April 1996 and was subsequently amended on
14 January 1997 and 5 August 2008, classifies all international payments and transfers into current items
and capital items. Current items are subject to the reasonable examination of the veracity of transaction
documents and the consistency of the transaction documents and the foreign exchange receipts and
payments by financial institutions engaging in conversion and sale of foreign currencies and supervision
and inspection by the foreign exchange control authorities. For capital items, overseas organizations and
overseas individuals making direct investments in China shall, upon approval by the relevant authorities
in charge, process registration formalities with the foreign exchange control authorities. Foreign
exchange income received overseas can be repatriated or deposited overseas, and foreign exchange and
foreign exchange settlement funds under the capital account are required to be used only for purposes as
approved by the competent authorities and foreign exchange administrative authorities. In the event that
international revenues and expenditure occur or may occur a material misbalance, or the national economy
encounters or may encounter a severe crisis, the State may adopt necessary safeguard and control measures
on international revenues and expenditure.


--- page 497 ---
– III-10 –
APPENDIX III  TAXATION AND FOREIGN EXCHANGE
The Regulations for the Administration of Settlement, Sale and Payment of Foreign Exchange ( ഐ
), which was promulgated by the PBOC on 2 0 June 1996 and implemented on
1 July 1996, removes other restrictions on convertibility of foreign exchange under current items, while
imposing existing restrictions on foreign exchange transactions under capital account items. Consequently,
Renminbi is generally freely convertible for payments of current account items, such as trade and service-
related foreign exchange transactions and dividend payments, but remains to be not freely convertible for
capital account items, such as direct investment, loan or investment in securities outside China unless prior
approval of the SAFE or its local counterparts is obtained.
According to the Announcement on Improving the Reform of the Renminbi Exchange Rate
Formation Mechanism (ʮѓ), which was issued by the PBOC
and implemented on 21 July 2005, the PRC has started to implement a managed floating exchange rate
system in which the exchange rate would be determined based on market supply and demand and adjusted
with reference to a basket of currencies since 21 July 2005. Therefore, the Renminbi exchange rate was
no longer pegged to the U.S. dollar. PBOC would publish the closing price of the exchange rate of the
Renminbi against trading currencies such as the U.S. dollar in the interbank foreign exchange market after
the closing of the market on each working day, as the central parity of the currency against Renminbi
transactions on the following working day.
According to the relevant laws and regulations in the PRC, PRC enterprises (including foreign
investment enterprises) which need foreign exchange for current item transactions may, without the
approval of the foreign exchange administrative authorities, effect payment through foreign exchange
accounts opened at the designated foreign exchange bank, on the strength of valid transaction receipts and
proof. Foreign investment enterprises which need foreign exchange for the distribution of profits to their
shareholders and PRC enterprises which, in accordance with regulations, are required to pay dividends
to their shareholders in foreign exchange (such as our Company) may, on the strength of resolutions of
the board of directors or the shareholders’ meeting on the distribution of profits, effect payment from
foreign exchange accounts at the designated foreign exchange bank, or effect exchange and payment at the
designated foreign exchange bank.
According to the Decisions of the State Council on Matters including Cancelling and Adjusting
a Batch of Administrative Approval Items (Ӕ
) which was promulgated by the State Council on 23 October 2014, it decided to cancel the approval
requirement of the SAFE and its branches for the remittance and settlement of the proceeds raised from
the overseas listing of the foreign shares into RMB domestic accounts.
According to the Notice of the State Administration of Foreign Exchange on Issues Concerning the
Foreign Exchange Administration of Overseas Listing (ྤ̮ɪ̹̮ි၍ଣϞᗫਪᕚ
) issued by the SAFE and implemented on 26 December 2014, a domestic company shall, within
15 business days from the date of the end of its overseas listing issuance, register the overseas listing with
the local branch office of the SAFE at the place of its establishment; the proceeds from an overseas listing
of a domestic company may be remitted to the domestic account or deposited in an overseas account,
but the use of the proceeds shall be consistent with the content of the prospectus and other disclosure
documents.


--- page 498 ---
– III-11 –
APPENDIX III  TAXATION AND FOREIGN EXCHANGE
According to the Notice of the State Administration of Foreign Exchange of the PRC on
Revolutionizing and Regulating Capital Account Settlement Management Policies (̮ි၍ଣ҅ᗫ
) which was promulgated by the SAFE and implemented on
9 June 2016, foreign currency earnings in capital account that relevant policies of willingness exchange
settlement have been clearly implemented on (including the recalling of raised capital by overseas
listing) may undertake foreign exchange settlement in the banks according to actual business needs of the
domestic institutions.
The tentative percentage of foreign exchange settlement for foreign currency earnings in capital
account of domestic institutions is 100%, subject to adjust of the SAFE in due time in accordance with
international revenue and expenditure situations. The Circular on Issues Concerning the Administration
of Foreign Exchange in Offshore Investments and Financing and Return Investments by Domestic
Residents through Special Purpose Vehicles (೻ҳ༟̮
) (the “Circular 37”) was promulgated and implemented by the SAFE on 4 July
2014. According to Circular 37, domestic residents, individuals and entities shall apply to the SAFE for
registration of foreign exchange for offshore investment before making contributions to special purpose
vehicles with domestic and overseas legal assets or equities. In addition, any domestic resident who is
a shareholder of an overseas special purpose vehicle shall complete the registration formality of foreign
exchange alteration for offshore investment with the SAFE in a timely manner in the event of any change
of significant matters of such overseas special purpose vehicle such as capital increase/decrease, equity
transfer or swap, merge and spin-off.
The subsequent foreign exchange business (including remittance of profits and dividend) of a
domestic resident who fails to comply with the registration requirements as set out in Circular 37 may
be restricted. Domestic residents that have made contributions to special purpose vehicles with domestic
and overseas legal assets or equities without the required registration of foreign exchange for offshore
investment prior to the implementation of Circular 37 shall issue a letter of explanation to the SAFE
containing specific reasons. The SAFE shall make a post-registration following the principles of legality
and rationality and impose administrative penalties in case of suspected violation of the Regulations on
Foreign Exchange Control of the PRC.
According to the Circular on Further Simplifying and Improving Policies for the Foreign Exchange
Administration Applicable to Direct Investment (ஷ
), which was issued by the SAFE on 13 February 2015, came into effect on 1 June 2015 and partially
repealed on 30 December 2019, the confirmation of foreign exchange registration under domestic direct
investment and the confirmation of foreign exchange registration under overseas direct investment shall be
directly examined and handled by banks and the foreign exchange authorities shall indirectly regulate the
foreign exchange registration of direct investment through banks. The banks that have obtained financial
institution identification codes from foreign exchange authorities and have connected to the Capital
Account Information System with the local foreign exchange authorities may directly handle the registration
under Circular 37.


--- page 499 ---
– IV-1 –
APPENDIX IV   SUMMARY OF PRINCIPAL PRC LEGAL
AND REGULATORY PROVISIONS
PRC LEGAL SYSTEM
The PRC legal system is based on the Constitution of the PRC () (the
“Constitution”) and is composed of the Constitution, written laws, administrative regulations, local
regulations, separate regulations, autonomous regulations, rules and regulations of departments of the State
Council, rules and regulations of local governments, international treaties of which the PRC G overnment
is a signatory, and other regulatory documents. Court verdicts do not constitute binding precedents.
However, they may be used as judicial reference and guidance.
According to the Constitution promulgated on 4 December 1982 and last amended and came into
effect on 11 March 2018 and the Legislation Law of the PRC which was promulgated on 1 July 2000 and
latest amended on 13 March 2023 () (the “Legislation Law”), the NPC and the
Standing Committee of the NPC are empowered to exercise the legislative power of the State. The NPC
has the power to formulate and amend basic laws governing civil and criminal matters, state organs and
other matters. The Standing Committee of the NPC is empowered to formulate and amend laws other
than those required to be enacted by the NPC and to supplement and amend any parts of laws enacted by
the NPC during the adjournment of the NPC, provided that such supplements and amendments are not in
conflict with the basic principles of such laws.
The State Council is the highest organ of the PRC administration and has the power to formulate
administrative regulations based on the Constitution and laws.
The people’s congresses of provinces, autonomous regions and municipalities and their respective
standing committees may formulate local regulations based on the specific circumstances and actual
requirements of their own respective administrative areas, provided that such local regulations do not
contravene any provision of the Constitution, laws or administrative regulations.
The ministries and commissions of the State Council, PBOC, the State Audit Administration as
well as the other organs endowed with administrative functions directly under the State Council may, in
accordance with the laws as well as the administrative regulations, decisions, rulings and orders of the
State Council and within the limits of their power, formulate rules and regulations.
The people’s congresses of cities divided into districts and their respective standing committees
may formulate local regulations in terms of urban and rural development and management, environmental
protection, and historical and cultural protection based on the specific circumstances and actual
requirements of such cities, which shall come into effect after being reported to and approved by the
standing committees of the people’s congresses of the relevant provinces or autonomous regions but such
local regulations shall conform with the Constitution, laws, administrative regulations, and the relevant
local regulations of the relevant provinces or autonomous regions.


--- page 500 ---
– IV-2 –
APPENDIX IV SUMMARY OF PRINCIPAL PRC LEGAL
AND REGULATORY PROVISIONS
People’s congresses of national autonomous areas have the power to enact autonomous regulations
and separate regulations in light of the political, economic and cultural characteristics of the nationality
(nationalities) in the areas concerned, which shall come into effect upon approval by the Standing
Committee of the NPC. Adaptations of provisions of laws and administrative regulations may be
introduced to the autonomy regulations and separate rules so long as they do not contravene the basic
principles of the laws or administrative regulations, and no adaptations shall be made to the specific
provisions on national autonomous areas in the Constitution, national region autonomy law and other
relevant laws and administrative regulations.
The people’s governments of the provinces, autonomous regions, and municipalities directly under
the central government and the cities divided into districts or autonomous prefectures may enact rules, in
accordance with laws, administrative regulations and the local regulations of their respective provinces,
autonomous regions or municipalities.
The Constitution has supreme legal authority and no laws, administrative regulations, local
regulations, autonomous regulations or separate regulations may contravene the Constitution. The
authority of laws is greater than that of administrative regulations, local regulations and rules. The
authority of administrative regulations is greater than that of local regulations and rules. The authority of
local regulations is greater than that of the rules of the local governments at or below the corresponding
level. The authority of the rules enacted by the people’s governments of the provinces or autonomous
regions is greater than that of the rules enacted by the people’s governments of the city divided into
districts or autonomous prefecture within the administrative areas of the provinces and the autonomous
regions.
The NPC has the power to alter or annul any inappropriate laws enacted by its Standing Committee,
and to annul any autonomous regulations or separate regulations which have been approved by its Standing
Committee but which contravene the Constitution or the Legislation Law. The Standing Committee of the
NPC has the power to annul any administrative regulations that contravene the Constitution and laws, to
annul any local regulations that contravene the Constitution, laws or administrative regulations, and to annul
any autonomous regulations or local regulations which have been approved by the standing committees of
the people’s congresses of the relevant provinces, autonomous regions or municipalities directly under the
central government, but which contravene the Constitution and the Legislation Law. The State Council has
the power to alter or annul any inappropriate ministerial rules and rules of local governments. The people’s
congresses of provinces, autonomous regions or municipalities directly under the central government have
the power to alter or annul any inappropriate local regulations enacted or approved by their respective
standing committees. The people’s governments of provinces and autonomous regions have the power to
alter or annul any inappropriate rules enacted by the people’s governments at a lower level.


--- page 501 ---
– IV-3 –
APPENDIX IV SUMMARY OF PRINCIPAL PRC LEGAL
AND REGULATORY PROVISIONS
According to the Constitution and the Legislation Law, the power to interpret laws is vested in
the Standing Committee of the NPC. According to the Decision of the Standing Committee of the NPC
Regarding the Strengthening of Interpretation of Laws (༆
Ӕᙄ) passed on 10 June 1981, the general interpretation on questions involving the specific
application of laws and decrees in court trials and the procuratorial work of the procuratorates shall be
given by the Supreme People’s Court of the PRC (the “Supreme People’s Court”) and the Supreme
People’s Procuratorate of the PRC (the “Supreme People’s Procuratorate”), respectively. The State
Council and its ministries and commissions are also vested with the power to give interpretation of the
administrative regulations and department rules which they have promulgated. At the regional level, the
power to give interpretations of the local laws and regulations as well as administrative rules is vested in
the regional legislative and administrative organs which promulgate such laws, regulations and rules.
PRC JUDICIAL SYSTEM
Under the Constitution and the PRC Law on the Organization of the People’s Courts ( ʕശɛ͏΍
) which was promulgated on 5 July 1979, implemented on 1 January 1980 and last
amended on 26 October 2018 and took effect on 1 January 2019, the PRC judicial system is made up of
the Supreme People’s Court, the local people’s courts, military courts and other special people’s courts.
The local people’s courts are comprised of the primary people’s courts, the intermediate people’s
courts and the higher people’s courts. The basic people’s courts may be organised into civil, criminal, and
economic tribunals. The intermediate people’s courts may be organised into divisions similar to those of
the basic people’s courts, and may be further organised into other special divisions. The people’s courts at
lower levels are subject to the supervision of the people’s courts at higher levels. The Supreme People’s
Court is the highest judicial organ of the PRC and it has the power to supervise the administration of
justice by the local people’s courts at all levels and all special people’s courts. The people’s procuratorates
also have the right to exercise legal supervision over the trial activities of people’s courts at same or lower
levels.
The people’s courts adopt a “second instance as final” appellate system in the trail of the cases. A
party to the case concerned may appeal against the judgement and ruling of the first instance by the local
people’s courts to the people’s courts at the next higher level in accordance with the legal procedures.
The people’s procuratorates may appeal to the people’s court at the next higher level in accordance with
the legal procedures. In the absence of any appeal by any parties to the case concerned or any appeal by
the people’s procuratorates within the stipulated period, the judgement and ruling of the first instance by
the local people’s courts shall be final and legally binding. Judgements and rulings of the second instance
of the intermediate people’s courts, the higher people’s courts and Supreme People’s Court and the
judgements and rulings of the first instance of the Supreme People’s Court shall be the final judgements
and rulings. If, however, the Supreme People’s Court finds some definite errors in a legally effective
judgement, ruling or conciliation statement of the people’s court at any level, or if the people’s court at
a higher level finds such errors in a legally effective judgement, ruling or conciliation statement of the


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people’s court at a lower level, it has the authority to review the case itself or to direct the lower-level
people’s court to conduct a retrial. If the chief judge of all levels of people’s courts finds some definite
errors in a legally effective judgement, ruling or conciliation statement, and considers that a retrial is
preferred, such case shall be submitted to the judicial committee of the people’s court at the same level for
discussion and decision. For death penalties, except those judged by the Supreme People’s Court, requests
shall be submitted to the Supreme People’s Court for approval.
The PRC Civil Procedure Law () (the “Civil Procedure Law”),
which was promulgated on 9 April 1991 and amended in 2007, 2012, 2017, 2021, 2023 and the latest
amendment came  into effect on 1 January 2024, sets forth the criteria for instituting a civil action, the
jurisdiction of the people’s courts, the procedures to be followed for conducting a civil action and the
procedures for enforcement of a civil judgment or order. All parties to a civil action conducted within the
PRC must comply with the Civil Procedure Law. Generally, a civil case is initially heard by a local court
of the municipality or province in which the defendant resides. The parties to a contract may, by express
agreement, select a judicial court where civil actions may be brought, provided that the judicial court is
either the plaintiff’s or the defendant’s domicile, the place of execution or implementation of the contract
or the place of the object of the action, provided that the provisions of this law regarding the level of
jurisdiction and exclusive jurisdiction shall not be violated.
A foreign national or enterprise generally has the same litigation rights and obligations as a citizen
or legal person of the PRC. If a foreign country’s judicial system limits the litigation rights of PRC
citizens and enterprises, the PRC courts may apply the same limitations to the citizens and enterprises
of that foreign country within the PRC. A foreign individual, a stateless person, a foreign enterprise or a
foreign organisation must engage a PRC lawyer in case he or it needs to engage a lawyer for the purpose
of initiating actions or defending against litigations at a PRC court. In accordance with the international
treaties to which the PRC is a signatory or participant or according to the principle of reciprocity, a
people’s court and a foreign court may request each other to serve documents, conduct investigation and
collect evidence and conduct other actions on its behalf.
If any party to a civil action refuses to comply with a judgment or ruling made by a people’s court
or an award made by an arbitration panel in the PRC, the other party may apply to the people’s court for
the enforcement of the same. There are time limits of two years imposed on the right to apply for such
enforcement. If a person fails to satisfy a judgment made by the court within the stipulated time, the court
will, upon application by either party, enforce the judgment in accordance with the law.
A party seeking to enforce a judgment or ruling of a people’s court against a party who is not
personally or whose property is not within the PRC may apply to a foreign court with jurisdiction over the
case for recognition and enforcement of the judgment or ruling. A foreign judgment or ruling may also be
recognized and enforced by the people’s court according to PRC enforcement procedures if the PRC has
entered into or acceded to an international treaty with the relevant foreign country, which provides for
such recognition and enforcement, or if the judgment or ruling satisfies the court’s examination according


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to the principle of reciprocity, unless the people’s court finds that the recognition or enforcement of such
judgment or ruling will result in a violation of the basic legal principles of the PRC, its sovereignty or
security or against social and public interest.
THE COMPANY LAW AND THE TRIAL MEASURES
A joint stock limited company which was incorporated in the PRC and seeking a listing on the
Stock Exchange is mainly subject to the following two laws and regulations in the PRC:
• The PRC Company Law () which was promulgated by the Standing
Committee of the NPC on 29 December 1993, came into effect on 1 July 1994, revised on 2 5
December 1999, 28 August 2004, 27 October 2005, 28 December 2013, and 26 October 2018
respectively and was latest revised on 29 December 2023 and came effect on 1 July 2024;
• On 17 February 2023, with the approval of the State Council, the CSRC promulgated the
Trial Measures and relevant six guidelines, which came into force on 31 March 2023.
Set out below is a summary of the major provisions of the Company Law and the Trial Measures
applicable to the Company.
General
A joint stock limited company refers to an enterprise legal person with independent legal person
properties and entitlements to such legal person properties incorporated under the Company Law with its
registered capital divided into shares. The liability of its shareholders is limited to the shares subscribed
them and the company is liable to its creditors to the extent of all its assets.
A joint stock limited company shall conduct its business in accordance with laws and administrative
regulations, observe social ethics and business ethics, act in good faith, and be subject to government
and public oversight. It may invest in other enterprises. Where any law provides that a company shall
not become a capital contributor that shall bear joint and several liability for the debts of the invested
enterprise, such provisions shall apply.
Incorporation
A joint stock limited company may be incorporated by promotion or subscription.


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A joint stock limited company may be incorporated by a minimum of one but not more than 200
promoters, and at least half of the promoters shall have residence within the PRC. Companies incorporated
by promotion are companies with the registered capital entirely subscribed for by the promoters  when
establishing a company. Where companies are incorporated by subscription, the promoters are required to
subscribe for not less than 35% of the total number of shares of a company unless otherwise stipulated by
laws and regulations when establishing a company, and the remaining shares can be offered to the public
or specific persons, unless otherwise required by law.
For a company incorporated by promotion, the promoters shall subscribe to the full number
of shares to be issued at the time of establishment as stipulated in the articles of association. For the
establishment of a joint stock limited company by promotion, the shares subscribed by the promoters shall
not be less than 35% of the total number of shares to be issued at the time of company. establishment as
stipulated in the company’ s articles of association, unless otherwise provided in any law or administrative
regulations. Promoters shall pay the full amount of the subscribed shares before the establishment of
the company. If any promoter fails to pay the share capital according to the subscribed shares, or if the
actual value of the non-monetary property used as capital contribution is significantly lower than the
subscribed shares, other promoters and the promoter shall bear joint and several liability within the scope
of insufficient capital contribution.
After the full payment of the proceeds from the public offering of shares, it shall be verified by a
legally established capital verification institution and a certificate shall be issued. The promoters of a joint
stock limited company incorporated by subscription shall convene the company ’s establishment meeting
within 30 days from the date of full payment of the shares to be issued at the time of establishment. The
promoter shall notify all subscribers of the meeting date or make an announcement fifteen days before the
establishment meeting. The establishment meeting shall be attended by more than half of the voting rights
held by the subscribers. The convening and voting procedures for the establishment meeting of a joint
stock limited company incorporated by promotion shall be stipulated in the articles of association or the
agreement of the promoters.
The board of directors shall authorize representatives to apply for establishment registration with
the company registration authority within 30 days after the conclusion of the company’s establishment
meeting.
If the shares required to be issued at the time of the establishment of a company are not fully
subscribed, or if, after the full payment for the issued shares, the promoters fail to convene an establishment
meeting within 30 days, any subscriber may demand the promoters to refund their subscriptions, plus the
interest calculated based on the bank interest rate for the corresponding period.
After the promoters and subscribers have paid for their subscribed shares or delivered non-
monetary assets as contributions, they shall not withdraw their capital except in cases where the issued
shares are not fully subscribed within the specified period, the promoters fail to convene an establishment
meeting within the prescribed period, or the establishment meeting resolves not to establish the company.


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According to the Interim Provisional Regulations on the Administration of Share Issuance and Trading
(၍ଣᅲБૢԷ) promulgated by the State Council on 22 April 1993 (which is only
applicable to the issuance and trading of shares in the PRC and their related activities), if a company is
established by means of public subscription, the promoters  or directors  of such company are required
to sign on the prospectus to ensure that the prospectus does not contain any misrepresentation, serious
misleading statements or material omissions, and assume joint and several responsibility for it.
Registered Capital
The promoters of a company can make capital contributions in cash or in kind, which can be valued
in currency and transferable according to law such as intellectual property rights or land use rights based
on their appraised value, except for assets which are prohibited from being contributed as capital by the
laws or administrative regulations.
If capital contribution is made other than in cash, valuation without any over-valuation or under-
valuation and verification of the property contributed must be carried out.
The stocks issued by a company shall be registered stocks.
The transfer of shares by shareholders should be conducted via the legally established stock
exchange or in accordance with other methods as stipulated by the State Council.
Shares issued by a company prior to the public offer of its shares shall not be transferred within
one year from the date of listing of the shares of the company on a stock exchange. Directors, supervisors
and senior management of a company shall not transfer over 25% of the shares held by each of them in
the company each year during their term of office  determined at the time of appointment  and shall not
transfer any share of the company held by each of them within one year after the listing date. There is no
restriction under the Company Law as to the percentage of shareholding a single shareholder may hold in
a company.
No changes shall be made to  the register of shareholders within 20 days before the date of a
shareholders’ meeting or within five days before the record date set for the purpose of distribution of
dividends.
Allotment and Issue of Shares
All issue of shares of a joint stock limited company shall be based on the principles of equality and
fairness. The same class of shares must carry equal rights. Shares issued at the same time and within the
same class must be issued on the same conditions and at the same price. The issue price of par value stock
may be based on the face value or exceed the face value but shall not be lower than the face value.


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Registered Shares
Under the Company Law, the shareholders may make capital contributions in cash, or alternatively
may make capital contributions with such valuated non-monetary property as physical items, intellectual
property rights, land-use rights, equity, debt claims, or other non-monetary assets which can be valued in
monetary terms and legally transferred, except for assets not eligible for capital contribution under any
other law or administrative regulations.
Under the Company Law, a joint stock limited company shall maintain a register of shareholders,
stating the following matters:
• the name and domicile of each shareholder;
• type and quantity of subscribed shares for each shareholder;
• for stocks issued in paper form, the stock serial numbers; and
• the date on which each shareholder acquired the shares.
Increase of Registered Capital
Pursuant to the Company Law, when the joint stock limited company issues new shares, resolutions
shall be passed by a shareholders’ meeting, approving the class and number of the new shares, the issue
price of the new shares, the commencement and end of the new share issuance and the class and amount of
new shares to be issued to existing shareholders, in the case of issuing non-par value shares, the amount of
proceeds from the new share issuance to be included in the registered capital.
The articles of association or the shareholders’  meeting may authorize the board of directors to
decide, within three years, on the issuance of shares not exceeding 50% of the issued shares. However, any
contribution made in the form of non-monetary assets shall be subject to resolution at the shareholders’
meeting.  If the board of directors, in accordance with the provisions above, decides to issue shares,
leading to changes in the company’ s registered capital or the quantity of issued shares, the modification of
the relevant entries in the articles of association shall not require a vote by the shareholders’  meeting. If
the articles of association or the shareholders’  meeting authorizes the board of directors to decide on the
issuance of new shares, the relevant resolution of the board of directors shall be adopted by two-thirds or
more of all the directors.
The company conducting a public offering of shares shall register the offering with the securities
regulatory authority under the State Council and publish a prospectus. After the share issuance has been
paid up, an announcement shall be made.


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Reduction of Registered Capital
A company may reduce its registered capital in accordance with the following procedures prescribed
by the Company Law:
• it shall prepare a balance sheet and a property list;
• the reduction of registered capital shall be approved by a shareholders’ meeting;
• it shall inform its creditors of the reduction in capital within 10 days and publish an
announcement of the reduction in the newspaper  or the National Enterprise Credit
Information Publicity System within 30 days after the resolution approving the reduction has
been passed;
• creditors may within 30 days after receiving the notice, or within 45 days of the public
announcement if no notice has been received, require the company to pay its debts or provide
guarantees covering the debts;
• A company decreasing its registered capital shall decrease shareholders’  contributions
or shares on a pro rata basis, except as otherwise stipulated by law, agreed upon by all
shareholders in the case of a limited liability company, or stipulated in the articles of
association in the case of a joint stock limited company.
After a company covers losses as provided in the second paragraph of Article 214 of this Law, if
there are still losses, the company may decrease its registered capital to make up for the losses. In the
case of deceasing the registered capital to make up for losses, the company shall not distribute profits to
shareholders or exempt shareholders from the obligation to pay contributions or share capital.
In the case of a decrease in registered capital pursuant to the preceding paragraph, the second
paragraph of the Article 224 (the obligation to inform creditors and publish an announcement as mentioned
above) shall not apply, but a public announcement shall be made through a newspaper or the National
Enterprise Credit Information Publicity System within 30 days of adopting the resolution on the decrease
in registered capital by the shareholders' meeting.
After a company decreases its registered capital as provided in the preceding two paragraphs,
profits shall not be distributed until the aggregate amount of statutory reserve and discretionary reserve
reaches 50% of the company ’s registered capital. In cases where a decrease in a company ’s registered
capital violates the provisions of this Law, shareholders shall return the funds received, and any decrease
in shareholders' contributions shall be reinstated; if any losses are caused thereby to the company,
shareholders, as well as any directors, supervisors, and senior officers responsible for the violation, shall
be liable for compensation.


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Repurchase of Shares
According to the Company Law, a joint stock limited company may not purchase its shares other
than for one of the following purposes: (i) to reduce its registered capital; (ii) to merge with another
company that holds its shares; (iii) to grant its shares for carrying out an employee stock ownership plan
or equity incentive plan; (iv) to purchase its shares from shareholders who are against the resolution
regarding the merger or division with other companies at a shareholders’ meeting; (v) use of shares for
conversion of convertible corporate bonds issued by the company; and (vi) the share buyback is necessary
for a listed company to maintain its company value and protect its shareholders’ equity.
The purchase of shares on the grounds set out in (i) and (ii) above shall require approval by way
of a resolution passed by the shareholders’ meeting. For a company’s share buyback under any of the
circumstances stipulated in (iii), (v) or (vi) above, a resolution of the company’s board of directors shall
be made by a two-third majority of directors attending the meeting according to the provisions of the
company’s articles of association or as authorized by the shareholders’ meeting.
Following the purchase of shares in accordance with (i), such shares shall be deregistered  within
10 days from the date of purchase. The shares shall be assigned or deregistered within six months if the
share buyback is made under the circumstances stipulated in either (ii) or (iv). The shares held in total by
a company after a share buyback under any of the circumstances stipulated in (iii), (v) or (vi) shall not
exceed 10% of the company’s total outstanding shares, and shall be assigned or deregistered within three
years.
Listed companies making a share buyback shall perform their obligation of information disclosure
according to the provisions of the Securities Law. If the share buyback is made under any of the
circumstances stipulated in (iii), (v) or (vi) hereof, centralized trading shall be adopted publicly.
A company may not accept its own shares as the subject matter of pledge.
Transfer of Shares
Shareholders of a joint stock limited company may transfer their shares in the company to other
shareholders, or to parties outside the shareholders; where there are restrictions on share transfers in
the company’s articles of association, those restrictions shall apply.  Pursuant to the Company Law,
transfer of shares by shareholders shall be carried out at a legally established securities exchange or in
other ways stipulated by the State Council. No modifications of registration in the share register shall be
carried out within 20 days prior to the convening of shareholder’s meeting or five days prior to the base
date for determination of dividend distributions. However, where there are separate provisions by law,
administrative regulations or Securities Regulatory Agencies under the State Council  on alternation of
registration in the share register of listed companies, those provisions shall prevail.


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Under the Company law, shares issued prior to the public issuance of shares shall not be transferred
within one year from the date of the joint stock limited company’s listing on a stock exchange. Where any
laws, administrative regulations, or the securities regulatory authority under the State Council have other
provisions regarding the transfer of shares of a listed company by its shareholders or actual controllers,
those provisions shall prevail.  Directors, supervisors and the senior management shall declare to the
company their shareholdings in the company and any changes of such shareholdings. They shall not
transfer more than 25% of all the shares they hold in the company annually during their tenure determined
at the time of appointment. They shall not transfer the shares they hold within one year from the date on
which the company’s shares are listed and commenced trading on a stock exchange, nor within six months
after their resignation from their positions with the company. The articles of association may set out other
restrictive provisions in respect of the transfer of shares in the company held by its directors, supervisors
and the senior management. If shares are pledged within a restricted period for transfer specified by laws
or administrative regulations, the pledgee shall not exercise the pledge during the restricted period for
transfer.
Shareholders
Under, among others,  the Company Law, the rights of holders of ordinary shares of a joint stock
limited company include:
• to receive return on assets, elect and replace directors and supervisors and determine matters
relating to their remunerations;
• the right to attend or appoint a proxy to attend shareholders’ meetings and to vote thereat;
• the right to transfer shares in accordance with laws, administrative regulations and provisions
of the articles of association;
• the right to inspect  and copy, or appoint intermediary institutions such as accounting firms
or law firms to inspect and copy  the company’s  and its wholly-owned subsidiary’s  articles
of association, share register, minutes of shareholder’s meetings, resolutions of meetings of
the board of directors, resolutions of meetings of the board of supervisors and financial and
accounting reports , in cases where a company rejects a shareholder’s request to inspect the
company’s accounting books, the shareholder may initiate legal action in the people’s court,
and to make proposals or enquiries on the company’s operations;
• the right to bring an action in the people’s court to rescind resolutions passed by
shareholder’s meetings and board of directors where laws, administrative regulations or the
articles of association is violated by the above resolutions  except in cases where there are
only minor defects in the procedure for convening the meeting or the voting method used in
the meeting, which had no material impact on the resolution;


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• the right to receive dividends and other types of interest distributed in proportion to the
number of shares held;
• in the event of the termination or liquidation of the company, the right to participate in the
distribution of residual properties of the company in proportion to the number of shares held;
and
• other rights granted by laws, administrative regulations, other regulatory documents and the
company’s articles of association.
The obligations of a shareholder include, among others,  the obligation to abide by laws,
administrative regulations and  the Company’s articles of association, to pay the subscription moneys in
respect of the shares subscribed for and in accordance with the form of making capital contributions, to
be liable for the company’s debts and liabilities to the extent of the amount of his or her subscribed shares
and any other shareholders’ obligation specified in the company’s articles of association.
Shareholders’ Meetings
The shareholders’ meeting is the organ of authority of the company, which exercises its powers in
accordance with the Company Law. Under the Company Law, the shareholders’ meeting exercises the
following principal powers:
• to elect or remove the directors and supervisors and to decide on matters relating to the
remuneration of directors and supervisors;
• to examine and approve reports of the board of directors;
• to examine and approve reports of the board of supervisors;
• to examine and approve the company’s proposals for profit distribution plans and loss
recovery plans;
• to decide on any increase or reduction of the company’s registered capital;
• to decide on the issue of bonds by the company;
• to decide on issues such as merger, division, dissolution and liquidation of the company and
other matters;
• to amend the company’s articles of association; and
• other powers as provided for in the articles of association.


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The shareholders’ meeting may authorize the board of directors to make resolutions on the issuance
of corporate bonds.
Shareholders’ annual meetings are required to be held once every year. Under the Company Law,
an extraordinary shareholders’ meeting is required to be held within two months after the occurrence of
any of the following:
• the number of directors is less than the number stipulated by the law or less than two thirds
of the number specified in the articles of association;
• the aggregate losses of the company which are not recovered reach one-third of the
company’s total paid-in registered capital;
• when shareholders alone or in aggregate holding 10% or more of the company’s shares
request the convening of an extraordinary meeting;
• whenever the board of directors deems necessary;
• when the board of supervisors so requests; or
• other circumstances as provided for in the articles of associations
Under the Company Law, shareholders’ meetings shall be convened by the board of directors, and
presided over by the chairman of the board of directors. In the event that the chairman is incapable of
performing or does not perform his duties, the meeting shall be presided over by the vice chairman. In the
event that the vice chairman is incapable of performing or not performing his duties, a director nominated
by a majority of the directors shall preside over the meeting.
Where the board of directors is incapable of performing or not performing its duties of convening
the shareholders’ meeting, the board of supervisors shall convene and preside over such meeting in
a timely manner. In case the board of supervisors fails to convene and preside over such meeting,
shareholders alone or in aggregate holding more than 10% of the company’s shares for 90 days
consecutively may unilaterally convene and preside over such meeting.  If a shareholder individually
holding or shareholders collectively holding 10% or more of the company’s shares, requests the convening
of an extraordinary shareholders’ meeting, the board of directors or the board of supervisors shall, within
10 days from the date of receiving the request, decide whether to convene the extraordinary shareholders’
meeting and provide a written response to the shareholder(s).
Under the Company Law, notice of shareholders’ meeting shall state the time and venue of and
matters to be considered at the meeting and shall be given to all shareholders 20 days before the meeting.
Notice of extraordinary shareholder’s meetings shall be given to all shareholders 15 days prior to the
meeting.


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There is no specific provision in the Company Law regarding the number of shareholders
constituting a quorum in a shareholders’ meeting.
Under the PRC Company Law, a single shareholder who holds, or several shareholders who jointly
hold, 1% or more of the shares of the company may submit an interim proposal in writing to the board
of directors 10 days before the meeting is held. The interim proposal shall include a specific issue for
discussion along with any concrete matter for resolution. The board of directors shall, within two days
upon receipt of the proposal, notify the other shareholders, and submit the said interim proposal to the
meeting for deliberation  except for any proposal that violates laws, administrative regulations, or the
articles of association, or any proposal that falls outside the purview of the shareholders’ meeting. The
company shall not increase the shareholding percentage for shareholders proposing interim proposals.
Shareholders attending a shareholders’ meeting shall have one voting right for each share they hold,
except for shareholders of non-ordinary shares. The company’s own shares held by the company do not
carry voting rights.
Pursuant to the provisions of the articles of association or a resolution of the shareholders’ meeting,
the accumulative voting system may be adopted for the election of directors and supervisors at the
shareholders’ meeting. Under the accumulative voting system, each share shall be entitled to vote equivalent
to the number of directors or supervisors to be elected at the shareholders’ meeting and shareholders may
consolidate their voting rights when casting a vote.
Pursuant to the Company Law, resolutions of the shareholders’ meeting shall be adopted by more
than half of the voting rights held by the shareholders present at the meeting. However, resolutions of the
shareholders’ meeting regarding the following matters shall be adopted by more than two-thirds of the
voting rights held by the shareholders present at the meeting: (i) amendments to the articles of association;
(ii) the increase or decrease of registered capital; (iii) the merger, division, dissolution, liquidation or
change in the form of the company. The meeting shall not make resolutions on matters that are not clearly
listed in the notices given to the shareholders.
Under the Company Law, meeting minutes shall be prepared in respect of decisions on matters
discussed at the shareholders’ meeting. The chairman of the meeting and directors attending the meeting
shall sign to endorse such minutes. The minutes shall be kept together with the shareholders’ attendance
register and the proxy forms.
Board
Under the Company Law, a joint stock limited company shall have a board of directors, which shall
consist of 3 or more members and may include employee representatives among them.


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In the case of a company with three hundred or more employees, except when a board of supervisors
has been established including a number of employee representatives among its members as required by
law, the company’s board of directors shall include employee representatives among its members. An
employee representative on the board of directors shall be elected by the company’s employees through
the employee representative assembly, employee assembly, or other forms of democratic elections. A
joint stock limited company with a smaller scale or fewer shareholders may appoint one director without
establishing a board of directors to exercise the functions and powers prescribed for the board of directors
by the Company Law. This director may serve concurrently as the company manager.  The term of a
director shall be stipulated in the articles of association, but no term of office shall last for more than
three years. Directors may serve consecutive terms if re-elected. A director shall continue to perform his
duties in accordance with the laws, administrative regulations and articles of association until a duly re-
elected director takes office, if re-election is not conducted in a timely manner upon the expiry of his term
of office, or if the resignation of directors results in the number of directors being less than the quorum.
Resignation of a director shall be notified to the company in writing, and the resignation shall become
effective on the date the company receives the notice, except in the circumstances as mentioned above,
where the director shall continue to perform duties.
A joint stock limited company may, as stipulated in its articles of association, establish an audit
committee within the board of directors composed of directors to exercise the functions and powers
prescribed for the board of supervisors by this Law, without establishing a board of supervisor or
supervisor. Under the Company Law, the board of directors mainly exercises the following powers:
• to convene the shareholders’ meetings and report on its work to the shareholders’ meetings;
• to implement the resolutions passed in shareholders’ meetings;
• to decide on the company’s business plans and investment proposals;
• to formulate the company’s profit distribution proposals and loss recovery proposals;
• to formulate proposals for the increase or reduction of the company’s registered capital and
the issuance of corporate bonds;
• to prepare plans for the merger, division, dissolution and change in the form of the company;
• to determine the establishment of the company’s internal management bodies;
• to determine the appointment or removal of the company manager and the manager’s
remuneration, and based on nominations by the manager, determine the appointment or
removal of any deputy manager and the head of finance and their remuneration;


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• to formulate the company’s basic management system; and
• any other functions or powers specified in the articles of association or granted by the
shareholders’ meeting.
Any restrictions on the functions and powers of the board of directors in the articles of association
shall not be enforceable against bona fide third parties.
Board Meetings
Under the Company Law, meetings of the board of directors of a joint stock limited company shall
be convened at least twice a year. Notice of meeting shall be given to all directors and supervisors 10 days
before the meeting. Interim board meetings may be proposed to be convened by shareholders representing
more than 10% of voting rights, more than one-third of the directors or the board of supervisors. The
chairman shall convene and preside over such meeting within 10 days after receiving such proposal.
Meetings of the board of directors shall be held only if half or more of the directors are present.
Resolutions of the board of directors shall be passed by more than half of all directors. Each director
shall have one vote for resolutions to be approved by the board of directors. Directors shall attend board
meetings in person. If a director is unable to attend a board meeting, he may appoint another director in
writing to represent them, and the power of attorney shall specify the scope of authorization.
If a resolution of the board of directors violates the laws, administrative regulations,  articles of
association, or any resolution of the shareholders’ meeting, and as a result of which the company sustains
serious losses, the directors participating in the resolution are liable to compensate the company. However,
if it can be proved that a director expressly objected to the resolution when the resolution was voted on,
and that such objection was recorded in the minutes of the meeting, such director may be released from
that liability.
Chairman of the Board
Under the Company Law, the board of directors shall appoint a chairman and may appoint a vice
chairman. The chairman and the vice chairman are elected with approval of more than half of all the
directors. The chairman shall convene and preside over board meetings and examine the implementation of
board resolutions. The vice chairman shall assist the work of the chairman. In the event that the chairman is
incapable of performing or not performing his duties, the duties shall be performed by the vice chairman.
In the event that the vice chairman is incapable of performing or not performing his duties, a director
nominated by more than half of the directors shall perform his duties.


--- page 515 ---
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APPENDIX IV SUMMARY OF PRINCIPAL PRC LEGAL
AND REGULATORY PROVISIONS
Qualification of Directors
The Company Law provides that the following persons may not serve as a director:
• a person who is unable or has limited ability to undertake any civil liabilities;
• a person who has been convicted of an offense of bribery, corruption, embezzlement or
misappropriation of property, or the destruction of socialist market economy order; or who
has been deprived of his political rights due to his crimes, in each case where less than five
years have elapsed since the date of completion of the sentence or in the case of a suspended
sentence, two years have not elapsed since the probation period was completed;
• a person who has been a former director, factory manager or manager of a company or an
enterprise that has entered into insolvent liquidation and who was personally liable for the
insolvency of such company or enterprise, where less than three years have elapsed since the
date of the completion of the bankruptcy and liquidation of the company or enterprise;
• a person who has been a legal representative of a company or an enterprise that has had its
business licence revoked or been ordered to close down due to violations of the law and the
person was personally responsible, where less than three years have elapsed since the date of
such revocation; or
• any individual identified as a subject of enforcement for breach of trust by the people’s court
for failure to repay a significant amount of overdue debts.
Board of Supervisors
A joint stock limited company shall have a board of supervisors composed of three or more
members. A joint stock limited company may, as stipulated in its articles of association, establish an
audit committee within the board of directors composed of directors to exercise the functions and powers
prescribed for the board of supervisors by the Company Law, without establishing a board of supervisor
or supervisor. A joint stock limited company with a smaller scale or fewer shareholders may appoint one
supervisor without establishing a board of supervisors to exercise the functions and powers prescribed
for the board of supervisors by the Company Law. The board of supervisors is made up of representatives
of the shareholders and an appropriate proportion of representatives of the employees of the company.
The actual proportion shall be stipulated in the articles of association, provided that the proportion of
representatives of the employees shall not be less than one third of the supervisors. Representatives of the
employees of the company in the board of supervisors shall be democratically elected by the employees at
the employees’ representative assembly, employees’ meeting or otherwise.
The directors and senior management may not act concurrently as supervisors.


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– IV-18 –
APPENDIX IV SUMMARY OF PRINCIPAL PRC LEGAL
AND REGULATORY PROVISIONS
The board of supervisors shall appoint a chairman and may appoint a vice chairman. The chairman
and the vice chairman of the board of supervisors are elected with approval of more than half of all the
supervisors. The chairman of the board of supervisors shall convene and preside over the meetings of the
board of supervisors. In the event that the chairman of the board of supervisors is incapable of performing
or not performing his duties, the vice chairman of the board of supervisors shall convene and preside over
the meetings of the board of supervisors. In the event that the vice chairman of the board of supervisors
is incapable of performing or not performing his duties, a supervisor nominated by more than half of the
supervisors shall convene and preside over the meetings of the board of supervisors.
Each term of office of a supervisor is three years and he or she may serve consecutive terms if re-
elected. A supervisor shall continue to perform his duties in accordance with the laws, administrative
regulations and articles of association until a duly re-elected supervisor takes office, if re-election is not
conducted in a timely manner upon the expiry of his term of office, or if the resignation of supervisors
results in the number of supervisors being less than the quorum.
The board of supervisors of a company shall hold at least one meeting every six months. According
to the PRC Company Law and the Guidelines for Articles of Association of Listed Companies (ɪ̹ʮ̡
ˏ), a resolution of the board of supervisors shall be passed by more than half of all the supervisors.
The board of supervisors exercises the following powers:
• to review the company’s financial position;
• to supervise the directors and senior management in their performance of their respective
duties and to propose the dismissal  of directors and senior management who have violated
laws, regulations, the articles of association or the resolutions of shareholders’ meeting;
• when the acts of directors and senior management are harmful to the company’s interests, to
require correction of those acts;
• to propose the convening of extraordinary shareholders’ meetings and to convene and
preside over shareholders’ meetings when the board of directors fails to perform the duty of
convening and presiding over shareholders’ meeting under the Company Law;
• to initiate proposals for resolutions to shareholders’ meeting;
• to initiate proceedings against directors and senior management; and
• other powers specified in the articles of association.


--- page 517 ---
– IV-19 –
APPENDIX IV SUMMARY OF PRINCIPAL PRC LEGAL
AND REGULATORY PROVISIONS
Supervisors may be present at board meetings and make inquiries or proposals in respect of
the resolutions of the board. The supervisory board may investigate any irregularities identified in the
operations of the company and, when necessary, may engage an accounting firm to assist its work at the
cost of the company.
Manager and Senior Management
Under the Company Law, a joint stock limited  company shall have a manager who shall be
appointed or removed by the board of directors.
The company manager shall report to the board of directors and exercise functions and powers as
specified in the articles of association or as authorized by the board of directors. The manager shall attend
board meetings.
According to the Company Law, senior management shall mean the manager, deputy manager(s),
person-in-charge of finance, board secretary (in case of a listed company) of a company and other
personnel as stipulated in the articles of association.
Duties of Directors, Supervisors and Senior Management
Directors, supervisors, and senior officers owe a duty of loyalty to the company and shall take
measures to avoid conflicts of interest between their personal interests and the interests of the company,
and shall not use their authority to seek improper benefits.
Directors, supervisors, and senior officers owe a duty of diligence to the company, and in the
execution of their duties, shall exercise the usual and reasonable care that a manager should have for the
maximum benefit of the company. Directors and senior management are prohibited from:
• embezzling company property, or misappropriation of the company’s capital;
• depositing the company’s capital into accounts under his own name or the name of other
individuals;
• using his authority to engage in bribery or accept other illegal income;
• accept and possess commissions paid by a third party for transactions conducted with the
company;
• unauthorized divulgence of confidential company information; or
• other acts in violation of their duty of loyalty to the company.


--- page 518 ---
– IV-20 –
APPENDIX IV SUMMARY OF PRINCIPAL PRC LEGAL
AND REGULATORY PROVISIONS
Directors, supervisors, and senior officers, whether directly or indirectly, entering into a contract
or engaging in a transaction with the company, shall report matters related to the contract execution or
transaction to the board of directors or the shareholders’  meeting and obtain approval in accordance with
the company’ s articles of association through resolutions of the board of directors or the shareholders’
meeting. The provisions above shall also apply to the close relatives of directors, supervisors, or senior
officers, enterprises directly or indirectly controlled by directors, supervisors, or senior officers or their
close relatives, and parties having other related-party relationships with directors, supervisors, or senior
officers who enter into contracts or engage in transactions with the company.
Directors, supervisors, and senior officers shall not use their positions to seek any business
opportunity available to the company for themselves or others, except in any of the following
circumstances:
(1) Where the activity is reported to the board of directors or the shareholders’  meeting and
approved in accordance with the company’ s articles of association through resolutions of the
board of directors or the shareholders’  meeting; or
(2) Where the company cannot exploit the business opportunity according to any laws,
administrative regulations, or the company’ s articles of association.
Directors, supervisors, and senior officers shall not operate businesses, either self-owned or owned
by others, similar to those of the company they serve, without reporting to the board of directors or the
shareholders’  meeting and obtaining approval in accordance with the company’ s articles of association
through resolutions of the board of directors or the shareholders’  meeting.
Income generated by directors or senior management in violation of aforementioned provisions
shall be returned to the company.
A director, supervisor or senior management who contravenes any law, regulation or the company’s
articles of association in the performance of his duties resulting in any loss to the company shall be
personally liable to the company.
If the shareholders’ meeting requires the attendance of any director, supervisor, or senior
management  such director, supervisor or senior management shall attend the meeting and answer the
inquiries from shareholders. Directors and senior management shall furnish all true information and data
to the supervisory board, supervisors, without impeding the discharge of duties by the supervisory board
or supervisors.
Where a director or senior management contravenes law, administrative regulation or the articles
of association in the performance of his/her duties resulting in any loss to the company, shareholder(s)
holding individually or in aggregate more than 1% of the company’s shares consecutively for over 180
days may request in writing that the supervisory board institute litigation at a people’s court on its behalf.
Where the supervisory board violates the laws or administrative regulations or the articles of association


--- page 519 ---
– IV-21 –
APPENDIX IV SUMMARY OF PRINCIPAL PRC LEGAL
AND REGULATORY PROVISIONS
in the discharge of its duties resulting in any loss to the company, such shareholder(s) may request in
writing that the board of directors institutes litigation at a people’s court on its behalf. If the supervisory
board or the board of directors refuses to institute litigation after receiving this written request from the
shareholder(s), or fails to institute litigation within 30 days of the date of receiving the request, or in case
of emergency where failure to institute litigation immediately will result in irrecoverable damage to the
company’s interests, such shareholder(s) shall have the power to institute litigation directly at a people’s
court in its own name for the company’s benefit. For other parties who infringe the lawful interests of the
company resulting in loss to the company. Such shareholder(s) may institute litigation at a people’s court
in accordance with the procedure described above. Where a director or senior management contravenes
any laws, administrative regulations or the articles of association in infringement of shareholders’
interests, a shareholder may also institute litigation at a people’s court.  In cases where any director,
supervisor, or senior officer of a wholly-owned subsidiary of the company contravenes law, administrative
regulation or the articles  of association in the performance of his/her duties resulting in any loss to the
subsidiary of company, or the lawful rights and interests of the wholly-owned subsidiary of the company
are infringed by any other person, resulting in any losses, any shareholder individually or shareholders
collectively holding 1% or more of the shares for 180 or more consecutive days, may, pursuant to the
above-mentioned provisions, make a written request to the board of supervisors or the board of directors
of the wholly-owned subsidiary to initiate legal action in the people’s court, or directly initiate legal action
in their own name in the people’s court.
Finance and Accounting
Under the Company Law, a company shall establish financial and accounting systems according to
laws, administrative regulations and the regulations of the financial department of the State Council and
shall at the end of each financial year prepare a financial and accounting report which shall be audited by
an accounting firm as required by law. The company’s financial and accounting report shall be prepared
in accordance with provisions of the laws, administrative regulations and the regulations of the financial
department of the State Council.
Pursuant to the Company Law, the company shall deliver its financial and accounting reports to
all shareholders within the time limit stipulated in the articles of association and make its financial and
accounting reports available at the company for inspection by the shareholders at least 20 days before the
convening of an annual meeting of shareholders. A joint stock limited company that has publicly offered
shares must also publish its financial and accounting reports.
When distributing each year’s after-tax profits, it shall set aside 10% of its after-tax profits into a
statutory common reserve fund (except where the fund has reached 50% of its registered capital).
If its statutory common reserve fund is not sufficient to make up losses of the previous year, profits
of the current year shall be applied to make up losses before allocation is made to the statutory common
reserve fund pursuant to the above provisions.


--- page 520 ---
– IV-22 –
APPENDIX IV SUMMARY OF PRINCIPAL PRC LEGAL
AND REGULATORY PROVISIONS
After allocation of the statutory common reserve fund from after-tax profits, it may, upon a
resolution passed at the shareholders’ meeting, allocate discretionary common reserve fund from after-tax
profits.
The remaining after-tax profits after making up losses and allocation of common reserve fund shall
be distributed in proportion to the number of shares held by the shareholders, unless otherwise stipulated
in the articles of association.
Shares held by the Company shall not be entitled to any distribution of profit.
The premium received through issuance of shares at prices above par value, the amount of capital
obtained from the issuance of non-par value shares that is not included in the registered capital, and other
items required by the financial department of the State Council to be allocated to the capital reserve fund
shall be allocated to the company’s capital reserve fund.
The Company’s reserve fund shall be applied to make up losses of the company, expand its business
operations or be converted to increase the registered capital of the company. When using a company’s
reserves to cover its losses, any discretionary reserve and statutory reserve balances shall first be used
to cover such losses; if there is still a shortfall, the capital reserve may be used in accordance with
regulations. Upon the conversion of statutory common reserve fund into an increase in registered capital,
the balance of the statutory common reserve fund shall not be less than 25% of the registered capital of the
company before such conversion.
The Company shall have no other accounting books except the statutory accounting books. Its assets
shall not be deposited in any accounts opened in the name of any individual.
Appointment and Retirement of Accounting Firms
Pursuant to the Company Law, the appointment or dismissal of accounting firms responsible for
the auditing of the company shall be determined by shareholders’ meeting , board of directors or board
of supervisors in accordance with provisions of articles of association. The accounting firm should
be allowed to make representations when the shareholders’ meeting,  board of directors,  or board of
supervisors conducts a vote on the dismissal of the accounting firm. The company should provide true and
complete accounting evidences, books, financial and accounting reports and other accounting data to the
accounting firm it employs without any refusal, withholding and misrepresentation.
Distribution of Profits
According to the Company Law, a company shall not distribute profits before losses are covered
and the statutory common reserve is drawn.


--- page 521 ---
– IV-23 –
APPENDIX IV SUMMARY OF PRINCIPAL PRC LEGAL
AND REGULATORY PROVISIONS
Amendments to Articles of Association
Any amendments to the company’s articles of association must be made in accordance with the
procedures set out in the company’s articles of association. Pursuant to the PRC Company Law, the
resolution of a shareholders’ meeting regarding any amendment to a company’s articles of association
requires affirmative votes by more than two-thirds of the votes held by shareholders attending the meeting.
Dissolution and Liquidation
According to the Company Law, a company shall be dissolved by reason of the following: (i) the
term of its operations set down in the articles of association has expired or other events of dissolution
specified in the articles of association have occurred; (ii) the shareholders’ meeting have resolved to
dissolve the company; (iii) the company is dissolved by reason of merger or division; (iv) the business
licence is revoked; the company is ordered to close down or be dissolved; or (v) the company is dissolved
by the people’s court in response to the request of shareholders holding shares that represent more than
10% of the voting rights of all its shareholders, on the grounds that the company suffers significant
hardship in its operation and management that cannot be resolved through other means, and the ongoing
existence of the company would bring significant losses for shareholders.
In the event of (i) and (ii)  above, provided that the company has not yet distributed its assets to
shareholders, it may continue its existence by amending its articles of association or by resolution of
the shareholders’ meeting.  The amendment of the articles of association in accordance with provisions
set out above shall require approval of more than two thirds of voting rights of shareholders attending a
shareholders’ meeting.
Where the company is dissolved in the circumstances described in subparagraphs (i), (ii), (iv), or (v)
above, it should be liquidated, and the director is the obligor of the company’s liquidation, a liquidation
group shall be established and the liquidation process shall commence within 15 days after the occurrence
of an event of dissolution.
The liquidation team shall be composed of directors, unless otherwise stipulated in the company’s
articles of association or appointed by a resolution of the shareholders’ meeting. If the liquidators fail to
fulfill their liquidation obligations in a timely manner, resulting in losses to the company or its creditors,
they shall be liable for compensation.
If a liquidation group is not established within the prescribed period or fails to proceed with
liquidation after forming a liquidation group, any stakeholders may apply to the people’s court to
designate relevant individuals to form a liquidation group for the liquidation. The people’s court shall
accept the application and promptly organize a liquidation group to conduct the liquidation.


--- page 522 ---
– IV-24 –
APPENDIX IV SUMMARY OF PRINCIPAL PRC LEGAL
AND REGULATORY PROVISIONS
If a company is dissolved due to the reason that its business licence is revoked, it is ordered to
close down or be dissolved, the authority or company registration authority making the decision on the
revocation of the business license or ordering the shutdown or dissolution may apply to the people’s court
to designate relevant individuals to form a liquidation group for the company’s liquidation.
The liquidation group shall exercise the following powers during the liquidation period:
• to handle the company’s assets and to prepare a balance sheet and an inventory of the assets;
• to notify creditors through notice or public announcement;
• to deal with the company’s outstanding businesses related to liquidation;
• to pay any tax overdue as well as tax amounts arising from the process of liquidation;
• to claim credits and pay off debts;
• to allocate the company’s remaining assets after its debts have been paid off; and
• to represent the company in civil lawsuits.
The liquidation group shall notify the company’s creditors within 10 days after its establishment
and issue public notices in newspapers or the National Enterprise Credit Information Publicity System
within 60 days. A creditor shall lodge his claim with the liquidation group within 30 days after receiving
notification, or within 45 days of the public notice if he did not receive any notification. A creditor shall
state all matters relevant to his creditor rights in making his claim and furnish evidence. The liquidation
group shall register such creditor rights. The liquidation group shall not make any debt settlement to
creditors during the period of claim.
Upon liquidation of properties and the preparation of the balance sheet and inventory of assets, the
liquidation group shall draw up a liquidation plan to be submitted to the shareholders’ meeting or people’s
court for confirmation.
The company’s remaining assets after payment of liquidation expenses, wages, social insurance
expenses and statutory compensation, outstanding taxes and debts shall be distributed to shareholders
according to their shareholding proportion. It shall continue to exist during the liquidation period, although
it can only engage in any operating activities that are related to the liquidation. The company’s properties
shall not be distributed to the shareholders before repayments are made in accordance to the foregoing
provisions.


--- page 523 ---
– IV-25 –
APPENDIX IV SUMMARY OF PRINCIPAL PRC LEGAL
AND REGULATORY PROVISIONS
Upon liquidation of the company’s properties and the preparation of the balance sheet and inventory
of assets, if the liquidation group becomes aware that the company does not have sufficient assets to meet
its liabilities, it must apply to the people’s court for a bankruptcy liquidation.
After the people’s court accepts the bankruptcy application, the liquidation group shall hand over
liquidation affairs to the administrator designated by the people’s court.
Upon completion of the liquidation, the liquidation group shall submit a liquidation report to the
shareholders’ meeting or the people’s court for verification. Thereafter, the report shall be submitted to
the registration authority of the company in order to cancel the company’s registration. Members of the
liquidation group shall fulfill liquidation responsibilities with a duty of loyalty and diligence.
Any member of the liquidation group who neglects their liquidation responsibilities and causes
losses to the company shall be liable for compensation; if losses are caused to any creditor due to intent or
gross negligence, such member shall be liable for compensation.
Liquidation of a company declaring bankruptcy according to laws shall be processed in accordance
with the laws on corporate bankruptcy.
Overseas Listing
On 14 November 2019, CSRC promulgated the Notice on the Guidance of H-share Companies
Applying for “Full Circulation” Business of Unlisted Shares in China ( H΅͡ሗ“Ό
ஷ”ˏ), which revised and came into effect on 10 August 2023. This provision is to regulate
the listing and circulation (the “Full Circulation”) of unlisted domestic shares of the H-share companies
listed on the stock exchange of Hong Kong (including unlisted domestic capital stock held by domestic
shareholders before overseas listing, unlisted domestic capital stock issued in China after overseas listing
and unlisted shares held by foreign shareholders) to the Stock Exchange.
According to the Guidelines for the “Full Circulation” Program for Domestic Unlisted Shares
of H-share Listed Companies, shareholders of domestic unlisted shares may determine by themselves
through consultation the amount and proportion of shares, for which an application will be filed for
circulation, provided that the requirements laid down in the relevant laws and regulations and set out in
the policies for state-owned asset administration, foreign investment and industry regulation are met, and
the corresponding H-share listed company shall be entrusted to file for the record for “Full Circulation”
with the CSRC. An H-share listed company shall submit a report on the relevant situation to the CSRC
within 15 days after the application for the registration of the transfer of shares in question with CSDCC is
completed.


--- page 524 ---
– IV-26 –
APPENDIX IV SUMMARY OF PRINCIPAL PRC LEGAL
AND REGULATORY PROVISIONS
On 17 February 2023, the CSRC released the Trial Measures, together with six interpretative
guidelines thereof, which became effective on 31 March  2023 (the “ Implementation Date”). The Trial
Measures, upon the Implementation Date, comprehensively improve and reform the existing regulatory
regime for overseas offering and listing of PRC domestic companies’ securities, and regulate both direct
and indirect overseas offering and listing of PRC domestic companies’ securities by adopting a filing-
based regulatory regime. According to the Trial Measures, PRC domestic companies that seek to offer
and list securities in overseas markets, either in direct or indirect means, are required to fulfill the filing
procedure with the CSRC within 3 working days after submitting the listing application documents to the
overseas supervisory authorities and report relevant information.
Loss of Share Certificates
If a registered share certificate is lost, stolen or destroyed, the relevant shareholder may apply, in
accordance with the relevant provisions set out in the Civil Procedure Law, to a people’s court to declare
such certificate invalid. After the people’s court declares the invalidity of such certificate, the shareholder
may apply to the company for a replacement share certificate.
Suspension and Termination of Listing
The Company Law has deleted provisions governing suspension and termination of listing. The
PRC Securities Law (2019 revision) ((2019ࠈࡌhas also deleted provisions
regarding suspension of listing. Where listed securities fall under the delisting circumstances stipulated
by the stock exchange, the stock exchange shall terminate its listing and trading in accordance with the
business rules.
Where the stock exchange decides on delisting of securities, it shall promptly announce and file
records with the securities regulatory authority of the State Council.
Merger and Division
Companies may merge through merger by absorption or through the establishment of a newly
merged entity. If it merges by absorption, the company which is absorbed shall be dissolved. If it merges
by forming a new corporation, both companies will be dissolved. When a company merges with another
company in which it holds 90% or more of the shares, the company being merged is not required to submit
the merger to a resolution of the shareholders’ meeting, but it shall notify the other shareholders, and the
other shareholders shall have the right to request the company to repurchase their equity or shares at a
reasonable price.
If the payment for a merger to be made by a company does not exceed 10% of its net assets, a
resolution of the shareholders’ meeting is not required for the merger, except as otherwise stipulated
in the company’s articles of association. In cases where a merger is not subject to a resolution of the
shareholders’ meeting according to above, it shall be subject to a resolution of the board of directors.


--- page 525 ---
– IV-27 –
APPENDIX IV SUMMARY OF PRINCIPAL PRC LEGAL
AND REGULATORY PROVISIONS
Pursuant to the PRC Company Law, a merger agreement shall be signed by merging companies
and the involved companies shall prepare their respective balance sheets and inventory of assets. The
companies shall within 10 days of the date of passing the resolution approving the merger notify their
respective creditors and publicly announce the merger through a newspaper or the National Enterprise
Credit Information Publicity System  within 30 days. A creditor may, within 30 days of receipt of the
notification, or within 45 days of the date of the announcement if he has not received the notification,
demand the company to settle any outstanding debts or provide relevant guarantees. In case of a merger,
the credits and debts of the merging parties shall be assumed by the surviving or the new company.
In case of a division, the company’s assets shall be divided and a balance sheet and an inventory of
assets shall be prepared. When a resolution regarding the company’s division is approved, the company
should notify all its creditors within 10 days of the date of passing such resolution and publicly announce
the division in newspapers or the National Enterprise Credit Information Publicity System  within 30
days. Unless an agreement in writing is reached with creditors in respect of the settlement of debts, the
liabilities of the company which have accrued prior to such division shall be jointly borne by the separated
companies.
SECURITIES LAW AND REGULATIONS
The PRC has promulgated a number of regulations that relate to the issue and trading of shares
and disclosure of information. In October 1992, the State Council established the Securities Committee
and the CSRC. The Securities Committee is responsible for coordinating the drafting of securities
regulations, formulating securities-related policies, planning the development of securities markets,
directing, coordinating and supervising all securities related institutions in the PRC and administering the
CSRC. The CSRC is the regulatory arm of the Securities Committee and is responsible for the drafting
of regulatory provisions of securities markets, supervising securities companies, regulating public offers
of securities by PRC companies in the PRC or overseas, regulating the trading of securities, compiling
securities related statistics and undertaking relevant research and analysis. On 29 March 1998, the State
Council consolidated the two departments and reformed the CSRC.
The Interim Provisional Regulations on the Administration of Share Issuance and Trading (ୃ
၍ଣᅲБૢԷ) were promulgated on 22 April 1993 by the State Council to deals with the
application and approval procedures for public offerings of equity securities, trading in equity securities,
the acquisition of listed companies, deposit, clearing and transfer of listed equity securities, the disclosure
of information with respect to a listed company, investigation, penalties and dispute settlement.
On 25 December 1995, the State Council promulgated and implemented the Regulations of the
State Council Concerning Domestic Listed Foreign Shares of Joint Stock Limited Companies ( ਷ਕ৫
). These regulations deal mainly with the issue, subscription,
trading and declaration of dividends and other distributions of domestic listed and foreign invested shares
and disclosure of information of joint stock limited companies having domestic listed and foreign invested
shares.


--- page 526 ---
– IV-28 –
APPENDIX IV SUMMARY OF PRINCIPAL PRC LEGAL
AND REGULATORY PROVISIONS
The PRC Securities Law took effect on 1 July 1999 and was revised on 28 August 2004, 27 October
2005, 29 June 2013, 31 August 2014 and 28 December 2019, respectively. This is the first national
securities law in the PRC, which is divided into 14 chapters and 226 articles regulating, among other
things, the issue and trading of securities, takeovers by listed companies, securities exchanges, securities
companies and the duties and responsibilities of the State Council’s securities regulatory authorities. The
PRC Securities Law comprehensively regulates activities in the PRC securities market. Article 224 of the
PRC Securities Law provides that domestic enterprises shall comply with the relevant provisions of the
State Council to list its shares outside the PRC. Currently, the issue and trading of foreign issued shares
(including H shares) are mainly governed by the rules and regulations promulgated by the State Council
and the CSRC.
ARBITRATION AND ENFORCEMENT OF ARBITRAL AWARDS
The Arbitration Law of the PRC () (the “Arbitration Law”) was passed
by the Standing Committee of the NPC on 31 August 1994, became effective on 1 September 1995
and was amended on 27 August 2009 and 1 September 2017. It is applicable to contract disputes and
other property disputes between natural persons, legal persons and other organisations where the parties
have entered into a written agreement to refer the matter to arbitration before an arbitration committee
constituted in accordance with the Arbitration Law. Under the Arbitration Law, an arbitration committee
may, before the promulgation by the PRC Arbitration Association of arbitration regulations, formulate
interim arbitration rules in accordance with the Arbitration Law and the Civil Procedure Law. Where the
parties have by agreement provided arbitration as the method for dispute resolution, the people’s court
will refuse to handle the case except when the arbitration agreement is declared invalid.
Under the Arbitration Law and the Civil Procedure Law, an arbitral award is final and binding on
the parties. If a party fails to comply with an award, the other party to the award may apply to the people’s
court for enforcement. A people’s court may refuse to enforce an arbitral award made by an arbitration
commission if there is any irregularity on the procedures or composition of arbitrators specified by law
or the award exceeds the scope of the arbitration agreement or is outside the jurisdiction of the arbitration
commission.
A party seeking to enforce an arbitral award of PRC arbitration panel against a party who, or
whose property, is not within the PRC, may apply to a foreign court with jurisdiction over the case
for enforcement. Similarly, an arbitral award made by a foreign arbitration body maybe recognized
and enforced by the PRC courts in accordance with the principles of reciprocity or any international
treaty concluded or acceded to by the PRC. The PRC acceded to the Convention on the Recognition
and Enforcement of Foreign Arbitral Awards (the “New York Convention”) adopted on 10 June 1958
pursuant to a resolution of the Standing Committee of the NPC passed on 2 December 1986. The New
York Convention provides that all arbitral awards made in a state which is a party to the New York
Convention shall be recognized and enforced by all other parties to the New York Convention, subject
to their right to refuse enforcement under certain circumstances, including where the enforcement of the
arbitral award is against the public policy of the state to which the application for enforcement is made.


--- page 527 ---
– IV-29 –
APPENDIX IV SUMMARY OF PRINCIPAL PRC LEGAL
AND REGULATORY PROVISIONS
It was declared by the Standing Committee of the NPC simultaneously with the accession of the PRC that
(i) the PRC will only recognize and enforce foreign arbitral awards on the principle of reciprocity and (ii)
the PRC will only apply the New York Convention in disputes considered under PRC laws to arise from
contractual and non-contractual mercantile legal relations.
An arrangement was reached between Hong Kong and the Supreme People’s Court for the mutual
enforcement of arbitral awards. On 18 June 1999, the Supreme People’s Court adopted the Arrangement
on Mutual Enforcement of Arbitral Awards between Mainland China and Hong Kong (࠰
τર), which became effective on 1 February 2000. Furthermore, on
26 November 2020, the Supreme People’s Court promulgated the Supplemental Arrangement on Mutual
Enforcement of Arbitral Awards between Mainland China and Hong Kong (ਜ
໾̂τર), of which the articles 1 and 4 came into effect on 27 November 2020, and
the articles 2 and 3 subsequently came into effect on 1 9 May 2021. In accordance with these arrangements,
the courts of Hong Kong agree to enforce the awards made pursuant to the Arbitration Law by the arbitral
authorities in the Mainland (the list to be supplied by the Legislative Affairs Office of the State Council
(܃through the Hong Kong and Macao Affairs Office of the State Council (਷ਕ৫ಥዦ
܃and the people’s courts of the Mainland agree to enforce the awards made in the Hong Kong
pursuant to the Arbitration Ordinance of the Hong Kong. If the people’s courts of the Mainland find that
the enforcement of awards made by the Hong Kong arbitral bodies in the Mainland will be against public
interests of the Mainland, or the courts of Hong Kong decide that the enforcement of the arbitral awards in
Hong Kong will be against public policies of Hong Kong, the awards may not be enforced.
JUDICIAL JUDGMENT AND ITS ENFORCEMENT
According to the Arrangement on Mutual Recognition and Enforcement of Judgments in Civil and
Commercial Matters by the Courts of the Mainland China and of the Hong Kong Special Administrative
Region Pursuant to Agreed Jurisdiction by Parties Concerned (݁
τર) promulgated by the Supreme People’s
Court on 3 July 2008 and implemented on 1 August 2008, in the case of final judgment, defined with
payment amount and enforcement power, made between the court of China and the court of the Hong
Kong Special Administrative Region in a civil and commercial case with written jurisdiction agreement,
any party concerned may apply to the People’s Court of China or the court of the Hong Kong Special
Administrative Region for recognition and enforcement based on this arrangement. “Choice of court
agreement in written” refers to a written agreement defining the exclusive jurisdiction of either the
People’s Court of China or the court of the Hong Kong Special Administrative Region in order to resolve
dispute with particular legal relation occurred or likely to occur by the party concerned. Therefore, the
party concerned may apply to the Court of China or the court of the Hong Kong Special Administrative
Region to recognize and enforce the final judgment made in China or Hong Kong that meet certain
conditions of the aforementioned regulations.


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– IV-30 –
APPENDIX IV SUMMARY OF PRINCIPAL PRC LEGAL
AND REGULATORY PROVISIONS
On 18 January 2019, the Supreme People’s Court and the Hong Kong government signed the
Arrangement on Reciprocal Recognition and Enforcement of Judgements in Civil and Commercial
Matters by the Courts of the Mainland and of the Hong Kong Special Administrative Region (ʫ
τર) (the “New Arrangement”), which
seeks to establish a mechanism with greater clarity and certainty for recognition and enforcement of
judgements in wider range of civil and commercial matters between Hong Kong and the PRC. The New
Arrangement discontinued the requirement for a written jurisdiction agreement for bilateral recognition
and enforcement. The New Arrangement will only take effect after the promulgation of a judicial
interpretation by the Supreme People’s Court and the completion of the relevant legislative procedures
in the Hong Kong. The New Arrangement will, upon its effectiveness, supersede the Arrangement on
Mutual Recognition and Enforcement of Judgements in Civil and Commercial Matters by the Courts of the
Mainland China and of the Hong Kong Special Administrative Region Pursuant to Agreed Jurisdiction by
Parties Concerned (΁кӔ
τર). Therefore, before the New Arrangement becomes effective it may be difficult or impossible to
enforce a judgement rendered by a Hong Kong court in China if the parties in dispute do not agree to enter
into a written jurisdiction agreement.


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– V-1 –
APPENDIX V SUMMARY OF THE ARTICLES OF
ASSOCIATION OF OUR COMPANY
This Appendix contains a summary of the principal provisions of the Articles of Association
adopted by the Company, which will become effective on the date on which the H Shares are listed on the
Stock Exchange. The main purpose of this Appendix is to provide potential investors with an overview
of the Articles of Association of the Company, and therefore it may not contain all the information that is
important for potential investors.
SHARES AND REGISTERED CAPITAL
Shares of the Company are represented by stock. The shares issued by the Company shall be
denominated in RMB. The par value per share is RMB1.00.
The Company shall issue shares in an open, fair and just manner, and each share of the same class
shall have the same rights.
Shares of the same class issued at the same time shall be issued on the same conditions and at the
same price. Any entity or individual shall pay the same price for each of the shares for which it or he or
she subscribes for.
INCREASE, DECREASE AND REPURCHASE OF SHARES
Capital Increase
The Company may, based on its business and development needs and in accordance with the
laws and regulations, increase its capital in the following ways, subject to separate resolutions of the
shareholders’ meeting:
1. Public offering of shares;
2. Non-public issuance of shares;
3. distributing bonus shares to its existing shareholders;
4. Conversion of capital reserve into share capital;
5. other means as is stipulated by laws, administrative regulations, or as approved by relevant
regulatory authorities.
The board of directors may, in accordance with the Articles of Association or the authorization of
the shareholders’ meeting, and subject to compliance with applicable laws, regulations, and normative
documents both domestically and internationally, decide to issue no more than 50% of the issued shares
within three years. Such resolution of the board of directors to decide to issue shares shall be passed by
more than two-thirds of all directors. But if non- monetary assets are valued as capital contributions, they
shall be subject to the resolution of the shareholders’ meeting.


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APPENDIX V SUMMARY OF THE ARTICLES OF
ASSOCIATION OF OUR COMPANY
Capital reduction
The Company may reduce its registered capital. When the company needs to reduce its registered
capital, it must prepare a balance sheet and an inventory of assets.
The Company shall reduce its registered capital in accordance with the procedures stipulated in the
Company Law, the GEM Listing Rules and other relevant regulations and the Articles of Association.
Shares repurchase
The Company shall not buy back its shares, except in one of the following circumstances:
1. reducing the registered capital of the Company;
2. merging with another company that holds shares in the Company;
3. using shares for employee stock ownership plan or equity incentives;
4. shareholders who object to resolutions of the shareholders’ meeting on merger or division of
the Company requesting the Company to buy back their shares;
5. to use the shares for conversion of corporate bonds issued by the Company which are
convertible into shares;
6. where it is necessary for the Company to preserve its value and shareholders’ interest;
7. other circumstances recognised by laws, administrative regulations, departmental rules,
normative documents, securities regulatory rules of the place where the Company’s shares
are listed and other relevant regulations.
The Company may repurchase its shares through public centralised trading or other methods
recognised by laws, administrative regulations, securities regulatory rules of the place where the
Company’s shares are listed and relevant regulatory authorities.
Where the Company repurchases its shares under the circumstances set out in items 3, 5 and 6
above, public centralised trading shall be adopted.
Where the Company repurchases its shares under the circumstances set out in items 1 and 2 above, a
resolution shall be passed at the shareholders’  meeting of the Company. Where the Company repurchases
its shares under the circumstances set out in items 3, 5 and 6 above, a resolution may be passed at a Board
meeting attended by more than two-thirds of the directors in accordance with the provisions of the Articles
of Association or as authorised by the shareholders’ meeting.


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– V-3 –
APPENDIX V SUMMARY OF THE ARTICLES OF
ASSOCIATION OF OUR COMPANY
Where the Company repurchases its shares under the circumstances set out in item 1 above, such
shares shall be cancelled within 10 days from the date of repurchase; where the Company repurchases
its shares under the circumstances set out in items 2 and 4, such shares shall be transferred or cancelled
within 6 months; where the Company repurchases its shares under the circumstances set out in items 3, 5
and 6, the total number of shares held by the Company shall not exceed 10% of the total issued shares of
the Company, and such shares shall be transferred or cancelled within 3 years.
Where relevant laws, regulations, normative documents and the securities regulatory rules of the
place where the shares of the Company are listed provide otherwise, such provisions shall prevail.
Transfer of Shares
Shares issued by the Company prior to the public offering of shares shall not be transferred within
one year from the date on which the Company’s shares are listed and traded on the Stock Exchange.
Directors, supervisors and senior management of the Company shall declare to the Company their
shareholdings in the Company and any changes thereof, and shall not transfer more than 25% of the total
number of shares of the Company held by them each year during their terms of office determined at the
time of appointment; the shares of the Company held by them shall not be transferred within one year from
the date on which the shares of the Company are listed and traded. The above personnel shall not transfer
the shares of the Company held by them within half a year after they leave the Company.  If shares are
pledged within the restricted transfer period stipulated by laws and administrative regulations, the pledgee
shall not exercise the pledge right within the restricted transfer period.
If the Company’s shareholders holding 5% (excluding the recognized clearing houses or their
agents as defined in the relevant ordinances in force under the laws of Hong Kong from time to time) or
above shares of the Company, Directors, Supervisors, senior management officers sell shares or other
securities with an equity nature within six months after buying the same or buy shares or securities within
six months after selling the same, the earnings arising therefrom shall belong to the Company and the
Board shall recover such earnings. However, the restriction shall not be applicable to any sale of shares
by a securities company holding 5% or above of the Company’s shares as a result of its purchase and
underwriting of the untaken shares after offering and other circumstances stipulated by CSRC.
The shares or other securities with an equity nature held by Directors, Supervisors, senior
management officers and natural person shareholders referred to in the preceding paragraph include the
shares or other securities with an equity nature held by their spouses, parents, children, and any of the
above which is held by using others’ accounts.
If the Company’s Board does not comply with the provision of the first paragraph, the shareholders
can request the Board to do so within 30 days. If the Board does not enforce such right within the aforesaid
period, the shareholders are entitled to commence litigations in the people’s court in their own names for
the interests of the Company.


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– V-4 –
APPENDIX V SUMMARY OF THE ARTICLES OF
ASSOCIATION OF OUR COMPANY
If the Company’s Board does not enforce the provision of the first paragraph of this Article, the
responsible Directors shall assume joint and severally liable in accordance with the laws.
REGISTER OF MEMBERS
The Company shall establish a register of shareholders in accordance with the evidence provided by
the securities registration authority.
The Company shall enter into a share custody agreement with the share registrar, regularly enquire
the information of substantial shareholders and the changes in shareholdings (including pledge of equity
interests) of substantial shareholders, and keep abreast of the shareholding structure of the Company.
The Company may, based on the understandings or agreements reached between the competent securities
regulatory authority of the State and overseas securities regulatory authorities, keep the register of H
Shares shareholders overseas and entrust overseas agencies to manage it. The original of register of
holders of H Shares shall be maintained in Hong Kong; a copy of the register of shareholders of H shares
shall be kept at the Company’s domicile.
When the Company convenes a shareholders’  meeting, distributes dividends, conducts liquidation
or engages in other activities that require the confirmation of the identity of shareholders, the Board or
the convener of the shareholders’  meeting shall determine the record date. Shareholders whose names
appear on the register of shareholders after the close of trading on the record date shall be the shareholders
entitled to relevant interests.
RIGHTS AND OBLIGATIONS OF SHAREHOLDERS
Shareholders of the Company shall enjoy the following rights:
1. to receive dividends and other distributions in proportion to the number of shares held;
2. to request, summon, preside over, attend or appoint a proxy to attend shareholders’ meetings
in accordance with the laws, and to exercise the corresponding voting rights;
3. to supervise the operation of the Company, making suggestions or enquiries;
4. to transfer, give or pledge the shares held by them in accordance with the laws, administrative
regulations and the Articles of Association;
5. to review or copy the Company’s and its wholly-owned subsidiary’s articles of association,
the register of members, minutes of shareholders’  meetings, resolutions of the Board
meetings, resolutions of the Board of Supervisors meetings and financial and accounting
reports;


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– V-5 –
APPENDIX V SUMMARY OF THE ARTICLES OF
ASSOCIATION OF OUR COMPANY
6. in the event of the termination or liquidation of the Company, to participate in the
distribution of remaining assets of the Company in proportion to the number of shares held;
7. to request the Company to buy back the shares of shareholders objecting to resolutions of the
shareholders’ meeting concerning merger or division of the Company;
8. other rights stipulated by laws, administrative regulations, departmental rules or the Articles
of Association.
Shareholders of the Company shall assume the following obligations:
1. to abide by laws, administrative regulations and the Articles of Association;
2. to pay subscription monies according to the number of shares subscribed and the method of
subscription;
3. not to make divestment unless in the circumstances stipulated by laws and regulations;
4. not to abuse the rights of shareholders to damage the interests of the Company or that of
other shareholders; not to abuse the independent status of the Company as a legal person and
the limited liability of shareholders to damage the interests of the creditors of the Company;
5. other obligations imposed by laws, administrative regulations, securities regulatory rules of
the place where the Company’s shares are listed and the Articles of Association.
Shareholders of the Company who abuse their shareholders’ rights and cause losses to the Company
or other shareholders shall be liable for compensation in accordance with the law. Shareholders of the
Company who abuse the independent status of the Company as a legal person and the limited liability of
shareholders to evade debts and seriously damage the interests of the creditors of the Company shall bear
joint and several liabilities for the debts of the Company.
RESTRICTIONS ON RIGHTS OF THE CONTROLLING SHAREHOLDERS
The controlling shareholders and de facto controllers of the Company shall not use their connected
relations to damage the interests of the Company. If the violation causes losses to the Company, it shall be
liable for compensation.
The controlling shareholders and de facto controllers of the Company shall have fiduciary duties
towards the Company and its public shareholders. The controlling shareholder shall exercise its rights as
a capital contributor in strict compliance with the laws. The controlling shareholder shall not damage the
legitimate rights and interests of the Company and public shareholders by means of profit distribution, asset
restructuring, external investment, fund appropriation, loan guarantee, etc., and shall not use its controlling
status to damage the interests of the Company and public shareholders.


--- page 534 ---
– V-6 –
APPENDIX V SUMMARY OF THE ARTICLES OF
ASSOCIATION OF OUR COMPANY
SHAREHOLDERS’ MEETING
General Provisions of Shareholders’ Meetings
The shareholders’ m eeting is the organ of authority of the Company and shall exercise the following
functions and powers:
1. to elect and replace directors and supervisors and to decide on matters relating to the
remuneration of directors and supervisors;
2. to consider and approve the reports of the Board;
3. to consider and approve the report of the Board of Supervisors;
4. to consider and approve the Company’s profit distribution plans and loss recovery plans;
5. to resolve on the increase or reduction of the registered capital of the Company;
6. to resolve on the issue of corporate bonds;
7. to resolve on the merger, division, dissolution, liquidation or change of corporate form of the
Company;
8. amendments to the Articles of Association;
9. to resolve on the appointment and dismissal of the accounting firm of the Company;
10. to consider and approve the guarantee matters stipulated in Article 48 of the Articles of
Association;
11. to consider the purchase or disposal of material assets within one year with an amount
exceeding 30% of the latest audited total assets of the Company;
12. to consider related party transactions required by laws, administrative regulations or the
securities regulatory rules of the place where the Company’s shares are listed to be decided
by the shareholders’ meeting.
13. to consider and approve the change in use of proceeds;
14. to consider share incentive schemes and employee share ownership schemes;
15. to resolve on the purchase of shares of the Company under the circumstances specified in
Article 24, items (1) and (2) of the Articles of Association.


--- page 535 ---
– V-7 –
APPENDIX V SUMMARY OF THE ARTICLES OF
ASSOCIATION OF OUR COMPANY
16. to consider other matters required by laws, administrative regulations, departmental rules, the
securities regulatory rules of the place where the Company’s shares are listed or the Articles
of Association to be decided by the shareholders’ meeting.
17. The above-mentioned powers of shareholders’ meeting shall not be exercised by the Board or
other institutions or individuals by way of authorization. In addition to the above matters, the
general meeting may authorise or entrust the Board and/or its authorised persons to handle
the matters authorised or entrusted by it without violating the laws and regulations and the
mandatory provisions of the relevant laws, regulations and regulatory rules of the place
where the Company’s shares are listed.
Shareholders’  meetings are divided into annual shareholders’  meetings and extraordinary
shareholders’  meetings. The annual shareholders’  meeting shall be convened once a year within six
months after the end of the previous accounting year.
The Company shall convene an extraordinary shareholders’  meeting within two months from the
date of occurrence of any of the following circumstances:
(1) the number of directors is less than the number stipulated in the Company Law or less than
two-thirds of the number specified in the Articles of Association;
(2) when the unrecovered losses of the Company amount to one-third of the total amount of its
share capital;
(3) when shareholders individually or jointly holding 10% or more of the Company’s shares so
request;
(4) when deemed necessary by the Board;
(5) when proposed by the Board of Supervisors;
(6) other circumstances stipulated by laws, administrative regulations, departmental rules,
securities regulatory rules of the place where the Company’s shares are listed or the Articles
of Association.
Summoning of Shareholders’ Meetings
Shareholders’  meetings shall be generally summoned by the Board.  If the Board of Directors
is unable or fails to fulfill its duty to convene a shareholders’ meeting, the Board of Supervisors shall
promptly convene and preside over it; If the Board of Supervisors does not convene and preside over the
meeting, shareholders who individually or collectively hold more than 10% of the company’s shares for
more than 90 consecutive days may convene and preside over the meeting on their own.


--- page 536 ---
– V-8 –
APPENDIX V SUMMARY OF THE ARTICLES OF
ASSOCIATION OF OUR COMPANY
The independent non-executive Directors are entitled to propose to the Board to convene an
extraordinary shareholders’  meeting. The Board shall, in accordance with the laws, administrative
regulations and the Articles of Association, give a written reply on whether or not to convene the
extraordinary shareholders’ meeting within 10 days after receiving the proposal from the independent non-
executive Directors.
If the Board agrees to convene the extraordinary shareholders’  meeting, a notice of such meeting
shall be issued within five days after the resolution of the Board is passed. If the Board does not agree to
convene the extraordinary shareholders’ meeting, it shall explain the reasons and make an announcement.
The Board of Supervisors shall have the right to propose to the Board to convene an extraordinary
shareholders’ meeting in writing. The Board shall, in accordance with the laws, administrative regulations
and the Articles of Association, give a written reply on whether to convene the extraordinary shareholders’
meeting or not within 10 days after receipt of the proposal.
If the Board agrees to convene the extraordinary shareholders’  meeting, a notice of such meeting
shall be issued within five days after the resolution of the Board is passed. Any changes to the original
proposal made in the notice shall be approved by the Board of Supervisors.
If the Board does not agree to convene the extraordinary shareholders’  meeting or fails to give a
reply within 10 days after receiving the proposal, the Board shall be deemed to be unable or fail to perform
the duty of convening the shareholders’ meeting, and the Board of Supervisors may summon and preside
over the meeting on its own.
Shareholders individually or jointly holding 10% or more of the Company’s shares shall have the
right to request the Board of Directors in writing to convene an extraordinary shareholders’ meeting. Such
written request shall state the subject of the meeting and present a complete proposal. Shareholders shall
sign the relevant documents in person and shall not entrust others (including other shareholders). The
Board shall, in accordance with the laws, administrative regulations and the Articles of Association, give
a written reply on whether to convene the extraordinary shareholders’ meeting or not within 10 days after
receipt of the proposal.
If the Board agrees to convene the extraordinary shareholders’  meeting, a notice of such meeting
shall be issued within five days after the resolution of the Board is passed. Any change to the original
request made in the notice shall be subject to the consent of the relevant shareholders.
If the Board does not agree to convene an extraordinary shareholders’  meeting or does not reply
within 10 days upon receipt of the proposal, the shareholders individually or jointly holding more than
10% of the Company’s shares shall have the right to propose to the Board of Supervisors to convene an
extraordinary shareholders’ meeting, and such proposal shall be made in writing.


--- page 537 ---
– V-9 –
APPENDIX V SUMMARY OF THE ARTICLES OF
ASSOCIATION OF OUR COMPANY
If the Board of Supervisors agrees to convene the extraordinary shareholders’ meeting, it shall issue
a notice of shareholders’ meeting within five days upon receipt of the request. Any changes to the original
request in the notice shall be approved by the relevant shareholders.
If the Board of Supervisors fails to issue the notice of the shareholders’  meeting within the
prescribed period, it shall be deemed that the Board of Supervisors will not convene and preside over the
shareholders’  meeting, and shareholders individually or jointly holding 10% or more of the Company’s
shares for more than 90 consecutive days may summon and preside over the meeting by themselves.
Proposals at Shareholders’ Meetings
When the Company convenes a shareholders’  meeting, the Board, the Board of Supervisors and
shareholders individually or jointly holding more than 3% of the Company’s shares shall have the right to
submit proposals to the Company.
Shareholders individually or jointly holding 1% or more of the Company’s shares may submit ad
hoc proposals in writing to the convener 10 days before a shareholders’ meeting is convened. Temporary
proposals should have clear agenda items and specific resolution matters.  The convener shall issue
a supplementary notice of the shareholders’  meeting within two days upon receipt of the proposal to
announce the contents of the provisional proposal, notify other shareholders and submit the temporary
proposal to the shareholders’ meeting for review. For the publication of the supplementary notice of the
shareholders’ meeting, if there are special provisions in the securities regulatory rules of the place where
the shares of the Company are listed, such provisions shall prevail, provided that such provisions are not
in violation of the Company Law, the Securities Law, the Administrative Measures and the Guidelines
for the Articles of Association of Listed Companies. If the shareholders’ meeting is postponed due to the
issuance of a supplementary notice of the shareholders’ meeting pursuant to the securities regulatory rules
of the place where the Company’s shares are listed, the shareholders’ meeting shall be postponed pursuant
to the securities regulatory rules of the place where the Company’s shares are listed.
Except as provided in the preceding paragraph, the convener shall not amend the proposals set
out in the notice of the shareholders’  meeting or add any new proposals after issuing the notice of the
shareholders’ meeting.
No vote shall be taken and no resolution shall be made at the shareholders’  meeting on any
proposal which is not set forth in the notice of the shareholders’ meeting or which does not fall within the
authorized scope of the shareholders’ meeting, does not relate to specific topics and matters to be decided,
or does not comply with laws, administrative regulations, securities regulatory rules of the place where the
Company’s shares are listed or the Articles of Association.


--- page 538 ---
– V-10 –
APPENDIX V SUMMARY OF THE ARTICLES OF
ASSOCIATION OF OUR COMPANY
Notice of Shareholders’ Meetings
The convener shall notify all shareholders by way of written notice 21 days before the annual
shareholders’  meeting and shall notify all shareholders by way of written notice 15 days before the
extraordinary shareholders’ meeting.
Provided that the relevant laws, regulations, securities regulatory rules of the place where the
Company’s shares are listed are met, and the relevant procedures are followed, the company may issue
notices for shareholders’  meetings of shareholders through the company website and/or designated
websites specified by Stock Exchange, or in any other manner permitted by the GEM Listing Rules and
the Articles of Association.
Convening of Shareholders’ Meetings
All ordinary shareholders (including preferred shareholders with voting rights restored) registered
on the record date or their proxies are entitled to attend the shareholders’ meeting. They shall speak and
exercise their voting rights in accordance with the relevant laws, regulations, the GEM Listing Rules and
the Articles of Association.
Individual shareholders who attend the meeting in person shall produce their identity cards or other
effective document or proof of identity and stock account cards. Proxies of individual shareholders shall
produce their valid identity cards and the power of attorney of the shareholder.
Shareholder that is a legal person shall be represented at the meeting by its legal representative or a
proxy appointed by it. If a legal representative attends the meeting, he/she should produce his/her identity
card and valid proof that he/she is a legal representative; if a proxy attends the meeting, the proxy should
produce his/her identity card and a written power of attorney issued by the legal representative of the legal
person shareholder in accordance with the law (unless a shareholder is a recognised clearing house as
defined in the relevant ordinances in force from time to time under the laws of Hong Kong or its nominee
(hereinafter referred to as a “Recognised Clearing House”)).
If the shareholder is a Recognised Clearing House (or its nominee), the shareholder may authorise
one or more persons as it thinks fit to act as its representative (s) at any shareholders’ meeting or any
class shareholders’ meeting; however, if more than one person are so authorised, the power of attorney
shall specify the number and class of shares in respect of which each such person is authorised, and the
power of attorney shall be signed by the authorised personnel of the Recognised Clearing House. The
person so authorised may attend the meeting on behalf of the Recognised Clearing House (or its nominee)
to exercise the rights (without being required to present share certificate, notarized authorization and/or
further evidence to prove that he/she is duly authorised) as if he/she was an individual shareholder of the
Company.
The proxy form shall contain a statement that in the absence of instructions from the shareholder
whether the proxy may vote as he/she thinks fit.


--- page 539 ---
– V-11 –
APPENDIX V SUMMARY OF THE ARTICLES OF
ASSOCIATION OF OUR COMPANY
If the proxy form is signed by a person authorised by the principal, the power of attorney or other
authorization documents shall be notarized. The instrument appointing a proxy, the notarized power of
attorney or other authorization documents shall be placed at the domicile of the Company or at such other
place as specified in the notice convening the meeting.
If the principal is a legal person, its legal representative or such person as is authorised by
resolution of its board of directors or other governing body to act as its representative may attend the
shareholders’ meeting of the Company.
Resolutions of Shareholders’  Meetings
Resolutions of the shareholders’  meeting are divided into ordinary resolutions and special
resolutions.
Ordinary resolutions shall be passed by votes representing more than half of the voting rights
represented by the shareholders (including proxies) present at the meeting.
A special resolution shall be passed by votes representing more than two-thirds of the voting rights
represented by the shareholders (including proxies) present at the meeting.
The following matters shall be approved by ordinary resolutions at a shareholders’ meeting:
1. work reports of the Board and the Board of Supervisors;
2. profit distribution plans and loss recovery plans formulated by the Board;
3. appointment and removal of members of the Board and members of the Board of Supervisors,
their remuneration and method of payment;
4. issuance of corporate bonds;
5. annual reports of the Company;
6. matters other than those required by the laws, administrative regulations or the Articles of
Association to be adopted by special resolution.
The following matters shall be approved by special resolutions at a shareholders’ meeting:
1. increase or reduction of the registered capital of the Company;
2. division, division, merger, dissolution and liquidation of the Company;
3. amendments to the Articles of Association;


--- page 540 ---
– V-12 –
APPENDIX V SUMMARY OF THE ARTICLES OF
ASSOCIATION OF OUR COMPANY
4. purchase or disposal of material assets or provision of guarantee by the Company within one
year with an amount exceeding 30% of the latest audited total assets of the Company;
5. share incentive scheme;
6. other matters stipulated by laws, administrative regulations, the securities regulatory rules of
the place where the Company’s shares are listed or the Articles of Association, the Rules of
Procedure of the Shareholders’  Meeting, and other matters considered by the shareholders’
meeting, by way of ordinary resolution, to have a material impact on the Company and need
to be approved by special resolution.
DIRECTORS AND BOARD OF DIRECTORS
Directors
Directors shall be elected or replaced by the shareholders’ meeting, and may be dismissed  by the
shareholders’ meeting before the expiry of their terms of office. The term of office of the Directors shall
be 3 years, and they may be re-elected and re-appointed.
The term of office of the Directors shall commence from the date of their appointment until the
expiry of the term of the current session of the Board. Where the re-election of directors is not held in time
after the term of office of the existing directors has expired, or where the number of members of the board
of directors falls below the quorum due to the resignation of any director, the said director shall continue
fulfilling the duties as director pursuant to laws, administrative regulations, departmental rules and the
Articles of Association until a new director is elected.
If a director resigns, they shall notify the company in writing, and the resignation shall take effect
on the date the company receives the notice. However, under the circumstances specified in the preceding
paragraph above, the director shall continue to perform their duties.
On the premise of complying with relevant laws and administrative regulations, the shareholders’
meeting may dismiss any director whose term of office has not yet expired by ordinary resolution. The
dismissal shall take effect on the date of the resolution. If a director is dismissed before the expiration of
his term without justifiable reasons, the director may demand compensation from the company.
Directors are not required to hold any shares in the Company by way of qualification. Further, there
are no provisions in the Articles relating to the retirement of Directors upon reaching any age limit.
The Board
The Company shall have a board of directors which shall be accountable to the shareholders’
meeting. The Board shall consist of nine Directors, including six executive and/or non-executive Directors
and three independent non-executive Directors.


--- page 541 ---
– V-13 –
APPENDIX V SUMMARY OF THE ARTICLES OF
ASSOCIATION OF OUR COMPANY
The Board shall exercise the following powers:
1. to summon shareholders’ meetings and report its work to the shareholders’ meetings;
2. to implement the resolutions of the shareholders’ meeting;
3. to decide on the Company’s business plans and investment plans;
4. to formulate the Company’s profit distribution plans and loss recovery plans;
5. to formulate proposals for the increase or reduction of the Company’s registered capital, the
issue of bonds or other securities and listing plans;
6. to formulate plans for material acquisitions, purchase of shares of the Company under the
circumstances specified in Article 24, items (1) and (2) of the Articles of Association or
merger, division, dissolution and change of corporate form of the Company;
7. to decide on the Company’s external investment, acquisition and disposal of assets, pledge of
assets, external guarantees, entrusted wealth management, connected transactions, external
donations and other matters in accordance with the laws, regulations, the securities regulatory
rules of the place where the shares of the Company are listed and within the scope authorised
by the shareholders’ meeting;
8. with attendance of more than two-thirds of the directors, to decide on purchase of shares of
the Company under the circumstances specified in Article 24, items (3), (5) and (6) of the
Articles of Association;
9. to decide on the establishment of the Company’s internal management structure;
10. to decide on the appointment or dismissal of the Company’s general manager, secretary
to the Board and other senior management, and decide on their remuneration, rewards and
punishments; to decide on the appointment or dismissal of the Company’s deputy general
manager, person in charge of finance and other senior management based on the nomination
of the general manager, and decide on their remuneration, rewards and punishments;
11. to formulate the basic management system of the Company;
12. to formulate proposals for any amendment to the Articles of Association;
13. to manage the information disclosure of the Company;
14. to propose to the shareholders’  meeting the appointment or replacement of the accounting
firm that audits the Company;


--- page 542 ---
– V-14 –
APPENDIX V SUMMARY OF THE ARTICLES OF
ASSOCIATION OF OUR COMPANY
15. to listen to the work report of the general manager of the Company and inspect the work of
the general manager;
16. other functions and powers conferred by laws, administrative regulations, departmental rules,
securities regulatory rules of the place where the Company’s shares are listed,  the Articles of
Association or the shareholders’ meeting.
The restrictions on the powers of the Board of Directors in the company’s Articles of Association
shall not counteract those of bona fide counterparties.  Matters beyond the scope of authorization of the
shareholders’ meeting shall be submitted to the shareholders’ meeting for consideration.
SENIOR MANAGEMENT
General Manager
The general manager shall be accountable to the Board and exercise the following powers:
1. to be in charge of the production, operation and management of the Company, organise the
implementation of the resolutions of the Board and report to the Board;
2. to organise the implementation of the Company’s annual business plan and investment plan;
3. to draft plans for the establishment of the Company’s internal management structure;
4. to draft the basic management system of the Company;
5. to formulate the specific rules and regulations of the Company;
6. to propose to the Board to appoint or dismiss other senior management personnel of the
Company;
7. to appoint or dismiss management personnel other than those required to be appointed or
dismissed by the Board;
8. to exercise other powers conferred by the Articles of Association or the Board.
The general manager is to attend board meetings.


--- page 543 ---
– V-15 –
APPENDIX V SUMMARY OF THE ARTICLES OF
ASSOCIATION OF OUR COMPANY
Secretary to the Board
The Company shall have a secretary to the Board, who shall be responsible for the preparation of
the shareholders’  meetings and Board meetings of the Company, keeping of documents, management of
shareholders’ information of the Company and handling matters such as information disclosure.
The secretary to the Board shall comply with the relevant provisions of laws, administrative
regulations, departmental rules and the Articles of Association.
BOARD OF SUPERVISORS
The Company shall have a Board of Supervisors. The Board of Supervisors shall consist of five
Supervisors including two employees  representative Supervisor and shall have one chairman. The
chairman of the Board of Supervisors shall be elected by more than half of all Supervisors.
The board of supervisors shall comprise shareholder representatives and an appropriate proportion
of the company’s staff representatives, of which the proportion of staff representatives shall not be less
than one-third. The employee representatives of the Board of Supervisors shall be democratically elected
by the Company’s employees at the employee representative assembly, employee meeting or otherwise.
The Board of Supervisors exercises the following powers:
1. it shall review the regular reports of the Company prepared by the Board and to provide
written review opinions;
2. to examine the financial affairs of the Company;
3. to supervise the directors and senior management in their performance of their duties and
to propose the dismissal  of directors and senior management who have violated laws,
administrative regulations, the Articles of Association or the resolutions of the shareholders’
meetings;
4. to demand rectification from a Director or senior management when the acts of such persons
are detrimental to the interests of the Company;
5. to propose the convening of extraordinary shareholders’ meetings and to summon and preside
over shareholders’  meetings when the Board fails to perform the duty of summoning and
presiding over shareholders’ meetings under the Company Law;
6. to submit proposals to the shareholders’ meeting;
7. to initiate proceedings against directors and senior management in accordance with Article
189 of the Company Law;


--- page 544 ---
– V-16 –
APPENDIX V SUMMARY OF THE ARTICLES OF
ASSOCIATION OF OUR COMPANY
8. To investigate any irregularities identified in the operation of the Company; if necessary, to
engage professional institutions such as accounting firms and law firms to assist its work at
the expense of the Company.
Resolutions of the Board of Supervisors shall be passed by an absolute majority of supervisors.
FINANCIAL AND ACCOUNTING SYSTEM
The Company shall establish its financial and accounting system in accordance with the laws,
administrative regulations and the requirements of the relevant state authorities.
The company shall submit, disclose, and/or present annual reports, interim reports, preliminary
performance announcements, and other regulatory documents in accordance with the laws, regulations,
securities regulatory rules of the place where the Company’s shares are listed and other normative
documents.
NOTICES
Subject to the laws, administrative regulations, departmental rules and the securities regulatory
rules of the place where the Company’s shares are listed, a notice of the Company shall be given in the
following manner:
1. by hand;
2. by mail;
3. by way of announcement;
4. by fax or email;
5. other means stipulated by securities regulatory rules of the place where the Company’s
shares are listed or the Articles of Association.
As required by the GEM Listing Rules, the company may provide or send company communications
to H shares shareholders through the means designated the company and/or the Stock Exchange website,
or by electronic means, provided that it complies with laws, administrative regulations, departmental rules,
securities regulatory of the stock exchange on which the company’s shares are listed, and the Article of
Association.
Where a notice of the Company is published by way of announcement, the said notice shall be
deemed as received by all relevant persons once it is published.


--- page 545 ---
– V-17 –
APPENDIX V SUMMARY OF THE ARTICLES OF
ASSOCIATION OF OUR COMPANY
DISSOLUTION AND LIQUIDATION OF THE COMPANY
The Company shall be dissolved for the following reasons:
1. the term of its operations as is stipulated in the Articles of Association has expired or events
of dissolution specified in the Articles of Association have occurred;
2. the shareholders’ meeting resolves to dissolve the Company;
3. dissolution is necessary due to merger or division of the Company;
4. the Company’s business licence is revoked, the Company is ordered to close down or be
revoked in accordance with the law;
5. Where the Company encounters serious difficulties in its operation and management and its
continuous existence will cause significant losses to the interests of shareholders, and such
difficulties cannot be resolved through other means, shareholders holding more than 10%
of the voting rights of all shareholders of the Company may request the People’s Court to
dissolve the Company.
If the company encounters the reasons for dissolution as stipulated in the preceding paragraph, it
shall publicize the reasons for dissolution through the National Enterprise Credit Information Publicity
System within ten days.  Where the Company is dissolved pursuant to items 1 and 2 above and has not
distributed any property to shareholders, it may continue to exist by amending the Articles of Association
or by a resolution of the shareholders’ meeting. Any amendment to the Articles of Association under those
circumstances  must be approved by more than two-thirds of the voting rights held by the shareholders
present at the shareholders’ meeting.  Where the Company is dissolved pursuant to items 1, 2, 4 and 5
above, the director is the liquidation obligor of the company, a liquidation committee shall be established
and the liquidation shall commence within 15 days after the occurrence of the cause of dissolution. The
liquidation committee shall be composed of directors or persons determined by the shareholders’ meeting.
If the liquidation obligor fails to fulfill the liquidation obligation in a timely manner and causes losses
to the company or creditors, they shall bear the liability for compensation.  If the liquidation team is not
established within the deadline for liquidation or fails to liquidate after the establishment of the liquidation
team, interested parties may apply to the People’s Court to designate relevant personnel to form a
liquidation team for liquidation. The People’s Court shall accept the application and promptly organize a
liquidation team to carry out liquidation.
The liquidation committee shall notify creditors within 10 days from the date of its establishment,
and publish an announcement in a newspaper recognised by the stock exchange where the Company’s
shares are listed or the National Enterprise Credit Information Publicity System within 60 days.


--- page 546 ---
– V-18 –
APPENDIX V SUMMARY OF THE ARTICLES OF
ASSOCIATION OF OUR COMPANY
If the liquidation committee discovers that the Company’s assets are insufficient to repay its debts
after cleaning up the Company’s assets and preparing a balance sheet and an inventory of assets, it shall
apply to the People’s Court for a declaration of insolvency in accordance with the law.
Upon completion of the liquidation, the liquidation committee shall prepare a liquidation report
which shall be submitted to the shareholders’ meeting or the people’s court for confirmation, and
shall submit the same to the company registration authority, apply for cancellation of the company’s
registration, and publish an announcement on the termination of the company.
AMENDMENTS TO THE ARTICLES
The Company shall amend the Articles of Association in any of the following circumstances:
(1) after amendments are made to the Company Law or relevant laws, administrative regulations,
departmental rules and securities regulatory rules of the place where the shares of the
Company are listed, the provisions of the Articles of Association are in conflict with the
amended laws, administrative regulations, departmental rules and securities regulatory rules
of the place where the shares of the Company are listed;
(2) there is a change in the Company’s situation, which is inconsistent with the matters recorded
in the Articles of Association;
(3) the shareholders’ meeting decides to amend the Articles of Association.
The amendments to the Articles of Association adopted by the shareholders’ meeting shall be
submitted to the competent authorities for approval if they are subject to approval by the competent
authorities. If there is any change relating to the registered particulars of the Company, application shall
be made for registration of the changes in accordance with the laws.


--- page 547 ---
– VI-1 –
APPENDIX VI STATUTORY AND GENERAL INFORMATION
A. FURTHER INFORMATION ABOUT OUR COMPANY
1. Establishment of our Company
Our Company was established in the PRC as a joint-stock cooperative enterprise on 28 March
2000, converted into a limited liability company on 12 July 2023 and subsequently converted into a
joint stock company with limited liability on 31 October 2023. We established a place of business
in Hong Kong at 46/F, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong, and was
registered as a non-Hong Kong Company under Part 16 of the Companies Ordinance on 8 December
2023. Ms. Cheung Lai Ha, a joint  company secretary of our Company, has been appointed as our
agent for the acceptance of service of process in Hong Kong.
As we are established in the PRC, we are subject to the relevant laws and regulations of the
PRC. A summary of the relevant aspects of PRC laws and principal regulatory provisions is set out
in Appendix IV to this prospectus.
2. Changes in registered capital of our Company
On 28 March 2000, our Company was established as a joint-stock cooperative enterprise with
a registered capital of RMB190,000.
On 31 December 2005, our registered capital was increased to RMB194,000.
On 31 December 2008, our registered capital was increased to RMB199,000.
On 30 July 2009, our registered capital was increased to RMB1,820,000.
On 12 July 2023, our Company was converted into a limited liability company.
On 31 July 2023, our registered capital was increased to RMB5,000,000.
On 31 October  2023, our Company was converted into a joint stock company with
limited liability. Upon completion of such conversion, the share capital of our Company was
RMB20,000,000 divided into 20,000,000 Shares of nominal value of RMB1  each.
On 6 November 2023, our share capital was increased to RMB23,750,000.
Assuming the Offer Size Adjustment Option is not exercised, immediately upon completion
of the Share Offer, the share capital of our Company will be RMB 33,929,000, made up of
23,750,000 Unlisted Shares and 10,179,000 H Shares, with a nominal value of RMB1 each.


--- page 548 ---
– VI-2 –
APPENDIX VI STATUTORY AND GENERAL INFORMATION
Assuming the Offer Size Adjustment Option  is exercised in full and immediately upon
completion of the Share Offer, the share capital of our Company will be RMB35,455,000, made up
of 23,750,000 Unlisted Shares and 11,705,0 00 H Shares, with nominal value of RMB1 each.
Save as disclosed in this paragraph and in “History, Development  and Corporate Structure
– Major Corporate Development and Shareholding Changes” in this prospectus, there has been no
alteration in the share capital of our Company within the two years immediately preceding the date
of this prospectus.
3. Restriction of the share repurchase
For details of the restrictions on the share repurchase by our Company, see “Summary of the
Articles of Association of the Company” in Appendix V to this prospectus.
4. Resolutions of all Shareholders passed on 28 November 2023
At our Shareholders’ meeting held on 28 November 2023, among other things, the following
resolutions were passed by our Shareholders:
(a) approving the issue of the H Shares by our Company and the Listing;
(b) subject to completion of the Share Offer, the Articles of Association have been
approved and adopted, which shall become effective on the Listing Date; and
(c) approving the Board to handle all matters relating to, among other things, the issue of
the H Shares and the Listing.
5. Registration under Part 16 of the Companies Ordinance
Our Company has established a place of business in Hong Kong for the purpose of
registration under Part 16 of the Companies Ordinance at 46/F, Hopewell Centre, 183 Queen’s
Road East, Wan Chai, Hong Kong. Our Company has been registered as non-Hong Kong company
under Part 16 of the Companies Ordinance. Ms. Cheung Lai Ha, a joint company secretary of our
Company, has been appointed as agent of our Company for the acceptance of service of process in
Hong Kong.


--- page 549 ---
– VI-3 –
APPENDIX VI STATUTORY AND GENERAL INFORMATION
B.  FURTHER INFORMATION ABOUT THE BUSINESS OF OUR COMPANY
1. Summary of material contracts
The following contracts (not being contracts entered into in the ordinary course of business)
have been entered into by our Company within the two years preceding the date of this prospectus
and are or may be material:
(a) the Deed of Non-Competition;
(b) the Deed of Indemnity; and
(c) the Public Offer Underwriting Agreement.
2. Intellectual property rights of our Company
(a) Trademarks
As at the Latest Practicable Date, our Company had registered the following
trademarks which we consider to be material to our business:
No. Trademark
Trademark
number Class
Place of
registration Expiry date
1.
 306389425 35, 38, 42 Hong Kong 31 October 2033
2.
 306389434 35, 38, 42 Hong Kong 31 October 2033
3.
 73751923 42 PRC 27 April 2034
4.
 73765012 42 PRC 27 April 2034
5.
 74813405 35 PRC 20 April 2034
6.
 74823357 38 PRC 20 April 2034
7.
 74813395 42 PRC 27 June 2034
As at the Latest Practicable Date, our Company had applied for registration of the
following trademarks which we consider to be material to our business:
No. Trademark
Application
number Class
Place of
application
Date of
application
1.
 73759770 38 PRC 29 August 2023
2.
 73767134 42 PRC 29 August 2023
3.
 73772709 35 PRC 29 August 2023
4.
 306633586 35, 38, 42 Hong Kong 7 August 2024


--- page 550 ---
– VI-4 –
APPENDIX VI STATUTORY AND GENERAL INFORMATION
(b) Domain names
As at the Latest Practicable Date, our Company had  registered the following domain
name:
Domain name Registered owner Registration date Expiry date
www.xyjiance.cn Our Company 26 February 2016 26 February 2027
(c) Software copyright
As at the Latest Practicable Date, our Company had registered the following software
copyright:
Name
Copyright
owner
Registration
number
First
publication
date
Date of
approval
Place of
registration
Testing and Inspection Information
Artificial Intelligent Management
System V1.0 (ࢹڦ
౽ঐ၍ଣӻ୕V1.0)
Our Company 2023SR1226932 8 August 2020 12 October
2023
PRC


--- page 551 ---
– VI-5 –
APPENDIX VI STATUTORY AND GENERAL INFORMATION
(d) Patent
As at the Latest Practicable Date, our Company had applied for registration of the
following patent which we consider material to our business:
No. Title of patent Patent applicant
Registration
number
Date of
application
Place of
registration
1. An intelligent supervision platform for
water basin management
(ٙ
౽ᅆ္၍̨̻)
Sun Yat-Sen University
and our Company
2023115639892 21 November
2023
PRC
2. A project schedule management system
and management method
(ج)
Our Company 2024101185808 29 January 2024 PRC
3. Material delivery pallet for construction
material testing
(৔Ꮸϖ ᆵ)
Our Company 2024205981718 26 March 2024 PRC
4. Material delivery rotary table for
construction material testing
(৔Ꮸᔷᆵ)
Our Company 2024206396213 29 March 2024 PRC
3. Related party transactions
Save as disclosed in Note  27 to the Accountant’ s Report, the text of which is set out in
Appendix I to this prospectus, during the three  years immediately preceding the date of this
prospectus, we have not engaged in any other material related party transactions.


--- page 552 ---
– VI-6 –
APPENDIX VI STATUTORY AND GENERAL INFORMATION
C.  FURTHER INFORMATION ABOUT OUR DIRECTORS, SUPERVISORS AND
SUBSTANTIAL SHAREHOLDERS
1. Directors and Supervisors
(a) Disclosure of interests of Directors and Supervisors
None of our Directors and Supervisors or their associates was engaged in any dealings
with our Company during the two years preceding the date of this prospectus.
(b) Particulars of Directors’ and Supervisors’ service contracts
(i) Directors
Our Company entered into a service contract with each of our Directors on 13
August 2024 . Each of the service contracts is for a fixed term ending on 25 October
2026, unless terminated by not less than three months’ notice in writing served
by either party on the other and is subject to termination provisions therein, and
provisions on removal and re- election as set forth in the Articles of Association.
(ii) Supervisors
Our Company entered into a service contract with each of our Supervisors on
13 August 2024. Each of the service contracts is for a fixed term ending on 25 October
2026, and is subject to termination provisions therein, and provisions on removal and
re-election as set forth in the Articles of Association.
Pursuant to the respective service contracts, our executive Directors and Supervisors
are not entitled to any service fee but are each entitled to a discretionary management bonus
in such sum as our Board may in its absolute discretion determine based on the review and
advice of the remuneration committee of our Board and the financial performance of our
Company and the market conditions. Our non-executive Directors are not entitled to any
service fee. Each of Ms. Liu Hongge, Ms. Deng Dian and Mr. Luo Qiling, our independent
non-executive Directors, is entitled to an annual service fee of RMB 300,000, RMB 300,000
and RMB300,000, respectively, with effect from 13 August 2024.
None of our Directors or Supervisors is expected to receive any other remuneration for
holding their office as a Director or Supervisor, respectively.


--- page 553 ---
– VI-7 –
APPENDIX VI STATUTORY AND GENERAL INFORMATION
Save as disclosed aforesaid, none of our Directors or Supervisors has or is proposed
to have a service contract with our Company or any of our subsidiaries other than contracts
expiring or determinable by our Company within one year without the payment of
compensation (other than statutory compensation).
(c) Remuneration of Directors
The aggregate emoluments paid and benefits in kind granted by our Company to our
Directors in respect of FY2021, FY2022,  FY2023 and 6M2024 were nil, nil,  RMB1,065,000
and RMB5 50,000, respectively.
Under the arrangements currently in force, the aggregate emoluments (excluding
discretionary bonus) payable by our Company to and benefits in kind receivable by our
Directors (including our independent non-executive Directors) for the year ending 31
December 2024  is expected to be approximately RMB1.1 million.
None of our Directors or any past directors of our Company  has been paid any sum
of money for each of FY2021, FY2022,  FY2023 and 6M2024 as (i) an inducement to join or
upon joining our Company; or (ii) for loss of office as a director of our Company or of any
other office in connection with the management of the affairs of our Company.
There has been no arrangement under which a Director has waived or agreed to waive
any emoluments for each of FY2021, FY2022,  FY2023 and 6M2024.
(d) Interests and short positions of our Directors and Supervisors in the Shares,
underlying Shares or debentures of our Company and our associated corporations
following the Share Offer
Immediately following completion of the Share Offer and taking no account of
any Shares which may be allotted and issued pursuant to the exercise of the Offer Size
Adjustment Option, none of our Directors or Supervisors had any interests or short
positions in the Shares, underlying Shares or debentures of our Company and our associated
corporations (within the meaning of Part XV of the SFO) which will have to be notified to
our Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO
(including interests and short positions 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
recorded in the register referred to therein or which will be required to notify our Company
and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors
of Listed Issuers contained in the GEM Listing Rules.


--- page 554 ---
– VI-8 –
APPENDIX VI STATUTORY AND GENERAL INFORMATION
2. Interest discloseable under the SFO and substantial shareholders
Save as disclosed in “Substantial Shareholders” in this prospectus, our Directors are not
aware of any person (other than our Director or chief executive of our Company) who will,
immediately following completion of the Share Offer (assuming that the Offer Size Adjustment
Option is not exercised), have interests or short positions in our Shares or underlying Shares which
would be required to be disclosed to us and the Stock Exchange under the provisions of Divisions 2
and 3 of Part XV of the SFO, or who is, directly or indirectly, interested in 10% or more of the issued
voting shares of our Company.
3. Disclaimers
Save as disclosed in paragraphs headed “– 1. Directors and Supervisors – (d) Interests and
short positions of our Directors and Supervisors in the Shares, underlying Shares or debentures
of our Company and our associated corporations following the Share Offer” and “– 2. Interest
discloseable under the SFO and substantial shareholders” above in this section:
(a) and taking no account of any Shares which may be taken up or acquired under the
Share Offer or upon the exercise of the Offer Size Adjustment Option, our Directors
are not aware of any person (not being a Director, Supervisor or chief executive of
our Company) who will, immediately following completion of the Share Offer, have
an interest or a short position in Shares or underlying Shares which would fall to be
disclosed to our Company under the provisions of Divisions 2 and 3 of Part XV of the
SFO, or who will, 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 our Company or any other member of us;
(b) none of our Directors or Supervisors has any interest or short position in any of
the shares, underlying shares or debentures of our Company or any associated
corporations within the meaning of Part XV of the SFO, which will have to be notified
to our Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of
the SFO (including interests and short positions which any of them is deemed to have
under such provisions of the SFO) or which will be required, pursuant to section 352
of the SFO, to be entered in the register referred to therein or which will be required
to be notified to our Company and the Stock Exchange pursuant to the Model Code for
Securities Transactions by Directors of Listed Issuers, in each case once the Shares are
listed.  None of our Directors nor any of the parties listed in “ – D. Other Information
– 8. Qualification of experts” below has been interested in the promotion of, or has
any direct or indirect interest in any assets which have been, within the two years
immediately preceding the date of this prospectus, acquired or disposed of by or leased
to our Company or any of our subsidiaries, or are proposed to be acquired or disposed
of by or leased to our Company or any other member of us nor will any Director apply
for the H Shares either in his/her own name or in the name of a nominee;


--- page 555 ---
– VI-9 –
APPENDIX VI STATUTORY AND GENERAL INFORMATION
(c) none of our Directors nor any of the parties listed in “ – D. Other  Information – 8 .
Qualification of experts” below is materially interested in any contract or arrangement
subsisting at the date of this prospectus which is significant in relation to business of us;
and
(d) save in connection with the Underwriting Agreements, none of the parties listed in “ –
D. Other Information – 8 . Qualification of experts” below:
(i) is interested legally or beneficially in any securities of any member of us; or
(ii) has any right (whether legally enforceable or not) to subscribe for or to
nominate persons to subscribe for securities in any member of us.
D. OTHER INFORMATION
1. Tax and other indemnities
Our Controlling Shareholder has entered into a deed of indemnity with and in favor of our
Company (being the contract referred to in “– B. Further Information about the Business of our
Company – 1. Summary of Material Contracts” above) to provide indemnities to our Company
in respect of any income, profits, gains, transactions, events, matters or things earned, accrued,
received, entered into or occurring on or before the Listing Date, whether alone or in conjunction
with any other circumstances whenever occurring and whether or not such tax liabilities are
chargeable against or attributable to any other person, firm, company or corporation, and whether or
not such tax liabilities shall be paid or payable before or after the Listing Date.
2. Estate duty
Our Directors have been advised that no material liability for estate duty is likely to fall on
our Company.
3. Litigation
As at the Latest Practicable Date, our Company is not engaged in any litigation, arbitration
or claim of material importance, and no litigation, arbitration or claim of material importance is
known to our Directors to be pending or threatened by or against our Company, that would have a
material adverse effect on our results of operations or financial condition of our Company.
4. Preliminary expenses
We have not incurred any material preliminary expenses.


--- page 556 ---
– VI-10 –
APPENDIX VI STATUTORY AND GENERAL INFORMATION
5. Promoter
The promoters of our Company (the “Promoters”) are Xinyi City CEQS Center and Xinyi
Xinhui.
Within the two years preceding the date of this prospectus, no amount or benefit has been
paid or given to any Promoters in connection with the Share Offer.
6. Agency fees or commissions received
The Underwriters will receive a commission of 4.0% of the aggregate Offer Price payable
for the Offer Shares, out of which they will pay any sub-underwriting commissions. We may, at
our sole and absolute discretion, pay to any or all the Underwriters  an additional incentive fee of
up to b ut not exceeding 2.0% of the aggregate Offer Price of the Offer Shares from the Share Offer,
including proceeds from the exercise of the Offer Size Adjustment Option.
The aggregate commissions and fees payable by us in relation to the Share Offer together
with the Stock Exchange listing fees, SFC transaction levy, the Stock Exchange trading fee, A FRC
transaction levy, legal and other professional fees and printing and other expenses relating to the
Share Offer at the Offer Price of HK$9 .5 per H Share (the mid-point of the proposed range of the
Offer Price) are estimated to amount to approximately HK$4 2.3 million in total (assuming that the
Offer Size Adjustment Option is not exercised).
7. Joint Sponsors
The Joint Sponsors have made an application on behalf of our Company to the Listing
Committee for listing of, and permission to deal in, the H Shares to be issued as mentioned in this
prospectus and any H Shares which may be issued upon the exercise of the Offer Size Adjustment
Option on the Stock Exchange. All necessary arrangements have been made to enable the securities
to be admitted into CCASS.
The Joint Sponsors are independent from our Company pursuant to Rule 6A.07 of the GEM
Listing Rules.
The Joint Sponsors will be paid by our Company fee of HK$ 8.4 million  to act as the joint
sponsors to the Share Offer.


--- page 557 ---
– VI-11 –
APPENDIX VI STATUTORY AND GENERAL INFORMATION
8. Qualifications of experts
The following are the qualifications of the experts who have given opinions or advice which
are contained in this prospectus:
Name Qualification
Huajin Corporate Finance
(International) Limited
Licensed corporation under the SFO to carry on Type
4 (advising on securities) and Type 6 (advising on
corporate finance) regulated activities
Yue Xiu Capital Limited Licensed corporation under the SFO to carry out
Type 6 (advising on corporate finance) regulated
activities
Jingtian & Gongcheng Qualified PRC lawyers
PricewaterhouseCoopers Certified Public Accountants under Professional
Accountants Ordinance (Chapter 50 of the Laws of
Hong Kong)
Registered Public Interest Entity Auditor  under
Accounting and  Financial Reporting  Council
Ordinance (Chapter 588 of the Laws of Hong Kong)
China Insights Industry Consultancy
Limited
Industry consultant
9. Consents of experts
Each of Huajin Corporate Finance (International) Limited, Yue Xiu Capital Limited, Jingtian
& Gongcheng, PricewaterhouseCoopers and China Insights Industry Consultancy Limited has given
and has not withdrawn their respective written consents to the issue of this prospectus with the
inclusion of their report and/or letter and/or legal opinion and/or opinion (as the case may be) and
the references to their names, addresses, qualifications or summaries of opinions included herein in
the form and context in which they respectively appear.
None of the experts named above has any shareholding interests in our Company or any of
our subsidiaries or the right (whether legally enforceable or not) to subscribe for or to nominate
persons to subscribe for securities in our Company or any of our subsidiaries.


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– VI-12 –
APPENDIX VI STATUTORY AND GENERAL INFORMATION
10. 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 the provisions (other than the penal provisions) of
sections 44A and 44B of the Companies (WUMP) Ordinance so far as applicable.
11. Taxation of holders of H Shares
Dealings in H Shares registered on our Company’s H Shares register of members will be
subject to Hong Kong stamp duty. Intending holders of H Shares are recommended to consult
their professional advisers if they are in any doubt as to the taxation implications of subscribing
for, purchasing, holding or disposing of or dealing in H Shares. It is emphasized that none of our
Company, our Directors or the other parties involved in the Share Offer can accept responsibility
for any tax effect on, or liabilities of, holders of H Shares resulting from their subscription for,
purchase, holding or disposal of or dealing in H Shares.
Profits from dealings in H Shares arising in or derived from Hong Kong may also be subject
to Hong Kong profits tax.
The sale, purchase and transfer of H Shares are subject to Hong Kong stamp duty, the current
rate of which is 0.1% of the consideration or, if higher, the value of the H Shares being sold or
transferred. Information in relation to taxation is set out in Appendix III to this prospectus.
12. Miscellaneous
(a) Save as disclosed in “History , Development  and Corporate Structure – Major
Corporate Development and Shareholding Changes” ,“Share Capital” and “Structure
and Conditions of the Share Offer” in this prospectus:
(i) within two years preceding the date of this prospectus:
• no share or loan capital of our Company 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;
• 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; and
• no commission (except commission to the Underwriters) has been paid or
payable for subscribing or agreeing to subscribe, or procuring or agreeing
to procure the subscriptions, for any shares in our Company;


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– VI-13 –
APPENDIX VI STATUTORY AND GENERAL INFORMATION
(ii) no share or loan capital of our Company is under option or is agreed
conditionally or unconditionally to be put under option;
(iii) there are no arrangements under which future dividends are waived or agreed to
be waived;
(iv) there are no procedures for the exercise of any right of pre-emption or
transferability of subscription rights;
(v) our Company has no outstanding convertible debt securities or debentures; and
(vi) our Company has not issued nor agreed to issue any founder shares,
management shares or deferred shares;
(b) our Directors confirm that there has been no material adverse change in the financial
or trading position or prospects of our Company since 30 June 2024 (being the date to
which the latest audited financial statements of our Company were made up);
(c) our Directors confirm that there has not been any interruption in the business of our
Company which may have or has had a significant effect on the financial position of
our Company in the 12 months preceding the date of this prospectus; and
(d) no part of the equity and debt securities of our Company, if any, is currently listed
on or dealt in on any other stock exchange or trading system nor is any listing or
permission to list on any stock exchange other than the Stock Exchange is currently
being or agreed to be sought.
13. Bilingual prospectus
The English language and Chinese language versions of this prospectus are being published
separately, in reliance upon the exemption provided under section 4 of the Companies (Exemption
of Companies and Prospectuses for Compliance with Provisions) Notice (Chapter 32L of the Laws
of Hong Kong).


--- page 560 ---
– VII-1 –
APPENDIX VII DOCUMENTS DELIVERED TO
THE REGISTRAR OF COMPANIES IN
HONG KONG AND AVAILABLE ON DISPLAY
1. DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES IN HONG
KONG
The documents attached to a copy of this prospectus and delivered to the Registrar of Companies in
Hong Kong for registration were, among other documents:
(a) the written consents referred to in “Statutory and General Information – D. Other Information
– 9. Consents of experts” in Appendix VI  to this prospectus, and
(b) copies of the material contracts referred to in “Statutory and General Information – B.
Further Information about the Business of our Company – 1. Summary of material contracts”
in Appendix VI  to this prospectus.
2. DOCUMENTS AVAILABLE ON DISPLAY
Copies of the following documents will be available on display on the websites of the Stock
Exchange (www.hkexnews.hk ) and our Company (www.xyjiance.cn ) for a period of 14 days from the
date of this prospectus:
(a) our Articles of Association;
(b) the Accountant’ s Report received from  PricewaterhouseCoopers in respect of our historical
financial information for the Track Record Period, the text of which is set out in Appendix I
to this prospectus;
(c) the audited financial statements of our Company  for the years ended 31 December 2021,
2022 and 2023, and for the six months ended 30 June 2024;
(d) the report on the unaudited pro forma financial information of our Company  received from
PricewaterhouseCoopers, the text of which is set out in Appendix II to this prospectus;
(e) the PRC Company Law, the PRC Securities Law, the Trial Measures  together with their
unofficial English translation;
(f) the legal opinions prepared by our PRC Legal Advisers, Jingtian & Gongcheng, in respect of
certain aspects of our Company and the property interests of our Company in the PRC;


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– VII-2 –
APPENDIX VII DOCUMENTS DELIVERED TO
THE REGISTRAR OF COMPANIES IN
HONG KONG AND AVAILABLE ON DISPLAY
(g) the CIC Report;
(h) the material contracts referred to in “Statutory and General Information – B. Further
Information about Our Business – 1. Summary of material contracts” in Appendix VI  to this
prospectus;
(i) the service contracts referred to “Statutory and General Information – C. Further Information
about our Directors, Supervisors and Substantial Shareholders – 1. Directors and Supervisors
– (b) Particulars of Directors’ and Supervisors’ service contracts” in Appendix VI  to this
prospectus; and
(j)  the written consents referred to in “Statutory and General Information – D. Other Information
– 9. Consents of experts” in Appendix VI to this prospectus.


--- page 562 ---
GUANGDONG SYNTRUST GK TESTING AND CERTIFICATION
TECH SERVICE CENTER CO., LTD.
廣東集信國控檢測認證
技術服務中心股份有限公司
