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WellCell Holdings Co., Limited
SHARE
OFFER
(incorporated in the Cayman Islands with limited liability)
Stock code: 02477
Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers
Joint Sponsors
Sole Overall Coordinator, Joint Global Coordinator, Joint Bookrunner and Joint Lead Manager
WellCell Holdings Co., Limited
Halcyon Capital Limited
Halcyon Securities Limited


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If you are in any doubt about any of the contents of this prosp ectus, you should obtain independent professional advice.
WellCell Holdings Co., Limited
經緯 天 地 控 股 有 限 公 司
(Incorporated in the Cayman Islands with limited liability)
SHARE OFFER
Number of Offer Shares : 125,000,000 Shar es (subject to the Over-allotment Option)
Number of Public Offer Shares : 12,500, 000 Shares (subject to reallocation)
Number of Placing Shares : 112,500,000 Shares (subject to reallocation and the Over-
allotment Option)
Offer Price : Not more than HK$1.30 per Offer Share and expected to
be not less than HK$1.00 per Offer Share (payable in
full on application in Hong Kong dollars, subject to
refund on final pricing, plus brokerage of 1%, SFC
transaction levy of 0.0027%, Stock Exchange trading fee
of 0.00565% and AFRC transaction levy of 0.00015%)
Nominal value : HK$0.01 per Share
Stock code : 02477
Joint Sponsors
Halcyon Capital Limited
Sole Overall Coordinator, Joint Global Coordin ator, Joint Bookrunner and Joint Lead Manager
Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers
Halcyon Securities Limited
Joint Lead Managers
Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clea ring Company Limited take no responsib ility for the
contents of this prospectus, make no representation as to its accuracy or co mpleteness and expressly disclaim any liability whatsoever for any loss h owsoever arising from or in
reliance upon the whole or any part of the contents of this prospectus.
A copy of this prospectus, having attached thereto the documents specified in the paragraph headed ‘‘Documents delivered to the Registrar of Companies in Hong Kong ’’in
Appendix V to this prospectus, has been registered by the Registrar of Comp anies in Hong Kong as required by section 342C of the Companies (Winding Up an d Miscellaneous
Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong). The Securities an d Futures Commission of Hong Kong and the Registrar of Companies in Hong K ong take no
responsibility for the contents of this prospectus or any other document referred to above.
The Offer Price is expected to be fixed by agreement between Sole Overall C oordinator (for itself and on behalf of the Underwriters) and our Company on t he Price Determination
Date. The Price Determination Date is expected to be on or before 12:00 noon on Wednesday, 10 January 2024. The Offer Price will be no more than HK$1.30 pe r Offer Share and
is currently expected to be no less than HK$1.00 per Offer Share unless other wise announced. If, for any reason, the Offer Price is not agreed by 12:00 no on on Wednesday, 10
January 2024 between Sole Overall Coordinator (for itself and on behalf of the Underwriters) and us, the Share Offer will not proceed and will lapse.
The Offer Shares have not been and will not be registered under the U.S. Securi ties Act and may not be offered, sold, pledged or transferred, except purs uant to the exemption from,
or in a transaction not subject to, the registration requirements of the U.S. Securities Act and in accordance with any applicable United States secur ities laws. The Offer Shares are
being offered and sold only outside the United States i n offshore transactions in reliance on Regulations S.
Prior to making an investment decision, prospective investors should consid er carefully all the information set out in this prospectus, including r isk factors set out in the section
‘‘Risk factors ’’. Pursuant to the Public Offer Underwriting Agreement, Sole Overall Coordi nator (for itself and on behalf of the Underwriters) has the right in certai n circumstances
to terminate the obligations of the Public Offer Underwriter at any time prio r to 8:00 a.m. (Hong Kong time) on the Listing Date. Further details of such circumstances are set out in
the section ‘‘Underwriting — Underwriting arrangements and expenses — The Public Offer — Grounds for termination ’’.
ATTENTION
We have adopted a fully electronic application process for the Public Offe r. We will not provide printed copies of this prospectus to the public in rela tion to the Public Offer.
This prospectus is available at the website of the Hong Kong Stock Exchange at www.hkexnews.hk and our website at www.wellcell.com.cn . If you require a printed copy of
this prospectus, you may download and print from the website addresses above.
IMPORTANT
28 December 2023


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IMPORTANT NOTICE TO INVESTORS
OF PUBLIC OFFER SHARES
FULLY ELECTRONIC APPLICATION PROCESS
We have adopted a fully electronic application process for the Public Offering and below
are the procedures for application.
This prospectus is available at the website of the Stock Exchange at www.hkexnews.hk
under the ‘‘H K E X n e w s>N e wL i s t i n g s>N e wL i s t i n gI n f o r m a t i o n’’section, and our website
at www.wellcell.com.cn.
To apply for Public Offer Shares, you may use o ne of the following application channels:
Application
Channel Platform Target Investors Application Time
eWhite Form
service
www.ewhiteform.com.hk
Enquiries:
+852 2504 6968
Investors who would like to
receive a physical Share
certificate. Public Offer Shares
successfully applied for will be
allotted and issued in your own
name.
From 9:00am on Thursday, 28
December 2023 to 11:30 a.m.
on Tuesday, 9 January 2024,
Hong Kong time.
The latest time for completing
full payment of application
monies will be 12:00 noon on
Tuesday, 9 January 2024,
Hong Kong time.
HKSCC EIPO
channel
Your broker or custodian who is a
HKSCC Participant will submit an
EIPO application on your behalf
through HKSCC ’sF I N Is y s t e mi n
accordance with your instruction
Investors who would not like to
receive a physical Share
certificate. Public Offer Shares
successfully applied for will be
allotted and issued in the name of
HKSCC Nominees, deposited
directly into CCASS and credited
to your designated HKSCC
Participant ’s stock account.
Contact your broker or custodian
for the earliest and latest time
for giving such instructions, as
t h i sm a yv a r yb yb r o k e ro r
custodian.
We will not provide any physical channels to acce pt any application for the Public Offer Shares
by the public. The contents of this prospectus are identical to the prospectus as registered with
the Registrar of Companies in Hong Kong pursuant to Section 342C of the Companies (Winding
Up and Miscellaneous Provisions) Ordinance.
If you are an intermediary , broker or agent , please remind your customers, clients or
principals, as applicable, that this prospectus is available online at the website addresses above.
Please refer to the section headed ‘‘How to apply for Public Offer Shares ’’for further details of
the procedures through which you can apply for the Public Offer Shares electronically.
IMPORTANT


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Your application through the eWhite Form service or the HKSCC EIPO channel must be for
a minimum of 4,000 Public Offer Shares and in one of the numbers set out in the table below. You
are required to pay the amount next to the number you select.
Number of
Public Offer
Shares
applied for
Maximum
Amount
payable (2)
on application/
successful
allotment
Number of
Public Offer
Shares
applied for
Maximum
Amount
payable (2)
on application/
successful
allotment
Number of
Public Offer
Shares
applied for
Maximum
Amount
payable (2)
on application/
successful
allotment
Number of
Public Offer
Shares
applied for
Maximum
Amount
payable (2)
on application/
successful
allotment
HK$ HK$ HK$ HK$
4,000 5,252.44
8,000 10,504.89
12,000 15,757.32
16,000 21,009.77
20,000 26,262.21
24,000 31,514.65
28,000 36,767.09
32,000 42,019.53
36,000 47,271.97
40,000 52,524.42
60,000 78,786.64
80,000 105,048.85
100,000 131,311.06
120,000 157,573.25
140,000 183,835.46
160,000 210,097.68
180,000 236,359.89
200,000 262,622.10
300,000 393,933.16
400,000 525,244.20
500,000 656,555.26
600,000 787,866.30
700,000 919,177.36
800,000 1,050,488.40
900,000 1,181,799.46
1,000,000 1,313,110.50
1,500,000 1,969,665.76
2,000,000 2,626,221.00
2,500,000 3,282,776.26
3,000,000 3,939,331.50
3,500,000 4,595,886.76
4,000,000 5,252,442.00
4,500,000 5,908,997.26
5,000,000 6,565,552.50
6,000,000 7,878,663.00
6,248,000
(1) 8,204,314.40
Notes:
(1) Maximum number of Public Offer Shares you may apply for.
(2) This is approximately 50% of the Public Offer Shares ini tially offered, and the amount payable is inclusive of
brokerage, SFC transaction levy, the Stock Excha nge trading fee and AFRC transaction levy. If your
application is successful, brokerage will be paid to the Exchange Participants (as defined in the Listing Rules)
or to the eWhite Form Services Provider (for applica tions made through the eWhite Form service) while the
SFC transaction levy, the Stock Exchange trading fee and the AFRC transaction levy will be paid to the SFC,
the Stock Exchange and the AFRC, respectively.
No application for any other number of Public Offer Shares will be considered and any such
application is liable to be rejected.
IMPORTANT


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If there is any change to the following timetable relating to the Share Offer, we will make
an appropriate announcement on the Stock Exchange ’sw e b s i t ea twww.hkexnews.hk a n do no u r
Company ’sw e b s i t ea twww.wellcell.com.cn to inform investors accordingly.
Date and time (1)
P u b l i c O f f e r c o m m e n c e s.............................................. 9 : 0 0 a . m . o n T h u r s d a y ,
28 December 2023
Latest time for completin g electronic applications
under eWhite Form service through the designated
website at www.ewhiteform.com.hk ................................. 1 1 : 3 0 a . m . o n T u e s d a y ,
9 January 2024
Application lists open (3) .............................................. 1 1 : 4 5 a . m . o n T u e s d a y ,
9 January 2024
Latest time to give electronic application instructions
to HKSCC (4) .......................................................1 2 : 0 0 n o o n o n T u e s d a y ,
9 January 2024
If you are instructing your broker or custodian who is a HKSCC Participant to give
electronic applica tion instructions via FINI 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.
Latest time to complete payment of eWhite Form
a p p l i c a t i o n s b y e f f e c t i n g P P S p a y m e n t t r a n s f e r ( s ) .....................1 2 : 0 0 n o o n o n T u e s d a y ,
9 January 2024
Application lists close (3) ..............................................1 2 : 0 0 n o o n o n T u e s d a y ,
9 January 2024
Expected Price Determination Date on or before (5) ................... 1 2 : 0 0 n o o n o n W e d n e s d a y ,
10 January 2024
EXPECTED TIMETABLE
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Date and time (1)
(1) Announcement of
. the final Offer Price;
. the level of indication of interest in the Placing;
. the level of applications in the Public Offer; and
. the basis of allocation of the Public Offer Shares
to be published on the website of the Hong Kong
Stock Exchange at www.hkexnews.hk and our
website at www.wellcell.com.cn o n................ T h u r s d a y ,1 1J a n u a r y2 0 2 4
(2) Results of allocations in the Public Offer (with successful
applicants ’ identification document numbers, where appropriate)
to be available through a variety of channels including:
. in the announcement to be posted on the Company ’s
website at www.wellcell.com.cn and
the Stock Exchange ’s website at www.hkexnews.hk ..... T h u r s d a y ,1 1J a n u a r y2 0 2 4
. from the designated results of allocations website
at www.ewhiteform.com.hk/results with a
‘‘search by ID ’’f u n c t i o nf r o m........... 1 1 : 0 0p . m .o nT h u r s d a y ,1 1J a n u a r y2 0 2 4
to 12:00 midnight on Thursday,
18 January 2024
. by telephone enquiry line by calling +852 2153 1688
b e t w e e n9 : 0 0a . m .a n d6 : 0 0p . m .f r o m ................. F r i d a y ,1 2J a n u a r y2 0 2 4
to Thursday, 18 January 2024
(3) A full announcement of the Share Offer containing (1)
and (2) above to be published on the website of
the Hong Kong Stock Exchange at www.hkexnews.hk
and our website at www.wellcell.com.cn (6) ,o n............ T h u r s d a y ,1 1J a n u a r y2 0 2 4
EXPECTED TIMETABLE
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Date and time (1)
Dispatch of Share certificates or deposit of
the share certificates into CCASS in respect of wholly
or partially successful applications pursuant to
t h eP u b l i cO f f e ro no rb e f o r e(7)(9) ................................. T h u r s d a y , 1 1 J a n u a r y 2 0 2 4
Dispatch of refund cheques and eWhite Form
e-Refund payment instructions in respect of wholly or
partially successful applications (if applicable) or
wholly or partially unsuccessf ul applications pursuant to
Public Offer on or before
(7)(8) .......................................F r i d a y , 1 2 J a n u a r y 2 0 2 4
Dealings in the Shares on Main Board
e x p e c t e d t o c o m m e n c e a t .............................. 9 : 0 0 a . m . o n F r i d a y , 1 2 J a n u a r y 2 0 2 4
The application for the Public Offer Share s will commence on Thursday, 28 December
2023 through Tuesday, 9 January 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, 12 January 2024.
Notes:
(1) All times refer to Hong Kong local times and dates, except as otherwise stated.
(2) You will not be permitted to submit your a pplication through the designated website at www.ewhiteform.com.hk
after 11:30 a.m. on the last day for lodging applications. If you have already submitted your application and
obtained an application reference number from the designat ed 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 of
lodging applications, when the application lists close.
(3) If there is a tropical cyclone wa rning signal number 8 or above, or a ‘‘black ’’rainstorm warning in force in Hong
Kong at any time between 9:00 a.m. and 12:00 noon on Tuesday, 9 January 2024, the application lists will not open
on that day. Please refer to the section headed ‘‘How to Apply for Public Offer Shares — E. Severe Weather
Arrangements ’’in this prospectus.
(4) Applicants who apply for Public Offer Shares by giving electronic application instructions to HKSCC via CCASS
or instructing your broker or custodian to apply on your behalf via CCASS should refer to the section headed
‘‘How to Apply for Public Offer Shares — A. Applications for the Public Offer Shares ’’in this prospectus.
(5) The Price Determination Date is expected to be on or before 12:00 noon on Wednesday, 10 January 2024. If, for
any reason, the Offer Price is not agreed by 12:00 noon on Wednesday, 10 January 2024 between our Company and
the Sole Overall Coordinator (for itself and on behalf of Underwriters), the Share Offer will not proceed and will
lapse.
(6) None of the website or any of the information contained on the website forms part of this prospectus.
EXPECTED TIMETABLE
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(7) Applicants who have applied for Public Offer Share s through HKSCC EIPO channel should refer to the section
headed ‘‘How to Apply for Public Offer Shares — D. Despatch of share certificates and refund of application
monies ’’in this prospectus for details.
Applicants who have applied through the eWhite Form service and paid their application monies through single
bank accounts may have refund monies (if any) dispatch ed to the bank account in the form of e-Refund payment
instructions. Applicants who have applied through the eWhite Form service and paid their application monies
through multiple bank accounts may have refund monies (if any) dispatched to the address as specified in their
application instructions in the form of refund cheques by ordinary post at their own risk.
Share certificates and/or refund cheques (if applicable) f or applicants who have applied for Public Offer Shares will
be dispatched by ordinary post and at the own risk of the applicants shortly after the expiry of the time for
collection at the date of dispatch of refund cheque as described in the section headed ‘‘How to Apply for Public
Offer Shares — D. Despatch of share certificates and refund of application monies ’’in this prospectus.
(8) e-Refund payment instructions/ refund cheques will be issued in respect of wholly or partially unsuccessful
applications and also in respect of successful applicati ons in the event that the Offer Price is less than the initial
price per Offer Share payable on application. Part of your Hong Kong identity card number/national identification
document number/passport number, or, if you are joint applicants, part of the Hong Kong identity card number/
national identification document number/passport num ber of the first-named applicant, provided by you may be
printed on your refund cheque, if any. Such data would also be transferred to a third party to facilitate your refund.
Your banker may require verification o f your Hong Kong identity card number/ national identification document
number/passport number before encashment of your refu nd cheque. Inaccurate completion of your Hong Kong
identity card number/national identification document num ber/passport number may lead to delay in encashment of
your refund cheque or may invalidate your refund cheque . Further information is set out in the section headed ‘‘How
to Apply for Public Offer Shares ’’in this prospectus. Applicants who apply through the eWhite Form service and
paid their applications monies through a single bank acc ount may have refund monies (if any) despatched to their
application payment bank account, in the form of e-Refund payment instructions. Applicants who apply through the
eWhite Form service and paid their application monies through m ultiple bank accounts may have refund monies (if
any) despatched to the address as specified in their application instructions to the eWhite Form Service Provider, in
the form of refund cheques, by ordinary post at their own risk.
(9) Share certificates for the Offer Shares allotted and issued to the placees are expected to be deposited directly into
CCASS for credit to the relevant HKSCC Participants ’ stock accounts designated by the Sole Overall Coordinator
(for itself and on behalf of the Underwriters), the placees or their agents (as the case may be). No temporary
documents or certificates of title will be issued by our Company.
Share certificates will only become valid evidence of title to which they relate at 8:00 a.m. (Hong Kong time) on the
Listing Date provided that (i) the Share Offer has beco me unconditional in all respects; and (ii) the right of
termination described in the section headed ‘‘Underwriting — Underwriting arrangements and expenses — Grounds
for termination ’’in this prospectus has not been exercised and has l apsed. Investors who trade Shares prior to the
receipt of share certificates or the share certificates becoming valid evidence of title do so entirely at their own risk.
EXPECTED TIMETABLE
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IMPORTANT NOTICE TO INVESTORS
This prospectus is issued by our Company solely in connection with the Share Offer and
does not constitute an offer to sell or a solicitation of an offer to buy any security other than the
Offer Shares offered by this prospectus pursuant to the Share Offer. This prospectus may not be
used for the purpose of and does not constitute an offer to sell or a solicitation of an offer in any
other jurisdiction or in any other circumstan ces. No action has been taken to permit a public
offering of the Offer Shares in any jurisdiction other than Hong Kong and no action has been
taken to permit the distribution of this prospectus in any jurisdiction other than Hong Kong. The
distribution of this prospectus and the offerin g of the Offer Shares in other jurisdiction are
subject to restrictions pursuant to registration w ith or authorisation by the relevant securities
regulatory authorities or any exemption therefrom.
Y o us h o u l dr e l yo n l yo nt h ei n f o r m a t i o nc o n t a i n e di nt h i sp r o s p e c t u st om a k ey o u r
investment decision. Our Company, the Joint Sponsors, the Sole Overall Coordinator, Joint
Global Coordinators, the Joint Bookrunners, the Joint Lead Managers and the Underwriters have
not authorised anyone to provide you with information that is different from what is contained in
this prospectus. Any informatio n or representation not contained in this prospectus must not be
relied on by you as having been authorised by us, the Joint Sponsors, the Sole Overall
Coordinator, Joint Global Coordinators, the J oint Bookrunners, the Joint Lead Managers, the
Underwriters, any of our or their affiliates or a ny of their respective directors, officers,
employees, agents or representatives, or any ot her person or party involved in the Share Offer.
The information contained on our website at
www.wellcell.com.cn does not form part of this
prospectus.
Page
EXPECTED TIMETABLE ....................................................... i
CONTENTS ..................................................................... v
SUMMARY ...................................................................... 1
DEFINITIONS ................................................................... 1 9
GLOSSARY OF TECHNICAL TERMS ........................................... 3 2
FORWARD-LOOKING STATEMENTS ........................................... 3 7
WAIVER FROM STRICT COMPLIANCE WITH THE LISTING RULES .......... 3 9
RISK FACTORS ................................................................. 4 1
INFORMATION ABOUT THIS PROSPECTUS AND THE SHARE OFFER ........ 7 0
CONTENTS
– v –


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Page
DIRECTORS AND PARTIES INVOLVED IN THE SHARE OFFER ............... 7 5
CORPORATE INFORMATION .................................................. 8 4
INDUSTRY OVERVIEW ......................................................... 8 6
REGULATORY OVERVIEW ..................................................... 1 0 2
HISTORY, REORGANISATION AND CORPORATE STRUCTURE ............... 1 1 4
BUSINESS ....................................................................... 1 3 1
RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS ................ 2 5 8
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES ...................... 2 6 5
SUBSTANTIAL SHAREHOLDERS ............................................... 2 8 2
SHARE CAPITAL ............................................................... 2 8 4
FINANCIAL INFORMATION .................................................... 2 8 8
FUTURE PLANS AND USE OF PROCEEDS ...................................... 3 6 2
UNDERWRITING ............................................................... 4 0 3
STRUCTURE AND CONDITIONS OF THE SHARE OFFER ...................... 4 1 8
HOW TO APPLY FOR PUBLIC OFFER SHARES ................................ 4 3 1
APPENDIX I — ACCOUNTANT ’SR E P O R T .................................. I - 1
APPENDIX II — UNAUDITED PRO FORMA FINANCIAL INFORMATION .... II-1
APPENDIX III — SUMMARY OF THE CONSTITUTION OF THE COMPANY
AND CAYMAN ISLANDS COMPANY LAW ................ III-1
APPENDIX IV — STATUTORY AND GENERAL INFORMATION .............. I V - 1
APPENDIX V — DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES AND ON DISPLAY ........................... V - 1
CONTENTS
– vi –


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This summary aims to give you an overview of the i nformation contained in this prospectus.
Since this is a summary, it does not contain all the information that may be important to you,
and is qualified in its entirely by, and should be need in conjunction with the full text of this
prospectus. You should read the whole document before you decide to invest in the Offer Shares.
There are risks associated with any investment in the Offer Shares. Some of the particular risks
in investing in the Offer Shares are set out in the section ‘‘Risk Factors ’’in this prospectus. You
should read that section carefully before you decide to invest in the Offer Shares.
OVERVIEW
Our Group is a telecommunication network support and information and communication
technology (ICT) integration services provid er and software developer in the PRC. When we
commenced business in 2003, we mainly engaged in the development of telecommunication
network performance analysis software and we later expanded our business into provision of
telecommunication network support services and ICT integration services. During the Track Record
Period, we engaged in the provision of (i) telecommunication network support services, comprising
wireless telecommunication network enhan cement services and telecommunication network
infrastructure maintenance and engineering ser vices; (ii) ICT integration services; and (iii)
telecommunication network-related software dev elopment services. Our revenue from wireless
telecommunication network enhancement services , telecommunication net work infrastructure
maintenance and engineering services, ICT integrat ion services, telecommuni cation network-related
software development services in 2022 accounte d for approximately 0.8%, 0.01%, 0.03% and 2.5%,
respectively, of the market share of these industries in the PRC in terms of revenue in the same
year.
OUR BUSINESS
O u rb u s i n e s sm o d e l .The following diagram sets out our business model and position in the
service supply chain:
Suppliers of
telecommunication and
electronic equipment and
other general hardware
and software
Telecommunication
operators,
telecommunication network
equipment manufacturers,
telecommunication network
and technical service
providers, general
contractors and others
Our suppliers
Our Group’s businesses Our customers
► Wireless telecommunication network
enhancement services
● Routine telecommunication network
enhancement services
● Specific telecommunication network
enhancement services
► Telecommunication network infrastructure
maintenance and engineering services
► Customised software development services
► Sales of our software
Telecommunication network support
services
ICT integration services
Telecommunication network-related
software development
SUMMARY
– 1 –


--- page 12 ---
O u rb u s i n e s sl i n e s .Our business can be categorised into the following business lines:
(I) Telecommunication network support services. Our telecommunication network support
services include:
(i) wireless telecommunication network e nhancement services which are solution
oriented as compared to our telecommunicat ion network infrastructure maintenance
services and mainly comprise:
(a) routine telecommunication network e nhancement services involving testing,
detecting and providing and implementing solutions related to communication
network issues with a view to improving connectivity, quality, coverage and
end-user experience etc of a telecommunication network. For example, we
provided overall testing, user compl aint analysis and telecommunication
network interference screening servi ces to telecommunication operators; and
(b) specific telecommunicat ion network enhancement services, which troubleshoot
specific network issues or achieve speci fic network improvement objectives by
providing and implementing enhancement solutions tailored to the needs of
our customers. For instance, we provided 5G mobile network data and
perception testing and analysis in majo r cities, expressways and high-speed
railway lines in the PRC; and
(ii) telecommunication network infrastruct ure maintenance and engineering services
which mainly comprise:
(a) maintenance services involving insp ection, maintenance and repair of base
stations and related equipment. For e xample, we carried out maintenance of
telecommunication network base stations, ancillary equipment in
telecommunication equipment room and ma in optical fibers pipeline in various
cities; and
(b) engineering services in the const ruction of telecommunication network
infrastructure. For example, we participated in construction of ground
telecommunication network infrast ructure, external power access,
telecommunication rooms, etc.
(II) ICT integration services. Our ICT integration services mainly involve: (i) customising
our customers ’ computer system design for providing business-specific systems for our
customers with the choice of equipment, hardware and software within a customer ’s
budget; (ii) procuring equipment, hardware and software and engaging of third-party
subcontractors; (iii) arranging and assemblin g equipment, hardware, software and other
equipment to form a functional and inter-co nnected system accordin g to the integration
plan and ensuring the compatibility of both, together with other ancillary work to
formulate a customised s ystem for our customers ’ specific purposes; and (iv) providing
follow-up services such as advising cust omers on operation and management of the
integrated system. For example, we custom ise the design and integrate an e-commerce
management platform in support of a customer ’s e-commerce business, which mainly
serves to allow standardised exchange of in formation between the customer and its
counterpart on one hand, and e-commerce and logistics enterprises on the other.
SUMMARY
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(III) Telecommunication network-related software development . We also engage in the sales
and development of telecommunication network -related software which include (i) the
sale of software developed by us for testi ng, evaluating, analysing, maintaining and
enhancing the performance of telecommuni cation networks; and (ii) developing
customised software for our customer s to cater to their specific needs on
telecommunication network perform ance monitoring, enhancement, etc.
In respect of our telecommunicat ion network support services, the table below sets out the key
distinctions between our wireless telecomm unication network enhancement services and
telecommunication network infrastructure maintenance services:
wireless telecommunication network
enhancement services
telecommunication network
infrastructure maintenance services
Focus of services . Solution-oriented: involving
implementation of enhancement
solutions which aim to improve
connectivity between wireless terminal
devices (such as mobile phones), base
stations and the Internet, etc., quality,
coverage and end-user experience, etc.
of a telecommunication network
. The telecommunication network before
such enhancement is generally in
workable condition but the
performance of which can be
improved through the deployment of
our solutions
. Maintenance of condition: involving
the performance of routine
maintenance and repair services which
aim to restore the workable condition
of a telecommunication network
. The telecommunication network before
maintenance and repair may not be in
workable condition due to, for
instance, malfunctioning
telecommunication network
infrastructure equipment
Focus of technologies or
techniques required
. Wireless telecommunication network
testing and data collection
. Analysis of telecommunication
network data collected
. Knowledge of telecommunication
network parameters and enhancement
solutions
. Telecommunication network
infrastructure inspection, maintenance
and repair
. In particular relating to the physical
condition and workability of the
components of base station and other
infrastructure
Main examples of
works required to be
performed
. Adjustment of telecommunication
network parameters and settings
depending on brands of
telecommunication network equipment
. Adjustment of antenna to lower or
cancel the telecommunication network
interference
. Enhancement of bandwidth usage
efficiency by prioritising and
allocating bandwidth to important
functions as designated by customers
(such as restricting bandwidth used by
entertainment applications to expand
bandwidth for business and financial
applications)
. Ascertaining if the telecommunication
network of a customer needs to be
upgraded due to changing needs of the
customer, such as growth in their data
volume, etc.
. Inspection of base stations and
transmission equipment
. Examination of the status of power
supply system and backup generator
. Repair of malfunctioning components
(such as fixing or replacing broken
parts)
. Emergency power supply to base
station
SUMMARY
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wireless telecommunication network
enhancement services
telecommunication network
infrastructure maintenance services
Typical operational flow 1. Collecting telecommunication
network data
2. Analysing data collected to locate
issues requiring improvement (e.g.
misconfiguration of parameters and
settings)
3. Implementing enhancement solutions
to improve performance
1. Inspecting base stations or other
telecommunication network
infrastructure
2. Locate problems which cause
malfunctioning of equipment
3. Perform repair and maintenance to
restore workability
For a more detailed description of the above bus iness lines, please refer to the paragraphs
headed ‘‘Business — Our services — Key distinctions among our wireless telecommunication
network enhancement services, telecommunicatio n network infrastructure maintenance and
engineering services and ICT integration services ’’in this prospectus.
Business identification. During the Track Record Period, we id entified and obtained business
through open tenders and non-tender methods (mainly by responding to customers ’ requests for
private quotations). In relation to open tenders , we generally identifi ed potential business
opportunities through browsing tender invitations o f our existing customers o r potential customers
which were made publicly available on the internet . Alternatively, certain potential customers may
directly request quotations from us, followed by private discussions and negotiation. For more
details, please refer to the paragraphs headed ‘‘Business — Our business operational flow ’’in this
prospectus.
The following table sets out the number of t enders we had submitted and the number of
successful tenders secured by us by business line during the Track Record Period:
FY2020 FY2021 FY2022 6M2023
Wireless telecommunication network
enhancement services
Number of tenders submitted 68 67 73 17
Number of successful tenders 39 52 48 12
Success rate (approximately) (%) 57.4 77.6 65.8 70.6
Telecommunication network infrastructure
maintenance and engineering services
Number of tenders submitted 15 19 39 18
Number of successful tenders 10 13 21 15
Success rate (approximately) (%) 66.7 68.4 51.3 83.3
ICT integration services
Number of tenders submitted 2 14 22 20
Number of successful tenders 1 10 15 12
Success rate (approximately) (%) 50 71.4 68.2 60.0
Software development services
Number of tenders submitted 13 7 21 4
Number of successful tenders 10 2 17 3
Success rate (approximately) (%) 76.9 28.6 81.0 75.0
Note: Under our software development operation, the sal e of our software normally does not involve open tender
during the Track Record Period.
SUMMARY
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The following table sets out the number of quotations we submitted and the number of
successful quotations secured by us by bus iness line during the Track Record Period:
FY2020 FY2021 FY2022 6M2023
Wireless telecommunication network
enhancement services
Number of quotations submitted 44 36 28 9
Number of successful quotations 38 32 25 8
Success rate (approximately) (%) 86.4 88.9 89.3 88.9
Telecommunication network infrastructure
maintenance and engineering services
Number of quotations submitted 13 28 20 11
Number of successful quotations 11 21 16 8
Success rate (approximately) (%) 84.6 75.0 80.0 72.7
ICT integration services
Number of quotations submitted 16 30 32 15
Number of successful quotations 14 26 24 13
Success rate (approximately) (%) 87.5 86.7 75.0 86.7
Telecommunication network-related
software development
Number of quotations submitted 27 32 22 12
Number of successful quotations 24 27 19 9
Success rate (approximately) (%) 88.9 84.4 86.4 75.0
Our revenue by service line, customer type an d place of registration of our customers. The
table below sets forth the breakdown of our Group ’s revenue by service line for the years/period
indicated:
FY2020 FY2021 FY2022 6M2022 6M2023
RMB ’000 % RMB ’000 % RMB ’000 % RMB ’000 % RMB ’000 %
(approximately) (approximately) (approximately) (approximately) (approximately)
(unaudited)
Telecommunication network support services
— Wireless telecommunication network enhancement
services 93,673 47.9 100,085 49.2 102,136 45.1 39,413 38.2 42,404 37.3
— Telecommunication network infrastructure
maintenance and engineering services 39,654 20.3 41,787 20.6 44,516 19.7 21,244 20.6 18,709 16.4
Sub-total 133,327 68.2 141,872 69.8 146,652 64.8 60,657 58.8 61,113 53.7
ICT integration services 38,515 19.7 42,505 20.9 54,592 24.1 34,756 33.6 35,550 31.2
Telecommunication network-related software development
— Sales of software 11,522 5.9 9,672 4.8 3,524 1.6 2,195 2.1 4,508 4.0
— Software development services 12,206 6.2 9,287 4.5 21,745 9.5 5,629 5.5 12,667 11.1
Sub-total 23,728 12.1 18,959 9.3 25,269 11.1 7,824 7.6 17,175 15.1
Total 195,570 100 203,336 100 226,513 100 103,237 100 113,838 100
Note: figures may not add up due to rounding.
SUMMARY
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The following table sets forth the breakdown of our revenue by customer type and business
line, and the respective percentage of our to tal revenue during the T rack Record Period:
FY2020 FY2021 FY2022 6M2022 6M2023
RMB ’000 % RMB ’000 % RMB ’000 % RMB ’000 % RMB ’000 %
(approximately) (approximately) (approximately) (approximately) (approximately)
(unaudited)
Telecommunication operators (Note 1)
— Telecommunication network support services 41,646 21.3 51,128 25.1 52,295 23.1 22,402 21.7 20,805 18.3
— ICT integration services —— 8,684 4.3 12,409 5.5 5,176 5.0 10,801 9.5
— Telecommunication network-related software
development 5,238 2.7 5,358 2.6 8,050 3.6 4,583 4.4 2,623 2.3
Subtotal 46,884 24.0 65,170 32.0 72,754 32.1 32,161 31.1 34,229 30.1
Telecommunication network equipment manufacturers
(Note 2)
— Telecommunication network support services 8,028 4.1 9,035 4.4 8,364 3.7 2,239 2.2 5,425 4.8
— ICT integration services —— —— 249 0.1 —— ——
— Telecommunication network-related software
development 2,579 1.3 2,727 1.4 526 0.2 526 0.5 ——
Subtotal 10,607 5.4 11,762 5.8 9,139 4.0 2,765 2.7 5,425 4.8
Telecommunication network and technical service
providers and general contractors (Note 3)
— Telecommunication network support services 82,040 41.9 77,185 38.0 83,370 36.8 35,834 34.7 31,648 27.8
— ICT integration services 32,819 16.8 29,462 14.5 40,380 17.8 28,467 27.6 21,016 18.5
— Telecommunication network-related software
development 14,556 7.4 10,642 5.2 16,692 7.4 2,715 2.6 14,552 12.8
Subtotal 129,415 66.1 117,289 57.7 140,442 62.0 67,016 64.9 67,216 59.0
Others (Note 4)
— Telecommunication network support services 1,613 0.9 4,524 2.2 2,623 1.2 183 0.2 3,235 2.8
— ICT integration services 5,696 2.9 4,359 2.2 1,555 0.7 1,113 1.1 3,733 3.3
— Telecommunication network-related software
development 1,355 0.7 232 0.1 —— —— ——
Subtotal 8,664 4.5 9,115 4.5 4,178 1.9 1,296 1.3 6,968 6.1
Total 195,570 100 203,336 100 226,513 100 103,237 100 113,838 100
Notes:
1. Telecommunication operators are companies which p rovide landline, mobile and Internet access services.
2. Telecommunication network equipment manufactur ers are companies which mainly engage in the sale of
hardware used for the purpose of telecommunication.
3. Telecommunication network and technical service p roviders and general contractors are companies which
provide telecommunication network s upport and other technical services.
4. Other customers include PRC government departme nts, universities, research organisations, etc.
SUMMARY
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The table below sets out the movement of contract amount and reve nue generated from our projects during the Track Record Period by
business line:
FY2020 FY2021 FY2022 6M2023
Telecommunication
network support
services
ICT
integration
services
Telecommunication
network-related
software
development Total
Telecommunication
network support
services
ICT
integration
services
Telecommunication
network-related
software
development Total
Telecommunication
network support
services
ICT
integration
services
Telecommunication
network-related
software
development Total
Telecommunication
network support
services
ICT
integration
services
Telecommunication
network-related
software
development Total
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
Outstanding contract amount
as at the beginning of
the year/period 86,163 17,838 4,117 108,118 116,736 27,299 1,132 145,166 86,415 27,937 711 115,063 110,764 23,371 6,571 140,706
Add: Additional contract amount
secured during the
year/period 163,900 47,976 20,743 232,620 111,551 43,143 18,538 173,232 171,003 50,026 31,129 252,158 64,319 51,754 17,654 133,727
Less: Contract amount
recognised
as revenue during the
year/period (133,327) (38,515) (23,728) (195,570) (141,872) (42,505) (18,959) (203,336) (146,652) (54,592) (25,269) (226,513) (61,113) (35,55 0) (17,175) (113,838)
Outstanding contract amount
as at the end of the
year/period 116,736 27,299 1,132 145,166 86,339 28,014 711 115,063 110,766 23,371 6,571 140,708 113,893 39,652 7,050 160,595
Notes:
1. The slight discrepancy between the outstanding amount as at the beginning of a year/period and that as at the end of the immediately previous year was due to the
reclassification of our projects under relevant business lines.
2. Figures may not add up due to rounding.
For further details, please refer to the paragraphs headed ‘‘Business — Our services — Revenue contribution and movement of backlog of
our services ’’in this prospectus.
SUMMARY
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--- page 18 ---
The table below sets out a breakdown of our Group ’s revenue by place of registration of our
customers during the Track Record Period:
Province/municipal city F Y2020 FY2021 FY2022 6M2023
RMB ’000 % RMB ’000 % RMB ’000 % RMB ’000 %
(approximately) (approximately) ( approximately) (approximately)
Guangdong 133,786 68.4 129,278 63.6 143,967 63.5 66,882 58.7
Beijing and Hebei 18,730 9.6 16,153 7.9 12,671 5.6 10,676 9.4
Guangxi 4,529 2.3 12,382 6.1 9,710 4.3 6,438 5.7
Shanghai and Jiangsu 6,258 3.2 11,583 5.7 18,763 8.3 14,199 12.5
Qinghai 4,896 2.5 4,637 2.3 5,446 2.4 1,988 1.7
Others 27,371 14.0 29,303 14.4 35,956 15.9 13,655 12.0
Total 195,570 100 203,336 100 226,513 100 113,838 100
Note: Others include Guizhou province, Zhejiang province, Sichuan province, etc.
While our revenue derived from wireless teleco mmunication network enhancement services
was relatively stable, our revenue from telecommun ication network infrastructure maintenance and
engineering services had increased during th e Track Record Period, which was principally
attributable to the contribution of two projec ts, namely CX Heilongjiang Telecom Maintenance
Project and the GG Guangxi Comprehensive Mainte nance Project. The considerable growth in our
revenue derived from ICT integration services during the Track Record Period was consistent with
the increase in the number of our ICT integration projects from 13 projects in FY2020 to 25
projects in FY2021 and to 35 projects in FY2022. During the Track Record Period, we had
undertaken a number of projects which, in aggreg ate, contributed revenue of (i) over RMB5 million
in aggregate during the Track Record Period; or ( ii) over RMB3 million du ring any financial year
over the Track Record Period (the ‘‘Major Projects ’’), and were related to our wireless
telecommunication network enhancement services , telecommunication net work infrastructure
maintenance and engineering services and ICT integration services. Our revenue generated from
these Major Projects accounted for approximately 53.9%, 55.5%, 55.8% and 44.9%, respectively, of
our total revenue for FY2020, FY2021, FY2022 and 6M2023, respectively. For details, please refer
to the paragraphs headed ‘‘Financial information — results of operation of our Group ’’.
OUR CUSTOMERS
Our customers can be broadly categorised into: (i) telecommunication operators; (ii)
telecommunication network equipment manufactu rers; (iii) telecommunication network and
technical service providers and general contr actors; and (iv) others. During the Track Record
Period, we mainly undertook our projects in the following manners: (i) we secured the whole
project or part of the works in a project directly from end customers such as telecommunication
operators; or (ii) after a general contractor had secured a project from the project owner and divide
it into various sub-projects or works, we may be assigned one or more of such sub-projects or
works from the general contractor. During the Trac k Record Period, to a relatively large extent, our
revenue was generated from customers who were end customers, but whether our Group conducted
business as a contractor or subcon tractor did not have a material i mplication on our operations or
standard of services. For more details, please refer to the paragraphs headed ‘‘Business — Our
customers ’’in this prospectus.
During the Track Record Period, we had a total o f 65, 81, 78 and 64 customers, respectively,
all of which had their principal place of business in the PRC. The revenue generated from our five
largest customers in each year/period during t he Track Record Period in aggregate amounted to
approximately RMB116.8 million, RMB123.9 mill ion, RMB115.6 million and RMB53.3 million,
SUMMARY
– 8 –


--- page 19 ---
representing approximately 59.6%, 61.0%, 51. 0% and 46.8% of our total revenue, respectively,
whereas revenue generated from our largest cust omer in each year/period during the Track Record
Period accounted for approximately 21.2%, 24.0% , 23.8% and 22.6%, respectively, of our total
revenue. Up to the Latest Practicable Date, we had established business relationships of two to 16
years with our five largest customers in each year/period during the Track Record Period, all of
whom are Independent Third Parties. For more de tails, please refer to the paragraphs headed
‘‘Business — Our customers ’’in this prospectus.
In general, we have achieved a high customer retention rate, as evidenced by the fact that
approximately 46.2%, 45.7%, 48.1% and 69.7% of our customers for FY2020, FY2021, FY2022
and 6M2023 respectively were repeat customers (bei ng customers in a particular year/period during
the Track Record Period who engaged us for our services or purchased our software at least once in
the three financial years immediately preceding tha t particular year) and they contributed revenue of
approximately RMB163.0 million, RMB174.6 mill ion, RMB198.3 million and RMB88.1 million,
representing approximately 83.3%, 85.9%, 87.6% and 77.4%, respectively, of our total revenue
during FY2020, FY2021, FY2022 and 6M2023.
OUR SUPPLIERS AND SUBCONTRACTORS
Suppliers of our Group mainly included (i) su ppliers of telecommunication and electronic
equipment (such as portable data terminals and sign al acquisition devices) required for provision of
our telecommunication network s upport services; and (ii) suppliers of other general hardware (such
as servers, cables and optical fibers) and softwa re (such as security software and operating system
software) required for our ICT integration ser vices. In the supply chain of telecommunication and
electronic equipment, our suppliers may rely on components, products and/or equipment sourced
from multinational conglomerates and technology corporations (including telecommunications
network equipment and device makers) that are headquartered in the PRC owing to their
prominence in the competitive market and the popu larity of their products. It is possible that these
multinational conglomerates and technology cor porations headquartered in the PRC and/or their
products may be subject to export/import restric tions and/or sanctions imposed by certain foreign
countries for use in these foreign countries from tim e to time. In certain instances, such restrictions
and/or sanctions may have implications on th eir downstream supply. If the export/import
restrictions or the scope and coverage of any sa nction against these upstream players or their
products escalate or expand further or if these upstream players cannot source components from
certain overseas countries, the development and s upply of their telecommunication products would
be disrupted, which could in turn disrupt the su pply of telecommunication products to our suppliers
directly and to us indirectly. Purchases from our fi ve largest suppliers in each year/period during
the Track Record Period in aggregate amounte d to approximately RMB17.5 million, RMB11.4
million, RMB23.7 million and RMB9.6 million, re presenting approximately 70.7%, 54.9%, 79.7%
and 88.2%, respectively, of our total project s upplies cost, while purchases from our largest
supplier in each year/period during the Track Rec ord Period accounted for approximately 21.8%,
14.6%, 61.4% and 47.5%, respectively, of our total project supplies cost.
We also engaged subcontractors for carrying o ut (i) certain technical services required in a
particular project (for instance, supplying eme rgency power supply to base stations) and other
works which require specific technical skills an d knowledge, such as electrical works; and (ii)
labour services for non-technical works such as ins tallation of cabling and associated devices and
certain relatively repetitive work in our ICT integration projects, wiring and installation of data
collection devices. During the Tr ack Record Period, subcontracting charges paid to our five largest
subcontractors in each year/period during the Track Record Period in aggregate accounted for
approximately 57.2%, 54.5%, 56.5% and 61.2%, respectively, of our total subcontracting charges,
while subcontracting charges paid to our largest subcontractor in each year/period during the Track
Record Period accounted for approximately 21.5%, 21.9%, 19.9% and 22.6%, respectively, of our
total subcontracting charges.
SUMMARY
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--- page 20 ---
OVERLAPPING CUSTOMERS AND SUPPLIERS OR SUBCONTRACTOR
Owing to the nature of our business, some of our customers are also our suppliers or
subcontractors from which we procure various kinds of services and products. While none of our
customers was also our supplier or subcontractor for 6M2023 and none of our major suppliers or
subcontractors was also our customer for 6M2023, three of our major customers were also our
subcontractors and one of our major subcontractors was also our customer from FY2020 to
FY2022. For more details, please refer to the paragraphs headed ‘‘Business — Customers —
Entities which are our customers and also our suppliers or subcontractors ’’in this prospectus.
SUMMARY OF CONSOLIDATED FINANCIAL INFORMATION
The following table sets forth a summary of our c onsolidated financial information during the
Track Record Period, which has been extracted from the Accountants ’ Report as set out in
Appendix I to this prospectus, including the notes thereto.
Selected information extracted from the conso lidated statements of comprehensive income
FY2020 FY2021 FY2022 6M2022 6M2023
RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
(unaudited)
Revenue 195,570 203,336 226,513 103,237 113,838
Other income 3,053 3,092 3,434 1,799 1,224
Listing expenses (1,014) (7,544) (10,108) (6,590) (5,945)
Operating profit 35,208 30,479 30,070 13,549 18,049
Profit before income tax 34,712 30,148 29,268 13,272 17,661
Profit for the year/period attributable to
the equity holders of the Company 29,660 25,524 24,259 9,371 14,658
Our revenue. Our total revenue increased from approximately RMB195.6 million in FY2020
to approximately RMB203.3 million in FY2021, whi ch was mainly due to the considerable growth
in our revenue derived from our provision of ICT integration services and telecommunication
network infrastructure maintenance and infrast ructure engineering services during the Track Record
Period. Our total revenue increased from approximately RMB203.3 million in FY2021 to
approximately RMB226.5 million in FY2022, which was mainly attributable to the overall increase
in all business lines. Our total revenue increased from approximately RMB103.2 million in 6M2022
to approximately RMB113.8 million in 6M2023, which was mainly attributable to the increase in
revenue derived from our software related business of approximately RMB9.4 million.
Our operating profit and net profit margin. Our operating profit decreased by approximately
13.4% from approximately RMB35.2 million for FY2020 to approximately RMB30.5 million for
FY2021, which was mainly attributable to the increase in subcontracting charges of approximately
RMB17.4 million and increase in Listing expens es of approximately RMB6.5 million, partially
offset by the increase in revenue of approximat ely RMB7.8 million and the decrease in employee
benefit expenses of approximately RMB9.2 m illion. Our operatin g profit decreased by
approximately 1.3% from approximately RMB 30.5 million in FY2021 to approximately RMB30.1
million in FY2022, which was mainly attributable to the increases in subcontracting costs,
materials, supplies and other project costs, net impairment losses of contract assets and trade
receivables and increase in Listing expenses, p artially offset by increase in our revenue and
decrease in staff costs. Our operating profit in creased by 33.2% from approximately RMB13.5
million in 6M2022 to approximately RMB18.0 mil lion in 6M2023, which was mainly attributable
to the increase in our revenue coupled with th e reduction in Major Operating Costs Ratio.
SUMMARY
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--- page 21 ---
After taking into account the Listing expenses and the tax expenses for the respective years/
period, our profit and total comprehensive income for FY2020, FY2021, FY2022 and 6M2023 were
approximately RMB29.7 million, RMB25.5 mill ion, RMB24.3 million and RMB14.7 million,
respectively. Our profit for the year decrea sed by approximately RMB4.2 million from
approximately RMB29.7 million for FY2020 to approximately RMB25.5 million for FY2021,
representing a decrease of approximately 13.9%. Such decrease was mainly due to (i) the increase
in subcontracting charges and (ii) the increase in Li sting expenses, which was partially offset by the
decrease in employee benefit expenses. The net p rofit margin reduced from approximately 15.2%
for FY2020 to approximately 12.6% for FY2021, wh ich was mainly attributable to the increase in
Listing expenses which represented approximately 0.5% of revenue for FY2020 and 3.7% of
revenue for FY2021. Our profit decreased by approximately 5.0% from approximately RMB25.5
million for FY2021 to approximately RMB24. 3 million for FY2022. Our net profit margin
decreased from approximately 12.6% for FY2021 to approximately 10.7% for FY2022, which was
principally attributable to the increase in net impairment losses of contract assets and trade
receivables and Listing expenses. Our profit inc reased by approximately 56.4% from approximately
RMB9.4 million for 6M2022 to approximately R MB14.7 million for 6M2023, which was mainly
attributable to increase in revenue of approxima tely RMB10.6 million and decrease in material,
supplies and other project costs of approximately RMB5.6 million, partially offset by increase in
subcontracting charges of approximately RMB13. 1 million. Our net profit margin increased from
approximately 9.1% for 6M2022 to approximately 12.9% for 6M2023.
Our Major Operating Costs Ratio. Our overall Major Operating Costs Ratio was
approximately 80.1%, 79.8%, 79.4% and 76.4% for FY2020, FY2021, FY2022 and 6M2023,
respectively.
Set out below is the Major Operating Costs Ratio for our four business lines during the Track
Record Period:
Business line FY2020 FY2021 FY2022 6M2023
Wireless telecommunicatio n network enhancement
services 67.2% 70.9% 72.1% 73.9%
Telecommunication network infrastructure maintenance
and infrastructure engineering s ervices 79.2% 83.2% 71.1% 73.0%
ICT integration services 99.0% 91.3% 78.9% 77.5%
Software-related busines s 30.4% 28.5% 49.4% 44.8%
We generally recorded relatively higher Major Operating Costs Ratio for ICT integration
services as such services usually involve hardwa re and/or software procurement which accounted
for a major part of costs for the services. Meanwh ile, we generally recorded a relatively lower
Major Operating Costs Ratio for our wireless telecommunication network enhancement services as
we are able to bargain for better margins since such services generally involve a higher level of
knowledge input. On the other hand, our software-re lated business generally involved a relatively
lower amount of subcontracting charges and does not incur any materials, supplies and other project
costs, and, therefore, our software-related busin ess generally records a lower Major Operating Costs
Ratio. During the Track Record Period, the fluctuation of Major Operating Costs Ratio of our
software-related services was consistent with th e fluctuation of its revenue contribution as we
normally incurred much higher project costs in o ur software development services as compared to
sales of software. For details of our financial cond ition and results of operations during the Track
Record Period, please refer to the paragraphs headed ‘‘Financial information — Results of
operations of our Group ’’in this prospectus.
SUMMARY
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--- page 22 ---
Selected information extracted from the con solidated statements o f financial position
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB ’000 RMB ’000 RMB ’000
Non-current assets 4,555 6,218 4,933 4,165
Current assets 122,126 143,644 158,248 161,934
Non-current liabilities 5,156 3,477 8,000 6,121
Current liabilities 56,009 75,299 74,439 78,910
Net current assets 66,117 68,345 83,809 83,024
Total assets less current liabilities 70,672 74,563 88,742 87,189
Net assets 65,516 71,086 80,742 81,068
We recorded an increase in net assets from a pproximately RMB65.5 million as at 31
December 2020 to approximately RMB71.1 millio n as at 31 December 2021, which was principally
attributable to the profit recorded in FY2021 of approximately RMB25.5 million, partially offset by
the dividend paid of approximately RMB20.0 million. Our net assets further increased to
approximately RMB80.7 million as at 31 December 2 022, which was principally attributable to our
profit recorded for FY2022 of app roximately RMB24.3 million, partially offset by the dividend
declared and paid of approximately RMB14.6 m illion. We recorded a slight increase in our net
assets to approximately RMB81.1 million as at 30 J une 2023, which was principally attributable to
the profit recorded for 6M2023 of approximat ely RMB14.7 million, partially offset by the
declaration of dividend of approximately RMB14.3 million during 6M2023.
Further, taking into account the above, we recorded an increase in net current assets from
approximately RMB66.1 million as at 31 Decembe r 2020 to approximately RMB68.3 million as at
31 December 2021 (mainly attributable to increa se in contract assets of approximately RMB13.5
million, increase in trade receivables of approx imately RMB5.0 million and increase in pledged
bank deposits of approximately RMB4.1 million, p artially offset by increase in trade and bills
payable of approximately RMB9.9 million, increas e in contract liabilities, other payables and
accruals of approximately RMB4.3 million and increase in current bank borrowings of
approximately RMB3.0 million). Our net current assets further increased to approximately
RMB83.8 million as at 31 December 2022 (mainly a ttributable to increas e in trade receivables of
approximately RMB3.9 million, i ncrease in cash and cash equival ents of approximately RMB20.7
million, decrease in trade and bills payables o f approximately RMB12.0 million and decrease in
contract liabilities, other payables and accruals of approximately RMB4.0 mil lion, partially offset
by decrease in contract assets of approximately R MB4.9 million, decrease in pledged bank deposits
of approximately RMB4.1 million and increase in current bank borrowings of approximately
RMB17.6 million). Our net current assets slightly decreased to approximat ely RMB83.0 million as
at 30 June 2023 (mainly attributable to decreas e in contract assets of approximately RMB6.4
million, decrease in cash and cash equivalents of approximately RMB10.7 million and increase in
contract liabilities, other payables and accruals of approximately RMB4.9 mil lion, partially offset
by increase in trade receivables of approximatel y RMB14.1 million and increase in prepayment and
deposits and other receivables of approximately RMB7.6 million).
Please refer to the paragraphs headed ‘‘Financial Information — Discussion of selected
statements of financial position items ’’in the prospectus.
SUMMARY
– 12 –


--- page 23 ---
Selected information extracted from th e consolidated statements of cash flows
FY2020 FY2021 FY2022 6M2022 6M2023
RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
(unaudited)
Net cash generated from/(used in) operatin g activities 13,232 25,019 16,962 (3,432) 6,501
Net cash (used in)/generated from investin g activities (1,075) (3,786) (1,198) (857) 77
Net cash (used in)/generated from financing activities (12,130) (22,821) 4,893 23,720 (17,270)
Net increase/(decrease) in cash and cas h balances 27 (1,588) 20,657 19,431 (10,692)
Cash and bank balances at the end of the year/period 23,130 21,542 42,199 40,973 31,507
For 6M2022, our net cash used in operating activ ities of approximately RMB3.4 million was
principally attributable to decrease in trade and b ills payable of approximately RMB10.3 million,
increase in contract assets and trade receivables of approximately RMB4.0 million, increase in
prepayments, deposits and other receivables o f approximately RMB2.4 million and decrease in
other payables and accruals of approximately RMB 2.2 million, partially offset by our operating
cash inflows before changes in working cap ital of approximately RMB16.5 million.
For a breakdown of our net cash generated from operating activities during the Track Record
Period, please refer to the paragraphs headed ‘‘Financial information — Liquidity and capital
resources — Cash flows of our Group — Operating cash flows — Net cash generated from
operating activities ’’.
For further details, please refer to the paragraphs headed ‘‘Financial information — Liquidity
and capital resources — Cash flows of our Group ’’in this prospectus.
KEY FINANCIAL RATIOS
As at or for the year ended 31 December
As at or for
the six months
ended 30 June
2020 2021 2022 2023
RMB’000 RMB ’000 RMB ’000 RMB ’000
Current ratio 1 2.2 1.9 2.1 2.1
Quick ratio 2 2.2 1.9 2.1 2.1
Gearing ratio
— Non-ordinary payables 3 1.9% 5.6% 2.3% 3.2%
Interest coverage ratio 4 7,098.4% 9,208.2% 3,749.4% 4,651.8%
Return on assets 5 23.4% 17.0% 14.9% 8.8%
Return on equity 6 45.3% 35.9% 30.0% 18.1%
Net profit margin 7 15.2% 12.6% 10.7% 12.9%
Notes:
1. Current ratio is calculated as the total current assets divided by the total current liabilities as at the respective dates.
2. Quick ratio is calculated as the current assets excludin g inventories divided by the total current liabilities as the
respective dates.
3. Gearing ratio — non-ordinary payables is calculated as the payabl es incurred not in the ordinary course of business
divided by total equity as at the respective date and multiplied by 100%.
4. Interest coverage ratio is calculated based on the profit before interest and tax divided by net finance costs of the
respective years/period a nd multiplied by 100%.
5. Return on assets is calculated as the net profit divided by the total assets as at the respective date and multiplied by
100%.
6. Return on equity is calculated as the net profit attributab le to our equity holders divided by the equity attributable to
our equity holders as at the respective date and multiplied by 100%.
7. Net profit margin is calculated as our net profit divided by revenue and multiplied by 100%.
SUMMARY
– 13 –


--- page 24 ---
For further details including the calculation basis, please refer to the paragraphs headed
‘‘Financial Information — Key financial ratios ’’in this prospectus.
PREVIOUS LISTING OF WELLCELL TECHNOLOGY
To tap into the PRC capital market, WellCell T echnology was listed on the National Equities
Exchange and Quotations ( 全國中小企業股份轉讓系統)( t h e ‘‘NEEQ ’’) on 9 December 2016.
However, owing to our Group ’s business development plans and intention to attain greater access to
international investors and markets by seeking a listing on other eligible exchange, WellCell
Technology was voluntarily delisted from the NEEQ in August 2018. Please refer to the paragraphs
headed ‘‘History, Reorganisation and corporate structure — Establishment and development of our
Company and our major subsidiaries ’’for details.
CONTROLLING SHAREHOLDERS
Immediately following completion of the Capitalisation Issue and the Share Offer (without
taking into account the exercise of the Over-allotment Option or any Shares which may be issued
pursuant to the exercise of any options that may be granted under the Share Option Scheme),
WellCell Group will be interested in 75% of the issued share capital of our Company and will
accordingly be a Controlling Shareholder within t he meaning of the Listing Rules. Furthermore,
WellCell Group is owned as to 51.5%, 37.5%, 5%, 4% and 2% by Shine Dynasty, Cheer Partners,
Golden Concord, Dazzling Power and Diamond Skyl ine, respectively, which are in turn wholly
owned by Mr. Jia, Mr. Lin, Mr. Fung, Mr. Cong and Ms. Chen, respectively. Shine Dynasty, Cheer
Partners, Golden Concord, Dazzling Power and Dia mond Skyline and their respective ultimate
beneficial owners are regarded as a group of Controlling Shareholders of our Company together
with WellCell Group under the Listing Rules. Please refer to the section headed ‘‘Relationship with
our controlling shareholders ’’for further details.
DIVIDENDS
We declared and paid dividends of approxim ately RMB20.0 million, RMB14.6 million and
RMB14.3 million during FY2021, FY2022 and 6M2023, while we did not declare a dividend for
FY2020. The declaration and payment of future dividends will be subject to the decision of the
Board having regard to various factors, includi ng but not limited to our operation and financial
performance, profitability, bus iness development, prospects, cap ital requirements, economic
outlook, and any applicable laws. The historical di vidend payments may not be indicative of future
dividend trends. As at the Latest Practicable Date, we did not have a dividend policy with a pre-
determined dividend payout ratio.
OFFERING STATISTICS
Offer size : 25% of the enlarged issued share capital of our Company
Offer Price : HK$1.00 to HK$1.30 per Offer Share
Number of Offer Shares : 125,000,000 Shares (subject to the Over-allotment Option)
Number of Public Offer Shares : 12,500,000 Shares (subject to reallocation)
Number of Placing Shares : 112,500,000 Shares (subject to reallocation and the Over-
allotment Option)
SUMMARY
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B a s e do nt h eO f f e rP r i c e
of HK$1.00 per
Offer Share (low-end)
B a s e do nt h eO f f e rP r i c e
of HK$1.30 per
Offer Share (high-end)
Market capitalisation of our Shares (1) HK$500 million HK$650 million
Unaudited pro forma adjusted consolidated net
tangible assets attributa ble to equity holders of our
Company per Share (2)(3) HK$0.36 HK$0.42
Notes:
(1) The calculation of market capitalisation of the Shares is based on 500,000,000 Shares in issue immediately after
completion of the Capitalisation Issue and the Share Offer.
(2) See Appendix II to this prospectus for details.
(3) All statistics in this table are based on the assumption t hat the Over-allotment Option is not exercised and without
taking into account Shares that may be allotted or issu ed pursuant to the exercise of any option which may be
granted under the Share Option Scheme.
FUTURE PLANS AND USE OF PROCEEDS
Assuming the Offer Price of HK$1.15 per Offer Share, being the midpoint of the indicative
Offer Price range of HK$1.00 per Offer Share to HK$1.30 per Offer Share, we will receive gross
proceeds of approximately HK$143.8 million. T he net proceeds from the Share Offer are estimated
to be approximately HK$81.6 million, after deduc ting the underwriting commission and other
e s t i m a t e de x p e n s e sp a y a b l eb yo u rC o m p a n yi nr e lation to the Share Offer and assuming the Over-
allotment Option is not exercised. We intend to apply such net proceeds from the Share Offer in the
following manner in order to execute our business strategies:
Approximate amount of net proceeds Intended applications
1. Approximately 28.0%, or HK$22.9 million
(equivalent to approximately RMB21.1 million)
Financing the initial funding needs for our future ICT
integration projects
2. Approximately 25.7%, or HK$21.0 million
(equivalent to approximately RMB19.4 million)
Pursuing new research and development undertakings
3. Approximately 14.7%, or HK$12.0 million
(equivalent to approximately RMB11.1 million)
Expanding our manpower in project management to
cater for the anticipated expansion plans and
business growth
4. Approximately 4.0%, or HK$3.3 million (equivalent
to approximately RMB3.0 million)
Financing our sales and marketing funding needs for
expansion of manpower and marketing activities
5. Approximately 17.6%, or HK$14.3 million
(equivalent to approximately RMB13.2 million)
Repaying part of our bank borrowings
6. Approximately 10.0%, or HK$8.1 million (equivalent
to approximately RMB7.0 million)
General working capital
LISTING EXPENSES
Based on an Offer Price of HK$1.15 per Offer Share (being the mid-point of the indicative
Offer Price range of HK$1.0 per Offer Share to HK$1.3 per Offer Share), the gross proceeds from
the Share Offer are expected to be approximatel y RMB124.1 million. The estimated expenses in
relation to the Listing represents approximatel y 43.2% of the gross proceeds from the Share Offer.
Out of the total Listing expenses amounting to approximately RMB57.3 million (or equivalent to
approximately HK$62.1 million in Hong Kong dolla rs), approximately RMB19.1 million is directly
attributable to the Listing and is expected to be accounted for as a deduction from equity upon
Listing. The remaining amount of approximately R MB38.2 million shall be charged to profit or loss
and other comprehensive income, and approximat ely RMB1.0 million, RMB1.0 million, RMB7.5
million, RMB10.1 million and RMB5.9 million ha ve been charged prior to the Track Record Period
and during FY2020, FY2021, FY2022 and 6M2023, respectively, while approximately RMB8.1
SUMMARY
– 15 –


--- page 26 ---
million is expected to be incurred in the remaining part of FY2023 and approximately RMB4.6
million is expected to be incurred in FY2024. Expenses in relation to the Listing are non-recurring
in nature. Our Group ’s financial performance and results of operations for FY2023 and FY2024 will
be adversely affected by the estimated expenses in re lation to the Listing. Out of the estimated total
Listing expenses of approximately HK$62.1 million, (i) approximately HK$7.2 million is
attributable to underwriting-related expen ses; and (ii) approximately HK$54.9 million is
attributable to non-underwriting-related expense s which include (a) estimated fees in the amount of
approximately HK$40.0 million to legal advisers and reporting accountant and (b) other fees and
expenses of approximately HK$14.9 million.
NON-COMPLIANCES
According to our PRC Legal Advisers, save for our failure to make adequate social insurance
contributions and housing provident fund contributions for certain employees of WellCell
Technology as required by the relevant PRC laws and regulations (details of which are set out in
the paragraphs headed ‘‘Business — Litigation and non-compliance ’’in this prospectus) during the
Track Record Period and up to the Latest Practi cable Date, we have been in compliance with the
relevant PRC laws and regulations in all material respects in our business operation, and our Group
has obtained all material licences, approvals and pe rmits issued by relevant r egulatory authorities
for our business operation.
COMPETITIVE LANDSCAPE
According to the CIC Report, each of the wireless telecommunication network enhancement
service market, telecommunication network infra structure maintenance and engineering service
market, ICT integration service market and telecommunication network-related software
development service industry is relatively fragm ented in the PRC and the market size by revenue is
expected to reach RMB15.5 billion, RMB598.7 bill ion, RMB254.0 billion and RMB1,620.3 million
in 2027, with a CAGR of approximately 4.9%, 8. 3%, 8.5% and 9.5%, respectively, from 2022 to
2027. The respective top five, top five, top three and top three market players in the said market/
industry accounted for approxima tely 24.3%, 24.9%, 13.3% and 38.3% of the market share in terms
of revenue in 2022, respectively, whistle our rev enue from this market/industry in 2022 accounted
for approximately 0.8%, 0.01%, 0.03% and 2.5% o f the market share in terms of revenue in 2022,
respectively.
OUR COMPETITIVE STRENGTHS
Our Directors believe that the following competitive strengths enable us to maintain our
position in the industry in the PRC in which we operate: (i) we are a comprehensive
telecommunication network support and ICT integ ration service provider; (ii) we maintain
relationships with our customers which include s ome renowned state-owned, listed and private
enterprises; (iii) our research an d development capabilities allow us to better serve our customers ’
needs and adapt to the fast-changing industry landscape; and (iv) we have an experienced
management team leading our Group ’s workforce. Please refer to the paragraphs headed ‘‘Business
— Competitive strengths ’’for further details.
RISK FACTORS
There are certain risks involved in our business a nd operations. These risks can be classified
into: (i) risks relating to our business; (ii) risks relating to the industry in which we operate; (iii)
risks relating to our operations in the PRC; (iv) risks relating to the Share Offer and our Shares;
and (v) risks relating to the st atements in this prospectus.
SUMMARY
– 16 –


--- page 27 ---
We believe that the following are some of the m ajor risks in our business and operations: (i)
our inability to manage cash flow mismatch arising from the incurrence of material initial project
costs for projects/work performed before they are r ecoverable/recovered may damage our financial
position and give rise to liquidity or insolvency risk; (ii) we may record net operating cash outflows
from time to time; (iii) we may not be able to bill and receive settlement of our contract assets in a
timely manner or at all due to reasons beyond our control; (iv) we may not be able to successfully
bill our contract assets and collect our trade receivables, and as a result, we may incur losses of
trade receivables and contract assets and our financ ial condition, in particular our liquidity, may be
materially and adversely affected; (v) we mainly derive our revenue from non-recurrent projects,
services and purchase orders, and there is no guarantee that our customers will engage us for our
services on their new undertakings or that we will secure new contracts or new purchase orders
from them; (vi) we derive a significant portion of our revenue from our major customers and the
loss of any major customer coul d materially and adversely aff ect our business and financial
position; (vii) we rely on our major suppliers to supply necessary equipment, hardware and
software for the provision of our services, and any shortage of, or delay in, the supply may
significantly impact on our business and results of operation; (viii) we purchase telecommunication
and electronic equipment from sup pliers for provision of our services, and our business could be
adversely affected if the supply chain of these telecommunication and electronic equipment,
hardware or software is disrupted; and (ix) we r ely on third-party subcontractors for certain
technical services and labour services and we may not have full control over their performance and
quality of work.
Please refer to the section headed ‘‘Risk factors ’’for further details. Prospective investors
s h o u l dr e a dt h ee n t i r es e c t i o nb e f o r ed e c i d i n gt oi n v e s ti nt h eO f f e rS h a r e s .
RECENT DEVELOPMENTS AND NO MATERIAL ADVERSE CHANGE
Subsequent to the Track Record Period and up to the Latest Practicable Date, (i) we submitted
88 tenders and 29 quotations (for contracts under existing and new projects); and (ii) we were
awarded 28 new projects through tenders and quot ation with an aggregate contract sum (excluding
tax) estimated to be more than approximately RMB56.1 million. The salient contract terms for the
new projects are generally consistent with other agreements which we have entered into during for
our various services during the Track Record Peri od, hence our business operations and business
model have not experienced any material ch anges. Based on our unaudited consolidated
management account, our revenue recognised for the nine months ended 30 September 2023
amounted to approximately RMB161.9 million. Based on our projects completed or on hand as at
the Latest Practicable Date, we expect that reve nue to be generated for the three months ending 31
December 2023 will be over RMB77.0 million.
The Listing expenses expected to be incurred by us in FY2023 are expected to record an
increase compared to FY2022 and have a material adverse impact on our net profit for FY2023 and
therefore our Group may record a decrease in net profit in FY2023 as compared with FY2022
principally attributable to the increase in Listing expenses. Save for the afo resaid, our Directors
confirmed that after the Track Record Period an d up to the date of this prospectus, (i) there has
been no material adverse change in the market conditions or the industry and environment in which
our Group operates; (ii) there has been no material adverse change in the trading and financial
position or prospects of our Group; and (iii) no event has occurred that would materially and
adversely affect the information shown in the Accountants ’ Report set out in Appendix I to this
prospectus.
SUMMARY
– 17 –


--- page 28 ---
Our revenue for the nine months ended 30 Sep tember 2023 disclosed above is derived from
our unaudited interim financial statements fo r the nine months ended 30 September 2023, which
have been prepared in accordance with the Hong Kong Accounting Standard 34, ‘‘Interim Financial
Reporting ’’. Our unaudited interim financial stateme nts for the nine months ended 30 September
2023 have been reviewed by our Reporting Accountant in accordance with Hong Kong Standard on
Review Engagements 2410, ‘‘Review of Interim Financial In formation Performed by the
Independent Auditor of the Entity. ’’
RECENT REGULATORY DEVELOPMENT
On 17 February 2023, the CSRC promulgated the Overseas Listing Trial Measures which
became effective on 31 March 2023. According t o the Overseas Listing Trial Measures, PRC
domestic companies that seek to offer and list secu rities in overseas markets, either in direct or
indirect means, are required to fulfill the fil ing procedure with the CSRC and report relevant
information. For details, please refer to the paragraphs headed ‘‘Regulatory overview —
Regulations related to overseas listing ’’.
The Overseas Listing Trial Measures also provide that if an issuer meets both of the following
criteria, the overseas securities offering and listing conducted by the issuer will be deemed as
indirect overseas offering by PRC domestic companies: (i) 50% or more of any of the issuer ’s
operating revenue, total profit, total assets or net assets as recorded in it s audited consolidated
financial statements for the most recent financial year is being accounted for by domestic
companies; and (ii) the main parts of the issuer ’s business activities are conducted in the Mainland
China, its principal place(s) of business are l ocated in the Mainlan d China, or the senior
management in charge of its business operation and management are mostly Chinese citizens or
domiciled in Mainland China. Given that we have me t both of the aforementioned criteria, our PRC
Legal Advisers are of the opinion that we are required to complete the filing procedures with the
CSRC and report relevant infor mation with respect to the Share Offer pursuant to the Overseas
Listing Trial Measures. Our PRC Legal Advise rs also confirmed that we have submitted the
necessary documents for the CSRC filing within t hree business days after our resubmission of the
application for Listing to the Stock Excha nge, and on 5 December 2023, the CSRC issued the
notification on completion of the filing procedur es for the Listing and Share Offer. As advised by
our PRC Legal Advisers, no other approvals from the CSRC are required to be obtained for the
Listing and Share Offer.
IMPACT ON OUR GROUP DUE TO THE COVID-19 PANDEMIC
Our Directors consider that the COVID-19 pandemic did not have any material adverse impact
on our business and financial performance during the Track Record Period and up to the Latest
Practicable Date as there was no material delay in procurement of hardware, software and
equipment from our suppliers and subcontractors or discharging our obligations under any projects
or orders from our customers and we had not been subject to any late charges or penalties imposed
on us by our customers during the COVID-19 pandemic in the PRC. Neither has the outbreak of
COVID-19 affected our collection of trade and bills receivable from our customers during the Track
Record Period. Our Directors believe that our busin ess and financial performance could maintain a
stable development during the Track Record Period and up to the Latest Practicable Date despite
the prevalence of COVID-19 because of the nature of our business as part of our service offerings
can generally be delivered remotely; and our customers ’ demands for our various kinds of
telecommunication network-related services is essen tial to their business and operation. Given that
the PRC government has substantially lifted its C OVID-19 prevention and control restrictions since
December 2022, our Directors are of the view that it is unlikely that the COVID-19 pandemic will
have a material effect on our business going forward.
SUMMARY
– 18 –


--- page 29 ---
In this prospectus, unless the context otherwis e requires, the following expressions have the
following meanings. Certain other terms are explained in the section headed ‘‘Glossary ’’in this
prospectus.
‘‘6M2022 ’’ the six months ended 30 June 2022
‘‘6M2023 ’’ the six months ended 30 June 2023
‘‘Accountant ’sR e p o r t’’ the accountant ’s report set out in Appendix I to this prospectus
‘‘AFRC ’’ Accounting and Financial Reporting Council of Hong Kong
‘‘Articles ’’or ‘‘Articles of
Association ’’
the amended and restated articles of association of our
Company conditionally adopted on 15 December 2023 and
which shall become effective on the Listing Date (as may be
amended from time to time) and a summary of which is set out
in Appendix III to this prospectus
‘‘Audit Committee ’’ the audit committee of the Board
‘‘Board ’’or ‘‘Board of Directors ’’ the board of Directors
‘‘Business Day ’’or ‘‘business
day’’
any day (other than a Saturday, Sunday or public holiday in
Hong Kong) on which licensed banks in Hong Kong are
generally open for normal banking business
‘‘BVI’’ the British Virgin Islands
‘‘Capitalisation Issue ’’ the issue and allotment of 374,999,600 Shares to be made
upon capitalisation of certain sums standing to the credit of the
share premium account of our Company as referred to in the
paragraphs headed ‘‘A. Further information about our Group
— 3. Written resolutions of our sole Shareholder passed on 15
December 2023 ’’in Appendix IV to this prospectus
‘‘CCASS ’’ the Central Clearing and Settlement System established and
operated by HKSCC
‘‘Cheer Partners ’’ Cheer Partners Limited, a company incorporated in the BVI as
a BVI business company on 18 July 2018 with liability
limited, which is wholly owned by Mr. Lin and a Controlling
Shareholder
DEFINITIONS
– 19 –


--- page 30 ---
‘‘China ’’or ‘‘PRC’’ the People ’s Republic of China, excluding, for the purpose of
this prospectus, Hong Kong, M acao Special Administrative
Region of the People ’s Republic of China and Taiwan
‘‘China Comservice ’’ China Comservice Construction Co., Ltd* ( 中通服建設有限公
司), a company established under the laws of the PRC and an
indirect wholly-owned subsid iary of China Communications
Services Corporation Limited ( 中國通信服務股份有限公司)
(established under the laws of t he PRC and listed on the Stock
Exchange (stock code: 552))
‘‘CIC’’ China Insights Industry Consultancy Limited, a market
research and consulting company and an Independent Third
Party
‘‘CIC Report ’’ a market research report commissioned by us and
independently prepared by CIC in relation to the industry in
which our Group operates
‘‘Companies Act ’’or
‘‘Cayman Companies Act ’’
the Companies Act (as revised) of the Cayman Islands
‘‘Companies Ordinance ’’ the Companies Ordinance (Chapter 622 of the Laws of Hong
Kong), as amended, supplemented or otherwise modified from
time to time
‘‘Companies (Winding up and
Miscellaneous Provisions)
Ordinance ’’
the Companies (Winding up and M iscellaneous Provisions)
Ordinance (Chapter 32 of the Laws of Hong Kong), as
amended, supplemented or otherwise modified from time to
time
‘‘Company ’’, ‘‘our Company ’’ WellCell Holdings Co., Limited ( 經緯天地控股有限公司), an
exempted company incorporated in the Cayman Islands with
limited liability on 14 September 2021
‘‘Controlling Shareholders ’’ has the meaning ascribed to it under the Listing Rules and,
unless the context otherwise requires, in the case of our
Company, means WellCell Group, Shine Dynasty, Cheer
Partners, Golden Concord, Dazzling Power, Diamond Skyline,
Mr. Jia, Mr. Lin, Mr. Fung, Mr. Cong and Ms. Chen, each a
‘‘Controlling Shareholder ’’
‘‘Corporate Governance Code ’’ the Corporate Governance Code as set out in Appendix 14 to
the Listing Rules
DEFINITIONS
– 20 –


--- page 31 ---
‘‘COVID-19 ’’ coronavirus disease 2019
‘‘CSRC ’’ China Securities Regulatory Commission
‘‘CSRC Archive Rules ’’ means the Provisions on Strengthening Confidentiality and
Archives Administration of Overseas Securities Offering and
L i s t i n gb yD o m e s t i cC o m p a n i e s(關於加強境內企業境外發行
證券和上市相關保密和檔案管理工作的規定)i s s u e db yt h e
CSRC, Ministry of Finance of the PRC, National
Administration of State Secrets Protection of the PRC, and
National Archives Administration of the PRC (effective from
31 March 2023), as amended, supplemented or otherwise
modified from time to time
‘‘CSRC Filing Report ’’ the filing report of the Company in relation to the Share Offer
submitted to the CSRC on 6 May 2023 pursuant to Article 13
of the Overseas List ing Trial Measures
‘‘CSRC Filings ’’ any letters, filings, corres pondences, communications,
documents, responses, undert akings and submissions in any
form made or to be made to the CSRC, relating to or in
connection with the Share Offer pursuant to the Overseas
Listing Trial Measures and supporting guidelines, and other
applicable rules and requirements of the CSRC (including,
without limitation, the CSRC Filing Report)
‘‘CSRC Rules ’’ the CSRC Archive Rules and the Overseas Listing Trial
Measures
‘‘Dazzling Power ’’ Dazzling Power Limited, a company incorporated in the BVI
a saB V Ib u s i n e s sc o m p a n yo n8A u g u s t2 0 1 8w i t hl i a b i l i t y
limited, which is wholly owned by Mr. Cong and a
Controlling Shareholder
‘‘Diamond Skyline ’’ Diamond Skyline Limited, a company incorporated in the BVI
as a BVI business company on 12 June 2018 with liability
limited, which is wholly owned by Ms. Chen and a
Controlling Shareholder
‘‘Director(s) ’’ the director(s) of our Company
DEFINITIONS
– 21 –


--- page 32 ---
‘‘Deed of Indemnity ’’ the deed of indemnity dated 22 December 2023 entered into by
our Controlling Shareholders in favour of our Company, the
particulars of which are set out in the section headed
‘‘Statutory and general information — E. Other information —
1. Tax and other indemnities ’’ in Appendix IV to this
prospectus
‘‘Deed of Non-competition ’’ the deed of non-competition dated 22 December 2023 entered
into by our Controlling Shareholders in favour of our
Company, the particulars of which are set out in the section
headed ‘‘Relationship with our Controlling Shareholders —
Non-competition undertakings ’’of this prospectus
‘‘eWhite Form ’’ 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 eWhite Form Service
Provider at www.ewhiteform.com.hk
‘‘eWhite Form Service Provider ’’ the eWhite Form Service Provider designated by our
Company, as specified on the designated website at
www.ewhiteform.com.hk
‘‘FINI ’’ ‘‘ Fast Interface for New Issuance ’’, an online platform
operated by HKSCC that is mandatory for admission to
trading and, where applicable, the collection and processing of
specified information on subscription in and settlement for all
new listings on the Stock Exchange
‘‘FY2019 ’’ the financial year ended 31 December 2019
‘‘FY2020 ’’ the financial year ended 31 December 2020
‘‘FY2021 ’’ the financial year ended 31 December 2021
‘‘FY2022 ’’ the financial year ended 31 December 2022
‘‘FY2023 ’’ the financial year ending 31 December 2023
‘‘FY2024 ’’ the financial year ending 31 December 2024
‘‘FY2025 ’’ the financial year ending 31 December 2025
‘‘FY2026 ’’ the financial year ending 31 December 2026
‘‘FY2027 ’’ the financial year ending 31 December 2027
DEFINITIONS
– 22 –


--- page 33 ---
‘‘General Rules of CCASS ’’ 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 in clude the CCASS Operational
Procedures
‘‘Golden Concord ’’ Golden Concord Holding Limited ( 金和控股有限公司), a
company incorporated in the BVI as a BVI business company
on 8 January 2019 with liability limited, which is wholly
owned by Mr. Fung and a Controlling Shareholder
‘‘Group ’’, ‘‘our Group ’’, ‘‘we’’,
‘‘our’’or ‘‘us’’
our Company and our subsidiaries at the relevant time or,
where the context refers to any time prior to our Company
becoming the holding company of our present subsidiaries,
such subsidiaries and the business carried on by such
subsidiaries or (as the case may be) our predecessors, and
‘‘we’’, ‘‘our’’or ‘‘us’’shall be construed accordingly
‘‘HK$’’or ‘‘Hong Kong dollars ’’ Hong Kong dollar(s), the lawful currency of Hong Kong
‘‘HKFRS ’’ Hong Kong Financial Reporting Standards, including Hong
Kong Accounting Standards and Interpretations promulgated
by the Hong Kong Accounting Standards Board
‘‘HKSCC ’’ Hong Kong Securities Clearing Company Limited, a wholly-
owned subsidiary of Hong Kong Exchanges and Clearing
Limited
‘‘HKSCC EIPO channel ’’ the application for the Public Offer Shares to be issued in the
name of HKSCC Nominees and deposited directly into CCASS
to be credited to your designated HKSCC Participant ’ss t o c k
account through causing HKSCC Nominees to apply on your
behalf, instructing your broker or custodian who is a HKSCC
Participant to submit an EIPO application on your behalf
through FINI in accordance with your instruction
‘‘HKSCC Nominees ’’ HKSCC Nominees Limited, a wholly-owned subsidiary of
HKSCC
‘‘HKSCC Operational
Procedures ’’
the operational procedures of the HKSCC, containing the
practices, procedures and admini strative or other requirements
relating to HKSCC ’s services and the operations and functions
of the systems established, operated and/or otherwise provided
by or through HKSCC (including FINI and CCASS) as from
time to time in force
DEFINITIONS
– 23 –


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‘‘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 ‘‘HKSAR ’’or
‘‘HK’’
the Hong Kong Special Administrative Region of the PRC
‘‘Hong Kong Branch Share
Registrar ’’
Boardroom Share Registrars (HK) Limited, our Hong Kong
branch share registrar and transfer office
‘‘Hong Kong Government ’’ the Government of the Hong Kong Special Administrative
Region of the PRC
‘‘Independent Third Party(ies) ’’ an individual(s) or a company( ies) who or which is/are not
connected person(s) (within the meaning of the Listing Rules)
of our Company or any of its subsidiaries or any of their
respective associates
‘‘Joint Bookrunners ’’ the joint bookrunners in respect of the Public Offer and the
Placing as named in the section headed ‘‘Directors and parties
involved in the Share Offer ’’of this prospectus
‘‘Joint Global Coordinators ’’ the joint global coordinators in respect of the Public Offer and
the Placing as named in the section headed ‘‘Directors and
parties involved in the Share Offer ’’of this prospectus
‘‘Joint Lead Managers ’’ the joint lead managers in respect of the Public Offer and the
Placing as named in the section headed ‘‘Directors and parties
involved in the Share Offer ’’of this prospectus
‘‘Joint Sponsors ’’ together (i) Halcyon Capital Lim ited, a corporation licensed by
the SFC to carry on type 6 (advising on corporate finance)
regulated activity under the SFO; and (ii) Eddid Capital
Limited, a corporation licensed by the SFC to carry on type 1
(dealing in securities) and type 6 (advising on corporate
finance) regulated activities under the SFO
‘‘Latest Practicable Date ’’ 20 December 2023, being the latest practicable date for the
purpose of ascertaining certain information contained in this
prospectus prior to its publication
‘‘Listing ’’ the listing of the Shares on the Main Board
‘‘Listing Committee ’’ the Listing Committee of the Stock Exchange
DEFINITIONS
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‘‘Listing Date ’’ the date expected to be on or about Friday, 12 January 2024,
on which dealings in the Shares first commence on the Main
Board
‘‘Listing Rules ’’ the Rules Governing the Listing of Securities on the Stock
Exchange, as amended, modified and supplemented from time
to time
‘‘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
‘‘Memorandum ’’or
‘‘Memorandum
of Association ’’
the amended and restated memorandum of association of our
Company (as amended from time to time), conditionally
adopted on 15 December 2023, which will become effective
on the Listing Date, a summary of which is set out in
Appendix III to this prospectus
‘‘Mr. Cong ’’ Cong Bin ( 叢斌), our executive Director and one of our
Controlling Shareholders
‘‘Mr. Fung ’’ Fung Man Hon ( 馮文瀚), one of our Controlling Shareholders
‘‘Mr. Jia ’’ Jia Zhengyi ( 賈正屹), our executive Director and one of our
Controlling Shareholders
‘‘Mr. Lin ’’ Lin Qihao ( 林啟豪), our non-executive Director and one of our
Controlling Shareholders
‘‘Ms. Chen ’’ Chen Shenmao ( 陳申茂), vice general manager and financial
controller of WellCell Technology and one of our Controlling
Shareholders
‘‘Ms. Liu ’’ Liu Ping ( 劉萍), our executive Director
‘‘Nominee Committee ’’ the nomination committee of an Board
DEFINITIONS
– 25 –


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‘‘Offer Price ’’ the final price for each Offer Share (exclusive of any
brokerage fee of 1%, SFC transaction levy of 0.0027%, Hong
Kong Stock Exchange trading levy of 0.00565% and AFRC
transaction levy of 0.00015% payable thereon), of not more
than HK$1.30 per Offer Share and is expected to be not less
than HK$1.00 per Offer Share, at which the Offer Shares are
to be offered for subscription under the Share Offer, to be
determined in the manner set out in the section headed
‘‘Structure and conditions of the Share Offer ’’ in this
prospectus
‘‘Offer Share(s) ’’ the Public Offer Shares and the Placing Shares
‘‘Over-allotment Option ’’ the option granted by our Company to the Placing
Underwriters exercisable by the Sole Overall Coordinator (for
itself and on behalf of the Placing Underwriters) at its sole and
absolute discretion, pursuant to which our Company may be
required to allot and issue up to an aggregate of 18,750,000
additional new Shares at the Offer Price representing 15% of
the Offer Shares initially available under the Share Offer, to
cover any over-allocations in th e Placing and/or to satisfy the
obligation of the Stabilising Manager to return securities
borrowed under the Stock Borrowing Agreement, subject to
the terms of the Placing Underwriting Agreement
‘‘Overseas Listing Trial
Measures ’’
the Trial Administrative Measures of Overseas Securities
Offering and Listing by Domestic Companies ( 境內企業境外
發行證券和上市管理試行辦法) and supporting guidelines
issued by the CSRC on 17 February 2023, as amended,
supplemented or otherwise modified from time to time
‘‘Placing ’’ the conditional placing of the P lacing Shares at the Offer Price
for and on behalf of our Company to professional, institutional
and other investors, as further described under the section
headed ‘‘Structure and conditions of the Share Offer ’’in this
prospectus
DEFINITIONS
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‘‘Placing Shares ’’ t h e1 1 2 , 5 0 0 , 0 0 0n e w l yi s s u e dS h a r e si n i t i a l l yo f f e r e db yo u r
Company for subscription at the Offer Price under the Placing
subject to reallocation (together, where relevant, to any
additional Shares which may be issued pursuant to the
exercise of the Over-allotment Option) and as further
described in the section headed ‘‘Structure and conditions of
the Shares Offer ’’in this prospectus
‘‘Placing Underwriter(s) ’’ the underwriter(s) of the Placing named in the section headed
‘‘Underwriting — Underwriters — Placing Underwriters ’’in
this prospectus that is expected to enter into the Placing
Underwriting Agreement to underwrite subscription of the
Placing Shares
‘‘Placing Underwriting
Agreement ’’
the conditional underwriting agre ement relating to the Placing
expected to be entered into by, among others, our Company,
our Controlling Shareholders, the executive Directors, the Joint
Sponsors, the Sole Overall Co ordinator and the Placing
Underwriters as further described in the section headed
‘‘Underwriting — Underwriting arrangements and expenses —
The Placing Underwriting Agreement ’’in this prospectus
‘‘PRC government ’’ the central government of the PRC, including all governmental
subdivisions (including provincial, municipal and other
regional or local government entities) and instrumentalities
thereof or, where the context requires, any of them
‘‘PRC Legal Advisers ’’ Beijing DHH (Shanghai) Law Firm, the legal advisers to our
C o m p a n ya st oP R Cl a w
‘‘Price Determination Agreement ’’ the agreement to be entered into between our Company and
the Sole Overall Coordinator, (for itself and on behalf of the
other Underwriters) on or before the Price Determination Date
to record and determine the Offer Price
‘‘Price Determination Date ’’ the date, expected to be on or before 12:00 noon on
Wednesday, 10 January 2024, on which the Offer Price will
be fixed for the purpose of the Share Offer
‘‘Public Offer ’’ the offer by our Company of the Pubic Offer Shares for
subscription by members of the public in Hong Kong at the
Offer Price (subject to adjustment as described in the section
headed ‘‘Structure and conditions of the Share Offer ’’in this
prospectus) and on and subject to the terms and conditions
stated herein
DEFINITIONS
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‘‘Public Offer Shares ’’ the 12,500,000 newly issued Shares initially offered by our
Company for subscription at the Offer Price pursuant to the
Public Offer, representing 10% of the initial number of the
Offer Shares, subject to reallocation as described in the section
headed ‘‘Structure and conditions of the Share Offer ’’in this
prospectus
‘‘Public Offer Underwriter(s) ’’ the underwriter(s) of the Public Offer named in the section
headed ‘‘Underwriting — Underwriters — Public Offer
Underwriters ’’in this prospectus
‘‘Public Offer Underwriting
Agreement ’’
the conditional underwriting agreement dated 27 December
2023 relating to the Public Offer entered into by our Company,
our Controlling Shareholders, our executive Directors, the
Joint Sponsors, the Sole Overall Coordinator, the Joint Global
Coordinators, the Joint Bookrunners, the Joint Lead Managers
and the Public Offer Underwriters, particulars of which are
summarised in the section headed ‘‘Underwriting ’’ in this
prospectus
‘‘Remuneration Committee ’’ the remuneration committee of the Board
‘‘Reorganisation ’’ the corporate reorganisation undertaken by our Group in
preparation of the Listing, de tails of which are set out in the
paragraphs headed ‘‘History, Reorganisation and corporate
structure — Reorganisation ’’in this prospectus
‘‘Reorganisation Agreement ’’ the reorganisation agreement d ated 27 April 2023 entered into
between our Company, WellCell Group, Shine Dynasty, Cheer
Partners, Golden Concord, Dazzling Power, Diamond Skyline,
Mr. Jia, Mr. Lin, Mr. Fung, Mr. Cong and Ms. Chen, pursuant
to which our Company acquired the entire issued share capital
of WellCell International from WellCell Group
‘‘RMB’’or ‘‘Renminbi ’’ Renminbi, the lawful currency of the PRC
‘‘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
‘‘Share(s) ’’ ordinary share(s) with par value of HK$0.01 each in the share
capital of our Company
‘‘Shareholder(s) ’’ the holder(s) of the Share(s), from time to time
‘‘Share Offer ’’ collectively, the Public Offer and the Placing
DEFINITIONS
– 28 –


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‘‘Share Option Scheme ’’ the share option scheme approve d and conditionally adopted
by our Company on 15 December 2023 the principal terms of
which are summarised in the paragraph headed ‘‘Statutory and
General Information — D. Share option scheme ’’in Appendix
IV to this prospectus
‘‘Shine Dynasty ’’ Shine Dynasty Limited ( 麗朝有限公司), a company
incorporated in the BVI as a BVI business company on 5 July
2018 with liability limited, which is wholly owned by Mr. Jia
and a Controlling Shareholder
‘‘Sole Overall Coordinator ’’ Eddid Securities and Futures Limited, a licensed corporation
under the SFO to carry out, type 1 (dealing in securities), type
2 (dealing in futures contract s), type 3 (leveraged foreign
exchange trading), type 4 (advising on securities), type 5
(advising on futures contracts), and type 9 (asset management)
regulated activities
‘‘Stabilising Manager ’’ Eddid Securities and Futures Limited
‘‘Stock Borrowing Agreement ’’ the stock borrowing agreement expected to be entered into
between the Stabilising Manager and WellCell Group on or
about the Price Determination Date, pursuant to which the
Stabilising Manager may borrow up to 18,750,000 Shares to
cover any over-allotment in the Placing
‘‘Stock Exchange ’’ The Stock Exchange of Hong Kong Limited
‘‘Track Record Period ’’ the financial period comprising the three financial years of the
Group ended 31 December 2022 and six months ended 30 June
2023 (i.e. FY2020, FY2021, FY2022 and 6M2023)
‘‘Underwriters ’’ collectively, the Public Offer Underwriters and the Placing
Underwriters
‘‘Underwriting Agreements ’’ collectively, the Public Offer U nderwriting Agreement and the
Placing Underwriting Agreement
‘‘US$’’or ‘‘United States dollars ’’ United States dollar(s), the lawful currency of the United
States of America
‘‘WellCell Group ’’ WellCell Group Co., Limited ( 經緯天地集團有限公司), a
company incorporated under the laws of the BVI on 8
February 2019 with limited liability, and one of our
Controlling Shareholders
DEFINITIONS
– 29 –


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‘‘WellCell HK ’’ WellCell Hong Kong Limited ( 經緯天地香港有限公司), a
company established under the laws of Hong Kong on 19
February 2019 with limited liability, and an indirect wholly-
owned subsidiary of our Company
‘‘WellCell Intelligent ’’ Guangdong WellCell Intelligent Technology Company
Limited* ( 廣東經緯天地智能科技有限公司), a company
established under the laws of the PRC on 3 July 2019 with
limited liability, and an indirect wholly-owned subsidiary of
our Company
‘‘WellCell International ’’ WellCell International Co., Limited ( 經緯天地國際有限公司),
a company incorporated under the laws of the BVI on 11
August 2021 with limited liability, and a direct wholly-owned
subsidiary of our Company
‘‘WellCell Technology ’’ Guangdong WellCell Technology Company Limited* ( 廣東經
緯天地科技有限公司), a company established under the laws
of the PRC on 20 March 2003 with limited liability, formerly
known as Guangdong WellCell Technology Company
Limited* ( 廣東經緯天地科技股份有限公司), Zhuhai WellCell
Communications Technology Company Limited* ( 珠海市
經緯天地通訊技術有限
公司) and Zhuhai WellCell
Communications Technology Company Limited* ( 珠海市緯地
通訊科技有限公司), and an indirect wholly-owned subsidiary
of our Company
‘‘%’’ per cent
Unless otherwise expressly stated or the cont ext otherwise requires, in this prospectus:
. all times refer to Hong Kong time and references to years in this prospectus are to
calendar years;
. the terms ‘‘associate(s) ’’, ‘‘close associate(s) ’’, ‘‘connected person(s) ’’, ‘‘core connected
person(s) ’’, ‘‘connected transaction(s) ’’, ‘‘continuing connected transaction(s) ’’,
‘‘subsidiary(ies) ’’and ‘‘substantial shareholder(s) ’’shall have the meanings ascribed to
such terms in the Listing Rules;
. certain amounts and percentage figures incl uded 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; and
DEFINITIONS
– 30 –


--- page 41 ---
. unless otherwise specified, all referen ces to any shareholding in the Company in this
prospectus assumes no allotment or issue of any Shares which may be issued or allotted
pursuant to the exercise of any of the Over-allotment Option or any exercise of options
under the Share Option Scheme.
The English names of the PRC laws, rules, regul ations, nationals, entities, governmental
authorities, institutions, facilities, certificates and titles etc. mentioned in this prospectus, including
those marked with ‘‘*’’, are translations from their Chine se names and are for identification
purpose only. If there is any inconsistency between the Chinese names and their English
translations, the Chinese names shall prevail.
DEFINITIONS
– 31 –


--- page 42 ---
This glossary of technical terms contains expl anations and definitions of certain terms used
in this prospectus in connection with our Group and our business. The terms and their meanings
may not correspond to standard industry meanings or usage of these terms.
‘‘1G’’ the first generation broadband technology
‘‘2G’’ the second generation broadband technology
‘‘3G’’ the third generation broadband technology
‘‘4G’’ the fourth generation broadband technology
‘‘5G’’ the fifth generation broadband technology
‘‘6G’’ the sixth generation broadband technology
‘‘antenna ’’ a rod, wire, or other device used to transmit or receive radio or
television signals
‘‘bandwidth ’’ the transmission capacity of a computer network or other
telecommunication system, whi ch determines the rate at which
information can be transmit ted across a medium, often
measured in terms of Mbps, Gbps or other relevant units
‘‘base station ’’ a base transceiver station for performing and managing
communications between a wire less communications network
and users, which is a basic unit of a cell in the wireless
communications network
‘‘broadband ’’ Mass market high-speed internet connection that is always on
and faster than dial-up access
‘‘CAGR ’’ compound annual growth rate, the year-on-year growth rate
over a specified period of time
‘‘CDMA ’’ Code Division Multiple Access, a channel access method used
by various radio communication technologies which enables a
number of transmitters can se nd information over a single
communication channel
‘‘cloud-based ’’ applications, services or resources made available to users on
demand via the Internet from a cloud computing provider ’s
server with access to shared pools of configurable resources
GLOSSARY OF TECHNICAL TERMS
– 32 –


--- page 43 ---
‘‘CMMI ’’ Capability Maturity Model Integ ration certification, a process
level improvement training and appraisal program administered
b yt h eC M M II n s t i t u t e( as u b s i diary of the Information
Systems Audit and Control Association)
‘‘cloud technology ’’ on-demand access, via the internet, to computing resources
such as applications, servers (physical servers and virtual
servers), data storage, development tools, networking
capabilities, etc., which are h osted at a remote data center
managed by a cloud services provider
‘‘core network ’’ a telecommunication network ’s core part, which offers
numerous services to the customers who are interconnected by
the access network
‘‘data mining ’’ a computational process of using specific algorithms to capture
implicit information from a large size of data
‘‘drive test tool ’’ a method of measuring and assessing the coverage, capacity
and quality of service of a telecommunication network
‘‘fibre optic cable ’’ a high-speed data transmission medium capable of transmitting
digital data through the cable at the speed of light
‘‘GB’’ the GB standards ( 中華人民共和國國家標準)w h i c ha r et h e
PRC national standards issued by the Standardization
Administration of China ( 中國國家標準化管理委員會). GB
stands for Guobiao ( 國標), which means ‘‘national standard ’’.
Mandatory standards are prefixed ‘‘GB’’. Recommended
standards are prefixed ‘‘GB/T ’’(T stands for tuijian ( 推薦),
which means ‘‘recommended ’’). The GB standards set forth
specific requirements for various types of products and
services
‘‘GB/T 19001-2016 ’’
recommended national standards for general requirements for
quality management ( 質量管理體系要求)
‘‘GB/T 28001-2011 ’’ recommended national standards for general requirements for
occupational health and safety management systems ( 職業健康
安全管理體系要求)
‘‘GB/T 24001-2016 ’’ recommended national standards for general requirements for
environmental management systems ( 環境管理體系要求)
GLOSSARY OF TECHNICAL TERMS
– 33 –


--- page 44 ---
‘‘GB/T 22080-2016 ’’ recommended national standards for general requirements for
information technology, securi ty techniques and information
security management systems ( 信息技術 安全技術 信息安全
管理體系要求)
‘‘GSM’’ Global System for Mobile Comm unications, a standard to
describe protocols for 2G digital cellular networks used by
mobile phones
‘‘ICT integration ’’ information and communications technology, which refers to
system design, equipment and material procurement,
installation and implementatio n, system commissioning, etc.,
a n da i m st op r o v i d eb u s i n e s se ntities and government entities
with solutions that help to digitalise daily operation and
increase operation efficiency, covering applications in
communication network, computer network, video
surveillance, video conferenc es, IoT services, and software
‘‘initial project costs ’’ the accumulated cash outflow of a service provider in its
provision of services to its customer in a project before it
receives the first payment of any fee or contract price from the
customer, which typically includes, in the contact of an ICT
integration project as an exam ple, payments to supplies and
subcontractors for procurement of hardware, software and
subcontracted service
‘‘IoT’’ Internet of Things, referring generally to physical objects
connected to a communication network so as to allow them to
transmit and receive data through sensors, software, etc., often
to enable remote access, control and management
‘‘ISO’’ International Organisation for Standardisation, an international
standard development organisation which develops and
publishes standardisation in tech nical and non-technical fields
‘‘ISO 9001 ’’ a quality management systems model published by ISO for
quality assurance in design, development, production,
installation and servicing
‘‘ISO/IEC 27001 ’’ Information Security Management System, an international
standard on management of information security published by
ISO and the International Electrotechnical Commission
‘‘LTE’’ Long Term Evolution, a standard for wireless broadband
communication for mobile devices and data terminals
GLOSSARY OF TECHNICAL TERMS
– 34 –


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‘‘Major Operating Costs ’’ the aggregate of (i) employee benefit expenses; (ii) sub-
contracting charges; and (iii) materials, supplies and other
project costs
‘‘Major Operating Costs Ratio ’’ a ratio calculated by dividing Major Operating Costs by
revenue
‘‘OHSAS ’’ Occupational Health and Safety Assessment Specification, an
international standard for occupational health and safety
management systems
‘‘OHSAS 18001 ’’ the requirements for occupational health and safety
management systems developed for managing health and
safety risks associated with a business
‘‘private quotation ’’ a document that a supplier submits privately to a potential
customer containing proposed terms pursuant to which the
proposed product(s) or service(s) are to be provided, typically
in response to requirements and conditions stipulated by the
customer
‘‘R&D’’ research and development
‘‘telecommunication network
coverage ’’
achieving the uniformly distribution of wireless
telecommunications signal transmission within certain
geographic area
‘‘telecommunications ’’ the transmission of information by various types of
technologies over wire, radio, optical, or other electromagnetic
systems
‘‘tender ’’ as invitation to bid for a contract concerning a project or
provision of services with is typically accompanied with
prescribed procedures and/or stipulated requirements of the
customer. A tender may be a public tender (which is generally
open to any interested parties in the public domain and/or is
advertised) or a private tender (which is generally made by
invitation only to selected vendors or suppliers of service and
is not advertised)
‘‘total contract sum ’’ the total contract sum of our project(s) since their
commencement up to 30 June 2023, including contract sum in
relation to period before the Track Record Period
‘‘tower ’’or ‘‘telecommunications
tower ’’
a high-erected steel structure or a pole for hosting antennas or
other equipment
GLOSSARY OF TECHNICAL TERMS
– 35 –


--- page 46 ---
‘‘WAN’’ Wide area network, a telecomm unication network that extends
over a large geographical area for the primary purpose of
computer networking
‘‘WLAN ’’ Wireless local area network, a wireless system used in a local
area network to connect computer users
‘‘wireless communications ’’ conducting information exchange or telecommunications
through wireless communications networks by both parties or
at least one party
GLOSSARY OF TECHNICAL TERMS
– 36 –


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This prospectus contains forward-looking statements that are, by their nature, subject to
significant risks and uncertainties. The forward- looking statements are contained principally in the
sections headed ‘‘Summary ’’, ‘‘Risk Factors ’’, ‘‘Industry Overview ’’, ‘‘Business ’’, ‘‘Financial
Information ’’and ‘‘Future Plans and Use of Proceeds ’’in this prospectus. These statements relate to
events that involve known and unknown risks, uncertainties and other factors, including those listed
under the section headed ‘‘Risk Factors ’’in this prospectus, which ma y cause our actual results,
performance or achievements to be materially d ifferent from performance or achievements
expressed or implied by the forward-looking stateme nts. These forward-looking statements include,
without limitation, statements relating to:
. our business prospects;
. future events and developmen ts, trends and conditions in the industry and markets in
which we operate or plan to operate;
. our business strategies and plans to achieve these strategies;
. our objectives and expectations regarding our future operations, profitability, liquidity
and capital resources;
. general economic, political and business conditions in the industry and markets in which
we operate;
. changes to the regulatory environment and ge neral outlook in the industry and markets in
which we conduct or may conduct our business;
. our ability to reduce costs;
. our dividend policy;
. the amount and nature of, and potential fo r, future development of our business;
. capital market developments;
. the actions and developments of our competitors; and
. change or volatility in interest rates, forei gn exchange rates, equity prices, volumes,
operations, margins, risk management and overall market trends.
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 terms and other similar expressions, as they relate to us, are
intended to identify a number of these forward-looking statements. These forward-looking
statements reflect our current views with respect to future events and are not a guarantee of future
FORWARD-LOOKING STATEMENTS
– 37 –


--- page 48 ---
performance. Actual results may differ materia lly from information contained in the forward-
looking statements as a result of a number of uncerta inties and factors, including but not limited to:
. any changes in the laws, rules and regulatio ns relating to any aspect of our business or
operations;
. general economic, market and business condi tions, including the sustainability of the
economic growth;
. changes or volatility in interest rates, forei gn exchange rates, equity prices or other rates
or prices;
. business opportunities and expansion that we may pursue; and
. the risk factors discussed in this prospectus as well as other factors beyond our control.
Subject to the requirements of applicable laws , rules and regulations, we do not have any
obligation to update or otherwise revise the forwar d-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-loo king events and circumstances discussed in this
prospectus might not occur in the way we expect, or at all. Accordingly, you should not place
undue reliance on any forward-looking information. All forward-looking statements contained in
this prospectus are qualified by reference to the cautionary statements set forth in this section as
well as the risks and uncertainties discussed in the section ‘‘Risk Factors ’’in this prospectus.
FORWARD-LOOKING STATEMENTS
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In preparation for the Share Offer, we have sought the following waiver from strict
compliance with Rule 8.12 of the Listing Rules:
MANAGEMENT PRESENCE IN HONG KONG
Pursuant to Rule 8.12 of the Listing Rules, we, as a company listed on the Stock Exchange
following the Listing, must have sufficient man agement presence in Hong Kong. This normally
means that at least two of our executive Direct ors must be ordinarily resident in Hong Kong.
For the purpose of the proposed Listing, our Company has established a principal place of
business in Hong Kong and was registered in Hong Kong as a non-Hong Kong company under Part
16 of the Companies Ordinance before the Listi ng. However, the principal business operations,
offices and facilities of our Group are primari ly located, managed and conducted in the PRC, and
all the executive Directors are not ordinarily r esidents in Hong Kong. We do not thereto have
sufficient management presence in Hong Kong for the purpose of Rule 8.12 of the Listing Rules.
We believe it would be more effective and efficient for our executive Directors and our senior
management to remain based in the PRC where our operation are based. We also believe that it
would not be in the best interests of our Group and our Shareholders as a whole to additionally
appoint two executive Directors who are ordin arily resident in Hong Kong but do not fully
understand or are not familiar with our business ope rations, activities and development for the sole
purpose of satisfying the requirements of Rule 8.12 of the Listing Rules.
Accordingly, we have applied for, and the Sto ck Exchange has granted, a waiver from strict
compliance with Rule 8.12 of the Listing Rules. Such waiver has been granted on the basis that
there will be an effective channel of communicat ion between us and the Stock Exchange by may of
the following arrangements:
1. pursuant to Rule 3.05 of the Listing Rules, our Company has appointed and will continue
to maintain two authorised representatives , who shall act at all times as our principal
channel of communication with the Stock Exchange. Our Company has appointed Mr.
Yiu Chun Wing (formerly known as Yiu Ka Wai), the company secretary of our
Company, who is ordinarily resident in H ong Kong, and Mr. Jia, as the two authorised
representatives of our Company (the ‘‘Authorised Representatives ’’). The Authorised
Representatives will be available to meet with the Stock Exchange in Hong Kong within
a reasonable period of time upon request and will be readily contactable by their
respective mobile phone number, office phone number, email address and facsimile
number (if available) to deal promptly with enquiries from the Stock Exchange. Each of
the Authorised Representatives has been duly authorised to communicate on our behalf
with the Stock Exchange. We will keep the Stock Exchange informed in respect of any
change to such details;
2. each Director will provide their contact in formation (includin g mobile phone number,
office phone number, fax number (if availabl e) and email address) to the Stock Exchange
and the Authorised Representatives, and e nsure that they may be reached by effective
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means of communication when travelling. Th is will ensure that the Stock Exchange and
the Authorised Representatives should have me ans for contracting all Directors promptly
at all times and when required;
3. meetings of the Board can be convened and h eld on short notice to discuss and address
any enquires or issues which the Stock Exchange may raise in a timely manner;
4. our Company has retained the services of a compliance adviser (the ‘‘Compliance
Adviser ’’) pursuant to Rule 3A.19 of the Listi ng Rules who will act as an additional
channel of communication with the Stock E xchange for a period commencing on the
Listing Date and ending on the date on which our Company distributes our annual report
for the first full financial year after the Listing Date (the ‘‘Engagement Period ’’)i n
accordance with Rule 13.46 of the Listing Rules.
We will ensure that during the Engagement P eriod, the Compliance Adviser will have
prompt access at all reasonable times to the Authorised Representatives, Directors and
other senior management members of our Company who will provide the Compliance
Adviser with such information and assistance as the Compliance Adviser may reasonably
require in connection with its performan ce of duties as the Compliance Adviser;
5. we will promptly inform the Stock Exchange of any changes to the Authorised
Representatives and/or the Compliance Adv iser in accordance with the requirements of
the Listing Rules;
6. we may appoint other professional advisers (including legal advisers in Hong Kong) from
time to time, as and when necessary, to assis t our Company in addressing any enquiries
which may be raised by the Stock Exchange and to ensure that there will be prompt and
effective communication wi th the Stock Exchange; and
7. meetings between the Stock Exchange and the Directors can be arranged through the
Authorised Representations or the Complian ce Adviser, or directly with the Directors,
within a reasonable time frame. In particular, each Director who is not ordinarily resident
in Hong Kong possesses or is able to apply for valid travel documents to visit Hong
Kong and will be able to meet with the Stock Exchange within a reasonable period of
time.
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Prospective investors should c onsider carefully all of the information set forth in this
prospectus and, in particular, should consider th e following risks and special considerations in
connection with an investment in our Compan y before making any investment decision in
relation to the Offer Shares. The occurrence of any of the following risks may have a material
adverse effect on the business, results of operati ons, financial conditions and future prospects of
our Group.
This prospectus contains certain forward- looking statements regarding our plans,
objectives, expectations, and intentions whic h involve risks and uncertainties. Our Group ’s
actual results could differ materially from those discussed in this prospectus. Factors that could
cause or contribute to such differences include those discussed below as well as those discussed
elsewhere in this prospectus. The trading price of the Offer Shares could decline due to any of
these risks and you may lose all or part of your investment.
We believe that there are certain risks involv ed in our business and operations. These risks
can be classified into: (i) risks relating to our business; (ii) risks relating to the industry in which
we operate; (iii) risks relating to having busine ss operations in the PRC; (iv) risks relating to the
Share Offer and our Shares; and (v) risks relat ing to the statements in this prospectus.
RISKS RELATING TO OUR BUSINESS
Our inability to manage cash flow mismatch ar ising from the incurrence of material initial
project costs for projects/work performed b efore they are recoverable/recovered may damage
our financial position and give ris e to liquidity or insolvency risks
We generally incur a material amount of costs in advance (including, without limitation, costs
of hardware and software and other equipment and subcontracting charges which may be incurred/
expensed immediately, or prepaid in advance) for the purpose of carrying out work or performing
services for our customers before we are entitled to charge for the work done or services performed.
In particular, when engaged for carrying out an ICT i ntegration project, we are typically required to
bear associated costs in relation to the procurement of general hardware and software and/or
engagement of subcontractors upfront or at an early stage of the project, whereas part of the
contract price intended for coverage of such costs is usually only recoverable at a later stage, and/or
upon completion, of the project. The time lags b etween paying initial costs in advance and
receiving payments from our customers would resu lt in cash flow mismatch. Further, our contracts
with some customers may permit them to pay for our services by instalments based on progress or
reaching a specific stage of a project, as a resu lt of which settlement of our fees may be delayed
until satisfactory completion of certain intern al acceptance procedures that are to be performed by
our customers.
The above arrangements and payment terms are considered to be in line with industry practice,
and therefore, we are not currently in a position t o materially deviate from such practice when
participating in public tenders or responding to pr ivate quotations, as any material deviation may
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adversely affect our competitive ness and prospects in securing new business. On the other hand,
such arrangements and payment terms may also cause us to experience net cash outflow where
payments due to us and settled by our customers (ofte n deferred towards the later stages of projects,
and subject to delay by acceptance procedures of customers) are inadequate to meet our payment
obligations and liabilities towards our suppliers o r subcontractors (often prepaid or settled ahead of
time by us).
In view of the possibility of such net cash out flow, albeit temporary in nature, we need to
maintain adequate cash reserves to mitigate the risk of default in meeting outstanding current
liabilities due to our suppliers, subcontractors and other creditors. Therefore prudent liquidity
management (including measures to ensure amou nts receivable from customers are settled on a
timely basis) is necessary for us to mitigate potent ial insolvency risks. The necessity to earmark and
tie-up an adequate cash buffer for such purposes t o cater for factors outside our control (such as
economic downturn which may affect quality and recoverability of our trade receivables and
exacerbate stress on our trade payables) may fur ther limit or constrain our growth potential.
By way of illustration of the potential risk of cash flow mismatch especially in relation to our
ICT integration projects, the average percentage of initial project costs (excluding staff cost) to
awarded contract value for our ICT integration pro jects which required initial project costs was
approximately 58.9%, 55.7%, 70.6% and 64.0% for FY2020, FY2021, FY2022 and 6M2023,
respectively. For our ICT integration projects w hich required initial project costs and (i)
commenced during the Track Record Period or (ii) commenced before the Track Record Period and
was on-going and/or completed during the Track Record Period: (a) we had received first payment
of our contract price from our customers for only approximately 81.3% of these projects and the
average time gap between the first payment of initi al project costs by us and the receipt of the first
payment was approximately 163.6 days; and (b) we had achieved breakeven (when receipt of
payments from customers that could cover our ini tial project costs incurred) for approximately
80.8% of these projects and the average time gap between the first payment of initial project costs
by us and the achieving of breakeven was approximately 188.4 days.
The above historical figures which highlight the f ollowing issues: (i) th e initial project costs
represented a material proportion relative to awa rded contract value and such proportion had been
on the rise during the Track Record Period, and thus it is imperative for us to reserve substantial
upfront capital, particularly for ICT integrati on projects; and (ii) the long average time gap of
almost five months between the expenditure of such capital and the first recovery of funds from
customers, and an even longer period for achiev ing breakeven, may compromise our liquidity
position especially in light of the material upfro nt capital requirement as demonstrated above.
Furthermore, to demonstrate the potential impact of a rising trend in initial project costs on
our liquidity position, on the ass umption of a hypothetical 10% increa se in our initial project costs
incurred for our ICT integration projects during t he Track Record Period, additional initial project
costs would amount to approximately RMB2.5 m illion, RMB2.7 million, RMB3.1 million and
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RMB2.2 million which represent approximately 18.6%, 10.9%, 18.2% and 34.4% respectively of
the net cash generated from operating activities of our Group for FY2020, FY2021, FY2022 and
6M2023.
We may record net operating cash outflows from time to time
Owing to the nature of our business, we may record net operating cash outflows from time to
time. For instance, for 6M2022, we recorded net cas h used in operating activities of approximately
RMB3.4 million, which was principally attribut able to the decrease in trade and bills payable of
approximately RMB10.3 million, increase in contr act assets and trade receivables of approximately
RMB4.0 million, increase in prepayments, deposit s and other receivables of approximately RMB2.4
million and decrease in other payables and accruals of approximately RMB2.2 million, and partially
offset by our operating cash inflows before chan ges in working capital of approximately RMB16.5
million. The decrease in trade and bills payable was pr incipally attributable to the settlement of the
subcontracting fees payable during 6M2022, while the increase in contract assets and trade
receivables was principally attributable to the incr ease of contract assets attributable to the projects
related to Guangzhou Chengxiang. On the other ha nd, the increase in prepayments, deposits and
other receivables was principally attributable to the increase in deferred Listing expenses of
approximately RMB2.3 million, and the decrease i n other payables and accruals was principally
attributable to the reductions in both contra ct liabilities and accrued trade payables.
During the Track Record Period, we mainly relied on internal resources generated from our
operation and debt financing to finance our business. As a result of potential net operating cash
outflows, our Group may be required to obtain additional external financing to meet our business
needs and obligations, including payment of ini tial project costs incurred for ICT integration
projects. If we are unable to do so, we may not be in a position to comply with our payment or
other obligations or to expand our business, in wh ich case our business, financial position and
results of operations may be materially and adversely affected.
If we are unable to prudently manage such potential cash flow mismatch which may occur
from time to time: (i) we may not be able to meet ou r obligations and liabilities towards our
suppliers and subcontractors, and we may become s ubject to legal and contractual claims from them
and they, and other suppliers and subcontractors, may suspend providing necessary equipment or
materials or providing services to us and/or refuse to provide further equipment or materials or
services to us; (ii) we may not be able to employ staff necessary for delivery of our services to
existing customers, resulting i n potential contractual claims; (iii) we may default on our banking
facilities in which event our repayment obligat ions may be accelerated and we may be subject to
penalty interests; (iv) our financial position, resu lts of operations, relationship with our customers
and stakeholders, and our prospects, may be materially and adversely affected; and (v) in more
serious circumstances, we may face insolvency ris ks, in need of fund-raising, debt restructuring or
other corporate rescue actions to remain sustainable.
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We may not be able to bill and receive settlement of our contract assets in a timely manner or
at all due to reasons beyond our control and as a result, our liquidity may be materially and
adversely affected
Our contract assets amounted to approximately RMB59.3 million and RMB72.8 million,
RMB67.9 million and RMB61.5 million as a t 31 December 2020, 2021, 2022 and 30 June 2023,
respectively. Contract assets may only be reco gnised as trade receivables in our accounts when we
are unconditionally entitled to bill pursuant to payment terms set out in the relevant contract (for
example, upon completion of settlement audit condu cted by customers or independent professional
parties engaged by them (involving review and e xamination of project or work delivered by us),
upon transfer of completed work, and/or the sat isfaction of other paym ent milestones as may be
stipulated in the contract). Thus, the billing and se ttlement of our contract assets will depend on the
timing of the settlement audit of a project, whi ch may vary among different customers based on
their own settlement audit processes and payment approval procedures. Further, there may be
instances where we are only involved in part of a project, in which case we may not be able to
receive payment of our services fees until the acce ptance procedures are completed in connection
with the entire project.
For FY2020, FY2021, FY2022 and 6M2023, we incurred impairment loss on contract assets
of approximately RMB609,000, RMB205,000, RMB985,000 and RMB1,436,000, respectively. For
details, please refer to the paragraphs headed ‘‘Financial information — Critical accounting policies
and estimates — Impairment of receivables and contract assets ’’in this prospectus.
We cannot assure you that we will be able to bill and recover our contract assets on time or at
all. Furthermore, our liquidity pressure arising from uncertainty and delay in timing of completion
of settlement audit may intensify if the number of sizeable projects undertaken by us take place in
the same time or increases in line with our expansion plans since our customers may need
additional time to carry out settlement audit for projects of a large scale whereby we may be
exposed to a more substantial cash flow mismatch. If we are unable to settle and recover our
contract assets in a timely manner or at all, our li quidity may be materially and adversely affected.
We may not be able to successfully bill our con tract assets and collect our trade receivables,
and as a result, we may incur losses of trade recei vables and contract assets and our financial
condition, in particular our liquidity, m ay be materially and adversely affected
Our financial position and liquidity are depen dent on the creditworthiness of our customers.
Currently, our Group grants credit terms to customers generally ranging from 15 days to 180 days
from the invoice date, depending on, among others, their length of business relationship with us,
their track record and their past payment performance. As at 31 December 2020, 2021 and 2022
and 30 June 2023, our trade receivables were appr oximately RMB26.5 million, RMB31.5 million,
RMB35.4 million and RMB49.5 million, respectiv ely, while during the Track Record Period, the
number of our trade receivable turnover days was approximately 51.5 days, 52.0 days, 53.9 days
and 67.5 days, respectively. Meanwhile, a majorit y of contract assets, which represent our rights to
consideration for work complete d but unbilled for its business, are transferred to trade receivables
when the rights to consideration become uncondit ional which generally takes less than one year. As
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at 31 December 2020, 2021 and 2022 and 30 June 2023, our contract assets amounted to
approximately RMB59.3 million, RMB72.8 mill ion, RMB67.9 million and RMB61.5 million,
respectively. Taking into account our contract asse ts and our trade receivables, our trade receivable
and contract asset turnover days during the Track Record Period were approximately 153.0 days,
170.5 days, 167.2 days and 170.4 days, respectively. During the Track Record Period, we incurred
net impairment losses on contract assets and tra de receivables of approximately RMB0.8 million,
RMB0.2 million, RMB3.3 million and RMB1.3 million, respectively. For further details, please
refer to the paragraphs headed ‘‘Financial information — Critical accounting policies and estimates
— Impairment of receivables and contract assets ’’in this prospectus.
We cannot guarantee that we will be able to succes sfully collect any or all of the receivables
due. We may encounter doubtful or bad debts due to a slow-down of industry growth or the PRC
economy, individual customers ’ deteriorating financial conditio n or otherwise in the future. Any
failure on the part of our customers to settle on time or at all the amounts due to us may materially
and adversely affect our financi al condition and operating cash f lows, which may have a material
adverse effect on our busines s and results of operations.
We mainly derive our revenue from projects, s ervices and purchase orders of a non-recurrent
nature, and there is no guarantee that our cus tomers will engage us for our services on their
new undertakings or that we will secure new c ontracts or new purchase orders from them
We typically secure business by submitting t enders in response to open invitations by our
potential customers or by providing private qu otations upon request. Regarding our routine
telecommunication network enhancement services and telecommunication network infrastructure
maintenance services which are typically secure d by way of tender, we generally enter into fixed-
term service agreements with our customers and we are generally required to tender for the project
again upon expiry of the relevant agreements (a nd, if such tender is accepted, enter into a new
service agreement for a fresh term). As to our other services that we provide, we generally enter
into service agreements with our customers on a project-by-project basis. In addition, we do not
have any long-term commitment from any of our customers who purchase our software.
As such, there is no assurance that our existing customers will continue to engage us in their
new projects or business undertakings after compl etion of our existing projects and services. There
is also no assurance that we can succeed in future tenders in relation to new projects of our
customers or we will be invited to provide quotati ons for their new projects. Even if we are invited,
we cannot guarantee that our quotations will be selected by our customers. We may be required to
lower our service fees, or selling price or offer mor e favourable terms to our customers to increase
the competitiveness of our tenders or quotations, which may adversely affect our profitability.
Furthermore, where we are unable to adjust our f ees, or prices or terms acceptable to our customers,
our chance to secure new business opportunities m ay be materially and adversely affected and
thereby our profitability and results of operations may also be affected.
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If we cannot obtain new projects or new purch ase orders from our existing or potential
customers with a similar or larger contract sum f or projects on a continuous basis, our results of
operations, financial condition as well as busin ess prospects may be materially and adversely
affected.
We derive a significant portion of our revenue from our major customers and the loss of any
major customer could material ly and adversely affect our business and financial position
Our revenue generated from our five largest customers in each year/period during the Track
Record Period in aggregate accounted for appr oximately 59.6%, 61.0%, 51.0% and 46.8%,
respectively, of our total revenue, whereas revenue generated from our largest customer in each
year/period during the Track Record Period accoun ted for approximately 21.2%, 24.0%, 23.8% and
22.6%, respectively, of our total revenue. Most of these customers are teleco mmunication operators,
telecommunication network equipment manufactu rers or telecommunication network and technical
service providers and general contractors in the PRC. Except for the fixed- term agreements which
we entered into with our customers for routine tel ecommunication network enhancement services
and telecommunication network infrastructure mai ntenance services, we have not entered into any
long term service agreements with our major custo mers. Since these customers are generally not
obliged to maintain their business relationships with us, there is also no assurance that they will
continue to use our services, to the same extent , or at all. As such, should there be any adverse
development related to our customers ’ operations, or any other reasons resulting in the deterioration
or termination of our business relationships wit h our major customers, our business, financial
condition, operating results and prospects c ould be materially and adversely affected.
We rely on our major suppliers to s upply necessary equipment, ha rdware and software for the
provision of our services, and any shortage of, or delay in, the supply may significantly impact
on our business and results of operation
We principally sourced various kinds of tel ecommunication network-related equipment,
hardware and software from our suppliers for provision of our telecommunication network support
services and ICT integration services during the Track Record Period. As such, we rely on the
ability and efficiency of suppliers for provision of our services to our customers. Purchase from our
five largest suppliers in each year/period during t he Track Record Period in aggregate amounted to
approximately RMB17.5 million, RMB11.4 mil lion, RMB23.7 million and RMB9.6 million,
representing approximately 70.7%, 54.9%, 79. 7% and 88.2% of our total project supplies cost,
respectively. Particularly, our purchases fro m Supplier A, a company incorporated in the PRC
principally engaged in the business of distributio n of ICT products, mobile devices and provision of
ICT services, which is our largest supplier for FY2020 and FY2022, amounted to approximately
RMB5.4 million, nil, RMB18.2 million and RMB5.2 million for FY2020, FY2021, FY2022 and
6M2023, respectively, representing 21.8%, nil, 61 .4% and 47.5% of our total project supplies cost
for the respective year/period. The increase in our Group ’s purchase from Supplier A from FY2021
to FY2022 was mainly attributable to a Major Project in FY2022 in relation to the provision of ICT
RISK FACTORS
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integration services which contributed revenue of approximately RMB15.6 million. We were
required to procure a number of telecommunication equipment of a particular brand specified in the
project and Supplier A was a sales agent of the relevant equipment at the time.
We mainly procured from Supplier A certain t elecommunication equipment such as servers,
network equipment and data storage equipment for the provision of our ICT integration services.
The stability of operations and business strat egies of Supplier A is beyond our control and may
affect our business. Any material disruption t o its operations could adversely affect our
procurement process, such as causing delays in delivery of stocks to us, which may in turn affect
our provision of services to our customers and our co mpliance with contractual obligations. If this
occurs, our results of operations could be materially and adversely affected.
As we had not entered into any long-term supply agreement with any of our major suppliers
(including Supplier A) during the Track Record Pe riod, any deterioration in our relationship with
our major suppliers could affect our ability to s ecure sufficient supply of equipment, hardware and
software for carrying out our business. In the eve nt of any shortage of, or delay in the supply, or
our inability to obtain suppliers from alternative sources, we may not be able to provide ICT
integration services to our customers in a timely m anner and our business, financial condition and
operating results may be mater ially and adversely affected.
We purchase telecommunication and electronic equipment from s uppliers for provision of our
services, and our business could be adv ersely affected if the supply chain of these
telecommunication and el ectronic equipment, hardware or software is disrupted
In providing telecommunication network sup port services, ICT integration services and
software development services, we purchase te lecommunication and electronic equipment such as
portable data terminals, signal acquisition devi ces and computers from suppliers located in the PRC.
In the supply chain of telecommunication and elec tronic equipment, our suppliers may rely on
components, products and/or equipment sourced fr om multinational conglomerates and technology
corporations (including telecommunications n etwork equipment and device makers) that are
headquartered in the PRC owing to their prominence in the competitive market and the popularity
of their products. It is possible that these multinat ional conglomerates and technology corporations
headquartered in the PRC and/or their products ma y be subject to export/import restrictions and/or
sanctions imposed by certain foreign countries fo r use in these foreign countries from time to time.
In certain instances, such restrictions and/or sa nctions may have implications on their downstream
supply.
There is no assurance that, in respect of the p roducts we source, our suppliers and/or the
corresponding upstream suppliers would not be subject to any export or import restrictions and
controls, trade barriers, tariffs, sanctions, boyco tts and other measures that may adversely affect our
supply chain. Any disruption in the supply chain of our suppliers or their upstream players or any
adverse changes and developments in global trade pol icies may affect the ability of our suppliers to
provide adequate quantities o f equipment and hardware to meet our needs, which could impair our
ability to provide our services as scheduled and t o operate our business. If we cannot successfully
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secure products from alternative suppliers in a tim ely manner or the alternative supplies sourced by
us do not satisfy the criteria of our customers, our r evenue, profitability and results of operations
could be adversely affected.
We rely on third-party subcontractors for cert ain technical services and labour services and
we may not have full control over their performance and quality of work
We rely on third-party subcontractors to ca rry out certain technical services including
temporary technical and maintenance works (such a s emergency power supply to base stations) and
works which require specific t echnical skills and knowledge, (such as electrical works for
telecommunication network infrastructure engin eering services), and labour services for non-
technical works (such as installation of cabling an d associated devices and wiring and installation
of data collection devices). During the Track Reco rd Period, the subcontracting charges incurred by
our Group amounted to approximately RMB69.2 mi llion, RMB86.6 million, RMB121.6 million and
RMB63.2 million, respectively, representing a pproximately 42.6%, 51.5%, 64.1% and 69.2% of our
total operating expenses (being the aggregate of our employee benefit expenses, subcontracting
charges, material, supplies and other project cost s, depreciation and amortis ation, net impairment
losses of contract assets and trade receivables an d other operating expenses) in the corresponding
year/period, respectively. Although we enter int o service agreements with our subcontractors and
provide them with protocols and/or guidelines, there is no assurance that they will strictly comply
with such agreements, protocols and/or guidelin e sa n dw em i g h tn o tb ea b l et oe x e r c i s es u f f i c i e n t
control over the performance and work quality of our subcontractors. If the performance of our
subcontractors does not meet the standards of our Group and/or our customers, the quality of our
services as a whole may be affected, which could h arm our reputation and expose us to litigation
and damage claims from our customers.
In addition, services carried out by our subcontractors may not be delivered to us or to our
customers on time or within budget, which in tu rn would result in the late delivery of project
deliverables to our customers and an increase in c osts. Any failure or delay in completing a project
could result in, among other things, increased co sts and expenses, delay or reduction in payment
from our customers to us, and/or potential contractual liabilities. Furthermore, our results of
operations may suffer due to cost overruns to the e x t e n tt h a tw ec a n n o tp a s son the additional costs
to our customers. In either case, our business, finan cial position and results of operations would be
materially and adversely affected.
On the other hand, suitable subcontractors may not always be readily available at reasonable
costs when we require their services. Our ability to p rovide satisfactory services could be adversely
affected if we are unable to engage suitable subcontractors at reasonable costs or at all. Moreover,
if a subcontractor fails to provide satisfactory services as required under a contract, we may need to
source an alternative subcontractor to provide the relevant services on a delayed basis or at a higher
replacement cost than anticipated. These may hav e material adverse impacts on our reputation,
profitability and results of operations.
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We may encounter cost overruns or delay in the provision of our telecommunication network
support services, ICT integration services and/or software development services, and as a
result, our business, financial position and re sults of operations may be adversely affected
In providing specific telecomm unication network enhancemen t services, ICT integration
services and software development services, we g enerally provide the services on a project basis
and at a fixed price. In deciding whether or not to undertake a project, we estimate the time and
costs required for the provision of these service s. There may be various factors affecting the actual
t i m et a k e na n dc o s ti n c u r r e db yu si nc o m p l e t i n gap roject, including, among others, integration
with the software and hardware supplied by third-par ty suppliers, the condition of the base stations,
the complexity and scale of the project and the implementation plan, unexpected technical
difficulties, labour (including subcontracting charges) and other unforeseeable issues and
circumstances. Delay in project completion or cost overruns could result from any of these factors.
There is no assurance that the actual time t aken and costs incurred would not exceed our
estimation. We expect to continue to undertake fixed price projects which may expose us to a
higher risk of cost overruns and result in lower profits or even losses in carrying out a project.
Some of our projects are subject to sp ecific completion schedules, and failure to meet the schedules
may result in claims against us for damages, other li abilities and disputes with our customers and/or
even termination of the relevant projects. There is no assurance that we would not encounter cost
overruns or delays in our current and future pro jects, and such problems can materially and
adversely affect our business, financia l position and results of operations.
Our business operates under various permits, licences, approvals and/or qualifications and the
loss of or failure to obtain or renew any or all of these permits, licen ces, approvals and/or
qualifications may materially and adversely affect our busin ess, results of operations and
financial condition
We are subject to extensive PRC laws and regulations at the national and local level, which
govern various aspects of our operations. For furt her information, please refer to the section headed
‘‘Regulatory overview ’’and the paragraph headed ‘‘Business — Licences, approvals and permits ’’
in this prospectus. These operating permits, licen ces, approvals and/or qualifications are granted,
renewed and maintained upon our satisfactory c ompliance with, among others, the applicable
criteria set by the relevant governmental departmen ts, authorities or organisations. Such criteria
may include, but are not limited to, the mainte nance of a sufficient project track record,
maintenance of a sufficient number of qualified pe rsonnel and compliance with safety regulations
and environment protection regulations. As at the Latest Practicable Date, we had obtained certain
key permits and qualifications for our telecommunication network support services and ICT
integration services, which may only be valid fo r a particular period of time and may be subject to
periodic review and renewal by the relevant authorit ies or organisations. In a ddition, the standards
of compliance required in relation thereto may change from time to time.
Further, uncertain and extensive government r egulations and requirements may cause delays in
our application for, or application for renewal of, th e requisite approvals, li cences, qualifications
and/or permits, which may then cause significant delay; in our introduction of additional services or
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software, which could materially and adverse ly affect our competitiveness. Certain legal
uncertainties in, and inconsistent interpreta tions and enforcement of, current PRC laws and
regulations may expose us to the risk of non-compliance. If deemed non-compliant, we could be
subject to administrative or regulatory fines and pen alties, including the suspension or revocation of
our approvals, licences, qualifications and/or pe rmits, and our operations may be significantly
hindered or halted, which could have a material a nd adverse effect on our business and results of
operations. If we are unable to continue to renew our permits, licences, approvals or qualifications,
or do so in a timely manner, we may not be permitte d to continue to provide the relevant services,
which may materially and adversely affect our business and financial position.
The quality of the hardware provided by our suppliers is not under our control. If the
products provided by our suppliers are defective or fail to meet the required standards, our
business and reputation m ay be adversely affected
During the Track Record Period, we sourced va rious kinds of telecommunication network-
related equipment and hardware from our suppliers for the provision of our telecommunication
network support services and ICT integration serv ices. Although the suppliers or manufacturers
generally warrant that their hardware will perform in accordance with the hardware ’s specifications
for a certain period of time, such hardware may have coding, design or manufacturing defects or
errors that may impair our customers ’ operations or settings cause malfunctions. There may also be
compatibility issues between the equipment and/or we source from our suppliers and our customers ’
existing computer systems or network environmen t. There is no assurance that we would be able to
detect and resolve these defects and errors in a timely manner or at all, and if we fail to do so, our
reputation may be adversely affected.
We may be subject to information technology system breaches, hacking, failures or
disruptions that could harm our business, financial position and results of operations
We rely on information technology systems t o operate and manage our business and to
process, maintain and safeguard information, in cluding information belonging to us, our customers
and employees. Our computer systems may fail or malfunction and are subject to interruption or
damage from power outages, human error or abuse, new system installations, computer viruses,
security breaches (including through cyber-attack and data theft), natural disasters and other
disruptive events beyond our control (such as act s of war or terrorism). Moreover, hacking and data
theft techniques are continuously evolving, and our anti-virus systems and security measures may
not be able to adjust to these changes in a timely manner. Although we exert efforts to maintain
and secure our systems from time to time, there is no assurance that our efforts will be effective
and adequate to ensure the security and reliabili ty of our systems. If our information technology
systems and our backup systems are compromised, de graded, damaged, breached or otherwise cease
to function properly, we could suffer interruptions in our operations or unintentionally allow
misappropriation of proprietary or confidential information (including information about our
customers), which could damage our reputation and result in significant expenses and legal claims.
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Information technology system br eaches or failures of the systems of our customers may also result
in similar adverse consequences. Any of these e vents could materially and adversely affect our
reputation, business, financial pos ition and results of operations.
Our non-compliance with relevant social insur ance and housing provident fund contribution
laws and regulations in the PRC could lead to imp osition of retrospective contributions, fines
and penalties
During the Track Record Period, WellCell Tech nology, our major operating subsidiary, failed
to pay social insurance contributions and housing provident fund contributions in full for its
employees for FY2020 and FY2021 in the amounts of (i) RMB0.7 million and RMB1.0 million,
respectively, with respect to social insurance paym ents, and (ii) approximately RMB0.4 million and
RMB0.3 million, respectively, with respect to hous ing provident fund contributions. For further
details, please refer to the paragraph headed ‘‘Business — Litigation and non-compliance ’’in this
prospectus.
As advised by our PRC Legal Advisers, the rele vant PRC authorities may demand that we pay
the outstanding social insuranc e contributions within a stipulated deadline and a late payment fee
based on the outstanding contribution amount a n dt h en u m b e ro fd a y so fb r e a c h .I fw ef a i lt om a k e
such payments, we may be liable to a fine of one to three times the amount of the outstanding
contributions. As at 30 June 2023, our Group may be subject to a late payment fee in the amount of
approximately RMB3.0 million (in r espect of total outstanding social insurance contributions) if
payment of the same is demanded by the relevant PRC authorities. If our Group fails to pay such
outstanding contributions and late payment fee on time, we may be subjected to a maximum fine of
approximately RMB5.0 million. Our PRC Legal Advi sers have also advised that, under the relevant
PRC laws and regulations, while there is genera lly no penalties for late payment of outstanding
housing provident fund contributions, we may be ordered by the relevant PRC authorities to pay
outstanding housing provident fund contributions within a prescribed time period, and if we fail to
make such payments, an application may be made to a court in the PRC for compulsory
enforcement. In the event that the relevant author ities strengthen the enforcement of the relevant
laws and regulations on social insurance and ho using provident fund, and accordingly consider it
necessary for us to make retrospective contributio ns to social insurance fund and housing provident
fund contributions, and/or impose penalties of a potentially significant amount on us, our Group ’s
business, financial condition an d operating results may be materially and adversely affected.
Our business operations and financial results ma y be adversely affected by natural disasters,
health epidemics and other outbreaks beyond our control or resurgence of COVID-19
Our operations may be under the threat of natura l disasters, outbreak of a widespread health
epidemic, such as swine flu, avian influenza, sev ere acute respiratory syndrome (SARS), Ebola,
Zika and COVID-19, and other factors beyond our control. For instance, the COVID-19 pandemic
has resulted in significant disruptions in the global economy.
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In January 2020, the PRC government announced a series of strict measures including
restricting movements of people, suspending or limiting business operations and lockdowns of
certain cities and regions. In compliance with the PRC government ’s policy, our Group suspended
operations after the 2020 Chinese New Year holidays until 10 February 2020, and we gradually
normal operations afterwards. The COVID-19 pa ndemic has been generally under control since
2021. However, in 2022 up to December 2022, there were resurgences in confirmed cases of
COVID-19, including the Omicron variant, from time to time in multiple cities in the PRC, and
local governments re-imposed quarantine and other restrictive measures.
If any of our employees or the employees of our subcontractors is suspected of having a
COVID-19 infection, we may have to suspend operat ions for disinfection a nd such employee(s) and
other employees working closely with him/her will have to be quarantined. If this happens, we may
not be able to fulfil our contractual obligations to deliver services or products to our customers on
time, which may result in breach and/or termin ation of our contracts with them and we may be
liable to pay damages or compensation to our customers for their loss suffered due to our delay or
default.
Furthermore, our suppliers and subcontract ors may also have to comply with the strict
measures implemented by the government to pr event the spread of COVID-19 from time to time.
The outbreak or escalation of COVID-19 and tight ened measures which may be adopted to combat
its spread may therefore cause disruption to the supply chain of equipment, hardware, etc. to us;
and we cannot guarantee that we will be able to fi nd similar supplies at similar prices within a
reasonable time, which in turn may materially a nd adversely affect our business and results of
operations.
Although the overall impact of COVID-19 on our business and operations had not been
material up to the Latest Practicable Date, the future development of which and its variants is
uncertain. The continuation or deterioration of the COVID-19 pandemic in the PRC or other parts
of the world could have an adverse impact on the domestic and international economy and,
possibly, the overall GDP growth of the PRC or other parts of the world. Hence, the operation and
financial performance of our customers may be adversely affected, and their demand for our
services may reduce as a result, which in turn may m aterially and adversely affect our business and
results of operations.
We are also vulnerable to natur al disasters, health epidemics and other calamities. Our
operation could also be severely disrupted if our suppliers or customers were affected by such
natural disasters or health epidemics. Any of the foregoing events may give rise to server
interruptions, breakdowns, system failures or telecommunication network failures, which would
adversely affect our ability to provide services to our customers or complete our projects on a
timely basis.
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We may not be able to adequately protect our intellectual property rights
Our Directors believe that our patents, copyri ghts and other intellectual property rights are
crucial to our success as they provide us with th e foundation for provision of our services, thus
giving us competitive advantages against our co mpetitors. We are susceptible to infringement by
third parties and may not be able to prevent unauthorised use of our intellectual property, which
could adversely affect our business, financial c ondition, results of operations, prospects and
competitive position. We depend to a significant extent on the relevant PRC laws and regulations to
protect our intellectual property rights. As at th e Latest Practicable Date, we had successfully
registered five trademarks, two domain names, two patents and 73 copyrights in the PRC. For
details of our intellectual property ri ghts, please refer to the paragraph headed ‘‘Statutory and
general information — B. Further information about the business of our Group — 2. Intellectual
property rights of our Group ’’in Appendix IV to this prospectus. We cannot guarantee that we will
be able to successfully register new intellectual p roperties currently under application or which we
may develop in the future. Further, there is no ass urance that the said registrations can completely
protect us against any infringement or challenge b y our competitors or other third parties. When
necessary, we may have to expend a significant amo unt of financial resources to assert, safeguard
and/or maintain our intellectual property rights.
We may be subject to third party infringement claims
During the Track Record Period, we developed sof tware in accordance with the specifications
provided by our customers. We are unable to make as surances that such specifications and software
will not be subject to infringement cla i m si nr e l a t i o nt oa n yt h i r dp a r t i e s’ intellectual property
rights.
Third parties may claim that we have infringed their intellectual property rights, and if their
claims succeed, we might be required to pay subs tantial damages to the claimant, refrain from
further selling or using certain of our software, an d/or enter into costly li censing agreements with
them on an on-going basis. Any intellectual prope rty litigation or successful claim could have a
material adverse effect on our business, operat ing results, financial condition or prospects.
We may be exposed to product and service liability and related claims asserted by our
customers, and our reputation and business coul d be materially and adversely affected if these
claims succeed
In the ordinary course of our business, claim s may be brought by our customers, suppliers and
subcontractors against us or vice versa and these c laims are generally related to alleged inferior
services, defective hardware or software, payment disputes or project delays. The claims may
involve actual damages and/or contractually agreed liquidated damages. On the other hand, claims
brought by us against our suppliers or subcontract ors may involve, among others, delay in works
and defective or inferior product s or services delivered to us.
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On the other hand, an error, failure or bug in our software or the services rendered by us,
including security vulnerability, could disrupt or cause permanent damage to the data and networks
of our customers. Failure of our software to perform to specifications (including the failure of our
telecommunication network analysis and maintenan ce products to identify issues), disruption of our
customers ’ telecommunication network tra ffic, damages to our customers ’ telecommunication
networks or loss of data caused by our software or services could result in product and service
liability claims by our customers. Any such event may damage our reputation, lower customer
confidence, require large research and development and marketing expenditures to remedy, and may
otherwise materially and advers ely affect our business and results of operations. Our customers may
have the right to bring an action against us and we may also be subject to tortious liabilities and
substantial damages.
We cannot assure you that we will not experience material losses arising from product or
service liability claims in the future. We do not mai ntain any product or servi ce liability insurance.
If our software or our services fail to meet the req uired specifications or quality standards, and, if
not resolved through negotiation, we are often subject to lengthy and expensive litigation or
arbitration proceedings. Such claims may be p ursued by way of contractual remedy or by way of
civil action and may result in se ttlements, injunctions, damages or other results adverse to us. In
such events, our business reputation and our financ ial condition could be materially and adversely
affected. Even if we are successful in defending ourselves, the costs of such defence may be
significant to us.
If any claims against us has aroused any negat ive publicity which cannot be effectively
remedied on a timely basis, our ex isting and/or potential custome rs may form negative views on the
quality of our services and software, which may adversely affect our ability to maintain long
standing relationship with our cust omers and engage new customers.
We may not be successful in maintaining our current market position, implementing our
business strategies or achieving the intended economic results or business objectives
Our ability to maintain our current market position and achieve market expansion may be
hindered by various risks includi ng instability or changes in the so cial, political, regulatory or
economic environment, our lack of understanding of the local business environment, financial and
management system or legal system, differences in legal obligations when complying with local
laws and regulations, changes in the safety standa rds and certification req uirements, stringent
product liability and warranty requirements, poten tially adverse tax consequences and competition
within the local market.
Our future success depends, to a significant extent, on our ability to enhance our research and
development capabilities. We have formulated ou r future plans with a view to increasing our market
share and achieving business growth. The future plans as described in the paragraph headed
‘‘Business — Business strategies ’’and ‘‘Future plans and use of proceeds — Implementation plan ’’
in this prospectus are based on our current intentions and assumptions.
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Our expansion plans and future expansion may involve the following risks: (i) the number of
service agreements and projects we enter into with our customers may be affected by the demand
for our services from time to time, which in tur n, may be affected by industry advancements and
changes, customers ’ needs or other factors which are beyond our control; (ii) the demand for our
services and software and revenue to be genera ted therefrom may not increase in line with our
enhanced research and development capabilities; ( iii) the direct labour costs, development costs,
depreciation expenses and subcontracting charges to be incurred; and (iv) other factors, including
the business environment, political, social and ec onomic conditions, regula tory framework and other
contingencies which are beyond our control. Such uncertainties and contingencies may lead to
postponement or changes in our future plans and/or may increase the costs of implementation.
There can be no assurance that our future plans will materialise.
As such, there is no assurance that we will be able to successfully maintain or expand our
market coverage and penetration, broaden our cu stomer base or grow our business after deploying
our management and financial resources. Any fail ure in maintaining our current market position or
implementing our expansion plans could materially and adversely affect our business, financial
condition and operating results.
Our historical results may not be indicative of our future growth rate, revenue and profit
margin, and our historical dividend payments may not be indicative of future dividend trends
For FY2020, FY2021, FY2022 and 6M2023, we recorded revenue of approximately
RMB195.6 million, RMB203.3 million, RMB226. 5 million and RMB113.8 million, respectively,
and profit of approximately RMB29.7 million, RMB25.5 million, RMB24.3 million and RMB14.7
million, respectively.
Given that the transactions with our customers are completed on a project-by-project basis,
and that our fees and profit margins in respect of the relevant transactions are dependent on a
number of factors and inherent risks in the industry, there is no assurance that we will always be
able to maintain similar levels of profitability as those during the Track Record Period.
Furthermore, the sustainability of our growth depends on a number of factors, including prospects
of our downstream industries, implementation of our strategies, competitive landscape as well as
general economic, social, and political cond itions in the PRC. We cannot assure you that our
growth rate can be maintained at any particular level. Should there be any changes which adversely
affect our operations, our growth, profitability and prospects could be mat erially and adversely
affected.
Further, we declared and paid dividends of appr oximately RMB20.0 million, RMB14.6 million
and RMB14.3 million during FY2021, FY2022 and 6M2023, while we did not declare dividends
for FY2020. However, the declaration and payment of future dividends will be subject to the
decision of the Board having regard to various fact ors, including but not limited to our operations
and financial performance, profitability, business d evelopment, prospects, capital requirements and
economic outlook. The declaration and payment of future dividend will also be subject to any
applicable laws. The historical dividend paymen ts may not be indicative of future dividend trends.
We do not have any predetermined dividend payout ratio.
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We rely on our key management team for our success
Our success and growth are, to a large extent, a ttributable to the continued commitment of our
executive Directors, who have extensive experience in the information technology and
telecommunication industry in the PRC for more than 18 years. Hence, our success depends on our
ability to retain and motivate the members of ou r senior management team who have expertise,
reputation and business connections in the telecomm unication network support service industry in
the PRC.
On the other hand, the implementation and pe rformance of our business plans depend, to a
significant extent, on the continued services and p erformance of our executive Directors and our
senior management team, the details of whom are set out in the section headed ‘‘Directors and
senior management ’’in this prospectus. We cannot assure you that we will be able to maintain the
services provided by our key personnel. Any failure to recruit and retain the key management and
technical personnel or the loss of any of our key personnel, including our executive Directors,
members of senior management team and personnel in charge of our projects, may have a material
adverse effect on our business operations.
We may not be able to attract, train or retai n qualified and skill ed employees needed to
support our business
We believe that our success depends on the efforts and talent of our employees, such as our
research and development personnel and proj ect managers. Our future success would therefore
depend on our continued ability to attract, deve lop, motivate and retai n qualified and skilled
employees. Competition for skilled technical staf f or risk management and financial personnel in
the telecommunications network service industry in the PRC is intense. We may not be able to hire
and retain these personnel at compensation levels consistent with our existing compensation and
salary structure. Some of the companies with which we compete for experienced employees may
have greater resources than we have and may be able to offer more attractive terms of employment.
In addition, we need to invest time and expens es in training our employees, which increases
their value to competitors who may seek to recruit them. If we fail to retain our employees, we
might incur significant expenses in hiring and training new employees, and the quality of our
services and our ability to respond to changes in telecommunication technology could decline,
resulting in material adverse effect on our business.
We may not be able to renew the tenancy agreements of our leased properties
All of our offices are located o n leased premises, details of which, including the term of
tenancy, are set out in the paragraph headed ‘‘Business — Properties — Leased properties ’’in this
prospectus. There is no assurance that we could renew the leases or negotiate new leases on similar
or favourable terms (including, without limitation , on similar tenure and similar rental charges) in
the future or that the leases would not be subject to early termination. In the event that we are
required to find alternative locations for our offi ces, there is no assurance that we would be able to
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secure comparable locations or negotiate leases on comparable terms, and we would need to incur
extra costs, time and resources for any such relo cation. This may in turn have an adverse effect on
our operations and hence our business, finan cial position and our future growth potential.
RISKS RELATING TO THE INDUSTRY IN WHICH WE OPERATE
If we are unable to compete successfully, our fina ncial condition and results of operations may
be adversely affected
The telecommunication network service industry, the ICT integration service industry and
telecommunication network-related software dev elopment industry in which our Group operates has
witnessed increasing competition in recent y ears and we expect this trend to continue and
accelerate. We cannot provide any assurance that o ur competitors will not develop the expertise,
experience and resources to provide services wit h greater competitiveness in terms of both price
and quality as compared with th e services offered by us, or that we will be able to maintain and
enhance our competitive edge. Our ability to co ntinue our success will depend on many factors,
including pricing, quality of services, software s uitability and industry developments and changes.
In addition, our competitors include large state-owned or private corporations in terms of
assets and revenue, with significant financial reso urces, well-established brands, good reputations
for service quality, established customer bases, ad vanced equipment and technologies, and/or strong
research and development capabilities. As a res ult of the foregoing factors, these existing
competitors may be able to compete more effectively than our Group. If we are unable to maintain
our competitive position, we co uld lose our market share and/or experience a decline in our
profitability. For more information about the industry in which we operate, please refer to the
section headed ‘‘Industry overview ’’in this prospectus.
Demand for our services depends on the level of activity in the telecommunication network
service industry in the PRC
During the Track Record Period, we derived most of our revenue from companies who
primarily engage in the telecommunication n etwork service industry in the PRC, including
telecommunication operators, telecommunica tion network equipment manufacturers and
telecommunication network and technical service providers and general contractors. As such, the
sustainable growth of our business and our succes s depend on the growth of the telecommunication
network support service industry in general and the overall demand for telecommunication network
support services, which are affected by various f actors, including: (i) user demand for wireless
telecommunication networks; (ii) changes in tech nologies and their applications; (iii) the level of
capital expenditure on telecommunication network su pport services and telecommunication network
infrastructure maintenance services by our cus tomers which comprise Chinese state-owned
enterprises and public companies; (iv) changes i n laws, regulations and government policies that
are related to the telecommunication network ser vice industry; and (v) the general economic and
social conditions in the PRC.
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We are dependent on our customers ’ demand for our services and if our customers turn to
deploy their in-house resources to conduct the services provided by us rather than engaging
external service providers, d emand for our services may be reduced and our results may be
adversely affected
The success of our business depends primarily on the number and size of service contracts or
orders from our customers, which include major t elecommunication operators and leading market
players in the telecommunicatio n industry. The demand for our services is susceptible to our
customers ’ preferences for either outsourcing part of their internal operational processes to
telecommunication network support service providers like our Group, or engaging directly in the
services. Our customers ’ willingness or ability to engage us for our services are subject to, among
other things, their own financial performance, ch anges in their available resources, decisions on
whether to establish in-house capab ilities, spending priorities, bud getary policies and practices,
changes in market price for subcontracting charg es and staff costs, and their need to develop new
technologies, services or products, which in turn are dependent upon a number of factors, including
their competitors ’ research, development and product ini tiatives, development and upgrading of
technologies and changes in customer demands. We cannot assure you that there will not be any
adverse changes in our customers ’ preferences, spending or policie s towards telecommunication
network support services, ICT integration services and telecommunication network-related software.
If there is any such adverse changes affecting t heir demand for our services or if the current
industry trend favouring the outsourcing of such services is weakened or reversed, our business,
financial condition and results of operati ons may be materially and adversely affected.
In particular, if our customers, including large state-owned or private corporations, turn to
perform the relevant services in-house instead of procuring service capacities from us, we may not
be able to maintain our competitive position as t hey may have more financial and human resources,
more renowned brands and reputations, and strong er research and development capabilities than our
Group and our competitive position , profitability and business prospects may be adversely affected.
Heavy reliance on major PRC telecommunication operators
According to the CIC Report, the telecomm unication network industry in the PRC is
dominated by the three telecommunication operators, and it is a major challenge for market players
to maintain good relationships with them and it is difficult to diversify such concentration risks. We
have established over 12 years of business relat ionship with two major PRC telecommunication
operators, but we have not entered into any long term service agreements with them. As the number
of major telecommunication operators in the PRC is limited, the number of potential customers of
similar size is also limited. Moreover, due to t heir substantial business scale and coverage,
telecommunication operators are typically in a s tronger bargaining position as compared to our
Group. If these PRC telecommunication operato rs change their procure ment policy or turn to
develop and deploy their in-house service teams ins tead of engaging external service providers such
as our Group to provide the relevant services, the turnover, operating results and financial
conditions of our Group may be materially and adversely impacted.
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Our failure to anticipate and respond to chan ges in technologies or needs could adversely
affect our business
The markets for telecommunication network sup port services, ICT integration services and
telecommunication network-related software deve lopment are characterised by rapidly-changing
industry advancements such as the introduction of n ew wireless communication standards, systems,
software and methodologies. For instance, while 5G technology is in the process of wider
commercialisation and applicat ion, 6G technology is already in a preparatory and inception stage
and more resources are expected to be invested by te lecommunication-related industry players in its
study and development in the coming years. For more information about 6G, please refer to the
section headed ‘‘Industry overview ’’in this prospectus. Our competi tiveness therefore depends on
our knowledge and command of the latest industry developments for the provision of
telecommunication network support services and I CT integration services and the development of
software, our ability to keep abreast of and adapt quickly to industry changes and our capability to
understand the changing needs, preferences and requirements of our customers. There is no
assurance that we will be able to offer new solution s or enhancements to exis ting technologies that
will address the changing needs of our customers in an effective and timely manner. Our Group
may experience unanticipated delays in the avail ability of new solutions and enhancements and may
fail to meet customers ’ expectations. If our Group fails to dev elop any upgraded solutions and offer
services and software with advanced capabilitie s and technologies, such as in relation to 5G and
6G, our competitive position, profitability and bu siness prospects may be adversely affected. Even
if our Group is able to upgrade our existing services and software, there is no assurance that our
software will achieve widespread m arket acceptance or meet customers ’ expectations whereby our
competitive position, profitability and bu siness prospects may be adversely affected.
Furthermore, our business, including our resear ch and development operations, also depends to
a significant extent on our engineers and technical staff. If we are unable to retain existing and/or
attract new talents with knowledge and expe rtise in the industry in which we operate, our
competitive position, business operations as well as our ability to enhance our research and
development capability in resp onse to industry changes and advancements may be materially and
adversely affected.
Furthermore, from time to time, our competito rs may offer telecommunication network support
services, ICT integration services and/or softwa re development services that could replace our
services. There is no assurance that any launch of new solutions or technologies by our competitors
will not cause customers to defer their engagement of our services.
RISKS RELATING TO OUR OPERATIONS IN THE PRC
Changes in the PRC ’s economic, political and social condi tions as well as government policies
and legal developments could adversely affect our f inancial condition and results of operations
We conduct all of our operations in the PRC and derive all of our revenue from our operations
in the PRC. Accordingly, our business, financial c ondition, results of operations and prospects are
susceptible to the economic, political and social c onditions as well as government policies and legal
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developments in the PRC. The PRC economy di ffers from the economies of other developed
countries in many respects including, among ot hers, level of government involvement, level of
development, growth rate, foreign excha nge control, and allocation of resources.
According to the CIC Report, there are government policies in the PRC which are favourable
to the industries in which we operate, such as the ‘‘Notice on Promoting the Accelerated
Development of Industrial Internet Information Management Department* ( 《關於推動工業互聯網
加快發展的通知》) issued by the Ministry of Industry and Information Technology of the PRC in
2020. For more information, please refer to the section headed ‘‘Industry overview ’’. However,
there is no assurance that such or other favourable policies will continue to be effective or issued.
If any favourable policies are cancelled or disc ontinued, or if the PRC government decides to adopt
different policies which have a negative impact on t he industries in which we operate, our business
operations, financial position and results of ope rations may be materially and adversely affected.
While the PRC economy has grown significant ly and has been one of the fastest-growing
economies in the world in recent years in ter ms of GDP, its growth has been uneven, both
geographically and among the various sectors of the economy. The PRC government has
implemented a range of monetary policies and economic measures to maintain economic growth
and guide the allocation of resources, but ther e is no assurance that such monetary policies or
economic measures will be successful. Further, s ome of these measures may benefit the overall
PRC economy, but may also negatively affect our ope rations. For example, our financial position
and results of operations may be adver sely affected by the PRC government ’s control over capital
investment or any changes in tax regulations that are applicable to us.
The PRC economy has grown significantly in recent decades, but there can be no assurance
that this growth will continue or continue at the same pace. In addition, demand for our services
and our business, financial position and result s of operations may be materially and adversely
affected by, among others, (i) political instabili ty or changes in social conditions in the PRC; (ii)
changes in laws, regulations or policies or the inte rpretation of laws, regulations or policies; (iii)
measures which may be introduced to control inflation or deflation; (iv) changes in the rate or
method of taxation; and/or (v) the imposition of ad ditional restrictions on currency conversion and/
or remittances abroad.
The interpretation and enforcement of PRC la ws and regulations involve uncertainties and
PRC laws differ from the laws of common law jurisdictions
Our business and operations in the PRC are gov erned by the laws and regulations of the PRC.
The PRC legal system comprises statutory laws, regula tions, circulars, administrative directives and
internal guidelines. Some of them, and the interpre tation, implementation and enforcement thereof,
are subject to frequent policy changes and adjust ments. Prior court decisions may not be legally
binding and may only be cited as reference. Addi tionally, PRC written statutes are also often
principle-oriented and may require detailed inte rpretations by the enforcement bodies in applying
and enforcing such laws. The PRC Government has pr omulgated laws and regulations in relation to
economic matters such as foreign investment, co rporate organisation and governance, commerce,
taxation and trade. However, as these laws and regulations are continually evolving in response to
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changing economic, social and other conditions , any particular interpretation of PRC laws and
regulations may not be definitive. Due to the fact that the legal system and economic system are
growing at different paces, some degree of uncer tainty exists in connection to whether and how
existing laws and regulations are applicable to certain circumstances. In the event that any of our
PRC subsidiaries is found to have committed any breaches of PRC laws or regulations, whether by
omission or not, we will be subjec t to the prescribed penalties.
In addition, the PRC legal system is based in par t on government policies and internal rules,
some of which may not be published on a timely basis, if at all, and some of which may have a
retroactive effect. The PRC legal system may not accord equivalent rights, or protection for such
rights, in the same manner or at all as compared with the legal system of other jurisdictions.
Such uncertainties, including the potential inab ility to enforce our contracts, together with any
development or interpretation of PRC laws and regulations that has an adverse effect on us, could
materially and adversely affect our business and op erations. Furthermore, i ntellectual property
rights and confidentiality protections in th eP R Cm a yn o tp r o v i d ee f f e c t i v ea n ds u f f i c i e n t
safeguards of our rights in practice. Also, we canno t predict the effect of future developments in the
PRC legal system, including the promulgatio no fn e wl a w s ,c h a n g e st oe x i s t i n gl a w so rt h e
interpretation or enforcement thereof, or the preem ption of local regulations by national laws. These
uncertainties could limit the legal protections available to us and investors, including you. In
addition, any litigation in the PRC may be protracted and result in substantial costs and diversion of
our resources and management attention.
It could be difficult to effect service of pro cess or to enforce foreign judgements in the PRC
Since most of our assets are located in the PRC , investors could encounter difficulties in
effecting service of process from outside the PRC upon us or most of our Directors and officers.
Moreover, it is understood that the enforcemen t of foreign judgements in the PRC is subject to
uncertainties. A judgement of a court of a foreign jurisdiction may be reciprocally recognised or
enforced if the jurisdiction has a treaty or arrangement with the PRC or if the judgements of the
PRC courts have been recognised before in that jur isdiction, subject to th e satisfaction of other
requisite requirements.
The PRC does not have treaties providing for the reciprocal recognition and enforcement of
judgements of courts with the Cayman Islands and many other countries and regions. Therefore,
recognition and enforcement in the PRC of judgements of a court in any of these non-PRC
jurisdictions in relation to any matter not subject to a binding arbitration provision could be
difficult or impossible.
Governmental control of currency convers ion may affect the value of your investment.
The PRC government imposes controls on currenc y conversion between Renminbi and foreign
currencies and, in certain cases, the remittance of currency out of and into the PRC. We receive all
of our revenue in Renminbi, which is currently not a freely convertible curr ency. Under our current
corporate structure, income of our Company will b e primarily derived from dividend payments from
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our PRC subsidiaries. Shortages in the availability of foreign currency may restrict the ability of
our PRC subsidiaries to remit sufficient forei gn currency to pay dividends to us, or otherwise
satisfy its foreign currency-dominated obligati ons. Fluctuations in the exchange rates may also
cause us to incur foreign exchange losses and affect the relative value of an y dividend distributed
by us. Currently, we have not entered into any he dging transactions to mitigate our exposure to
foreign exchange risk.
Movements in Renminbi exchange rates are affected by, among other things, changes in
political, social and economic conditions and the PRC ’s foreign exchange regime and policies. The
People ’s Bank of China regularly intervenes in the foreign exchange market to limit fluctuations in
Renminbi exchange rates and achieve certain exchan ge rate targets and policy goals. Our business
operations are mainly undertaken by our operatin g subsidiaries in the PRC, and all of our revenues
and expenditures are denominated in RMB, of which the convertibility into foreign currencies and
remittance out of the PRC are restricted and reg ulated. Conversion and remittance of foreign
currencies are subject to PRC foreign exchange regu lations, including but not limited to the Foreign
Exchange Administrative Regulations of the PRC* ( 《中華人民共和國外匯管理條例》)a n dt h e
Regulations on the Administration of Foreign Exchange Settlement, Sale and Payments* ( 《結匯、
售匯及付匯管理規定》).
Under the current PRC foreign exchange control s ystem, conversion and remittance of foreign
currencies are subject to PRC foreign exchange regulations. We cannot guarantee that we will have
sufficient foreign exchange to meet our foreign exchange needs. Also, under the said system,
foreign exchange transactions under the current account conducted by us, including the payment of
dividends, do not require advance approval from the SAFE, but we are required to present relevant
documentary evidence of such transactions and conduct such transactions at designated foreign
exchange banks within the PRC that have the licenses to carry out foreign exchange businesses.
Foreign exchange transactions under the capital account, however, must be directly reviewed and
handled by banks in accordance with PRC laws, and the SAFE and its branches must perform
indirect regulation over the foreign exchange reg istration via banks. The PRC government may also,
at its discretion restrict access in the future to fore ign currencies for current account transactions.
Any insufficiency in foreign exchange may restric t our ability to obtain ade quate foreign exchange
for dividend payments to sharehold ers or satisfy any other foreign exchange obligation. If we fail to
convert Renminbi into any foreign exchange for any of the above purposes, our potential offshore
capital expenditure plans and even our busines s may be materially and adversely affected.
The payment of dividends by our operating subsidiaries in the PRC is subject to restrictions
under PRC law.
We operate all of our core business through our operating subsidiaries in the PRC. PRC laws
require that dividends be paid only out of profit after tax, calculated according to PRC accounting
principles. PRC laws require PRC companies, inclu ding foreign-invested enterprises, to set aside
10% of their profit after tax as statutory reserves u ntil the accumulated statutory reserves account
for 50% of their registered capital. These statutory r eserves are not available for distribution as cash
dividends. Since the availability of funds to fund our operations and to service our indebtedness
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depends upon dividends received from our PRC subsidi aries, any restrictions on the availability and
usage of our major source of funding may have a material impact on our ability to fund our
operations and to service our debts.
Our Company may be subject to the PRC enterprise income tax on our worldwide income
under the PRC EIT Laws.
Our Company is incorporated under the laws of the Cayman Islands and it indirectly holds
interests in our PRC subsidiaries. Under the PRC Enterprise Income Tax Laws* ( 中華人民共和國
企業所得稅法)( t h e ‘‘PRC EIT Laws ’’) and the relevant PRC EIT R egulations, enterprises
established under the laws within the territory of the PRC, or established under the laws of a
foreign country (region), but whose ‘‘de facto management body ’’is located in the PRC, are treated
as resident enterprises for PRC tax purposes. If any e ntity is treated as a resident enterprise for PRC
tax purposes, it will be subject to PRC tax at the uniform tax rate of 25% on its worldwide income.
The term ‘‘de facto management body ’’is defined as the bodies that have material and overall
management control over the busine ss, personnel, accounts and properties of an enterprise. In April
2009, SAT promulgated the Notice of the State Administration of Taxation on Issues Concerning
the Determination of Chinese-Cont rolled Enterprises Registered O verseas as Resident Enterprises
on the Basis of their of Actual Management ( 國家稅務總局關於境外註冊中資控股企業依據實際管
理機構標準認定為居民企業有關問題的通知) and clarified the certain crit eria for the determination
of the ‘‘de facto management bodies ’’for foreign enterprises contro lled by PRC enterprises. These
criteria include: (i) members of senior management who are in charge of the enterprise ’s day-to-day
operations are mainly located in China; (i i) decisions relating to the enterprise ’s financial and
human resource matters are made or subject to appr oval by organisations or personnel in China;
(iii) the enterprise ’s primary assets, accounting books and records, company seals, and minutes of
board and shareholders ’ meetings are located or maintained in China; and (iv) 50% or more of
voting board members or senior executives of the enterprise habitually reside in China. If our
Company is deemed to be a PRC resident enterprise under the PRC EIT Law by the PRC taxation
authority, our Company may become subject to t he PRC enterprise income tax at a rate of 25% on
its worldwide income.
If our preferential tax treatments become unavai lable or if the calculation of our tax liability
is successfully challenged by the PRC tax aut horities, our results of operations would be
materially and adversely affected.
During the Track Record Period, we enjoyed a num ber of preferential tax treatments. WellCell
Technology was recognised as a High and New Technology Enterprise on 28 November 2018 and
20 December 2021, valid for a period of three years, respectively. Pursuant to the PRC EIT Laws,
WellCell Technology enjoys a preferential income tax treatment at a reduced rate of 15%. In
addition to being recognised as High and New T echnology Enterprise, WellCell Technology was
recognised as a Key Software Enterprise under rel evant PRC laws and regulations for FY2021, and
therefore entitled to a preferential income tax rate of 10% during FY2021. In addition, as WellCell
Technology sold software that it designed and developed during the Track Record Period, it
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enjoyed an immediate partially VAT refund policy f or such sales. For further details on the tax
regime our Group was subject to, please refer to the paragraphs headed ‘‘Regulatory overview —
Laws and regulations in relation to our Group ’s business in the PRC — Tax’’.
It is in the relevant PRC government authorities ’ discretion to decide when, under what
conditions or whether the preferential tax treatment should be granted to us. We cannot assure you
that the laws or regulations or governmental policie s in relation to our preferential tax treatments
will not change or that our current eligibility to enjoy preferential tax treatment will not be
cancelled. If there is any reduction, suspension, d iscontinuation or cancellation of our preferential
tax treatments which may adverse ly affect the recoverability of our tax recoverables, our business,
financial condition and profitability wo uld be materially and adversely affected.
PRC tax laws on dividend distribution may a dversely affect our operating results and
dividends payable by us to our investors and gains on the sale of our Shares may be subject to
withholding taxes under PRC tax laws.
Under the PRC EIT Laws, a withholding inco me tax at the rate of 20% is applicable to
dividends derived from sources within the PRC paid by foreign-invested enterprises to their non-
PRC parent companies. However, pursuant to t he implementation rules of the PRC EIT Laws,
reduced withholding income tax rate of 10% shall b e applicable in such cases. In addition, due to
the Arrangement between Mainland China and Hong Kong Special Administrative Region for the
avoidance of Double Taxation and Prevention of Fiscal Evasion With Respect to Taxes On Income*
(《內地和香港特別行政區關於對所得避免雙重徵稅和防止偷漏稅的安排》), promulgated by the
SAT and Hong Kong Special Administrative Region on 21 August 2006 and amended on 11 June
2008, 20 December 2010, 9 March 2016 and 31 December 2019 (the ‘‘Hong Kong Tax Treaty ’’),
a company incorporated in Hong Kong will be subj ect to withholding income tax at a rate of 5% on
dividends it receives from a PRC subsidiary if it h olds a 25% or more interest in that particular
PRC subsidiary, or 10% if it holds less than a 25% interest in that subsidiary. With respect to
dividends, the SAT promulgated the Notice on Certain Issues of ‘‘Beneficial Owners ’’under Tax
Treaty* (《國家稅務總局關於稅
收協定中「受益所有人」有關問題的公告》) on 3 February 2018 (the
‘‘Notice 9 ’’), which provides that, when determining the applicant ’ss t a t u so ft h e ‘‘beneficial
owner ’’regarding tax treatments in connection with d ividends, interests or royalties in the tax
treaties, several factors, including without limitation, whether the applicant is obligated to pay more
than 50% of its income in twelve months to residents in a third country or region, whether the
business operated by the applicant constitutes t he actual business activities, and whether the
counterparty country or region to the tax treatie s does not levy any tax or grant tax exemptions on
relevant incomes or levy tax at an extremely low rate, will be taken into account, and it will be
analysed according to the actual circumstances of the specific case. Notice 9 further provides that
applicants who intend to prove his or her status of the ‘‘beneficial owner ’’shall submit the relevant
documents to the relevant tax bureau accordin g to the Announcement of State Taxation
Administration on Promulgation of the Admin istrative Measures on Non-resident Taxpayers
Enjoying Treaty Benefits ( 《國家稅務總局關於發佈〈非居民納稅人享受稅收協定待遇管理辦法〉的
公告》). It is possible that under the Notice 9 the Hong Kong subsidiary would not be considered as
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the ‘‘beneficial owner ’’of any such dividends, and that such dividends would as a result be subject
to withholding income tax at the rate of 10% rather than the favourable 5% rate applicable under
the Hong Kong Tax Treaty.
In addition, due to uncertainties in relation to in the PRC EIT Laws and its implementation
rules, a withholding tax at the rate of 10% may also b e applicable to dividends payable to investors
(excluding individual natural pers ons) that are non-resident enterprises to the extent such dividends
are sourced within the PRC. Similarly, any gain realised on the transfer of our Shares by such
investors is also subject to a withholding tax at t he rate of 10% if such gain is regarded as income
derived from sources within the PRC. If we are considered a resident enterprise in the PRC, it is
unclear whether the dividends we pay with respect to our Shares would be treated as income
derived from sources within the PRC and be subject to PRC income tax. If we are required under
the PRC EIT Laws to withhold PRC income tax on our dividends payable to our foreign
Shareholders, or if you are required to pay PRC income tax on the transfer of the Shares, the value
of your investment in our Shares may be materially and adversely affected.
PRC regulations on loans to and direct investme nt by offshore holding companies in the PRC
entities may delay or prevent our Group f rom making loans or additional capital
contributions to our PRC subsidiaries.
As an offshore holding company of our PRC sub sidiaries, if necessary, our Company or our
offshore subsidiaries may make loans to our PR C subsidiaries, or may ma ke additional capital
contributions to our PRC subsidiaries. When an y loans or capital contributions are made by our
Company or our offshore subsid iary, as an offshore entity, to our PRC subsidiaries, such PRC
subsidiaries are subject to the PRC regulations and f oreign debt registrations to conduct relevant
filling procedures for such loans and capital cont ributions. For instance, loans by offshore holding
companies to our PRC subsidiaries to finance thei r activities cannot exceed the difference between
the total amount of investment of the relevant PRC entity and its registered capital (or other amount
of foreign debt determined in accordance with appl icable regulations) and m ust be registered with
the State Administration of Foreign Exchange of th e PRC or its local counterpart. In respect of our
Company ’s proposed capital contributions to our PRC su bsidiaries, these capital contributions must
be subject to the requirements of relevant laws an d regulations and filed to the Commercial banks
in the PRC. There is no assurance that our Compan y may obtain these government registrations or
files on a timely basis, if at all, with respect to future loans or capital contributions by our
Company to finance the PRC subsidiaries. If our Co mpany fails to receive rel evant registrations or
files, our ability to make equity contributions o r provide loans to our PRC subsidiaries or to fund
their operations may be negatively affected, w hich may adversely affect our PRC subsidiaries ’
liquidity and ability to fund their working capital and expansion projects and meet their obligations
and commitments, and in turn, may adversely and materially affect our business, financial condition
and results of operations.
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Natural disasters, acts of war, terrorist atta cks, political unrest and other events may have
adverse negative impact on our business.
Natural disasters and other acts of god which are beyond our control may materially and
adversely affect the economy and livelihood of the p eople in the PRC. Our operations and financial
condition may be adversely affected, especially when such events occur in regions in which our
operations and suppliers and subcontract ors are located. Acts of war, terrorists ’ attacks and political
unrest may cause damage or disruption to our operations, our employees, our suppliers and
subcontractors and our markets, any of which could materially and adversely affect our overall
results of operations and financial condition.
RISKS RELATING TO THE SHARE OFFER AND OUR SHARES
There has been no prior public market for our Shares, and the liquidity, market price and
trading volume of our Shares may be volatile.
Prior to the Share Offer, there was no public market for our Shares. The Offer Price for our
Shares will be the result of negot iations between the Sole Overall Coordinator (for itself and on
behalf of the Underwriters) and our Company, an d may differ significant ly from the market prices
for our Shares after the Share Offer. We have applied to the Stock Exchange for the listing of, and
permission to deal in, our Shares. However, we can not assure you that an active trading market will
develop or be maintained following the complet ion of the Share Offer or that the market price of
our Shares will not decline below the Offer Price.
The price and trading volume of our Shares may be highly volatile. Factors that may affect the
volume and price at which our Shares will be traded include, among other things, variations in our
sales, earnings, cash flows and costs, announcemen ts of new investments, stra tegic alliances and/or
acquisitions, fluctuations in market prices for our services and software or fluctuations in market
prices for comparable compani es and changes in laws and regulations in the PRC. We cannot assure
you that these developments will not occur in the future. In addition, shares of other companies
listed on the Stock Exchange with significant operations and assets in the PRC have experienced
price volatility in the past, and it is possible that our Shares may be subject to changes in price not
directly related to our performance.
In addition, stock markets and the shares of c ompanies listed on the Stock Exchange have
experienced substantial price and volume fluctua tions from time to time that are not related to the
operating performance of any particular compa ny. These fluctuations may also materially and
adversely affect the market price of our Shares.
Purchasers of our Shares will experience immediate dilution and may experience further
dilution if we issue additional Shares in the future.
Our Group may need to raise additional funds in the future to finance, among other things,
expansion or new developments relating to our exist ing operations or new acquisitions. If additional
funds are raised through the issue of new equity an d equity-linked securities of our Company other
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than on a pro-rata basis to the existing Shareholders, the percentage ownership of the Shareholders
in our Company may be reduced. In addition, our Company may issue additional Shares upon
exercise of options to be granted under the Share O ption Scheme in the future. The increase in the
number of Shares outstanding after the issue w ould result in the reduction in the percentage
ownership of the Shareholders and may result in a dilution in the earnings per Share and net asset
value per Share.
Investors of the Shares may experience dilutio n in the net asset value per Share of the Shares
they invested if our Company issues additional Sh ares in the future at a price which is lower than
the net asset value per Share.
The interests of our Controlling Shareholders may differ from tho se of our other Shareholders
Immediately following the Share Offer and th e Capitalisation Issue, our Controlling
Shareholders will beneficially own 75% of th e Shares. The interests of our Controlling
Shareholders may differ from the interests of o ur other Shareholders. If the interests of our
Controlling Shareholders conflict with the interes ts of our other Shareholders, or if our Controlling
Shareholders choose to cause us to pursue strategic objectives that conflict with the interests of our
other Shareholders, those Shareholders may be disadvantaged by the actions that our Controlling
Shareholders choose to cause us to pursue.
Our Controlling Shareholders may have signifi cant influence in determining the outcome of
any corporate transaction or other matters submi tted to our Shareholders for approval, including
mergers, consolidations and the sale of all, or subs tantially all, of our assets, election of Directors,
and other significant corporate actions. Our Cont rolling Shareholders have no obligation to consider
our interests or the interests of our other Shareholders.
Future sales by our existing Shareholders of a substantial number of our Shares in the public
market could materially and adversely affect the prevailing market price of our Shares.
Shares held by the Controlling Shareholder ar e subject to certain lock-up undertakings for
periods ending six to 12 months after the date on which trading in our Shares commences on the
Stock Exchange, details of which are set out in the section headed ‘‘Underwriting ’’ in this
prospectus. There are no assurances that any Controlling Shareholders will not dispose of our
Shares held by them following the expiration of the lock-up periods, on any Shares they may come
to own in the future. Future sales of a substantial number of our Shares by our existing
Shareholders, or the possibility of such sales, co uld materially and negatively impact the market
price of our Shares and our ability to raise equity capital in the future at a time and price that we
deem appropriate.
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There is a time lag between pricing and the Share Offer of the Shares, and the price of our
Shares may fall before trading begins.
As there will be a gap of several days or more between the pricing and the trading of our
Offer Shares, holders of our Offer Shares are subject to the risk that the price of our Offer Shares
could fall during the period before trading of o ur Offer Shares begins. The Offer Price of our
Shares is expected to be determined on the Price De t e r m i n a t i o nD a t e ,w h i c hi se x p e c t e dt ob eo no r
before 12:00 noon on Wednesday, 10 January 2024. However, our Shares will not commence
trading on the Stock Exchange until the Listing Date, which is expected to be on Friday, 12 January
2024. As a result, investors may not be able to sell or otherwise deal in our Shares during the
period between the Price Determination Date and the Listing Date. Our Shares will not commence
trading on the Stock Exchange until they are delivered, which is expected to be several business
days after the closing of application lists. As a result, investors may not be able to sell or deal in
our Shares during that period.
Accordingly, Shareholders are subject to the ri sk that the price of our Shares could fall before
trading begins as a result of adverse market co nditions or other adverse developments that could
occur between the time of sale and the time trading begins.
Investors may experience difficulties in enforcing their shareholders ’ rights because our
Company is incorporated in the Cayman Islands, and the protections afforded to minority
shareholders under Cayman Islands laws may be different from that under the laws of Hong
Kong or other jurisdictions.
Our Company is incorporated in the Cayman I slands and its affairs are governed by, among
others, the Articles of Association, the Compa nies Act and common law applicable in the Cayman
Islands. The laws of the Cayman Islands may diffe r from those of Hong Kong or other jurisdictions
where investors may be located. As a result, minority Shareholders may not enjoy the same rights
as under the laws of Hong Kong or such other jur isdictions. A summary of the Cayman Islands
company law on protection of minority Shareholders is set out in Appendix III to this prospectus.
RISKS RELATING TO THE STATEMENTS IN THIS PROSPECTUS
Forward-looking information may prove inaccurate.
This prospectus contains forward-looking stat ements with respect to our business strategies,
operating efficiencies, competiti ve positions, growth opportunities for existing operations, plans and
objectives of management, certain pro forma information and other matters. The words ‘‘aim’’,
‘‘anticipate ’’, ‘‘believe ’’, ‘‘could ’’, ‘‘predict ’’, ‘‘potential ’’, ‘‘continue ’’, ‘‘expect ’’, ‘‘intend ’’, ‘‘may’’,
‘‘might ’’, ‘‘plan ’’, ‘‘seek ’’, ‘‘will ’’, ‘‘
would ’’,a n d ‘‘should ’’and the negative of these terms and
other similar expressions identify a number of the se forward-looking statements. These forward
looking statements, including, amongst others, t hose relating to our future business prospects,
capital expenditure, cash flows, working capital, l iquidity and capital resources are necessarily
estimates reflecting the best judgement of our Di rectors and management and involve a number of
risks and uncertainties that could cause actual res ults to differ materially from those suggested by
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the forward-looking statements. As a consequen ce, these forward-looking statements should be
considered in light of various important factors, including those set out in the section headed ‘‘Risk
factors ’’in this prospectus. Accordingly, such statem ents are not a guarantee of future performance
and investors should not place undue reliance.
Certain facts, forecast and other statistics in th is prospectus obtained from publicly available
sources have not been independently verified and may not be reliable.
Certain facts, forecast and other statistics i n this prospectus are derived from various
government and official resources. However, our Directors cannot guarantee the quality or
reliability of such source materials. We belie ve that the sources of the said information are
appropriate sources for such information and have taken reasonable care in extracting and
reproducing such information. We have no reason to believe that such information is false or
misleading or that any fact has been omitted that would render such information false or
misleading. Nevertheless, such i nformation has not been independently verified by us, the Joint
Sponsors, the Sole Overall Coordinator, the Join t Global Coordinators, the Joint Bookrunners, the
Joint Lead Managers, the Underwriters or any of their respective affiliates or advisers and,
therefore, we make no representation as to the accuracy of such facts and statistics. Further, we
cannot assure our investors that they are stated or compiled on the same basis or with the same
degree of accuracy as similar statistics present ed elsewhere. In all cases, our investors should
consider carefully how much weight or importanc e should be attached to or placed on such facts or
statistics.
Investors should read the entire prospectus and should not rely on any information contained
in press articles or other media coverage regarding us and the Share Offer.
We strongly caution our investors not to rely on an y information contained in press articles or
other media regarding us and the Share Offer. Prior to the publication of this prospectus, there may
be press and media coverage regarding the Share Offer and us. Such press and media coverage may
include references to certain information that does not appear in this prospectus, including certain
operating and financial information and projectio ns, valuations and other information. We have not
authorised the disclosure of any such inform ation in the press or media and do not accept any
responsibility for any such press or media coverage or the accuracy or completeness of any such
information or publication. We make no repres entation as to the appropriateness, accuracy,
completeness or reliability of any such information or publication. To the extent that any such
information is inconsistent or conflicts with th e information contained in this prospectus, we
disclaim responsibility for it and our investors should not rely on such information.
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DIRECTORS ’ RESPONSIBILITY FOR THE CONTENTS OF THIS PROSPECTUS
This prospectus, for which our Directors (including any proposed director who is named as
such in this prospectus) collectively and individuall y accept full responsibilit y, includes particulars
given in compliance with the Companies (Winding -Up and Miscellaneous Provisions) Ordinance,
the Securities and Futures (Stock Market Listin g) Rules (Cap 571V of the Laws of Hong Kong) and
the Listing Rules for the purpose of giving info rmation to the public with regard to our Group. Our
Directors, having made all reas onable enquiries, confirm that to the best of their knowledge and
belief the information contained in this prospect us is accurate and complete in all material respects
and not misleading or deceptive, and there are no other matters the omission of which would make
any statement herein or this prospectus misleading.
PROSPECTUS ISSUED IN CONNECTION WITH THE PUBLIC OFFER ONLY
This prospectus is published solely in connection with the Public Offer, which forms part of
the Share Offer.
The Offer Shares are offered solely on the basis of the information contained and
representations made in this prospectus and on the terms and subject to the conditions set out
herein and therein. No person 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 Sole Overall Coordinator, the Join t Global Coordinators, the Joint Bookrunners, the
Joint Lead Managers, the Underwriters, any of th eir respective directors, agents, employees or
advisors or any other party involved in the Share Offe r. Neither the delivery of this prospectus nor
any offering, sale or delivery made in connection w ith the 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.
INFORMATION ON THE SHARE OFFER
The Share Offer comprises the Public Offer of 12,500,000 Shares initially offered by our
Company and the Placing of 112,500,000 Shares (subject to reallocation as set out under the
section headed ‘‘Structure and conditions of the Share Offer ’’in this prospectus). Further details of
the structure of the Share Offer, including its conditions, are set out in the section headed
‘‘Structure and conditions of the Share Offer ’’in this prospectus, and the procedures for applying
for the Public Offer Shares are set out in the section headed ‘‘How to Apply for the Public Offer
Shares ’’in this prospectus.
UNDERWRITING
This prospectus is published solely in connection with the Public Offer, which forms part of
the Share Offer. For applicants in the Public Offer, this prospectus set out the terms and conditions
of the Public Offer.
INFORMATION ABOUT THIS PROSPECTUS AND THE SHARE OFFER
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The listing of the Offer Shares on the Hong Kong Stock Exchange is sponsored by the Joint
Sponsors. The Public Offer is fully underwritte n by the Hong Kong Underwriters pursuant to the
Public Offer Underwriting Agreement. The Placin g Underwriting Agreement relating to the Placing
i se x p e c t e dt ob ee n t e r e di n t oo no ra r o u n dt h eP r i ce Determination Date, subject to agreement on
pricing of the Placing Shares between the Sole Overall Coordinator (on behalf of the Underwriters)
and us. The Share Offer is managed by the Sole Overall Coordinator.
If, for any reason, the Offer Price is not agreed between our Company and the Sole Overall
Coordinator (for itself and or behalf of the Underwriters), the Share Offer will not proceed and will
lapse. Please refer to the section headed ‘‘Underwriting ’’for further details.
RESTRICTIONS ON OFFER AND SALE OF SHARES
Each person acquiring the Public Offer Shares under the Public Offer will be required to
confirm, and is deemed by his acquisition of Publ ic Offer Shares to have confirmed, that he is
aware of the restrictions on offers of the Offer Sha res described in this prospectus and that he is not
acquiring, and has not been offered, any Offer Sha res in circumstances that contravene any such
restrictions.
No action has been taken to permit an offering of the Public 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 circumst ances 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 aut horisation by the relevant securities regulatory
authorities or an exemption therefrom. In particul ar, the Offer Shares have not been publicly offered
and sold, and will not be offered or sold, direct ly or indirectly in China or the United States.
The Public Offer Shares are offered to the publ ic for subscription solely on the basis of the
information contained and the representations made in this prospectus and on the terms and subject
to the conditions set out herein and therein. No person is authorised in connection with the Share
Offer to give any information or to make any repr esentation not contained in this prospectus, and
any information or representation not containe d herein must not be relied upon as having been
authorised by our Company, the Joint Sponsors, the Sole Overall Coordinator, the Joint Global
Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Underwriters, any of their
respective directors or employees or any other persons or parties involved in the Share Offer.
Prospective applicants for the Offer Shares shou ld consult their financial advisers and take
legal advice, as appropriate to inform themselves of, and to observe, all applicable laws and
regulations of any relevant jurisdiction. Prospect ive applicants for the Offer Shares should inform
themselves as to the relevant legal requirements and any applicable exchange control regulations
and applicable taxes in the countries of their re spective citizenship, residence or domicile.
INFORMATION ABOUT THIS PROSPECTUS AND THE SHARE OFFER
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ELIGIBILITY FOR CCASS
If the Hong Kong Stock Exchange grants the list ing of, and permission to deal in, our Shares
on the Hong Kong Stock Exchange and we comply w ith the stock admission requirements of
HKSCC, our Shares will be accepted as eligible sec urities by HKSCC for deposit, clearance and
settlement in CCASS with effect from the Listing Date or any other date as determined by HKSCC.
Settlement of transactions between participants of the Hong Kong Stock Exchange is required
to take place in CCASS on the second settlement day after any trading day. You should seek the
advice of your stockbroker or other professi onal advisor for details of those settlement
arrangements as such arrangements will affect your rights and interests.
All necessary arrangements have been made for the Shares to be admitted into CCASS.
All activities under CCASS are subject to the general rules of HKSCC and HKSCC
operational procedures in effect from time to time.
APPLICATION FOR LISTING ON THE HONG KONG STOCK EXCHANGE
Our Company has applied to the Listing Committee of the Stock Exchange for the granting of
the listing of and permission to deal in the Shares in issue and to be issued pursuant to the Share
Offer (including the additional Shares which may be issued pursuant to the exercise of the Over-
allotment Option and any shares which may be issued upon the exercise of the options which may
be granted under the Share Option Scheme).
No part of our share or loan capital is listed on or dealt in on any other stock exchange and no
such listing or permission to list is being or pr oposed to be sought on the Stock Exchange or any
other stock exchange as at the date of this prospectus. All the Offer Shares will be registered on the
Hong Kong Branch Share Registrar of our Company in order to enable them to be traded on the
Stock Exchange.
Under section 44B(1) of the Companies (Winding Up and Miscellaneous Provisions)
Ordinance, any allotment made in respect of any application will be invalid if the listing of, and
permission to deal in, the Shares on the Stock Exchange is refused before the expiration of three
weeks from the date of the closing of the application lists, or such longer period (not exceeding six
weeks) as may, within the said three weeks, be notified to our Company by or on behalf of the
Stock Exchange.
HONG KONG BRANCH SHARE REGISTER AND THE STAMP DUTY
All Shares issued by us pursuant to applications made in the Share Offer will be registered on
our branch register of members to be maintained in Hong Kong. Our principal register of members
will be maintained by Appleby Global Services (C ayman) in the Cayman Islands. The Shares are
freely transferable, but only secu rities registered on the branch r egister of members of our Company
kept in Hong Kong may be traded on the Stock Exchange, unless the Stock Exchange otherwise
agree.
INFORMATION ABOUT THIS PROSPECTUS AND THE SHARE OFFER
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Dealings in the Shares registered on our Hong Kong branch register will be subject to Hong
Kong stamp duty. For further details about Hong Kong stamp duty, please refer to the paragraph
headed ‘‘Taxation of holders of Shares ’’ under the section headed ‘‘E. Other information ’’ in
Appendix IV to this prospectus. Dealings in Shares will not be subject to Cayman Islands stamp
duty.
PROFESSIONAL TAX ADVICE RECOMMENDED
Potential investors in the Share Offer are recommended to consult their professional advisors
if they are in any doubt as to the taxation implications of subscribing for, purchasing, holding,
disposing of, dealing in or exercising any rights in relation to, the Shares. None of our Company,
the Joint Sponsors, the Sole Overall Coordina tor, the Joint Global Coordinators, the Joint
Bookrunners, the Joint Lead Managers, the Underwri ters, any of their respective directors or any
other person or party involved in the Share Offer accepts responsibility for any tax effects on, or
liabilities of, any person resulting from the subs cription for, purchase, holding, disposition of,
dealing in, or exercising any rights in relation to, the Shares.
STABILISATION AND OVER-ALLOTMENT
In connection with the Share Offer, the Stabili sing Manager or any person acting for it, on
behalf of the Underwriters, may over-allocate or effect transactions with a view to supporting the
market price of the Shares at a level higher than that which might otherwise prevail for a limited
period after the Listing Date. Such transactions may be effected in compliance with all applicable
laws and regulatory requirements. However, ther e is no obligation on the Stabilising Manager, its
affiliates or any person acting for it to do this. Suc h stabilisation, if commenced, will be conducted
at the absolute discretion of the Stabilising Manag er, its affiliates or any person acting for it and
may be discontinued at any time, and must be brought to an end after a limited period.
In connection with the Share Offer, we intend to grant to the Placing Underwriters the Over-
allotment Option, which is exercisable in full or in part by the Sole Overall Coordinator (on behalf
of the Placing Underwriters) within 30 days after the last day for lodging applications under the
Public Offer. Pursuant to the Over-allotment Op t i o n ,w em a yb er e q u i r e dt oi s s u ea n da l l o tu pt oa n
aggregate of 18,750,000 Shares (in aggregate rep resenting 15% of the total number of the Shares
initially available under the Share Offer) at th e Offer Price to cover over-allocation in the
International Placing.
Further details with respect to stabilisation and the Over-allotment Option are set out in the
sections headed ‘‘Structure and conditions of the Share Offer — Over-allotment Option ’’ and
‘‘Structure and conditions of the Share Offer — Stabilisation ’’in this prospectus.
PROCEDURE FOR APPLICATION FOR PUBLIC OFFER SHARES
The application procedure for the Public Offe r Shares is set out in the section headed ‘‘How to
Apply for Public Offer Shares ’’in this prospectus.
INFORMATION ABOUT THIS PROSPECTUS AND THE SHARE OFFER
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LANGUAGE
If there is any inconsistency between this pr ospectus and the Chinese translation of this
prospectus, this prospectus shall prevail. Howe ver, the English names of certain Chinese names,
entities, departments, f acilities, certificates, tit les, laws, regulations and the like are unofficial
translations of their Chinese names and are included for identification purposes only, and if there is
any inconsistency, the Chinese name prevails in such cases.
EXCHANGE RATE CONVERSION
Solely for your convenience, this prospectus contains translations of certain RMB amounts
into Hong Kong dollars at specified rates. You should not construe these translations as
representations that the RMB amounts could act ually be, or have been, converted into Hong Kong
dollar amounts (as applicable) at the rates indic ated or at all. Unless we indicate otherwise, the
translations of RMB amounts into Hong Kong dollars have been made at the rate of RMB0.92198
to HK$1.00.
COMMENCEMENT OF DEALINGS IN THE SHARES
Assuming that the Share Offer becomes unconditional at or before 8:00 a.m. (Hong Kong
time), Friday, 12 January 2024, it is expected tha t dealing in the Shares on the Stock Exchange will
commence at 9:00 a.m. on Friday, 12 January 2024 and will be traded in board lots of 4,000 each.
The stock code of our Shares is 02477.
ROUNDINGS
Amounts and percentage figures, including share ownership and operating data in this
prospectus, may have been subject to rounding adjustments. In this prospectus, where information
is presented in thousands or millions, amounts of l ess than one thousand or one million, as the case
may be, have been rounded to the nearest hundre d or hundred thousand, respectively, unless
otherwise indicated or the context requires otherw ise. Amounts presented as percentages have been
rounded to the nearest tenth of a percent, unless otherwise indicated or the context requires
otherwise. Accordingly, totals of rows or columns of numbers in tables may not be equal to the
apparent total of the individual items.
WEBSITE
The contents of any website mentioned in this prospectus do not form a part of this
prospectus.
INFORMATION ABOUT THIS PROSPECTUS AND THE SHARE OFFER
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DIRECTORS
Name Address Nationality
Executive Directors
Jia Zhengyi ( 賈正屹) Room 1702, Building 1
Huaye Linhai Garden
77 Jinghe Street
Xiangzhou District
Zhuhai City
Guangdong Province, PRC
Chinese
Liu Ping ( 劉萍) Room 1703, Building 11
Fenghuang Xigu Garden
99 Shenqian Road
Xiangzhou District
Zhuhai City
Guangdong Province, PRC
Chinese
Cong Bin ( 叢斌) Room 14B, Building 2
Yonghe Garden
Haizhou Road
Xiangzhou District
Zhuhai City
Guangdong Province, PRC
Chinese
Non-executive Director
Lin Qihao ( 林啟豪) Room 1701, Building 1
Zhongxin International Garden
Zhuhai City
Guangdong Province, PRC
Chinese
Independent non-executive Directors
Wu Wing Kuen, B.B.S. ( 胡永權)1 0 / F , B l o c k 9
Celestial Heights
80 Sheung Shing Street
Homantin
Kowloon, Hong Kong
Chinese
DIRECTORS AND PARTIES INVOLVED IN THE SHARE OFFER
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Name Address Nationality
Leung Kwong Sak ( 梁廣錫) Flat B, 6/F
Tower A, The Grandville
2 Lok Kwai Path
Sha Tin, New Territories
Hong Kong
Chinese
Yu Chi Wing ( 于志榮)1 6 / F , B l o c k 2 1
Celestial Heights
80 Sheung Shing Street
Homantin
Kowloon, Hong Kong
Chinese
Please refer to the section headed ‘‘Directors, senior management and employees ’’in this
prospectus for further info rmation on our Directors.
PARTIES INVOLVED IN THE SHARE OFFER
Joint Sponsors Halcyon Capital Limited
11/F, 8 Wyndham Street
Central, Hong Kong
Eddid Capital Limited
21/F, Citic Tower
1 Tim Mei Avenue
Central, Hong Kong
Sole Overall Coordinator Eddid S ecurities and Futures Limited
21/F, Citic Tower
1 Tim Mei Avenue
Central, Hong Kong
Joint Global Coordinators Eddid Securities and Futures Limited
21/F, Citic Tower
1 Tim Mei Avenue
Central, Hong Kong
Halcyon Securities Limited
11/F, 8 Wyndham Street
Central, Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE SHARE OFFER
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China Everbright Securities (HK) Limited
33/F, Everbright Centre
108 Gloucester Road
Wan Chai, Hong Kong
Beta International S ecurities Limited
Room 3326, 33/F, China Merchants Tower
Shun Tak Centre, 168 –200 Connaught Road Central
Sheung Wan, Hong Kong
CMBC Securities Company Limited
45/F, One Exchange Square
8 Connaught Place
Central, Hong Kong
China PA Securities (Hong Kong) Company Limited
Units 3601, 07 & 11 –13, 36/F, The Center
99 Queen ’s Road Central
Hong Kong
Quam Securities Limited
5/F and 24/F (Rooms 2401 and 2412), Wing On Centre
111 Connaught Road Central
Hong Kong
Joint Bookrunners Eddid Securities and Futures Limited
21/F, Citic Tower
1 Tim Mei Avenue
Central, Hong Kong
Halcyon Securities Limited
11/F, 8 Wyndham Street
Central, Hong Kong
China Everbright Securities (HK) Limited
33/F, Everbright Centre
108 Gloucester Road
Wan Chai, Hong Kong
Beta International S ecurities Limited
Room 3326, 33/F, China Merchants Tower
Shun Tak Centre, 168 –200 Connaught Road Central
Sheung Wan, Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE SHARE OFFER
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CMBC Securities Company Limited
45/F, One Exchange Square
8 Connaught Place
Central, Hong Kong
China PA Securities (Hong Kong) Company Limited
Units 3601, 07 & 11 –13, 36/F, The Center
99 Queen ’s Road Central, Hong Kong
Quam Securities Limited
5/F and 24/F (Rooms 2401 and 2412), Wing On Centre
111 Connaught Road Central, Hong Kong
Joint Lead Managers Eddid Securities and Futures Limited
21/F, Citic Tower
1 Tim Mei Avenue
Central, Hong Kong
Halcyon Securities Limited
11/F, 8 Wyndham Street
Central, Hong Kong
China Everbright Securities (HK) Limited
33/F, Everbright Centre
108 Gloucester Road
Wan Chai, Hong Kong
Beta International S ecurities Limited
Room 3326, 33/F, China Merchants Tower
Shun Tak Centre, 168 –200 Connaught Road Central
Sheung Wan, Hong Kong
CMBC Securities Company Limited
45/F, One Exchange Square
8 Connaught Place
Central, Hong Kong
China PA Securities (Hong Kong) Company Limited
Units 3601, 07 & 11 –13, 36/F, The Center
99 Queen ’s Road Central
Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE SHARE OFFER
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Quam Securities Limited
5/F and 24/F (Rooms 2401 and 2412), Wing On Centre
111 Connaught Road Central
Hong Kong
Maxa Capital Limited
Unit 2602, 26/F, Golden Centre
188 Des Voeux Road Central
Sheung Wan, Hong Kong
SBI China Capital Financial Services Limited
4/F, Henley Building
No. 5 Queen ’s Road Central
Hong Kong
SPDB International Capital Limited
33/F,SPD Tower
1 Hennessy Road
Hong Kong
Innovax Securities Limited
Unit A –C 20/F Neich Tower
128 Gloucester Road
Wan Chai, Hong Kong
Cinda International Capital Limited
45/F, COSCO Tower
183 Queen ’s Road Central
Hong Kong
P a t r o n sS e c u r i t i e sL i m i t e d
Unit 3214, 32/F., Cosco Tower
183 Queen ’s Road Central
Sheung Wan, Hong Kong
ZMF Asset Management Limited
Unit 2502 25/F World Wide House
19 Des Voeux Road Central
Central, Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE SHARE OFFER
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Goldlink Securities Limited
28/F, Bank of East Asia Harbour View Centre
56 Gloucester Road
Wanchai, Hong Kong
Underwriters Eddid Securi ties and Futures Limited
21/F, Citic Tower
1 Tim Mei Avenue
Central, Hong Kong
Halcyon Securities Limited
11/F, 8 Wyndham Street
Central, Hong Kong
China Everbright Securities (HK) Limited
33/F, Everbright Centre
108 Gloucester Road
Wan Chai, Hong Kong
Beta International S ecurities Limited
Room 3326, 33/F, China Merchants Tower
Shun Tak Centre, 168 –200 Connaught Road Central
Sheung Wan, Hong Kong
CMBC Securities Company Limited
45/F, One Exchange Square
8 Connaught Place
Central, Hong Kong
China PA Securities (Hong Kong) Company Limited
Units 3601, 07 & 11 –13, 36/F, The Center
99 Queen ’s Road Central
Hong Kong
Quam Securities Limited
5/F and 24/F (Rooms 2401 and 2412), Wing On Centre
111 Connaught Road Central
Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE SHARE OFFER
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Maxa Capital Limited
Unit 2602, 26/F, Golden Centre
188 Des Voeux Road Central
Sheung Wan, Hong Kong
SBI China Capital Financial Services Limited
4/F, Henley Building
No. 5 Queen ’s Road Central
Hong Kong
SPDB International Capital Limited
33/F,SPD Tower
1 Hennessy Road
Hong Kong
Innovax Securities Limited
Unit A –C 20/F Neich Tower
128 Gloucester Road
Wan Chai, Hong Kong
Cinda International Capital Limited
45/F, COSCO Tower
183 Queen ’s Road Central
Hong Kong
P a t r o n sS e c u r i t i e sL i m i t e d
Unit 3214, 32/F., Cosco Tower
183 Queen ’s Road Central
Sheung Wan, Hong Kong
ZMF Asset Management Limited
Unit 2502 25/F World Wide House
19 Des Voeux Road Central
Central, Hong Kong
Goldlink Securities Limited
28/F, Bank of East Asia Harbour View Centre
56 Gloucester Road
Wanchai, Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE SHARE OFFER
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Legal advisers to our Company As to Hong Kong law:
TC & Co.
Units 2201 –2203, 22/F
Tai Tung Building
8F l e m i n gR o a d
Wanchai
Hong Kong
As to PRC law:
Beijing DHH (Shanghai) Law Firm
62/F, Shanghai Tower
501 Yincheng Middle Road
Pudong New Area
Shanghai, PRC
As to Cayman Islands law:
Appleby
Suites 4201 –03 & 12
42/F, One Island East
Taikoo Place
18 Westlands Road
Quarry Bay, Hong Kong
Legal advisers to Joint Sponsors
and the Underwriters
As to Hong Kong law:
Charltons
12/F Dominion Centre
43–59 Queen ’sR o a dE a s t
Hong Kong
As to PRC law:
Beijing Dacheng Law Offices, LLP (Shenzhen)
3/F, 4/F & 12F, Block A
Shenzhen International Innovation Center
No. 1006, Shennan Boulevard
Futian District
Shenzhen, PRC
DIRECTORS AND PARTIES INVOLVED IN THE SHARE OFFER
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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, Block B
Jingan International Center
88 Puji Road, Jingan District
Shanghai, PRC
Receiving bank CMB Wing Lung Bank Limited
45 Des Voeux Road Central
Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE SHARE OFFER
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Registered office in the Cayman Islands 71 Fort Street
PO Box 500
George Town
Grand Cayman, KY1-1106
Cayman Islands
Principal place of business and
headquarters in the PRC
Room 2105, Building 2
M e i x iC o m m e r c i a lP l a z a
No. 168 Lvyou Road
Xiangzhou District
Zhuhai City
Guangdong Province
PRC
Principal place of business in Hong Kong
under Part 16 of the Companies
Ordinance
Units 2201 –2203, 22/F
Tai Tung Building
8F l e m i n gR o a d
Wanchai
Hong Kong
Company ’sw e b s i t e www.wellcell.com.cn
(Information contained in this website does not
form part of this prospectus)
Company secretary Y i uC h u nW i n g(姚俊榮)
Certified Public Accountant
Room 1205
Ngan Chun House
Tung Chun Court
Shaukiwan, Hong Kong
Authorised representatives (for the
purpose of the Listing Rules)
Y i uC h u nW i n g(姚俊榮)
Certified Public Accountant
Room 1205
Ngan Chun House
Tung Chun Court
Shaukiwan, Hong Kong
CORPORATE INFORMATION
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--- page 95 ---
Jia Zhengyi ( 賈正屹)
Room 1702, Building 1
Huaye Linhai Garden
77 Jinghe Street
Xiangzhou District
Zhuhai City
Guangdong Province, PRC
Compliance adviser Halcyon Capital Limited
11/F, 8 Wyndham Street
Central, Hong Kong
Audit Committee Yu Chi Wing ( 于志榮) (Chairman)
Wu Wing Kuen, B.B.S. ( 胡永權)
Dr. Leung Kwong Sak ( 梁廣錫)
Remuneration Committee Yu Chi Wing ( 于志榮) (Chairman)
Wu Wing Kuen, B.B.S. ( 胡永權)
Dr. Leung Kwong Sak ( 梁廣錫)
Nomination Committee Yu Chi Wing ( 于志榮) (Chairman)
Wu Wing Kuen, B.B.S. ( 胡永權)
Dr. Leung Kwong Sak ( 梁廣錫)
Cayman Islands principal share registrar
and transfer office
Appleby Global Services (Cayman) Limited
71 Fort Street
PO Box 500
George Town
Grand Cayman, KY1-1106
Cayman Islands
Hong Kong branch share registrar and
transfer office
Boardroom Share Registrars (HK) Limited
2103B, 21/F, 148 Electric Road
North Point
Hong Kong
Principal banks Bank of China Limited
Zhuhai branch
1148 Yuehai East Road
Gongbei, Zhuhai City
Guangdong
PRC
CORPORATE INFORMATION
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Certain information and statistics presented in this section and elsewhere in this document
were derived from official government publications and other publicly available sources as well
as from the CIC Report, a market research report prepared by CIC, an independent market
research and consulting company that was commissioned by us. We believe that the sources of
the information in this section and elsewhere in this document are appropriate sources for such
information and reasonable care has been taken in extracting and reproducing such information.
The information from official government sour ces has not been independently verified by us or
the Joint Sponsors, the Sole Overall Coordinator, the Joint Global Coordinators, the Joint
Bookrunners, the Joint Lead Managers and the Public Offer Underwriters or any of our or their
respective directors, officers, or representatives, and no repr esentation is given as to its
accuracy.
SOURCES OF INFORMATION
We commissioned CIC, a market research and consulting company founded in Hong Kong and
engaging in the provision of professional consulti ng services across multiple industries, to conduct
an analysis of and report on telecommunication n etwork service, ICT int egration service, and
telecommunication network-related software dev elopment service in China. The CIC Report was
prepared by CIC independent of our influence. The fees paid for the preparation of the CIC Report
was RMB1,140,000, which we believe reflects the market rate for such reports.
The information and data collected by CIC have b een analysed, assessed, and validated using
CIC’s in-house analysis models and techniques. Prim ary research was conducted via interviews with
key industry experts and leading industry parti cipants. Secondary research involved analysing
market data obtained from several publicly availa ble data sources, such as the National Bureau of
Statistics of China and the China Inte rnet Network Information Center ( ‘‘CNNIC ’’). The
methodology used by CIC is based on analysing i nformation gathered from multiple levels and
ensures that this information is cross-referenced for reliability and accuracy.
The market projections in the CIC Report are based on the following key assumptions: (i) the
overall social, economic and political environmen ts in China is expected to remain stable during the
forecast period; (ii) the economic and industry dev elopment in China is likely to maintain a steady
growth trajectory during the forecast period, accomp anied by continuing urbanisation; (iii) related
key industry drivers, such as growing demand for t elecommunication netwo rk service, increasing
complexity of telecommunication network serv ice technology, and favourable policies to promote
the development of telecommunication are l ikely to propel continued growth in China ’s
telecommunication network service, ICT integration service and telecommunication network-related
software development service i ndustry throughout the forecast period; and (iv) there will be no
extreme force majeure event or unforeseen i ndustry regulation that may significantly or
fundamentally affect the relevant market and industry.
Our Directors confirm that after taking reas onable enquiries, there had been no material
adverse change in the market information since t h ed a t eo ft h eC I CR e p o r tw h i c hm a yq u a l i f y ,
contradict, or have an impact on the information set out in this section. Except otherwise
mentioned, all data and forecasts contained i n this section are extracted from the CIC Report.
OVERVIEW OF TELECOMMUNICATION INDUSTRY IN CHINA
China ’s telecommunication industry has experi enced robust growth in recent decades, with
telecommunication technologies evolved from 1 G stage in 1980s to 5G stage in 2020s. In the 5G
stage, China has taken the lead in the world ’s communication network in terms of both technology
and applications.
According to CNNIC, total number of interne t users in China reached 1,067.4 million as of
December 2022, growing from 828.5 million in 2018, with a CAGR of 6.5%. With the continuous
development of the computer industry and the inc rease in utilisation rate of mobile devices, the
INDUSTRY OVERVIEW
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number of internet users will continue to increase, and the number of internet users is estimated to
increase to 1,232.3 million by 2027. The internet penetration rate 1 increased from 59.6% in 2018 to
75.6% in 2022, and it is expected to reach 87.6% by 2027.
The total number of base stations increased from 6.7 million units in 2018 to 10.8 million
units in 2022, with a CAGR of 12.9%, and the rapid growth in the number of base stations over the
past five years was mainly attributable to the large-scale commercialisation of 4G. According to the
‘‘ ‘Set Sail ’ Action Plan for 5G Applications (2021 –2023) ’’(《5G應用‘‘揚帆’’行動計劃(2021 –2023
年)》) issued by the Ministry of Industry and Informat ion Technology (MIIT), the penetration rate of
5G individual users will exceed 40%, and the number of 5G users will exceed 560 million, by
2023. Therefore, it is expected that the total numb er of base stations will continue to increase from
10.8 million units in 2022 to 13.0 mill ion units in 2027, with a CAGR of 3.8%.
With the strong commercialization foundation of 5G technologies, 6G technology has become
the focus of telecommunication technological innov ation of next generation. Compared to existing
telecommunication technologies, 6G technology us es higher frequency and wider bandwidth, and it
is expected to improve the accuracy of telecom munication indicators, expand the scope of
telecommunication space, and provide the applicat ion of telecommunicatio n technologies. China ’s
government has emphasized the importance of pro moting the development of 6G technologies, and
it has purposed to encourage the R&D investment of 6G technologies in the 14th Five-Year Plan
issued in 2021. Currently, 6G technology is still under R&D stage and it will take years to realize
its commercialization.
THE TELECOMMUNICATION NETWORK SERVICE INDUSTRY IN CHINA
Overview of telecommunication ne twork service industry in China
The telecommunication network service indus try is a comprehensive and rapidly growing
industry which provides various technical support to telecommunication operators ’ network before,
during and after various construction and its maj or services can be categorised into (1) wireless
telecommunication network enhancement service; an d (2) telecommunication network infrastructure
maintenance and engineering services.
Wireless telecommunication network enhan cement service refers to the provision of
enhancement service to enhance telecommunicati on network performance through various hardware
or software technologies and to ensure that the telecommunication network is made available to
telecommunication operators and end users i n stable, reliable, and efficient way.
Telecommunication network infrastructure mai ntenance services refers to the provision of
service to keep a telecommunication network r unning efficiently, and may typically involve
emergency restoration of base stations and monit oring of telecommunication network performance
whereas telecommunication network infrastructur e engineering services involve the physical
implementation of base stations and installation of related telecommunication network equipment.
Market size of wireless telecommunication network enhancement service in China
With the continuous increasing demand from tel ecommunication network users for better
mobile network quality, telecommunication opera tors invested heavily on the enhancement of
telecommunication network speed and stability, and the market size in terms of revenue of
delivered from the provision of wireless teleco mmunication network enhancement service have
increased from RMB9.1 billion in 2018 to RMB12. 2 billion in 2022, representing a CAGR of 7.4%.
Pursuant to the requirements proposed by the 13th Five-Year Plan, a series of social and
economic development initiative issued by t he PRC government, China have accelerated the
construction of telecommunication network industry and encouraged the commercial use of 5G
internet whereby telecommunication operators have continued to expand their telecommunication
network coverage, improved telecommunication net work service quality and maintained stable and
continuous investment in telecommunication netwo rk enhancement services in the future. The future
growth rate of wireless telecommunication network enhancement service is expected to slow down
compared to that in previous years, and it i s mainly because the service is becoming more
structured with the advancement of technologies an d telecommunication operators are expected to
maintain a stable budget on its documents. and its market size in terms of revenue is expected to
further increase to RMB15.5 billion in 2027, representing a CAGR of 4.9% from 2022 to 2027.
1 Internet penetration rate i s calculated as the number of internet users divided by the total population of the PRC.
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Market size of wireless telecommuni cation network enhancement service,
in terms of revenue, China, 2018 –2027E
0.0
5.5
11.0
16.5
4.9%7.4%
9.1
10.3 10.8 11.4 12.2 12.9 13.5 14.0 14.8 15.5
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E
Wireless telecommunication network enhancement serviceRMB billion
CAGR
2022–2027E2018–2022
Source: MIIT, CIC
Market size of the telecommunication networ k infrastructure maintenance and engineering
services in China
The market size of the telecommunication networ k infrastructure maintenance service market
in terms of revenue increased from RMB54.3 billion in 2018 to RMB81.1 billion in 2022,
representing a CAGR of 10.5%, and is expected to further increase to RMB112.8 billion in 2027,
representing a CAGR of 6.8% from 2022 to 2027.
The market size of the telecommunication network i nfrastructure engineering service market in
terms of revenue increased from RMB210.5 billion in 2018 to RMB321.3 billion in 2022,
representing a CAGR of 11.1%. Along with the construction of 5G base stations and other related
facilities, the market size of telecommunication network infrastructure engineering service is
expected to further increase to RMB485.9 bil lion in 2027, representing a CAGR of 8.6% from 2022
to 2027.
Market size of the telecommunication netw ork infrastructure maintenance and
engineering service market, in terms of revenue, China, 2018 –2027E
6.8%10.5%
8.6%11.1%
8.3%11.0%
264.8
210.5
54.3 62.1 68.6 74.0 81.1 87.9 94.7 100.9 107.1
112.8
299.5
237.3
333.7
265.1
367.4
293.4
402.4
321.3
440.0
352.1
0
150
300
450
600
598.7
485.9
478.3
383.5
517.6
416.7
558.0
451.0
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E
Telecommunication Network Infrastructure Engineering Service
Total
Telecommunication Network Infrastructure Maintenance Service
CAGR
2022–2027E2018–2022
RMB billion
Source: CAICT, MIIT, ODCC, CIC
Market drivers of telecommunicatio n network service industry in China
It is expected that growth in the telecommunication network service industry in China will be
driven by the following factors:
(i) growing demand from downstream markets: the rapid construction of base stations
brings large demand for wireless telecommunica tion network enhancement, infrastructure
maintenance and infrastructure engineering services in China. As of the end of 2022, the
number of 4G base stations and 5G base stati ons in China amounted to 6.2 million units
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and 2.3 million units respectively. With the continuous development of 4G applications
and commercialisation of the 5G network in t he foreseeable future, a large number of
base stations, optical cables, broadband and o ther telecommunication infrastructure need
to be upgraded and maintained regularly, whi ch is expected to drive the development of
telecommunication network service industry.
(ii) increasing complexity of telecommun ication network service technology: with the
continuous upgrading of telecommunication net work infrastructure, telecommunication
network services have become more diversified and complex. For example, 4G base
stations typically have a dozen antennas, while 5G base stations can have over a hundred
antennas and form a large-scale antenna a rray through massive MIMO (Multiple-Input
Multiple-Output) technology, which is more complicated than 4G technology and hence,
telecommunication operators would engage thi rd-party professional telecommunication
network services to provide high-quality techn ical services, which pr omote the efficiency
of the industry. In particular, base station equipment is upgraded from the original simple
equipment to more complicated digital equipment.
(iii) favourable government policies: the MIIT has clearly put forth the strategic goal of
promoting the telecommunication network service industry in China. For example, in
2020, MIIT issued the ‘‘Notice on Promoting the Accelerated Development of Industrial
Internet Information Management Department ’’ (《關於推動工業互聯網加快發展的通
知》), aimed at speeding up the construction of new infrastructure, promoting the
development of industrial internet and 5G. In addition, the ‘‘ ‘Set Sail ’ Action Plan for
5G Applications MIIT (2021 –2023) ’’ (《應用‘‘揚帆’’行動計劃(2021 –2023 年)》)o ft h e
MIIT mentioned that China targets to complete more than 1,500 5G industrial internet
projects to service 22 important industries of national economy by 2023. Such favourable
policies have promoted and will continue to encourage the development of the
telecommunication network service industry in China.
Competitive landscape of telecommunication network service industry in China
The wireless telecommunication network enhancem ent service market is relatively fragmented,
with the top five telecommunication network en hancement service providers accounting for
approximately 24.3% of the market share in terms of revenue in 2022. The Company ’s revenue in
wireless telecommunication network enhancemen t service reached RMB102.2 million in 2022 and
accounted for approximately 0.8% of market share in terms of revenue.
The Project Level Margin (1) of wireless telecomm unication network enhancement service of
the Company for 2022 was 27.9% (which is represented by one minus the Operating Costs Ratio of
this segment of approximately 72.1%), which fell within the range of gross profit margin of 10.5%
to 34.9% of the top five providers. Furthermor e, according to CIC, the industry range of profit
margin for projects of wireless telecommunicati on network enhancement service normally ranged
from 10.0% to 30.0%, and the Project Level Margin of the wireless telecommunication network
enhancement service projects undertaken b yt h eC o m p a n ya l s of e l lw i t h i ns u c hr a n g e .
In addition, the overall net profit margin of the top five wireless telecommunication network
enhancement service providers ranged from approximately 1.3% to 8.2% in 2022, and the net profit
margin of the Company was 10.7% in 2022, which exceeded the high-end of the range. The
relatively higher margin recorded by the Company was principally attributable to the fact that, as a
private company, the Company had adopted a more c ost cautious approach in managing its business
and selecting projects.
Note:
(1) The Company is not divided into business units based o n different types of services and only has one reportable
operating segment, and therefore, no costs of revenue or gros s profit are presented in the financial information of the
Company by business line and expenses are presented by nature. For the purpose of analysing the profit margins of
its different business segments, the Company allocates its Major Operating Costs (namely, subcontracting charges,
materials, supplies and other project costs and employee ben efit expenses) to different business segments, whereby
‘‘Project Level Margin ’’is calculated as one minus the Major Operating Costs Ratio. The Directors consider, and
CIC concurs, that such ‘‘Project Level Margin ’’is the best benchmark available for comparison against the gross
profit margin of other industry players.
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Ranking of the top five wireless telecommunica tion network enhancemen t service providers,
in terms of revenue, China, 2022
Rank Third-party service provi der Business Scope Revenue*
Market
share of
total revenue
Gross profit
margin
Overall
net profit
margin (3)
(RMB million) (%)
1 Sunwave Communications
Co. Ltd
A listed professional telecommunication
service provider founded in 1993 and
headquartered in Zhejiang province. Its
businesses focus on telecommunication
network service and internet advertisement
media service.
657.4 5.4% 34.9% 1.3%
2 Runjian Co., Ltd. A listed professional telecommunication
service provider founded in 2003 and
registered in Guangxi province. Its
businesses focus on network management
and maintenance in telecommunication
and energy industry.
656.3 5.4% 20.5%
(1) 5.2%
3 Hangzhou Huaxing Chuangye
Communication Technology
Co., Ltd.
A listed professional telecommunication
service provider founded in 2003 and
headquartered in Zhejiang province. Its
businesses focus on network enhancement
services, network plan and engineering
services.
650.4 5.3% 10.5% 2.1%
4 Guangdong Yichuang
Technology Co., Ltd
A listed professional telecommunication
service provider founded in 2001 and
headquartered in Guangdong province. Its
businesses focus on providing network
related services and solutions for
telecommunication operators.
577.5 4.7% 16.8%
(2) 8.2%
5 Beijing Eflag Communication
Technology Co., Ltd
An unlisted professional telecommunication
service provider founded in 2003 and
headquartered in Beijing. Its businesses
focus on network enhancement, network
design and engineering service, and IoT
integration services.
423.7 3.5% 12.0% 5.7%
Sub-total 2,965.4 24.3%
Others 9,218.7 75.7%
Total 12,184.1 100.0%
Notes:
(1) The number represented the gross profit margin of te lecommunication network business of Runjian Co., Ltd.
based on its latest published annual report.
(2) The number represented the gross profit margin of software and information services of Guangdong Yichuang
Technology Co., Ltd. based on its latest published annual report.
(3) Overall net profit margin is calculated by div iding the net profit attributable to the company ’s shareholders by
total revenue based on their latest published annual reports.
Source: Annual Reports of Companies, CIC
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The telecommunication network infrastructure mai ntenance and engineering service market is
also relatively fragmented, with the top five serv ice providers accounting for approximately 24.9%
of the market share in terms of revenue in 2022. The Company ’s revenue in tel ecommunication
network infrastructure maintenance and engineer i n gs e r v i c er e a c h e dR M B 4 4 . 6m i l l i o ni n2 0 2 2a n d
accounted for approximately 0.01% of market share in terms of revenue.
The Project Level Margin of this segment of the Company for 2022 was 28.9% (which is
represented by one minus the Operating Costs Ratio of approximately 71.1%), which exceeded the
high-end of the range of gross profit margin of 9.8% to 20.5% of the top five telecommunication
network infrastructure maintenance and engin eering service providers. According to CIC, the
industry range of profit margin for projects o f telecommunication network infrastructure
engineering services (normally ranging from 5.0% to 25.0%) is normally lower than the profit
margin for projects of telecommunication network in frastructure maintenance services (normally
ranging from 15.0% to 35.0%), so the Project Level Margin of this segment of the Company is
reasonable given the telecommunication network in frastructure maintenance services accounted for
a larger portion of revenue of the Company a s compared to telecomm unication network
infrastructure engineering services.
In addition, the overall net profit margi n of the top five telecommunication network
infrastructure maintenance and engineering servi ce providers ranged from approximately 0.8% to
8.2% in 2022, and the net profit margin of the Co mpany in 2022 also exceeded the high-end of the
range because of the adoption of a more cost cau tious approach in managing its business and
selecting projects.
Ranking of the top five telecommunication ne twork infrastructure maintenance and
engineering service providers , in terms of revenue, China, 2022
Rank Third-party service provider Description Revenue*
Market share
of total
revenue
Gross profit
margin
Overall net
profit
margin (4)
(RMB million) (%)
1 China Communications
Services Co., Ltd.
A listed state-owned telecommunication
technology service provider founded in
2006 and headquartered in Beijing. Its
businesses focus on network engineering
service and outsourcing services to
telecommunication operators and
government organizations.
91,064.3 22.6% 11.4%
(1) 2.4%
2 Runjian Co., Ltd. A listed professional telecommunication
service provider founded in 2003 and
registered in Guangxi province. Its
businesses focus on network management
and maintenance in telecommunication
and energy industry.
3,587.9 0.9% 20.5%
(2) 5.2%
3 China Bester Group Telecom
Co., Ltd.
A listed professional telecommunication
service provider founded in 1992 and
headquartered in Hubei province. Its
businesses focus on telecommunication
network service, smart city applications
and optoelectronic devices.
2190.0 0.5% 16.2% 4.1%
4 Guangdong Eastone Century
Technology Co., Ltd.
A listed professional telecommunication
service provider founded in 2001 and
headquartered in Guangdong province. Its
business focus on providing network
service and integrated solutions for
telecommunication operators and
developing IoT platforms and applications.
1,664.9 0.4% 9.8% 0.8%
5 Guangdong Yichuang
Technology Co., Ltd
A listed professional telecommunication
service provider founded in 2001 and
headquartered in Guangdong province. Its
businesses focus on providing network
related services and solutions for
telecommunication operators.
1,610.4 0.4% 16.8%
(3) 8.2%
Sub-total 100,117.5 24.9%
Others 302,248.0 75.1%
Total 402,365.5 100.0%
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Notes:
(1) The number represented the gross profit marg in of telecommunication network business of China
Communications Services Co., Ltd. based on its latest published annual report and no further segmental
information is presented.
(2) The number represented the gross profit margin of te lecommunication network business of Runjian Co., Ltd.
based on its latest published annual report.
(3) The number represented the gross profit margin of software and information services of Guangdong Yichuang
Technology Co., Ltd. based on its latest published annual report.
(4) Overall net profit margin is calculated by div iding the net profit attributable to the company ’s shareholders by
total revenue based on their latest published annual reports.
Source: Annual Reports of Companies, CIC
Entry barriers and key success factors of the telecommunication network service industry in
China
The following are key barriers of entry to the tel ecommunication network service industry in
China:
(i) license and qualification: telecommunication network service is essential to the safety
and stability of telecommunication networks which have broad implications on society
and the economy. Therefore, the industry regulatory authorities have formulated specific
qualification standards that would need to be met for service providers. Further, new
entrants to the market are required to obtain n ecessary licences and qualifications, such
as General Contracting Qualification of Telecommunication Engineering ( 通信工程總承
包資質), Communication Information Network System Integration Enterprise
Qualification ( 通信信息網絡系統集成資質), Construction Enterprise Qualification
Certificate ( 通信工程施工企業資質) and etc., before they carry out the
telecommunication network se rvice business. For example, the evaluation of General
Contracting Qualification of Te lecommunication Engineering ( 通信工程總承包資質)
involves complicated proce dures and requirements in terms of registered capital and
performance of the company.
(ii) technology and R&D capabilities: as a high-tech service industry, technology and R&D
capabilities are the foundation for the development of the telecommunication network
service industry. Telecommunication netwo rk service providers must have profound
understanding of the telecommunication n etwork system and technologies of different
telecommunication operators, and variou s kinds of telecommunication equipment, in
particular, during transition from 4G to 5 G. Therefore, market participants in the
telecommunication network service industry need to upgrade their technology know-how
and software in order to achieve high-efficiency and low-cost operation and enhance
their competitiveness.
(iii) talent acquisition: the telecommunication network serv ice industry is a talent-intensive
industry with heavy demand for telecommuni cation engineers. However, the average pass
rate of the examinations for Intermediate T elecommunication Engineer Qualification ( 中
級通信工程師職稱) has been below 30% for an extended period of time, and therefore
the talent pool for which is relatively limited. It is difficult for new entrants to establish
and maintain a stable professional servic e team with solid technology and extensive
experience in a short period of time, which has become one of the main barriers for
entering the telecommunicatio n network service industry.
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(iv) good relationship with d ownstream customers: to ensure stable and reliable
telecommunication network operat ion, downstream customers, such as
telecommunication opera tors, generally have a preference to cooperate with
telecommunication network service providers with strong technical ability, rich industry
experience and an outstanding track record of performance. Therefore, it is common for
telecommunication network service providers to maintain good relationship with
downstream customers and rely heavily on business opportunities from them and
improve their competitiveness in the market . Service providers who have accumulated
long-term and stable customer resources can form a barrier to other enterprises in the
industry.
THE INFORMATION AND COMMUNICATION T ECHNOLOGY INTEGRATION SERVICES
INDUSTRY IN CHINA
Overview of information and communication tech nology (ICT) integrati on services industry
Integration services generally involve detaile d design and implementation services that link
application functionality, such as customise d software, with the established or planned IT
infrastructure. Specific activities might include project planning, project management, detailed
design and implementation of application and systems. ICT integration service refers to a
subdivision of integration service s that deploy ICT technologies into projects, which include system
design, equipment and material procurement, installation and implementation and system
commissioning etc, which provide entities with ICT solutions that help digitalise their daily
operations and increase their operation efficiency , covering applications in communication network,
computer network, video surveillance, vide o conferences, IoT serv ices, and software.
ICT integration service providers can be categ orised into: (1) telecommunication operators
backed service providers; and (2) third-party se rvice providers. The former are subsidiaries of
telecommunication operators or partially owned by telecommunication operators, whereas the latter
are independent players who leverage their understandings in hardware and software and provide
professional integration services to customers and their services include hardware procurement, the
provision of customised solutions, software appl ications, project manage ment, maintenance and
operation services. As the Company is one of the third-party service providers engaged in ICT
integration services industry, this section mai nly focuses on the analysis of third-party ICT
integration services.
Market size of third-party ICT inte gration services industry in China
Total revenue generated by the third-party ICT integration services industry in China has
increased from RMB116.7 billion in 2018 to RMB1 68.7 billion in 2022, with a CAGR of 9.7%. In
the past few years, the development of 5G and IoT has boosted demand for third-party ICT
integration services from customers covering vari ous sectors, including industrial, security and
government. As government has published favourable policies continuing that continually promote
the rapid growth of integration services, wit h downstream sectors continuing to carry out
digitalisation transformation, the demand for I CT integration services is expected to grow in the
future. Total revenue of the third-party ICT integra tion service industry is expected to further grow
to RMB254.0 billion in 2027, with a CAGR of 8.5% from 2022 to 2027.
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Market size of third-party ICT integratio n services industry, in terms of revenue,
China, 2018 –2027E
0
100
200
300
8.5%9.7%
116.7 128.9 138.1 152.5 168.7
189.0 205.3 222.3 240.2 254.0
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E
Third-party ICT Integration Services
CAGR
2022–2027E2018–2022
RMB billion
Source: CIC
Market drivers and future trends of third-part y ICT integration services industry in China
It is expected that growth in the third-party ICT integration service industry will be driven by
the following factors:
(i) increasing demand for professional a nd customized integration services: customers
from vertical industries and government se ctors have increasing demand for ICT
integration services providers that have extensive industry knowledge and provide
customized services. Since th e IT infrastructure has developed to be more comprehensive
and customers ’ demand also varied according to i ndustry nature and their size,
professional and customized integrat ion services addressing customers ’ core demand has
become the leading trend of the industry.
(ii) continuous evolution of telec ommunication technology: the evolution of
telecommunication technology is the inherent driving force for the development of ICT-
related products and services. Every revo lution in telecommunication technology will
initiate the upgrade of telecommunication network, which will trigger new demands for
ICT infrastructure. The commercialisati on and application of 5G technologies has
triggered a new round of ICT infrastructure upgrade in downstream client and brought
new demand for ICT integration services.
(iii) favourable policies encouraging industrial applications of ICT: in 2022, the State
Council issued ‘‘Development Plan for the Digital Economy of the 14th Five-Year Plan ’’
(〈 ‘‘十四五’’數字經濟發展規劃〉), stating the importance of digital economy and
promoting industrial digital transformation process. In the 14th Five-year Plan, based on
the solid foundation of 5G commercialization, the government actively promotes the
development of 6G technologies and supports to the R&D of future 6G technology.
Given the thriving demand for digital transfo rmation from differe nt industries and the
evolving telecommunication technologies, th e business of ICT integration service will
enter into a new period of rapid development.
Competitive landscape of third-party ICT integration service industry in China
The third-party ICT integration services market is relatively fragmented, with top three third-
party ICT integration service providers accounting for approximately 13.3% of the market in terms
of revenue in 2022. The Company ’s revenue of third-party ICT integration services reached
RMB54.6 million in 2022 and accounted for approximately 0.03% of the market share in terms of
revenue.
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The Project Level Margin of this segment of the Company for 2022 was 21.1% (which is
represented by one minus the Operating Costs Ratio of approximately 78.9%), which exceeded the
gross profit margin of the top three providers. The Company considers that the relatively higher
project level margin of its ICT integration servic es segment was principally attributable to the
relatively cautious approach taken by the Company in view of the liquidity requirements of the ICT
integration projects. Nevertheless, according to CIC, the industry range of profit margin for projects
of ICT integration services normally ranged fr om 5.0% to 25.0%, and the Project Level Margin of
the ICT integration service of the Company fell within such range.
In addition, the net profit margin of the Compan y in 2022 also exceeded the overall net profit
margin of the top three third-party ICT integration services providers because of the adoption of a
more cost cautious approach in managing its business and selecting projects.
Ranking of the top three third-party ICT integration services providers,
in terms of revenue, China, 2022
Rank Third-party service provider Description Revenue*
Market
share of
total revenue
Gross
profit margin
Overall net
profit
margin (3)
(RMB million) (%)
1 China Communications
Services Co., Ltd.
A listed state-owned telecommunication
technology service provider founded in
2006 and headquartered in Beijing. Its
businesses focus on network engineering
service and outsourcing services to
telecommunication operators and
government organizations.
15,210.7 9.0% 11.4%
(2) 2.4%
2 Cetc Potevio Science and
Technology Co., Ltd. (1) A listed professional telecommunication
service provider founded in 2000 and
headquartered in Guangdong province. Its
business focus on telecommunication
network project, design and enhancement,
LED display, etc.
4,158.8 2.5% 15.2% 3.0%
3 Beijing Teamsun Technology
Co., Ltd.
A listed professional digital operation service
provider founded in 1998 and
headquartered in Beijing with its business
focus on
network engineering consulting,
communication planning, network design
and network enhancement, etc.
3,060.7 1.8% 8.4% –8.1%
Sub-total 22,430.2 13.3%
Others 146,220.3 86.7%
Total 168,650.5 100.0%
Notes:
(1) This company was formerly known as Gci Science and Technology Co., Ltd. and has been renamed as Cetc
Potevio Science and Technology Co., Ltd. since June 2022.
(2) The number represented the gross profit marg in of telecommunication network business of China
Communications Services Co., Ltd. based on its latest published annual report and no further segmental
information is presented.
(3) Overall net profit margin is calculated by div iding the net profit attributable to the company ’s shareholders by
total revenue based on their latest published annual reports.
Source: Annual Reports of Companies, CIC
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Entry barriers and key success factors of ICT integration service providers in China
The following are key barriers of entry to the ICT integration service providers in China:
(i) expertise in software and hardware application: technological competitiveness and
service quality are crucial to integration service providers. Project design,
implementation and maintenance stages of core technologies require service providers to
have a high level of communication network knowledge, and at the same time, they must
have profound understanding and extensive pract ical experience in the software industry.
(ii) deep understanding of demand: provision of customised ICT integration services
require deep understanding of demand from customers arising from their core business
needs. Service providers shall maintain goo d communications with their customers and
have deep understanding of their specific n eeds in order to successfully accomplish the
projects.
(iii) proven track record in industry practice: ICT integration services providers with
proven track record are more competitive in this industry. When communicating with
business customers, showing previous indu stry practice is an effective measure to gain
the trust from customers.
THE TELECOMMUNICATION NETWORK-RELATED SOFTWARE DEVELOPMENT
SERVICE INDUSTRY IN CHINA
Overview of telecommunication network-related software
Telecommunication network-related software perform telecommunication network testing, data
analysis, mapping, location analysis, backstage m anagement and other tasks in telecommunication
network enhancement and maintenance. As important tools in telecommunication network service,
telecommunication network-related software impr ove the efficiency of wirele ss telecommunication
network enhancement and maintenance and guarant ee the normal operation of telecommunication
network. Telecommunication netwo rk-related software include d rive test software, analysis
software, planning software and backstage manag ement software. The table below sets forth the
major functions of each software.
Type of software Major functions
Drive test software . Evaluate and measure the performance and quality parameter of
telecommunication network in specific area; enable engineers to verify,
enhance and troubleshoot network
Analysis software . Improve the automation degree in teleco mmunication network enhancement,
and help engineers to analyze data, locate and eliminate network faults
Planning software . Simulate environment planning, access p oints deployment, telecommunication
network signal and generate reports
Backstage management
software
. Manage and allocate resource for telecommunication network enhancement
and maintenance, including personnel, vehicles and equipment
Source: CIC
Market size of the telecommunication network-re lated software development service industry
in China
The total revenue of telecommunication network -related software development service industry
for China ’s telecommunication industry has incr eased from RMB653.6 million in 2018 to
RMB1,027.3 million in 2022, with a CAGR of 12.0%. The development of 5G has brought new
demand for telecommunication network-related s oftware from downstream clients, and companies
are developing new software to meet the demand for intelligent and automatic network support.
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Since the trend of 5G will continue to drive the growth of software application in
telecommunication network service and the telecommunication network-related software will be
inevitable in the practice of telecommuni cation network service, the total revenue of
telecommunication network-related software devel opment service industry is expected to grow from
R M B 1 , 0 2 7 . 3m i l l i o ni n2 0 2 2t oR M B 1 , 6 2 0 . 3m i l l i o ni n2 0 2 7 ,w i t haC A G Ro f9 . 5 % .
Market size of telecommunication network-rel ated software development service industry,
in terms of revenue, China, 2018 –2027E
0
500
1,000
1,500
9.5%12.0%
653.6 726.9 811.0
916.9
1,027.3
1,141.6
1,258.8
1,378.2
1,449.0
1,620.3
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E
Telecommunication network related software
CAGR
2022–2027E2018–2022
RMB million
Source: CIC
Market drivers and future trends of the telecommunication network-related software
development service industry in China
It is expected that growth in the telecommunica tion network-related software development
service industry will be driven by the following factors:
(i) increasing demand for mobile internet traffic: mobile internet traffic has grown
rapidly in the past few years. As of 2022, m obile internet traffic volume in China
reached 261.8 billion GB, increasing from 71.1 billion GB in 2018 with a CAGR of
38.5% during this period. Additionally, the average data traffic per user per month
(DOU) reached 15.2 GB in 2022, increasing from 4.6 GB in 2018 with a CAGR of
34.5% during this period. The thriving usage and demand for mobile internet traffic has
brought strict requirements for the enhancem ent and maintenance of telecommunication
network and promoted the development of related software market.
(ii) large-scale investment in 5G network: large-scale telecommunication network
construction will bring strong demand for telecommunication network-related software.
In 2022, approximately 860,000 base statio ns were built to China, bringing the total
number of base stations to 10.8 million. Meanw hile, the fixed asset investment of major
telecommunication operators in China amo unted to RMB419.3 billion in 2022. In order
to maintain the normal operation of mass ive telecommunicatio n network system,
telecommunication operators have increased the demand for telecommunication network
enhancement and maintenance, as well as the supporting software.
(iii) wider application in vertical industries: on 6 June, 2019, the MIIT officially issued 5G
commercial licences to the major telecommun ication operators, indicating that China ’s
telecommunication industr y has officially entered the 5G era. The development and
application of 5G technologies will profoundly change the service of the
telecommunication industry and drive the further application of related software. 5G
network will not only serve individual users, but also will have a wide range of
application in the IoT and vertical industries, s uch as intelligent factories and intelligent
vehicles. Therefore, the application o f software in telecommunication network
enhancement and maintenance will be e xtended to more vertical industries.
(iv) integration of multifunction telecommunication software: telecommunication network
support serves as the daily operation of telecommunication network and is fundamental
for the normal function of telecommunica tion network. With the upgrade of the
telecommunication technologies, automat ic and intelligent network support will be the
future trend, which would likely require com prehensive supporting software to provide
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with multi-functional services. In the future, tel ecommunication network-related software
will integrate multiple functions, enabling s taff to complete multiple tasks through single
software solution.
Competitive landscape of tel ecommunication network-related software development service
industry in China
Major players in the telecommunication network -related software development service industry
in China can be divided into three categories: 1) thir d-party service provider, 2) telecommunication
equipment supplier, and 3) software companies. T hird-party service provider achieved a market
share of 40.0% in the telecommunication network-re lated software development service industry as
of 2022.
Third-party service providers play an important role in the telecommunication network-related
software development service industry, and the top three third-party service providers accounted for
approximately 38.3% of industry in terms of revenue in 2022. The Company ’s revenue on
telecommunication network-related software dev elopment service in 2022 is RMB25.3 million and
accounted for 2.5% of the market share in telecomm unication network-related software development
service industry in terms of revenue.
The gross profit margin in relation to the network-related software products and development
service of the top three third-party service providers ranged from approximately 31.3% to 57.2%,
while the Project Level Margin of the Company for 2022 was 50.6% (which is represented by one
minus the Operating Costs Ratio of approxi mately 49.4%), which fell within the range.
Nevertheless, according to CIC, the industry range of profit margin for projects of network-related
software products and development services nor mally ranged from 20.0% to 40.0%, and the Project
Level Margin of the network-related software products and development services of the Company
and the gross profit margin of Dingli Communications Corp., Ltd. in the segment of approximately
50.6% and 57.2%, respectively, exceeded the ran ge. This, as far as the Company is concerned, is
because the pricing of software development ser vices of the Company was mainly determined based
on the estimated cost of software development and there is no standard pricing mechanism for such
service. Therefore, the Directors consider, and CIC concurs, that the Project Level Margin of this
segment of the Company was not unreasonable.
In addition, the net profit margin of the Compan y in 2022 also exceeded the overall net profit
margin of the top three third-party service p roviders because of the adoption of a more cost
cautious approach in managing its business and selecting projects.
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Ranking of the top three third-party service provider, in terms of revenue on
network-related software products an d development serv ice, China, 2022
Rank Third-party service provider Description Revenue*
Market share
of total
revenue
Gross profit
margin
Overall net
profit
margin (2)
(RMB million) (%)
1 Eastone Century Technology
Co., Ltd.
A listed professional telecommunication
service provider founded in 2001 and
headquartered in Guangdong province. Its
business focus on providing network
service and integrated solutions for
telecommunication operators and
developing IoT platforms and applications.
180.0 17.5% 31.3% 0.8%
2 Runjian Co., Ltd. A listed professional telecommunication
service provider founded in 2003 and
registered in Guangxi province. Its
businesses focus on network management
and maintenance in telecommunication
and energy industry.
131.3 12.8% N/A
(1) 5.2%
3 Dingli Communications
Corp., Ltd.
A listed professional telecommunication
service provider founded in 2001 and
headquartered in Guangdong province. Its
business focus on comprehensive solutions
for network operations, big data, cloud
computing and IoT applications
82.1 8.0% 57.2% –80.5%
Sub-total 393.4 38.3%
Others 633.9 61.7%
Total 1,027.3 100.0%
Note:
(1) The network-related software products and developm ent service is not a separate reportable segment in the
annual report of Runjian Co., Ltd. (probably due to its si ze as it only represented approximately 1.6% of the
total revenue of Runjian Co., Ltd.) and therefore no gross profit margin is available.
(2) Overall net profit margin is calculated by div iding the net profit attributable to the company ’s shareholders by
total revenue based on their latest published annual reports.
Source: Annual Reports of Companies, CIC
Entry barriers and key success factors of telecommunication network-related software
development service industry in China
The following are key barriers of entry to the tel ecommunication network-related software
development service industry in China:
(i) understanding in network technologies: R&D ability is the foundation of the
technology-intensive software industry fo r software developers to develop efficient
software that meet the demand for engineer s in performing telec ommunication network
enhancement and maintenance. For new market entrants, technology barrier is difficult to
overcome because developing software th at fits different standard from different
telecommunication operators require compreh ensive understanding in telecommunication
network technologies.
(ii) close relationship with tel ecommunication operators: telecommunication operators,
being major users and key clients in the mar ket, would incur considerable cost and
expenses in telecommunication network enha ncement and maintenance and its related
software. For players in the industry, close cooperation relationship with
telecommunication operators will therefore b e beneficial to the long-term development of
the players.
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(iii) recognition from industry professionals: recognition from industry professionals means
that the software is able to solve the practical pain points of engineers and improve their
work efficiency. Within the highly profes sional industry of telecommunication network
enhancement and maintenance, the recogni tion from industry profe ssionals is important
for software developers to expand their business.
(iv) talent acquisition: experienced and qualified softwa re engineers are essential in
developing telecommunicatio n network-related software, and they are required to have
solid background knowledge fo r telecommunication network service as well as software
develop abilities. Talents with such quali ties become key assets for market players in the
industry.
CHALLENGES OF TELECOMM UNICATION NETWORK SERVICE, ICT INTEGRATION
SERVICES AND TELECOMMUNICATIO N NETWORK-RELATED SOFTWARE
DEVELOPMENT SERVICE INDUSTRY
The major challenges for service providers of the telecommunication network service, ICT
integration services, and telecomm unication network-related softw are development service industry
in China include shortage of high-end technical pe rsonnel, intense marke t competition, and high
reliance on few customers.
(i) shortage of technology professionals: the telecommunication n etwork service, ICT
integration services and telecommunication n etwork-related software and development
industry is a talent and technology-intensive industry, which has huge demand for
professional technical pers onnel with solid technical background, comprehensive
application ability, as well a s practical experience to perform services in efficient
manner, and these technology professionals in high demand in the market. At present,
shortage of technology professionals has become one of the bottlenecks that restrict the
expansion of market players.
(ii) intense market competition: as there are a large number of companies actively
competing in the industry, the market competition is rather intense and market players
tended to use lower price to bid more projects. As a result, the actual contract price in
the market has decreased continually. For instance, the price discount of
telecommunication network service contr acts for telecommunication operators has
gradually decreased from approximately 50% in 2018 to approximately 40% in 2022 and
is expected to continue to decline in the future, which leads to shrinking profit margins
of market players.
(iii) high reliance on few clients: in China, telecommunication network industry is
dominated by the three telecommunication operators, and it is important for market
players to maintain good relat ionships with them and it is difficult to diversify such
concentration risks.
ANALYSIS OF LABOUR COST IN TELECOMMUNICATION NETWORK SERVICE
INDUSTRY IN CHINA
The telecommunication network se rvice industry is also labour intensive and thus rising labour
costs would have significant impact on industry players ’ operating performance.
With the aging of population in China, labo ur cost has been increasing in recent years, with
the annual salary of technical staff in the teleco mmunication network service industry increased
from RMB167.9 thousand in 2018 to RMB221.8 thousand in 2022, representing a CAGR of 7.2%.
It is expected that their annual salary will con tinue to increase and reach RMB288.0 thousand in
2027 with a CAGR of 5.4% from 2022 to 2027. However, due to fierce market competition and the
decline of profit margin in the telecommunication network service industry, the future growth rate
is expected to be lower than that in the previous five years.
To reduce the risk of declining profitability ca used by rising labour costs, it is important for
market players in telecommunicat ion network service industry to apply efficient human resource
management, labour skill training and improve work efficiency of employees.
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Annual salary of technical s taff in telecommunication
network service industry, China, 2018 –2027E
0
50
100
150
200
250
300
5.4%
167.9 186.9 199.2 210.2 221.8 233.9 246.6 259.8 273.6 288.0
7.2%
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E
Annual salary of technical staff in
telecommunication network service industry
CAGR
2022–2027E2018–2022
RMB thousand
Source: MIIT, CIC
ANALYSIS OF TELECOMMUNICATION NETWORK TESTING SOFTWARE IN CHINA
China ’s telecommunication network testing softwa re industry has experienced steady growth in
recent years. With telecommunication operators ’ increasing investment in the construction of
telecommunication network facilities in China, th eir demand for high-qual ity telecommunication
network access devices will continue to grow, and easy-to-use telecommunication network testing
software would be an optimal so lution for these operators.
In relation to traditional network testing software, which is mainly provided by leading ICT
companies and telecommunication network service p roviders, their solutions are more adaptive to
professional testing needs, which can only be used on computers or customized smartphones, and is
at high cost but with poor portability. On the contr ary, the easy-to-use telecommunication network
testing software has the advantage of affordabil ity and portability, and the application of this
software solution can be expanded to new target us ers who are individual non-technical users, such
as marketing and management personnel engaged in t elecommunication and ot her industries. There
are few similar software in the market that have comp arable functions, accessibility and price point,
and the market is not yet saturated.
Driven by the growing demand for easier access to network testing, the total number of target
clients of telecommunication network testing software in China is expected to increase from 2.1
million in 2022 to 3.7 million in 2027, with a CAGR of 12.1%. Based on the total number of target
clients in China and their expected annual expens es on the easy-to-use telecommunication network
testing software, the total addressable market o f this industry in China has increased from RMB33.9
million in 2018 to RMB76.7 million in 2022, representing a CAGR of 22.7%. Along with the
popularity of IoT devices and the development of 5 G and 6G telecommunication technologies, this
market size is expected to continue growing to approximately RMB163.0 million by 2027,
representing a CAGR of 16.3% from 2022 to 2027. The following chart presents the total
addressable market of easy-to-use telecommunicat ion network testing software industry in China
f r o m2 0 1 8t o2 0 2 7 .
Total addressable market of Easy-to -Use Telecommunication Network
Testing Software, in terms of revenue, China, 2018 –2027E
0
50
100
200
150
16.3%22.7%
33.9 44.5
163.0
146.7
128.5
111.8
95.7
76.768.559.4
2022 2023E 2024E 2025E 2026E 2027E
Total addressable market of Easy-to-Use Testing Software
CAGR
RMB million
2022–2027E2018-2022
2021202020192018
Source: MIIT, SRRC, CIC
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LAWS AND REGULATIONS IN RELATION TO OUR GROUP ’SB U S I N E S SI NT H EP R C
Our business operations are subject to extensiv e supervision and regulation in the PRC. This
Regulatory Overview sets out a summary of the prin cipal laws, regulations and policies to which
we are subject.
Regulations and policies relating to the industry
Pursuant to the Catalogue for the Guidance of In dustrial Structure Adjustment (《產業結構調
整指導目錄》) (2019 Version) promulgated by the National Development and Reform Commission
(‘‘NDRC ’’) on 30 October 2019 and amended on 30 December 2021, telecommunication network-
based technology service (including software d evelopment, operation and maintenance) is the
industry being encouraged.
In accordance with the Administrative Provisions on the Qualification of Construction
Enterprises (《建築業企業資質管理規定》) promulgated on 6 October 1995 and amended on 18
April 2001, 26 June 2007, 22 January 2015 , 13 September 2016 and 22 December 2018
respectively, a construction enterprise shall apply for its qualification based on its conditions such
as assets possessed by it, main personnel, achieve ment of construction projects completed, and
technical equipment, and may only engage in construction activities within the scope of its
qualification, after passing the q ualification examination and obtai ning the qualification certificate
of construction enterprise. The administrative department in charge of housing and urban-rural
development under the State Council shall be re sponsible for the centralized supervision and
administration of qualifications of construction enterprises nationwide. The administrative
department in charge of housing and urban-rural development of the people ’s government of a
province, autonomous region or municipality di rectly under the Central Government shall be
responsible for the centralized supervision and ad ministration of qualifications of construction
enterprises within its own jurisdiction.
In accordance with the Construction Law of the PRC (《中華人民共和國建築法》) promulgated
on 1 November 1997 and amended on 22 April 2011 and 23 April 2019 respectively, construction
enterprises, survey units, design units and project supervision units engaging in construction
activities shall be classified into different grades of qualifications in accord ance with its conditions
such as the registered capital, specialized t echnical personnel, technical equipment in their
possession and achievements in construction proj ects completed, and may engage in construction
activities within the scope permi tted by their respective qualifi cation grades on obtaining the
qualifications certificates of corresponding gr ades upon passing qualification examination.
In accordance with the Regulations on the Administration of Security and Technology of
Guangdong Province (《廣東省安全技術防範管理條例》) promulgated on 7 July 2002 and amended
on 23 July 2010, the public security authorities sha ll implement classified management upon the
operations including the design, construction and m aintenance of security-technology-guard-system
for preventive security. And those who have not obtained the corresponding qualification
certificates shall not be engaged in the above operations.
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Foreign investment
Pursuant to the Foreign Investment Law of the PRC (《中華人民共和國外商投資法》)
promulgated on 15 March 2019 and came into effect on 1 January 2020, and the Implementation
Regulations for the Foreign Investment Law of the PRC (《中華人民共和國外商投資法實施條例》)
promulgated by the State Council on 26 December 2019 and came into effect on 1 January 2020,
the State implements a management system of nat ional treatment before the entry of foreign
investment plus a negative list. If the investment conducted by investors from Hong Kong Special
Administrative Region and Macau Sp ecial Administrative Region, the Foreign Investment Law and
the Implementation Regulations for the Foreign Investment Law shall apply.
Foreign investments in different industries in the PRC are regulated through the Special
Administrative Measures for Access of Foreign Investment (Negative List) (2021 Edition) (《外商投
資准入特別管理措施(負面清單) (2021 年版)》)( ‘‘Negative List ’’)a n d the Negative List for Market
Access (2022 Version) (《市場准入負面清單(2022 年版)》)( ‘‘Market Access Negative List
’’)w h i c h
were jointly promulgated by the NDRC and the M inistry of Commerce of the PRC. According to
the 2021 version of the Negative List promulgated on 27 December 2021 and came into effect on 1
January 2022 and the Market Access Negative List issued on 12 March 2022, all kinds of market
players may enter into industries, f i e l d s ,b u s i n e s sa n ds oo no u t s i d ethe Market Access Negative
List in a legal and equal way. Foreign investors may not invest in areas where foreign investors are
prohibited from investment as provided by the Negative List . A foreign investment permission must
be obtained prior to investing in other areas th at are not prohibited in the Negative List.
Telecommunication network-based technology serv ice (including software development, operation,
maintenance and so on) has not been included in the Negative List and matters that are prohibited
from entry in the Market Access Negative List.
Bid Invitation and Bidding
In accordance with the Bid Invitation and Bidding Law of the PRC (《中華人民共和國招標投
標法》), which was promulgated on 30 August 1999 and amended on 27 December 2017, the
following construction projects to be undertake n within the territory of the PRC, including the
surveying, design, construction and supervisio n of such projects as well as the purchase of key
equipment and materials for such projects, shall be subject to bid invitation:
. large infrastructure and public utility project s that concern public interests and security;
. projects invested completely or partly with State-owned funds or financed by the State;
. projects using loans or aid funds from intern ational organizations or governments of
other countries.
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In accordance with Provisions for Engineering Project s Compulsorily Subject to the Bidding
Process (《必須招標的工程項目規定》) promulgated by NDRC on 27 March 2018 and came into
effect on 1 June 2018, and Provisions on the Scope of Infrastructure and Public Utility Projects
Compulsorily Subject to the Bidding Process (《必須招標的基礎設施和公用事業項目範圍規定》)
promulgated by NDRC and came into effect on 6 June 2018:
1. Large infrastructure and publ ic utility projects that concer n public interests and security
include:
. Energy infrastructure projects for coal, oil, natural gas, power, new energy, etc.;
. Transport infrastructure projects with respect to railway, highway, pipelines,
waterways, public aviation airports and Level A1 general aviation airports, etc.;
. Communications infrastructure projects for telecommunications hubs,
telecommunications information networks, etc.;
. Water resource infrastructure projects for flood control, irrigation, flood drainage,
water diversion (supply), etc.;
. Urban rail transit projects and other urban construction projects.
2. Projects invested completely or partly with State-owned funds or financed by the State
include:
. Projects using a budget fund of over RMB2 million which accounts for more than
10 percent of the project ’s investment amount;
. Projects using funds sourced from state-owned enterprises or institutions with a
controlling or dominant position.
3. Projects using loans or aid funds from inter national organizations or governments of
other countries include:
. Projects financially supported with loans or aid funds offered by international
organizations such as the World Bank and the Asian Development Bank;
. Projects invested with loans or aid funds from foreign governments or authorities
thereunder.
Projects within the above scope must undergo the bidding process if the procurement of
survey, design, construction or supervision servi ces, or important equipment and materials relating
to engineering construction, meets any of the following standards:
. The estimated price of a single construction contract is over RMB4 million;
. For the procurement of important equipmen t, materials or other goods, the estimated
price of a single contract is over RMB2 million;
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. For the procurement of survey, design or supervision services, the estimated price of a
single contract is over RMB1 million.
Where the procurement of survey, design, construction or supervision services, or important
equipment and materials relating to engineerin g construction in a single project can be made
together, such project must be subject to the biddi ng process if the estimated contract price totals
the criteria given in the preceding paragraph.
Real property
In accordance with the Administrative Measures f or Commodity Housing Tenancy (《商品房屋
租賃管理辦法》) promulgated on 1 December 2010 and came into effect on 1 February 2011, the
parties concerned to a housing tenancy shall sign a tenancy contract in accordance with applicable
laws and administrative regulations. The parties concerned to a housing tenancy shall go through
the housing tenancy registration formalities with the competen t construction (real estate)
departments of the municipaliti es directly under the Central Government, cities and counties where
the housing is located within 30 days after the housing tenancy contract is signed.
Intellectual property
Patent
In accordance with the Patent Law of the PRC (《中華人民共和國專利法》) promulgated on 12
March 1984 and amended on 4 September 1992, 25 August 2000, 27 December 2008 and 17
October 2020 respectively, the patent adminis tration division of the State Council shall be
responsible for the patent administration throug hout the PRC, and shall accept and examine patent
applications and grant patent rights in accordance with laws. The patent admi nistration department
of the people ’s governments of provinces, autonomous regions or municipalities shall be
responsible for the patent administration within their respective own jurisdictions.
Pursuant to the Patent Law , to be granted a patent, an invention or a utility model shall be
novel, inventive and practically applicable. Gener ally, only one patent right will be granted for each
invention, utility model and appea rance design. The patent right for inventions shall be valid for 20
years, the patent right for utility models shall be valid for 10 years, and the patent right for designs
shall be valid for 15 years, in all cases shall be from the initial filing date of the patent application.
The patentee shall pay an annual fee since the year in which the patent right was granted. In any of
the following cases, the patent right shall cease before the expiration of its duration:
. where an annual fee is not paid as prescribed;
. where the patentee abandons his or its patent right by a written declaration.
Any cessation of the patent right shall be registered and announced by the patent
administrative department of the State Council.
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Trademark
In accordance with the Trademark Law of the PRC (《中華人民共和國商標法》) promulgated
on 23 August 1982, came into effect on 1 March 1983 and amended on 22 February 1993, 27
October 2001, 30 August 2013 and 23 April 2019 of which the last amendment has become
effective on 1 November 2019, the Trademark Office of the administrative department for industry
and commerce under the State Council shall be respo nsible for the registration and administration
of trademarks in the PRC. The administrative department for industry and commerce under the
State Council shall establish a Trademark Revi ew and Adjudication Board to be responsible for
handling trademark disputes. Any natural person, le gal person, or other organizations that needs to
acquire the exclusive right to use a trademark in th e production and operation activities shall file an
application for trademark registration with the Trademark Office.
Registered trademarks shall be valid for 10 years from the date when the registration is
approved. If a registrant needs to continue to use t he registered trademark after its expiration, an
application for registration renewal shall be ma de within 12 months before the expiration date. If
the registrant fails to apply in a timely manner, an extension period of an additional six months
may be granted. If no application has been filed bef ore the extension period expires, the registered
trademark shall be deregistered. Each renewal of registration shall be valid for 10 years.
Copyright
According to the Copyright Law of the PRC (《中華人民共和國著作權法》) promulgated on 7
September 1990 and revised on 27 October 2001, 26 February 2010 and 11 November 2020
respectively, the Regulations for the Implementation of the Copyright Law of the PRC (《中華人民
共和國著作權法實施條例》) promulgated on 30 May 1991 and revised on 2 August 2002, 8
January 2011 and 30 January 2013 respectively and the Regulation for Computer Software
Protection (《計算機軟件保護條例》) promulgated on 4 June 1991, revised on 20 December 2001, 8
January 2011 and 30 January 2013, works of citizen s, legal persons or other organizations of the
PRC, whether published or not, enjoy copyri ght protection under this Law. According to the
Measures for the Registration of Computer Software Copyright (《計算機軟件著作權登記辦法》)
promulgated and came into effect on 20 February 2002 and amended on 18 June 2004, such
measures are applicable to registration of softwa re copyright, exclusive licensing contracts for
software copyright and transfer contracts of softw are copyright. The state copyright administrative
department shall encourage softwa re registration and give priority to the protection of the registered
software.
Domain name
According to the Administrative Measures for Internet Domain Names (《互聯網域名管理辦
法》) promulgated by Ministry of Industry and Information Technology ( ‘‘MIIT ’’) on 24 August
2017 and coming into effect on 1 November 2017, MIIT shall be responsible for supervising and
administering nationwide domain name service s and the communications administrations of all
provinces, autonomous regions and municipalitie s directly under the central government shall
supervise and administer domain name services with in their respective administrative region. The
‘‘.CN’’and the ‘‘.zhongguo (in Chinese character) ’’shall be China ’s national top-level domain
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names. Chinese domain names are an integral part of the internet domain name system of China.
The State shall encourage and support the technica l research, promotion and application of the
Chinese domain name system.
Production safety
The principal law on production safety is the Production Safety Law of the PRC (《中華人民共
和國安全生產法》) promulgated on 29 June 2002 and amended on 27 August 2009, 31 August 2014
and 10 June 2021 respectively. Pursuant to the Production Safety Law , manufacturing companies
should establish a safe production system and imp rove working conditions in accordance with this
law and other relevant laws, administrative re gulations and national standards or industrial
specifications.
Labour protection
Labour contracts
Pursuant to the Labour Law of the PRC (《中華人民共和國勞動法》) which was promulgated
on 5 July 1994 and was amended on 27 August 2009 and 29 December 2018, the Labour Contract
Law of the PRC (《中華人民共和國勞動合同法》) which was promulgated on 29 June 2007 and was
amended on 28 December 2012, and the Regulations on the Implementation of Labour Contract
Law of the PRC (《中華人民共和國勞動合同法實施條例》) which was promulgated and came into
effect on 18 September 2008, the labour contract is the basic form of employment adopted by the
PRC enterprises, and, employers shall enter into labour contracts with employees within one month
since the date of employment.
Social insurance
According to the Law of Social Insurance of the PRC (《中華人民共和國社會
保險法》)w h i c h
was promulgated on 28 October 2010 and was amended on 29 December 2018, the Chinese social
security system basically consists of five majo r types of social insurances, namely maternity
insurance, endowment insurance, medical insuran ce, unemployment insurance and industrial injury
insurance, and each company in the PRC is requi red to contribute social insurance for its
employees. If any company fails to fully pay the social insurance premiums, the social insurance
contributions collecting agency shall place an order with the employer demanding full payment
within a prescribed period, and an overdue payment at the rate of 0.05% per day shall be levied as
of the date of indebtedness. When the payment is not made at the expiry of the prescribed period, a
fine above the overdue amount but less than its triple shall be demanded by the relevant
administrative department.
Under the Interim Regulation on the Collection and Payment of Social Insurance Premiums
(《社會保險費徵繳暫行條例》) promulgated on 22 January 1999 and revised on 24 March 2019,
employers and individuals shall pay social ins urance premiums timely in full amount. At the same
time, it clarified that if an employer fails to pay and withhold social insurance premiums, the labour
insurance administrative department or the tax a uthority shall order it to pay within a prescribed
time limit. When the payment is not made at the expiry of the prescribed time limit, 0.2% of the
amount of arrears per day shall be collected.
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Housing provident fund
According to the Regulation on Management of Housing Provident Fund (《住房公積金管理條
例》) promulgated on 3 April 1999 and amended on 24 March 2002 and 24 March 2019, employers
in the PRC must register with the housing provid ent fund management centre. Employers will then
need to open housing fund accounts for their employ ees and contribute to the fund at a rate of not
less than 5% of the employee ’s average monthly salary in the previous year.
Any entity fails to make payment and deposit registration of housing provident fund or go
through the formalities for opening housing provident fund account for its employees will be
ordered by the housing provident management cent re to process the foregoing within prescribed
period, otherwise it will be imposed a fine rang ing from RMB10,000 to RMB50,000. Any entity
fails to make payment of housing provident fund timely or have shortfall in payment of housing
provident fund will be ordered to make the payment or make up the shortfall within the prescribed
time limit, otherwise, the housing provident mana gement centre is entitled to apply for compulsory
enforcement with the people ’sc o u r t .
Tax
Enterprise income tax (EIT)
According to the EIT Law of the PRC (《中華人民共和國企業所得稅法》)w h i c hw a s
promulgated on 16 March 2007 and was amended on 24 February 2017 and 29 December 2018,
and the Regulation on Implementation of the EIT Law of the PRC (《中華人民共和國企業所得稅法
實施條例》) which was promulgated on 6 December 200 7 and revised on 23 April 2019, unless
specified, a uniform income tax rate of 25% applies to all enterprises within the territory of the
PRC. These enterprises are classified as either res ident companies or non-resident companies. Under
the EIT Law , enterprises established under the laws o f foreign countries or regions and whose ‘‘de
facto management bodies ’’are located within the PRC are considered ‘‘resident enterprises ’’and
thus will generally be subject to enterprise income tax at the rate of 25% on their global income.
Also, the Regulation on Implementation of the EIT Law defines the term ‘‘de facto management
bodies ’’
as ‘‘bodies that substantially carry out compre hensive management and control on the
production, operation, personnel, a ccounts and assets of enterprises ’’.
According to the EIT Law, certain high-tech enterprises are entitled to a reduced EIT rate of
15%. The Administrative Measures for the Determination of High and New Technology Enterprise
(《高新技術企業認定管理辦法》) which was promulgated on 14 April 2008 and revised on 29
January 2016 provides that, a company that is to be certified as a High-tech Enterprise shall meet
certain criteria under relevant laws and regulat ions. Once an enterprise obtains the high-tech
enterprise qualification, it may apply for the ta x reduction or exemption with the competent tax
authorities.
According to the Announcement of the State Administration of Taxation on Issuing the Revised
Measures for the Handling of Matters concerning Preferential Enterprise Income Tax Policies
(《國家稅務總局關於發佈修訂後的〈企業所得稅優惠政策事項辦理辦法〉的公告》), which was
promulgated on 25 April 2018 and applicable to the f inal settlements and payments of enterprise
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income tax for 2017 and the handling of matters concerning PIE Tax for subsequent years, matters
concerning PEI Tax refer to those preferences prescribed in the EIT Law and those developed by
the State Council and ethnic autonomous areas upon authorization by the EIT Law. An enterprise
shall, based on its operating conditions and relate d tax regulations, determine on its own whether it
meets the conditions stipulated in the preferentia l items. Those enterprises who meet the conditions
may calculate the tax deductions accordingly and may enjoy EIT preferences by filing an EIT
return. Such enterprises shall collect and sav e relevant documents for future reference.
Withholding Tax on Dividends
According to the Arrangements between the Mainland and the Hong Kong Special
Administrative Region for the Avoidance of Doub le Taxation and the Prevention of Fiscal Evasion
with Respect to Taxes on Income (《內地和香港特別行政區關於對所得避免雙重徵稅和防止偷漏稅
的安排》)，which was signed on 21 August 2006 and amended and became effective on 11 June
2008, 20 December 2010, 29 December 2015 and 6 D ecember 2019, the withholding tax rate for
dividends paid by the PRC resident enterprise to a Hong Kong resident enterprise is 5%, if the
Hong Kong enterprise holds at least 25% of equity interests of the PRC enterprise directly.
According to the Notice of the State Administratio n of Taxation on Issues Concerning the
Implementation of the Dividend Clauses of Tax Agreement (《國家稅務總局關於執行稅收協定股息
條款有關問題的通知》), which was promulgated on 20 February 2009, all of the following
requirements should be satisfied where a fiscal r esident of the other party to the tax agreement
needs to be entitled to such tax agreement treatme nt as being taxed at a tax rate specified in the tax
agreement for the dividends paid to it by a PRC resident company: (a) such a fiscal resident who
obtains dividends should be a company as provided in the tax agreement; (b) owner ’se q u i t y
interests and voting shares of the PRC resident c o m p a n yd i r e c t l yo w n e db ys u c haf i s c a lr e s i d e n t
reaches a specified percentage; and (c) the equity interests of the PRC resident company directly
owned by such a fiscal resident, at any time duri ng the 12 months prior to the obtainment of the
dividends, reaches a percentage specified in the tax agreement.
Regulations on Transfer Price
According to the Circular of the SAT on Printing and Distributing the Implementing Measures
for Special Tax Adjustments (for Trial Implementation) (國家稅務總局關於印發《特別納稅調整實
施辦法(試行)》的通知) promulgated by SAT on 8 January 2009 and became effective on 1 January
2008, and was amended on 16 June 2015, 29 June 2016, 11 October 2016, 11 October 2016, 17
March 2017, 15 June 2018, 26 May 2023 and 7 September 2023 respectively, related party
transactions between an enterprise and i ts related parties shall follow the arm ’s length principle.
A c c o r d i n gt ot h eImplementation Regulations for the EIT Law (《中華人民共和國企業所得稅法實
施條例》) promulgated by the State Council on 6 December 2007 and revised on 23 April 2019, for
the transactions between the enterprise and its related parties, if not meeting the arm ’sl e n g t h
principle, or if done by the enterprise for unreasonable commercial purpose, the tax authority may
adjust the taxable revenue or income in compliance with reasonable methods (including comparable
uncontrolled price method, resale price method, co st-plus method, transactional net profit method,
profit split method and other methods that meet the arm ’s length principle).
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Value-added tax (VAT)
Pursuant to the Interim Regulations of the PRC on Value-added Tax (《中華人民共和國增值稅
暫行條例》) promulgated on 13 December 1993 and am ended on 10 November 2008, 6 February
2016 and 19 November 2017 respectively, and t he Detailed Rules for Implementing the Interim
Regulations of the PRC on Value-Added Tax (《中華人民共和國增值稅暫行條例實施細則》)
promulgated on 25 December 1993, amended on 15 December 2008 and 28 October 2011, all
entities and individuals engaged in sale of goods , provision of processing, repair and replacement
services, sale of services, intan gible assets and, or immovables, and the importation of goods within
the territory of the PRC shall pay VAT. For VAT taxpayers selling goods, labour services or
tangible movable property, leasing services, or i mporting goods other than those specifically listed
in relevant laws and regulations, the VAT rate is 17%, and in certain limited circumstances the
VAT rate is 11%. For taxpayers selling services o r intangible assets, th e tax rate shall be 6%.
Pursuant to the Circular of the Ministry of Finance and the State Administration of Taxation
on Adjusting Value-added Tax Rates (《財政部、國家稅務總局關於調整增值稅稅率的通知》)
which was issued by the Ministry of Finance and t he State Administration of Taxation on 4 April
2018 and became effective on 1 May 2018, the original tax rates of 17% and 11% applicable to any
taxpayer ’s VAT taxable sale or import of goods were adjusted to 16% and 10% respectively.
Pursuant to the Announcement on Relevant Pol icies for Deepening Value-Added Tax Reform
(《關於深化增值稅
改革有關政策的公告》) which was issued by the Mini stry of Finance, the State
Administration of Taxation and the General A dministration of Customs on 20 March 2019 and
became effective on 1 April 2019, the origina l tax rates of 16% and 10% applicable to any
taxpayer ’s VAT taxable sale or import of goods we re adjusted to 13% and 9% respectively.
Urban maintenance and construction tax and education surcharges
Pursuant to the Law of the PRC on Urban Maint enance and Construction Tax (《中華人民共和
國城市維護建設稅法》) which was promulgated on 11 August 2020 and came into effect on 1
September 2021, all entities or individuals who are required to pay consumption tax and value-
added tax shall also be subject to urban maint enance and construction tax. Payment of urban
maintenance and construction tax shall be based on the amount of the consumption tax and value-
added tax actually paid by the taxpayer and shall be made simultaneously. The rates of urban
maintenance and construction tax shall be set at 7%, 5% and 1% for a taxpayer located in a city, in
a county town or town and in a place other than a city, county town or town, respectively.
In accordance with the Interim Provisions on the Collection of Education Surcharges (《徵收
教育費附加的暫行規定》) which was promulgated by the State Council on 28 April 1986 and
amended on 7 June 1990, 20 August 2005 and 8 January 2011 respectively, all entities and
individuals who pay consumption tax, value-added tax and business tax, except for those paying
rural education surcharges in accordance with the Notice of the State Council on Raising
Operational Funds of Rural School (《國務院關於籌措農村學校辦學經費的通知》), shall also be
subject to education surcharges. The rate of edu cation surcharges is set at 3% of the amount of
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value-added tax, business tax and consumption ta x actually paid by each entity or individual, and
the education surcharges shall be paid simultaneously with the value-added tax, business tax and
consumption tax.
Foreign exchange
According to the Foreign Exchange Control Regulations of the PRC (《中華人民共和國外匯管
理條例》) promulgated by the State Council on 29 January 1996 and amended on 14 January 1997
and 5 August 2008, foreign exchan ge receipts of domestic institutions or individuals may be
transferred to the PRC or deposited abroad; the conditions for transfer to the PRC or overseas
deposit, time limit and other details will be specif ied by the foreign exchange control department of
the State Council. Foreign exchange receipts fo r current account transactions may be retained or
sold to financial institutions engaging in the set tlement of foreign exchange in accordance with
relevant regulations. For foreign exchange pro ceeds under the capital accounts, approval from the
State Administration of Foreign Exchange ( ‘‘SAFE ’’) is required for its retention or sale to a
financial institution engaging in settlement and sale of foreign exchange, except where such
approval is not required under the relevant rules and regulations of the State. Domestic institutions
or individuals that make direct investments abroa d or are engaging in the overseas distribution or
trade of valuable securities or derivative products should register according to the provisions of the
foreign exchange control department of the State Council. Relevant institutions or individuals
should complete the approval or recording procedur es prior to foreign exchange registration, if they
are required to maintain records, or receive a pproval from, the compe tent administration
departments in advance as required by the State. However, no prior approval from the SAFE is
required for a foreign invested enterprise to conve rt after-tax dividends into foreign exchange and
to remit abroad such foreign exchange from their bank accounts in the PRC. The exchange rate for
RMB follows a managed floating exchange rate system based on market demand and supply.
According to the Notice of the State Administration of Foreign Exchange on the
Administration of Foreign Exchange Involved in the Investment and Financing and Round-trip
Investment Conducted by the PRC Residents via Special Purpose Vehicles (SAFE Circular No.
37) (《國家外匯管理局關於境內居民通過特殊目的公司境外投融資及返程投資外匯管理有關問題
的通知》), which was promulgated and implemented by the SAFE on 4 July 2014, domestic
residents (including domestic institutions and re sident individuals) are required to register with
the competent local branch of SAFE before th ey make contribution to any offshore special
purpose vehicles with legitimate holdings o f domestic or overseas assets or interests.
Pursuant to the Circular of the State Administrat ion of Foreign Exchange on Further
Simplifying and Improving the Foreign Exchange Administration Policies of Direct Investment
(SAFE Circular No.13) (《國家外匯管理局關於進一步簡化和改進直接投資外匯管理政策的通
知》(匯發[2015]13 號)) which was promulgated on 13 February 2015 and was amended on 30
December 2019, foreign exchange registration for domestic direct investment and foreign exchange
registration for overseas dir ect investment shall be directly reviewed and handled by banks in
accordance with the SAFE Circular No.13 and its appendix the Direct Investment Foreign
Exchange Operating Guidelines for Foreign Exchange Business in Direct Investment (《直接投資外
匯業務操作指引》).
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According to the Circular of the State Administrat ion of Foreign Exchange on Reforming and
Regulating Policies on the Control over Foreig n Exchange Settlement of Capital Accounts (Hui Fa
[2016] No.16) (《國家外匯管理局關於改革和規範資本項目結匯管理政策的通知》(匯發[2016] 16
號)), which was promulgated and implemente d by the SAFE on 9 June 2016 and amended on 4
December 2023, the tentative percentage of fore ign exchange settlement for foreign currency
earnings in capital account of domestic institutions is 100%, subject to adjustment of the SAFE in
due time in accordance with international reven ue and expenditure conditions. The use of foreign
exchange incomes of capital accounts by domest ic institutions shall follow the principles of
authenticity and self-use within the business scope of enterprises. The foreign exchange incomes of
capital accounts and capital in RMB obtained by the domestic institutions from foreign exchange
settlement shall not be used for the following purposes:
. directly or indirectly used for the payment beyond the business scope of the enterprises
or the payment prohibited by relevant laws and regulations;
. directly or indirectly used for investment in s ecurities or other financial schemes (except
for wealth management products and structured deposits with a risk rating of not higher
than Level 2) unless otherwise provided by relevant laws and regulations;
. used for granting loans to non-connected ente rprises, unless otherwise permitted by its
business scope; and
. used for the purchase of residential real estate that is not for self-use (except for
enterprises engaged in real estate de velopment or leasing operations).
According to the Circular of the State Administration of Foreign Exchange on Further
Promoting Cross-Border Trade and Investm ent Facilitation (Hui Fa [2019] No.28) (《國家外匯管理
局關於進一步促進跨境貿易投資便利化的通
知》(匯發[2019]28 號)), which was promulgated and
implemented by the SAFE on 23 October 2019 and amended on 4 December 2023, non-investment
foreign-funded enterprises are allowed to lawfull y make domestic equity investments by using their
capital on the premise that the Negative List are no t violated and the projects invested thereby in
t h eP R Ca r et r u ea n dc o m p l i a n t .
M&A Rules
According to the Regulations on Merger and Acquisition of Domestic Enterprises by Foreign
Investors (《關於外國投資者併購境內企業的規定》), which was promulgated by six PRC
governmental and regulatory agencies on 8 August 2006 and amended on 22 June 2009, if any
domestic company, enterprise or natural person m erges its affiliated domestic company in the name
of a company legally established or controlled by the aforesaid domestic company, enterprise or
natural person in foreign countries or regions, it shall be subject to the approval of the Ministry of
Commerce of the PRC.
According to the Manual of Guidance on Admin istration for Foreign Investment Access ( 《外
商投資准入管理指引手冊》), issued by the MOFCOM on 18 December 2008 and implemented on
the same date, for foreign-inves ted enterprises already establis hed, the transfer of equity from a
Chinese party to a foreign party is not subject to the M&A Rules, whether or not there is a
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relationship between the two parties, or whether t he foreign party is an original shareholder or a
new investor. Under the M&A Rules, the target com pany of merger and acquisition only includes
domestic enterprise.
REGULATIONS RELATED TO OVERSEAS LISTING
According to the Overseas Li sting Trial Measures (the ‘‘Overseas Listing Trial Measures ’’),
w h i c hw a sp r o m u l g a t e db yC S R Co n1 7F e b r u a r y2 0 2 3a n dc a m ei n t oe f f e c to n3 1M a r c h2 0 2 3 ,
where a domestic enterprise seeks to d irectly conducts overseas offeri ng and listing, the issuer shall
file with the CSRC and where a domestic enterpr ise indirectly conducts o verseas offering and
listing, the issuer shall designate a major domest ic operating entity, which shall, as the domestic
responsible entity, file with the CSRC.
The Overseas Listing Trial Measures provides that no overseas offering and listing shall be
made under any of the following circumstances: (i) su ch securities offering and listing is explicitly
prohibited by provisions in laws, administrative regulations and relevant state rules; (ii) the
intended securities offering and listing may endan ger national security as reviewed and determined
by competent authorities under the State Coun cil in accordance with law; (iii) the domestic
company intending to make the securities offering an d listing, or its controlling shareholders or the
actual controller, have commi tted crimes such as corrupti on, bribery, embezzlement,
misappropriation of property or undermining the o rder of the socialist market economy during the
latest three years; (iv) the domestic company inte nding to make the securities offering and listing is
suspected of committing crimes or major vio lations of laws and regulations, and is under
investigation according to law and no conclusi on has yet been made thereof; or (v) there are
material ownership disputes over equity held by the domestic company ’s controlling shareholder or
by other shareholders that are controlled by the co ntrolling shareholder and/or actual controller.
According to the CSRC Archive Rules, which was jointly promulgated the CSRC and other
three relevant government authorities on 24 February 2023, a domestic enterprise that, either
directly or through its overseas listed entity, publ icly discloses or provides to relevant securities
companies, securities service institutions, overseas regulatory authorities, and other entities and
individuals, any documents and materials that invol ve state secrets or work secrets of state organs,
shall obtain approval from the competent depar tment with examination and approval authority
according to the law, and file with the administrativ e department of confidentiality at the same level
for recordation. The working papers formed within the territory of the PRC by the securities
companies and securities service institutions th at provide corresponding services for the overseas
issuance and listing of do mestic enterprises shall be kept within the territory of the PRC, and cross-
border transfer shall go through the examination and approval procedures in accordance with the
relevant regulations of the State.
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OVERVIEW
Our Company was incorporated in the Cayman Is lands as an exempted company with limited
liability on 14 September 2021 and is the holding company of our Group. As at the Latest
Practicable Date, our Company had four subsidiari es. Details of our Company, its subsidiaries and
the corporate structure of our Group are set out in the sub-section headed ‘‘Establishment and
development of our Company and our major subsidiaries ’’in this section.
Immediately following completion of the Capit alisation Issue and the Share Offer, WellCell
Group will own in aggregate 75% of the issued share capital in our Company (without taking into
account the Over-allotment Option or any Share whi ch may be allotted and issued upon exercise of
any option which may be granted under the Share Option Scheme).
BUSINESS DEVELOPMENT
The history of our Group can be traced back to th e establishment of WellCell Technology, our
major operating subsidiary, in the PRC in 2003 b y Mr. Jia and Ms. Liu, together with two business
partners, namely Mr. Ju Jianming ( ‘‘Mr. Ju ’’) and Zhuhai Weidi Technology Co., Ltd.* ( 珠海市緯
地技術有限公司)( ‘‘Zhuhai Weidi ’’), both are Independent Third Parties of our Company. For
details, please refer to the paragraphs headed ‘‘Establishment and development of our Company and
our major subsidiaries — WellCell Technology ’’in this section. At the time of incorporation,
WellCell Technology was principally engaged in t he provision of telecommunication network
performance analysis system on Personal Handy-phone System ( ‘‘PHS’’), a mobile network system
which functioned as a cordless telephone. We gr adually expanded our software development
business since 2003 by launching our first princ ipal software, a telecommunication network
performance analysis system on PHS.
Riding on our experience in developing teleco mmunication network performance analysis
system on PHS, we started to develop and sell wir eless telecommunicatio n network performance
analysis software which can be used by our customers as the basis of, and a tool for, further
enhancement and maintenance solutions for their telecommunication netwo rk. Having accumulated
an understanding of our customers ’ needs and demands for telecommunication network
enhancement and maintenance services, we tappe d into the telecommunication network support
services industry in 2008. In 2014, on top of our experience and knowledge accumulated in the
provision of telecommunication network suppor t services, we tapped into the business of ICT
integration services after being engaged to provi de integration service s of telecommunication
network testing equipment for a university in Chongqing. Since then, we have gradually engaged in
customised software development for ICT projects and provision of ICT integration services to our
customers. Over the years, we had also gradually developed working relationships with our major
customers, including state-owned and private tel ecommunication operators and telecommunication
network equipment manufacturers.
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KEY BUSINESS MILESTONES OF OUR GROUP
The following table sets forth the key milestones in the development of the business of our
Group since its establishment up to the Latest Practicable Date:
Year Milestone
2003 WellCell Technology, our major o perating entity, was established in
Zhuhai, the PRC
Our first principal product, a tel ecommunication network performance
analysis system on PHS, was launched
WellCell Technology obtained the Soft ware Enterprise Certification* ( 軟件
企業認定證書) awarded by the Economic and Information Commission of
Guangdong Province* ( 廣東省信息產業廳)( ‘‘Software Enterprise
Certification ’’), in recognition of its expertise in software development
2007 WellCell Technology was recognised as a High and New Technology
Enterprise* ( 高新技術企業)( ‘‘High and New Technology Enterprise ’’)b y
the Department of Science and Tec hnology of Guangdong Province* ( 廣東
省科學技術廳)a n dw a se n t i t l e dt oat a xp r e f e r e n c ew i t har e d u c t i o no ft h e
enterprise income tax from 25% to 15%
2010 The Mobile Remote Control Research and Development Centre* ( 移動遠程
管控研發中心), a cooperative initiative of our Group with a university in
Zhuhai for the collaboration on the development of wireless communication
software commenced operation
2013 Our Group entered into a cooperation agreement with a university in
Guangzhou, the PRC for collaboration on the development of big data
technical application
WellCell Technology obtained the Software Enterprise Certification again
2014 Our Group entered into the first agreement for the provision of ICT
integration services with a university in Chongqing
2015 WellCell Technology became recognised as a High and New Technology
Enterprise again
We registered our invention patent Wir eless Network Quality Monitoring
System and Method* ( 無線網絡質量監測系統及方法), in the PRC
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Year Milestone
WellCell Technology obtained the Ma turity Level-3 (Defined) software
enterprise qualification for Orga nizational Unit R&D Center from
Capability Maturity Model Integration (CMMI) Institute
2017 We obtained the Design, Construction and Maintenance of Safety
Technology Protection System Qualification Certificate of Guangdong
Province* ( 廣東省安全技術防範系統設計、施工、維修資格證), which
enabled us to tap into the business of ICT integration services in relation to
safety technology protection system in the PRC
We obtained China Telecom Wireles s Network Excellent Enterprise
Qualification* ( 中國電信無線網路協優企業資質證書)a w a r d e db yC h i n a
Telecom in recognition of the quality of our telecommunication network
support services
WellCell Technology was recognis ed as a Key Software Enterprise* ( 重點
軟件企業) by Zhuhai Software Industry Association* ( 珠海市軟件行業協
會)( ‘‘Key Software Enterprise ’’) and was entitled to a preferential
enterprise income tax rate o f 10% for that financial year
2018 We developed a number of telecommunication network-related software,
such as Wangyou Renwoxing* ( 網優任我行), the first mobile app launched
by the Group for Android devices, and, with a view to centralising the
provision of our telecommunication network support services via these
software platforms
We first obtained the Construction Ent erprise Qualification Certificate*
(建築業企業資質證書) of Level III general contr acting for communication
engineering construction issued by the Housing and Urban-Rural
Development Department of Guangdong Province* ( 廣東省住房和城鄉建
設廳), the Construction Enterprise Qualification Certificate* ( 建築業企業資
質證書) issued by the Housing and Urban-Rural Development Department
of Zhuhai City* ( 珠海市住房和城鄉建設廳), the Work Safety Permit* ( 安
全生產許可證) issued by the Housing and Urban-Rural Development
Department of Guangdong Province* ( 廣東省住房和城鄉建設廳)a n dt h e
Permit of Installation (Repair, Trial) of Electric Power Facilities* ( 承
裝(修、試)電力設施許可證) issued by the National Energy Administration
Southern Regulatory Bureau* ( 國家能源局南方監管局), which enabled us
to tap into the business of telecommunication network infrastructure
engineering services in the PRC
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Year Milestone
WellCell Technology was recognised again as a High and New Technology
Enterprise and a Key Software Enterprise
2019 WellCell Technology was recognise d again as a Key Software Enterprise
Our full-dimension multi-scene high-end user market analysis system
supported by massive big data* ( 基於海量大數據支撐的全維度多場景高端
用戶市場分析系統) was selected as Big Data Application Demonstration
Project in 2018* (2018 年大數據應用示範項目) by the Department of
Industry and Information of Guangdong Province* ( 廣東省工業和信息化
廳)
2020 We were named as a Professional, Advanced, Specialized and New SME of
the Guangdong Province in 2020* (2020 年廣東省專精特新中小企業)b y
the Department of Industry and Information Technology of Guangdong
Province* ( 廣東省工業和信息化廳) in July 2020
2021 We were awarded Zhuhai Enterprise Famous Brand Top 100* ( 珠海企業知
名品牌100強) by Zhuhai Enterprise and Entrepreneur Union* ( 珠海市企業
與企業家聯合會) and Zhuhai Economic Development and Promotion
Association* ( 珠海市經濟發展促進會) in December 2021
WellCell Technology was recognised again as a High and New Technology
Enterprise and a Key Software Enterprise
WellCell Technology obtained the CMMI Maturity Level 3 software
enterprise qualification again
WellCell Technology was recognised as Guangdong Communication
Network Application and Testing E nhancement Engineering Technology
Research Center 2021* (2021 年度廣東省通信網路應用及檢測優化工程技
術研究中心) by the Department of Science and Technology of Guangdong
Province* ( 廣東省科學技術廳)
2022 WellCell Technology was recognised as Zhuhai Communication Network
Application and Testing Enhancement Engineering Technology Research
Center 2021 –2022* (2021 –2022 年度珠海市通信網絡應用及檢測優化工程
技術研究中心) by the Zhuhai Science and Technology Innovation Bureau*
(珠海市科技創新局)
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For details of other honours and awards of our Group, please refer to the section headed
‘‘Business — Recognitions, awards and certifications ’’in this prospectus.
ESTABLISHMENT AND DEVELOPMENT OF OUR COMPANY AND OUR MAJOR
SUBSIDIARIES
Our Company
Our Company was incorporated in the Cayman Is lands as an exempted company with limited
liability on 14 September 2021 in preparation of the Listing and is the holding company of our
Group. Our Company was registered in Hong Kong as a non-Hong Kong company under Part 16 of
the Companies Ordinance on 23 May 2022 and obtai ned the business registration certificate under
the Business Registration Ordinance (Cap. 30 of t he Laws of Hong Kong). As at incorporation, our
Company had an authorised share capital of HK$380,000 divided into 38,000,000 ordinary shares
of par value of HK$0.01 each, of which one subscrib er Share was allotted and issued as fully paid
to the initial subscriber at par on 14 September 2021 and transferred from the initial subscriber to
WellCell Group on the same day. On the same date, our Company allotted and issued, credited as
fully paid, 199 Shares at par to WellCell Group.
On 15 December 2023, as part of the Capita lisation Issue, WellCell Group, being our
Controlling Shareholder, resolved to increase the authorised share capital of our Company from
HK$380,000 divided into 38,000,000 Shares to HK$10 ,000,000 divided into 1,000,000,000 Shares
by the creation of an additional 962,000,000 Shares, each ranking pari passu with our Shares then
in issue in all respects.
Immediately following the completion of the Capitalisation Issue and the Share Offer,
WellCell Group will own in aggregate 75% of the i s s u e ds h a r ec a p i t a li no u rC o m p a n y( w i t h o u t
taking into account any Shares which may be allotted and issued upon the exercise of the Over-
allotment Option or any options that may be granted under the Share Option Scheme).
As at the Latest Practicable Date, our Group c omprised our Company and four subsidiaries,
namely WellCell International, WellCell HK, WellCell Technology and WellCell Intelligent. Set out
below is a brief corporate history of the subsidiaries of our Company.
WellCell Technology
Early history
WellCell Technology is the key operating subs idiary of our Group. It was established in
Zhuhai, the PRC on 20 March 2003 with limited liability. As at the date of its establishment,
WellCell Technology had a regist ered capital of RMB1.0 millio n which was owned as to 16% by
Mr. Jia, 16% by Ms. Liu, 18% by Mr. Ju and 50% by Zhuhai Weidi, a limited liability company
incorporated in the PRC which is primarily enga ged in the business of dev eloping of multimedia,
computer systems and selling of electronic produ cts. Mr. Ju and Zhuhai Weidi are both Independent
Third Parties.
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In July 2004, because Zhuhai Weidi held differe nt views with the then other shareholders in
terms of the development and future plans of WellCell Technology, Zhuhai Weidi disposed of its
entire equity interest in WellCell Technology by transferring 16%, 17% and 17% to Mr. Ju, Mr. Jia
and Ms. Liu, respectively, at the total consideration of RMB450,000. In April 2009, due to personal
reasons, Mr. Ju disposed of his entire equity inte rest of 34% in WellCell Technology to Mr. Jia and
Ms. Liu equally, each of whom received 17% equity interest, at the consid eration of RMB170,000
for each transfer. The consideration of the said t ransfers was based on, and proportionate to, the
then registered capital of WellCell Technology. A fter such share transfers, WellCell Technology
was owned as to 50% by Mr. Jia and 50% by Ms. Liu as at 6 May 2009. Subsequently, after
several rounds of capital injection and reduction, th e registered capital of WellCell Technology was
increased to RMB10.1 million as at 14 August 2015.
On 19 January 2016, the registered capital of WellCell Technology was further increased to
RMB11.1 million after the injection of RMB1.0 m illion by Zhuhai Kapok Investment Management
Partnership (Limited Partnership) ( 珠海木棉花投資管理合夥企業(有限合夥)) ( ‘‘Zhuhai Kapok ’’),
which consequently became a shareholder of Well Cell Technology. As confirmed by our Directors,
the partners of Zhuhai Kapok were the employees of WellCell Technology, including Mr. Jia. On
t h es a m ed a t e ,( i )M r .J i ae n t e r e di n t ot h r e ee q u i ty transfer agreements, pursuant to which Mr. Jia
transferred approximately 3.5%, 0.3% and 2.7% equity interest in WellCell Technology to Mr.
Wang Lei ( ‘‘Mr. Wang ’’) who was the supervisor of Guizhou WellCell, Ms. Lu Yan ( ‘‘Ms. Lu ’’)
who was the financial controller of WellCell Technology and Mr. Cong at a consideration of
approximately RMB0.7 million, RMB60,000 and RMB 0.6 million, respectiv ely; and (ii) Ms. Liu
entered into two equity transfer agreements, pursuant to which Ms. Liu transferred her
approximately 1.4% and 2.1% equity interest in WellCell Technology to Mr. Wang and Ms. Lu at
a consideration of approximately RMB0.3 mill ion and RMB0.4 million, respectively. The
considerations for the said transfers were based on the then net asset value of WellCell Technology
with reference to its audit report as of 31 Decembe r 2015. The said capital injection and transfers
were completed on 25 January 2016.
After the above transfers and capital injection, WellCell Technology was owned as to
approximately 42.3% by Ms. Liu, 39.5% by Mr. Jia, 9.0% by Zhuhai Kapok, 4.5% by Mr. Wang,
2.5% by Mr. Cong and 2.2% by Ms. Lu. Such transfers and capital injection were conducted in
contemplation of WellCell Technology ’s listing on the National Equities Exchange and Quotations
(全國中小企業股份轉讓系統)( t h e ‘‘NEEQ ’’) in 2016, details of which are set forth in the
paragraphs headed ‘‘Previous listing of WellCell Technology on the NEEQ ’’below in this section.
Previous listing of WellCell Technology on the NEEQ
WellCell Technology had previously sought a listing on the NEEQ to tap into the capital
market in the PRC. On 25 April 2016, WellCell Technology was converted from a limited liability
company into a company limited by shares, with its net assets converted into an issued share capital
of RMB22,000,000. On 9 December 2016, the shar es of WellCell Technology were listed and
traded on NEEQ (stock code: 870034).
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Reasons for delisting of WellCell Technology from the NEEQ and the Listing in the Stock Exchange
During the time when WellCell Technology was listed on the NEEQ, its shares had a low
trading volume, which inhibited its ability to raise funds publicly to continuously support its
business growth. WellCell Technology was volunt arily delisted from the NEEQ in August 2018, as
approved by The National Equities Exchange And Quotations Co., Ltd.* ( 全國中小企業股份轉讓系
統有限責任公司). When it was delisted from the NEEQ, the market capitalisation of WellCell
Technology was approximately RMB63.4 million (cal culated with reference to its then total issued
shares and the trading price for the last sale of shares on the NEEQ by an Independent Third Party
to Mr. Jia). Such market capitalisation is materiall y lower than the expected market capitalisation of
our Shares upon Listing primarily because our Group ’s business scale, revenue and profit levels
have materially grown over the years, and the mark et capitalisation of Wellcell Technology prior to
its delisting from the NEEQ may not have fully reflected its value due to the low trading volume
before delisting. As WellCell Technology ’s delisting from the NEEQ has been approved by all
shareholders, no privatisation process was requir ed to be carried out in connection with its delisting
from the NEEQ. WellCell Technology ’s delisting from the NEEQ was our commercial and strategic
decision, based on our Group ’s business development plans and desire to attain greater access to
international investors and markets by se eking listing on other eligible exchange.
Our Directors believe that WellCell Technology ’s delisting from the NEEQ and our Group ’si n
seek of listing on the Stock Exchange will be in the interest of our Group ’s business strategies, and
would be beneficial to us and our Shareholders as a whole for the following reasons:
(1) the NEEQ is a market in the PRC which is restricted to only qualified investors that can
meet the requirements in relation to paid-up ca pital or average daily financial assets. The
nature of the NEEQ and its low trading liquidity could make it difficult to (a) identify
and establish the fair value of our Group to refle ct its competitive strengths; (b) publicly
raise funds, in equity or debt, to continuously support our business growth; and (c)
execute substantial on-market disposals by Shareholders to realise value;
(2) in contrast, the Stock Exchange, as a lead ing player of the international financial
markets, could offer us a direct access to the international capital markets, enhance our
fund-raising capabilities and channels and b roaden our Shareholders base. Accordingly,
the Listing would provide us a viable source of capital to support our business growth;
and
(3) listing on the Stock Exchange will further r aise our business profile and thus, enhance
our ability to attract new customers, busines s partners and strategic investors as well as
to recruit, motivate and retain key management personnel for our Group ’sb u s i n e s s .
As confirmed by our Directors and our PRC Legal Advisers, throughout the period it was
listed on the NEEQ, (i) WellCell Technology ha d not issued any new shares; (ii) WellCell
Technology and its then directors were not subj ect to any investigation, disciplinary action or
administrative penalties for non-compliance by any regulatory authority nor were they involved in
any material breach of rules governing a listing on the NEEQ or other applicable laws and
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
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regulations; (iii) there were no material non-comp liance incidents or breaches involving our Group ’s
business or its subsidiaries, our Directors or sen ior management; and (iv) there is no other matter
that would needs to be brought to the attention of our Shareholders.
Recent developments
As at the time of its delisting from the NEEQ, WellCell Technology was owned as to
approximately 41.8% by Mr. Jia, 39.0% by Ms. Liu, 9.0% by Zhuhai Kapok, 4.5% by Mr. Wang,
3.5% by Mr. Cong and 2.2% by Ms. Lu. Following the delisting from the NEEQ, WellCell
Technology was converted back into a limit ed liability company on 3 September 2018.
On 5 September 2018, Ms. Liu, Zhuhai Kapok, Mr. Wang and Ms. Lu disposed of all his/her
equity interest in WellCell Technology and entered into equity interest transfer agreements with the
relevant transferees, details are as follows:
Transferor Transferee
Approximate
registered capital
transferred
Approximate
consideration
Approximate
percentage of the
registered capital
being transferred
(RMB million) (RMB million) (%)
Ms. Liu
Mr. Lin 7.9 9.9 35.8
Ms. Chen 0.4 0.6 2.0
Mr. Jia 0.1 0.2 0.7
Mr. Cong 0.1 0.1 0.5
Mr. Wang Mr. Lin 1.0 1.2 4.5
Ms. Lu Mr. Lin 0.5 0.6 2.2
Zhuhai Kapok Mr. Jia 2.0 2.5 9.0
Total 12.0 15.1 54.7
For personal reasons and to realise her/his gai n in the investment in WellCell Technology, Ms.
Liu, Mr. Wang and Ms. Lu disposed of her/his entire 39.0%, 4.5% and 2.2% equity interest in
WellCell Technology to Mr. Lin and other transfere es for the consideration set out above, which
was based on the then net asset value of WellCell Technology with reference to its audit report as
of 31 December 2017. It is notable that Mr. Wan g and Ms. Lu, being ex-employees of WellCell
Technology, left Wellcell Technology after the y disposed of their equity interest in WellCell
Technology. After the said share transfers comp leted on 11 September 2018, WellCell Technology
was owned as to 51.5% by Mr. Jia, 42.5% by Mr. Lin, 4.0% by Mr. Cong and 2.0% by Ms. Chen.
Mr. Cong and Ms. Chen are senior employees o f WellCell Technology. On the same date, the
registered capital of WellCell Technology was i ncreased from RMB22,000,000 to RMB50,000,000.
As at the Latest Practicable Date, the additional reg istered capital has yet to be fully paid up as it is
not due until 31 December 2025 according to the ar ticles of WellCell Technology. Our PRC Legal
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
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Advisers confirmed that even though the registered capital of WellCell Technology has not been
fully paid up as at the Latest Practicable Date, such non-payment is not in violation of any
applicable PRC law.
On 28 September 2018, the shareholders of WellCell Technology resolved to approve the
transfer by Mr. Lin of his 5.0% equity interest in WellCell Technology to Mr. Fung, an investor, at
a consideration of approximately RMB1.4 million. The consideration for the said transfer was based
on the then net asset value of WellCell Technology with reference to its audit report as of 31
December 2017. Upon completion of the transfer on 5 November 2018, WellCell Technology was
owned as to 51.5% by Mr. Jia, 37.5% by Mr. Lin, 5.0% by Mr. Fung, 4.0% by Mr. Cong and 2.0%
by Ms. Chen.
Branch office of WellCell Technology
In order to prepare for the development of our operation in Shenzhen and neighbouring
regions in the PRC and the recruitment of more technical personnel, WellCell Technology
established a branch office in Shenzhen on 7 November 2019. As confirmed by our PRC Legal
Advisers, WellCell Technology assumes the legal obligations and responsibilities of the branch
office as a branch office is not a separate legal entity under the laws of the PRC. As at the Latest
Practicable Date, the Shenzhen branch office was not yet active.
WellCell Intelligent
On 3 July 2019, WellCell HK established WellCell Intelligent in the PRC with limited
liability. As at the date of its incorporation, We llCell Intelligent had a registered capital of
RMB10.0 million which has yet to be fully paid up as it is not due until 31 December 2025
according to the articles of WellCell Intellige nt. Our PRC Legal Advisers confirmed that even
though the registered capital of WellCell Intel ligent has not been fully paid up as at the Latest
Practicable Date, such non-payment is not in violation of any applicable PRC law.
WellCell Intelligent was established to principally engage in the research and development of
telecommunication network and system, such as the development of software.
Guizhou WellCell (deregistered)
Guizhou WellCell Communicat ion Technology Co., Ltd.* ( 貴州經緯天地通訊技術有限公司)
(‘‘Guizhou WellCell ’’) was a former subsidiary of WellCell Technology. On 30 June 2009,
WellCell Technology established Guizhou WellCe ll in Guizhou province, the PRC with limited
liability. As at the date of incorporation, Guizhou WellCell had a registered capital of RMB0.5
million and was owned as to 50% by WellCell Technology and 50% by Mr. Wang who
subsequently transferred his entire equity interest in Guizhou WellCell to WellCell Technology at
the consideration of RMB240,000 on 8 December 2 015. It was principally engaged in the provision
of telecommunication net work support services.
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Guizhou WellCell was voluntarily deregistere d on 12 February 2018, which, as confirmed by
our Directors, was due to inactivity of business. As confirmed by our Directors and concurred by
our PRC Legal Advisers, Guizhou WellCell was not involved in any material claim, litigation or
non-compliant incident during the Track Record Period. In addition, the deregistration had no
material impact on our Group ’s financial performance, financial position and cash flows during the
Track Record Period.
As at the Latest Practicable Date, each of the tra nsactions described above in connection with
members of the Group had been duly, validly, and legally completed and settled and all necessary
approvals (as applicable) have been obtained from the relevant authorities.
REORGANISATION
The following diagram sets out the corporate and shareholding structure of our Group
immediately prior to the Reorganisation and the Share Offer:
51.5% 37.5% 2% 4%5%
Mr. Jia Mr. Lin
WellCell Technology
(PRC)
Ms. ChenMr. CongMr. Fung
In preparation for the Listing, we have undergon e the Reorganisation, details of which are set
out as below:
(1) Incorporation of corporat e shareholders of our Company
Shine Dynasty
Shine Dynasty was incorporated in the BVI as a BVI business company with
limited liability on 5 July 2018. Shine Dynasty was authorised to issue a maximum of
50,000 shares with a par value of US$1, of which only one share was allotted and issued
as fully paid to Mr. Jia at par.
Shine Dynasty is wholly owned by Mr. Jia and is intended to be the investment
holding vehicle of Mr. Jia for holding shares of WellCell Group (the Controlling
Shareholder of the Company) upon completion of the Reorganisation.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
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Cheer Partners
Cheer Partners was incorporated in the BVI as a BVI business company with
limited liability on 18 July 2018. Cheer Part ners was authorised to issue a maximum of
50,000 shares with a par value of US$1, of wh ich only 1 share was allotted and issued as
f u l l yp a i dt oM r .L i na tp a r .
Cheer Partners is wholly owned by Mr. Lin and is intended to be the investment
holding vehicle of Mr. Lin for holding shares of WellCell Group (the Controlling
Shareholder of the Company) upon completion of the Reorganisation.
Golden Concord
Golden Concord was incorporated in the BVI as a BVI business company with
limited liability on 8 January 2019. Golden Concord was authorised to issue a maximum
of 50,000 shares with a par value of US$1, of which only 1 share was allotted and issued
as fully paid to Mr. Fung at par.
Golden Concord is wholly owned by Mr. Fung and is intended to be the investment
holding vehicle of Mr. Fung for holding sha res of WellCell Group (the Controlling
Shareholder of the Company) upon completion of the Reorganisation.
Dazzling Power
Dazzling Power was incorporated in the BVI as a BVI business company with
limited liability on 8 August 2018. Dazzlin g Power was authorised to issue a maximum
of 50,000 shares with a par value of US$1, of which only 1 share was allotted and issued
as fully paid to Mr. Cong at par.
Dazzling Power is wholly owned by Mr. Cong and is intended to be the investment
holding vehicle of Mr. Cong for holding shares of WellCell Group (the Controlling
Shareholder of the Company) upon completion of the Reorganisation.
Diamond Skyline
Diamond Skyline was incorporated in the BVI as a BVI business company with
limited liability on 12 June 2018. Diamond Skyline was authorised to issue a maximum
of 50,000 shares with a par value of US$1, of which only 1 share was allotted and issued
as fully paid to Ms. Chen at par.
Diamond Skyline is wholly owned by Ms. Chen and is intended to be the
investment holding vehicle of Ms. Chen for holding shares of WellCell Group (the
Controlling Shareholder of the Company) upon completion of the Reorganisation.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
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After the above incorporation and issue and allotment of share by each of Shine
Dynasty, Cheer Partners, Golden Concord , Dazzling Power and Diamond Skyline, the
shareholding structure of the relevant companies was as follows:
100%100%100% 100% 100%
Mr. Jia Mr. Lin
Shine Dynasty
(BVI)
Cheer Partners
(BVI)
Ms. Chen
Diamond Skyline
(BVI)
Mr. Cong
Dazzling Power
(BVI)
Mr. Fung
Golden Concord
(BVI)
(2) Incorporation of WellCell Group
WellCell Group was incorporated in the BVI a s a private company with limited liability
on 8 February 2019.
WellCell Group was authorised to issue a maximum of 50,000 shares with a par value of
US$1, of which 103, 75, 10, eight and four shares were allotted and issued as fully paid to
Shine Dynasty, Cheer Partners, Mr. Fung, Dazzling Power and Diamond Skyline at par,
respectively on 8 February 2019. Subsequently on 1 September 2021, Mr. Fung transferred his
entire equity interest in WellCell Group to Golden Concord at the consideration of US$1.00.
WellCell Group is intended to be a common investment holding company for the
interests of Mr. Jia, Mr. Lin, Mr. Fung, Mr. Cong and Ms. Chen in our Company upon
completion of the Reorganisation.
(3) Incorporation of WellCell HK
WellCell HK was incorporated in Hong Kong as a private company with limited liability
on 19 February 2019. On the date of its incorpora tion, one share of WellCell HK was allotted
and issued as fully paid to WellCell Group at the consideration of HK$1.00.
WellCell HK is intended to be the investment holding vehicle for the holding of the
Group ’s interest in its principal operating subsidiaries, WellCell Technology and WellCell
Intelligent upon completion of the Reorganisation.
(4) Acquisition of the entire equity int erest of WellCell Technology by WellCell HK
WellCell HK entered into an equity transfer agreement with each of Mr. Jia, Mr. Lin,
Mr. Fung, Mr. Cong and Ms. Chen on 1 March 2019, pursuant to which WellCell HK
acquired 51.5%, 37.5%, 5%, 4% and 2% equity interest in WellCell Technology at a
consideration of approximately RMB14.7 m illion, RMB10.7 million, RMB1.4 million,
RMB1.1 million and RMB0.6 million from Mr. Jia, Mr. Lin, Mr. Fung, Mr. Cong and Ms.
Chen, respectively. The transfers were co mpleted on 22 March 2019, as a result of which
WellCell Technology became wholly owned by WellCell HK.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
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(5) Incorporation of We llCell Intelligent
WellCell Intelligent was established in the PRC by WellCell HK on 3 July 2019. For
details of WellCell Intelligent, p lease refer to the paragraph headed ‘‘Establishment and
development of our Company and our major subsidiaries — WellCell Intelligent ’’in this
section.
(6) Incorporation of WellCell International
WellCell International was incorporated in the BVI as a private company with limited
liability on 11 August 2021. As at the date of its incorporation, WellCell International was
authorised to issue a maximum of 50,000 shares of par value of US$1.00 each, of which one
share was allotted and issued as fully paid to WellCell Group at par on even date.
WellCell International is intended to be t he offshore investment holding vehicle.
(7) Acquisition of the entire equity interest of WellCell HK by WellCell International
WellCell International entered into an equ ity transfer agreement w ith WellCell Group on
27 August 2021, pursuant to which WellCell In ternational acquired from WellCell Group
100% equity interest in WellCell HK at a consideration of the issue and allotment of one
additional share in WellCell I nternational to WellCell Group. After the said issue and
allotment, a total of two shares of WellCell I nternational were held by WellCell Group. The
transfer was completed on 27 August 2021, as a result of which two shares of WellCell
International were held by WellCell Gr oup and WellCell HK became wholly owned by
WellCell International.
(8) Incorporation of our Company
In order to facilitate the proposed Listing, the Company was incorporated under the laws
of the Cayman Islands as an exempted company w ith limited liability on 14 September 2021
to act as the ultimate holding company of the Group. Upon its incorporation, our Company
had an initial authorised share capital of HK$380,000 divided into 38,000,000 ordinary shares
of par value of HK$0.01 each, of which one full yp a i ds u b s c r i b e rS h a r ew a sa l l o t t e da n d
issued to the initial subscriber at par on 14 S eptember 2021 and transferred from the initial
subscriber to WellCell Group on the same day. On the same date, our Company allotted and
issued, credited as fully paid, 199 Shares at par to WellCell Group.
Our Company was registered in Hong Kong as a non-Hong Kong company under Part 16
of the Companies Ordinance on 23 May 2022.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
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(9) Acquisition of the entire equity interest of WellCell International by our Company
Our Company entered into the Reorganisation Agreement with WellCell Group on 27
April 2023, pursuant to which our Company acquired from WellCell Group 100% equity
interest in WellCell International at a cons ideration of the issue and allotment of 200
additional Shares to WellCell Group. After the said issue and allotment, a total of 400 Shares
were held by WellCell Group. The transfer was completed on 27 April 2023, as a result of
which WellCell International became wholly owned by our Company.
Upon completion of the reorganisation ste ps as set out above, our Company became the
holding company of our Group. The following chart sets forth the shareholding and corporate
structure of our Group immediately following the Reorganisation but prior to the
Capitalisation Issue and the Share Offer:
100%100%100% 100% 100%
2%
100%
37.5%51.5%
100% 100%
4%5%
100%
100%
Mr. Jia Mr. Lin
Shine Dynasty
(BVI)
Cheer Partners
(BVI)
Ms. Chen
Diamond Skyline
(BVI)
WellCell Technology
(PRC)
WellCell Intelligent
(PRC)
Mr. Cong
Dazzling Power
(BVI)
Mr. Fung
Golden Concord
(BVI)
Offshore
Onshore
WellCell Group
(BVI)
our Company
(Cayman Islands)
WellCell International
(BVI)
WellCell HK
(Hong Kong)
As at the Latest Practicable Date, all the share transfers pursuant to the Reorganisation
have been duly, validly, and legally completed and settled and all necessary approvals (as
applicable) have been obtained from the relevant authorities.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
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(10) Capitalisation Issue
Conditional upon the share premium account o f our Company having sufficient balance,
or otherwise being credited as a result of the is sue of new Shares pursuant to the Share Offer,
the Shareholders shall pass a resolution to aut horise the Directors to capitalise an amount of
HK$3,749,996 standing to the credit of the share premium account of our Company by
applying such sum in paying up in full at par a total of 374,999,600 Shares at par for
allotment and issue to WellCell Group, to enabl e it to maintain its aggregate shareholding in
our Company at a percentage of 75% of the enlarged issued share capital of our Company
(without taking into account the Over-allotme nt Option or any Shares which may be allotted
and issued upon the exercise of any options which may be granted under the Share Option
Scheme).
The following chart sets forth the shareholding and corporate structure of our Group
immediately following completion of the Capit alisation Issue and the Share Offer (without
taking into account the Over-allotment Option or any Shares which may be allotted and issued
upon the exercise of any options which may be granted under the Share Option Scheme):
100%100%100% 100% 100%
2%
75%
37.5%51.5%
100% 100%
4%5%
25%
100%
100%
Mr. Jia Mr. Lin
Shine Dynasty
(BVI)
Cheer Partners
(BVI)
Ms. Chen
Diamond Skyline
(BVI)
WellCell Technology
(PRC)
WellCell Intelligent
(PRC)
Mr. Cong
Dazzling Power
(BVI)
Mr. Fung
Golden Concord
(BVI)
The public
Offshore
Onshore
WellCell Group
(BVI)
our Company
(Cayman Islands)
WellCell International
(BVI)
WellCell HK
(Hong Kong)
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
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SAFE REGISTRATION IN THE PRC
Pursuant to the Circular of the State Administration of Foreign Exchange of the PRC
(‘‘SAFE ’’) on Foreign Exchange Administration of Over seas Investment, Financing and Round-trip
Investments Conducted by Domestic Residents through Special Purpose Vehicles ( 《關於境內居民
通過特殊目的公司境外投融資及返程投資外匯管理有關問題的通知》)( t h e ‘‘SAFE Circular 37 ’’),
promulgated by SAFE which became effective on 4 Ju ly 2014, (i) a PRC resident must register with
the local SAFE branch before he or she contributes assets or equity interests in an overseas special
purpose vehicle (the ‘‘Overseas SPV ’’) that is directly established o r indirectly controlled by the
PRC resident for the purpose of conducting investme nt or financing, and (ii) following the initial
registration, the PRC resident is also required t o register with the local SAFE branch for any major
changes in respect of the Overseas SPV, includi ng, among other things, a change in the Overseas
SPV’s PRC resident shareholder(s), the name of t he Overseas SPV, terms of operation, or any
increase or reduction in the Overseas SPV ’s capital, share transfer or swap, and merger or division.
Pursuant to the SAFE Circular 37, failure to compl y with these registration procedures may result
in penalties.
Pursuant to the Circular of the SAFE on Furthe r Simplification and Improvement in Foreign
Exchange Administration on Direct Investment ( 《國家外匯管理局關於進一步簡化和改進直接投資
外匯管理政策的通知》)( t h e ‘‘SAFE Circular 13 ’’), promulgated by SAFE and became effective on
1 June 2015, the power to accept SAFE registration was delegated from local SAFE branch to local
banks where the assets or interest in the domestic entity was located.
As advised by our PRC Legal Advisors, Mr. J i a ,M r .L i n ,M r .C o n ga n dM s .C h e nh a v e
completed the registration under the SAFE Circular 37 in November 2018.
OVERSEAS LISTING
The CSRC promulgated the Overseas Listing Trial Measures on 17 February 2023, which took
effect on 31 March 2023. According to the Overseas Listing Trial Measures, where a domestic
enterprise seeks to directly conduct overseas o ffering and listing, the issuer shall file with the
CSRC and where a domestic enterprise indirectly conducts overseas offering and listing, the issuer
shall designate a major domestic operating entity, which shall, as the domestic responsible entity,
file with the CSRC. The Overseas Listing Trial Measures provides that if an issuer meets both of
the following criteria, the overseas securities offering and listing conducted by the issuer will be
deemed as indirect overseas offering by PRC dom estic companies: (i) 50% or more of any of the
issuer ’s operating revenue, total profit, total assets or net assets as recorded in its audited
consolidated financial state ments for the most recent financial year is being accounted for by
domestic companies; and (ii) the main parts of the issuer ’s business activities are conducted in the
Mainland China, its principal place(s) of business are located in the Mainland China, or the senior
management in charge of its business operation and management are mostly Chinese citizens or
domiciled in the Mainland China. Given that we hav e met both of the aforementioned criteria, our
PRC Legal Advisers are of the opinion, which is concurred by our Directors, the Joint Sponsors and
their PRC legal advisers, that we are required to complete the filing procedures with the CSRC and
report relevant information with respect to the Sh are Offer pursuant to the Overseas Listing Trial
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
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Measures. Our PRC Legal Advisers also confirme d that we have submitted the necessary documents
for the CSRC filing within three bus iness days after our resubmissio n of the application for Listing
to the Stock Exchange, and on 5 December 2023, the CSRC issued the notification on completion
of the filing procedures for the Listing and Share Offer. As advised by our PRC Legal Advisers, no
other approvals from the CSRC are required to be obtained for the Listing and Share Offer.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
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OVERVIEW
Our Group is a telecommunication network support and information and communication
technology (ICT) integration services prov ider and software developer in the PRC. Our
telecommunication network support services m ainly include the provision of (i) wireless
telecommunication network enhancement services, encompassing both routine and specific services
for improving connectivity, quality and coverage of a telecommunication network and/or for
troubleshooting telecommunication network issu es for our customers; and ( ii) telecommunication
network infrastructure maintenance and enginee ring services, involving routine maintenance and
emergency restoration of the operations of base s tations, and provision of engineering and labour
services in projects related to construction of te lecommunication network infrastructure. Our ICT
integration services mainly involve customising our customers ’ computer system design for
providing business-specific systems along wi th equipment and material procurement and
installation, integration of software and hardware and implementation. We also develop
telecommunication network-related software for evaluation, enhancement and maintenance of
wireless networks, both for our own use and for sale to our customers and provide software
development services for our customers who look for customised software.
The various kinds of telecomm unication network-related services provided by us are
complementary to one another which enhance syner gistic effects, diversif y our revenue streams and
solidify our relationship with our customers by o ffering them complementary services. Hence, a
number of our customers are inclined to purchase more than one type of our services from us.
Telecommunica/g415on network support
services
Telecommunica/g415on network-related
so/g332ware development
ICT integra/g415on services
Experience accumulated and data collected
facilitate the research, development and upgrade
of telecommunica/g415on network-related so/g332ware
So/g332ware developed are u/g415lised in provision of
telecommunica/g415on network support services and
ICT integra/g415on services
General knowledge and experience in
telecommunica/g415on network service industry
aid the design of wireless network and the
selec/g415on and integra/g415on of hardware and
so/g332ware required for an ICT system
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During the Track Record Period, 28 of our customers engaged us for more than one of our
services and/or both procured our service and pu rchased our software over the Track Record Period
(either in the same year/period or across differe nt years/period in the Track Record Period). Our
revenue generated from these 28 customers a mounted to approximately RMB138.5 million,
RMB162.5 million, RMB173.0 million and RMB 66.0 million, respectively, during the Track
Record Period.
We typically secure our business by submitting tenders in response to open tenders that may
be launched by our potential customers or by submitting private quotations upon request. As a
tender may cover more than one kind of service t o be provided for the same customer, success in a
tender may entail the securing of several pro jects and contracts from the same customer.
During the Track Record Period, our customer s were mainly entities located in various
provinces and cities in the PRC and included ( i) telecommunication operators which provide
telecommunication and internet services to end-us ers; (ii) telecommunicat ion network equipment
manufacturers; and (iii) telecommunication network and technical service providers and general
contractors, which have busines s operations in various cities and provinces in the PRC. Over the
years, our Group has established business rela tionships with a number of customers which are
among the leading market players in their industry, including China Comservice, major PRC
telecommunication operators and a leading PRC te lecommunication tower infrastructure service
provider. Revenue generated from our five larges t customers in each year/period during the Track
Record Period in aggregate accounted for appr oximately 59.6%, 61.0%, 51.0% and 46.8%,
respectively, of our total revenue, while revenue generated from our largest customer in each
year/period during the Track Record Period accoun ted for approximately 21.2%, 24.0%, 23.8% and
22.6%, respectively, of our total revenue.
During the Track Record Period, our suppli ers mainly included (i) suppliers of
telecommunication and electronic equipment; and (ii) suppliers of other general hardware and
software. Purchases from our five largest supplie rs in each year/period during the Track Record
Period in aggregate accounted for approximately 70.7%, 54.9%, 79.7% and 88.2%, respectively, of
our total project supplies cost, wh ile purchases from our largest supplier in each year/period during
the Track Record Period accounted for approx imately 21.8%, 14.6%, 61.4% and 47.5%,
respectively, of our total project supplies cost. We also engaged subcontractors to carry out certain
technical works and non-technical works for our th ree business lines on an as-needed basis during
the Track Record Period. The subcontracting charges paid to our subcontractors generally cover
their service fees and the hardware, software, el ectronic components and equipment procured by the
subcontractors and their labour costs.
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Owing to the nature of our business, some of our customers are also our suppliers or
subcontractors, from which we have procured various services or products. During the Track
Record Period, three of our major customers we re also our suppliers or subcontractors and one of
our major subcontractors was also our customer.
We place great emphasis on our in-house resear ch and development capa bilities. As at 30 June
2023, our research and development operation had 69 technical and support personnel and the
majority of whom are engineers. The focus of our r esearch includes (i) application of 5G and IoT;
(ii) wireless telecommunication; and (iii) big data and signal and data analysis. As at the Latest
Practicable Date, reflecting the research, des ign and development efforts of our Group, we have
obtained 73 software copyrights and two invention patents in the PRC. During the Track Record
Period, our research and development expens es amounted to approximately RMB16.3 million,
RMB10.8 million, RMB16.6 million and RMB5.4 mil lion, respectively, which mainly comprised
salary of our research and development staff an d materials, and hardware and software used in
research and development activities.
Despite the prevalence of COVID-19 in the PRC since late 2019 which led to the PRC
government ’s implementation of a series of interim mea sures (including restricting travel,
suspending or limiting business operations and lockdown of certain cities and regions to combat
the spread of the pandemic), with the effective COVID-19 control measures in the PRC, the
business operations of our Group gradually returned to normal from the second quarter of 2020.
Our Directors confirm that during the Track Record Period and up to the Latest Practicable Date,
the COVID-19 outbreak did not have any material adverse impact on our business and results of
operations. For more details, please see the paragraphs headed ‘‘Impact of the COVID-19 outbreak
on our business ’’in this section.
COMPETITIVE STRENGTHS
We believe that our success is attributable to, am ong other things, the following competitive
strengths:
We are a comprehensive teleco mmunication network support and ICT integration service
provider
We are a telecommunication network support and I CT integration service provider that offers
a comprehensive range of services and products, f rom enhancement and main tenance of the existing
telecommunication networks of our customers and in frastructure, to customising computer system
design for providing business-specific system to our customers. We also engage in research and
development of software which complements our core services. According to the CIC Report, only
few market players in the PRC have a similarly wide range of services as those that we offer. We
consider our extensive service coverage to be a co mpetitive strength since it allows us to cross-sell
our different types of services and products to our customers. For instance, Customer A, one of our
five largest customers in each year/period througho ut the Track Record Period (details of which are
set out in the paragraphs headed ‘‘Our customers — Our five largest customers ’’in this section),
was a customer of our services covering ICT integ ration services, wireless telecommunication
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network enhancement services, telecommunicatio n network infrastructure maintenance and
engineering services, software development se rvices and sales of software. Our other major
customers may also be inclined to engage us for more than one type of our services and/or
products. Our Directors believe that this is attr ibutable to their satisfaction of our services in
different lines of our business.
Over the years, our Group has obtained qualifications and accreditations that are material to
our business operations from notable institutions in the telecommunication and related industries in
the PRC, which include, among others, Construction Enterprise Qualification Certificate* ( 建築業
企業資質證書) (General Contractor for Telecommunica tion Engineering Construction Level 3* ( 通
信工程施工總承包三級)), Work Safety Permit* ( 安全生產許可證), Construction Enterprise
Qualification Certificate* ( 建築業企業資質證書) (Professional Contractor for Electronic and
Intelligent Engineering Level 2 , Professional Contractor for Ste el Structure Engineering Level 3,
Construction labour* ( 電子與智能化工程專業承包二級、鋼結構工程專業承包三級、施工勞務不
分等級)), Permit for Installation (Repair, Trial) of Electric Power Facilities* ( 承裝(修、試)電力設
施許可證) (Installation Level 4, Repair Level 4, Trial Level 4* ( 承裝類四級，承修類四級、承試
類四級)), Guangdong Province Safety Technology Preventive System Design, Construction and
Maintenance Qualification Certificate* ( 廣東省安全技術防範系統設計、施工、維修資格證),
CMMI Maturity Level 3 certification, the recogni tion of Guangdong Telecommunication Network
Application and Testing Enhancement Enginee ring Technology Research Center 2021* (2021 年度
廣東省通信網路應用及檢測優化工程技術研究中心), and a series of ISO management
certifications. Our Directors bel ieve that these qualifications an d accreditation serve as proof of
recognition we received from the relevant author ities and other industry organisations in the PRC,
and as the credentials evidencing our industry c ompetence. For more details and examples of our
recognitions and qualifications, please refer to the paragraphs headed ‘‘Licences, approvals and
permits ’’ and ‘‘Recognitions, awards and certifications ’’ in this section. According to the CIC
Report, these recognitions and qualifications are one of the main factors considered by our existing
and potential customers in their selection of tel ecommunication network support, ICT integration
and telecommunication network-related s oftware development service providers.
We maintain relationships with our customers which include some renowned state-owned,
listed and private enterprises
We believe that our experience and knowledge accumulated in the provision of
telecommunication network support services a nd ICT integration services in the PRC, our
dedication to understanding our customers ’ needs and demands, and our ability to respond to their
requests have collectively fostered our customers ’ confidence in our qualit y services and products.
As such, our Directors believe that our Group is abl e to establish and maint ain relationships with
our customers, including some reputable companie s of a substantial business scale and thus, expand
our customer base. Our customers during the Tr ack Record Period included China Comservice,
major PRC telecommunication operators and a lead ing PRC telecommunication tower infrastructure
service provider.
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Although it is usually a requirement of our custo mers, especially those which are state-owned
or listed companies, that renewal of fixed term c ontracts (which are generally one to two years) for
provision of routine telecommunication network enhancement services is subject to new tenders
following the expiry of the fixed term, our Direct ors believe we have the following strengths that
our existing customers will consider in evaluati ng new tenders: (i) our track record and experience
in the provision of wireless telecommunication net work enhancement services; (ii) our delivery of
satisfactory services to them; and (iii) the mitigation of their concerns of any uncertainties and
additional time that would be incurred in engaging a new service provider.
As for our other services such as specific telec ommunication network enhancement services
and ICT integration services, upon satisfactory a ssessment and completion of a project, some
customers have expressed their recognition of ou r services by issuing a letter of commendation or
other awards to us, which can be a contributing f actor in our participation in other open tenders
invited by the same customers for their new proj ects, and may increase our chances of securing a
project.
In general, we have achieved a high customer retention rate, as evidenced by the fact that
repeat customers (being customers in a particu lar year during the Track Record Period who have
engaged us for our service or purchased our software at least once in the three financial years
immediately preceding that particular year) c ontributed revenue of approximately RMB163.0
million, RMB174.6 million, RMB198.3 million and RMB88.1 million, representing approximately
83.3%, 85.9%, 87.6% and 77.4%, respectively, of our total revenue during FY2020, FY2021,
FY2022 and 6M2023.
Our research and development capabiliti es allow us to better serve our customers ’ needs and
adapt to the fast-changing industry landscape
The history of our Group can be traced back to 2003 when WellCell Technology, our major
operating subsidiary, was established and was at the time principally engaged in the provision of
telecommunication network performance anal ysis system on Personal Handy-phone System
(‘‘PHS’’), a mobile network system which functione d as a cordless telephone. Since then, our
Group has been engaged in the research and devel opment of various types of software capable of
performing a wide range of functions, such as w ireless telecommunication network performance
testing and analysis, and integrated telecommun ication network manageme nt system. For example,
our Wangyou Renwoxing Wireless Network Test ing and Analysis System can perform various
measurement on a wireless telecommunication net work such as the operating conditions of base
stations, the rate of information transfer, delays that occur in data transmission, user download and
upload speed, etc. and assist users in evaluatin g the performance of a telecommunication network.
We also developed an integrated telecommunica tion network management system, namely LTE
Integrated Micro Base Station Network Manag ement System, which serves to enable users to
monitor and manage the operation of small and micr o base stations and affiliated equipment. Our
Group continued to develop software in alignment with our business expansion as a
telecommunication network support and ICT integ ration services provider since 2008 and 2014,
respectively. Through the accumulation of resea rch and development experiences over the years,
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and through regular communication with customers, we have gained knowledge about industry
developments and an understanding of customers ’specific requirements, and thus possess the ability
to develop software that are tailored to the needs of customers. For more details about our software,
please refer to the paragraphs headed ‘‘Our software ’’in this section.
Our research and development undertakings are supported by our strategically set up
infrastructure. We established our own research a nd development operation in 2003 supported by
our in-house engineers and technical personnel to reduce our reliance on technical expertise and
software development of third parties. Our recent r esearch focuses include (i) the application of 5G
and IoT); (ii) wireless communication; and (iii) bi g data and signal and data analysis. The results of
our research, such as new software or technologi es, are then applied to different aspects of our
services (such as data collection and analys is to complement our telecommunication network
support services), or launched as software for general sale to our customers, or applied in the
development of software that we customise for particular customers. During the Track Record
Period, revenue generated from the sales of our software, such as our Wangyou Renwoxing
Wireless Network Testing and Analysis System ( ‘‘網優任我行’’移動網絡測試分析系統), amounted
to approximately RMB11.5 million, RMB9.7 million, RMB3.5 million and RMB4.5 million,
respectively.
With our in-house research and development capabilities, in 2007, 2015, 2018 and 2021,
respectively, we were recognised as a H igh and New Technology Enterprise* ( 高新技術企業),
details of which are set out in the paragraphs headed ‘‘Recognitions, awards and certifications ’’in
this section. Our Directors believe that we are able to cater to our customers ’ specific needs and
develop software that offer particular solutions, a nd to leverage the latest industry developments to
enhance our services. For further details ab out our software and research and development
infrastructure, please refer to the paragraphs headed ‘‘Our software ’’ and ‘‘Research and
development ’’in this section.
We have an experienced management team leading our Group ’s workforce including technical
and professional personnel
We have an experienced and dedicated management team led by our executive Directors, Mr.
Jia, Mr. Cong and Ms. Liu, each of whom has over 18 years of experience in the information
technology and telecommunication industry in th e PRC. Together, they have been instrumental in
spearheading the growth and development of our Group, responsible for the overall strategic
management, planning and development of our Group ’s business operations.
In addition, we have an experienced senior m anagement team with extensive operational
expertise and in-depth understanding of the in dustry in which we operate. Members of our senior
management team are capable of identifying customers ’specific needs and expectations and keeping
abreast of the latest developments in the field.
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Our management team is supported by over 110 in-house engineers and technicians as at 30
June 2023. By providing adequate on-going traini ng to our professional personnel and enhancing
their awareness of the latest trends in the i ndustry, we believe they are well-equipped to
satisfactorily assist in our research and devel opment undertakings and render services to our
customers.
Attributed to the knowledge of our management te am and technical workforce, we believe that
our Group is well-positioned to achieve further gro wth and capitalise on market opportunities in the
future. Please refer to the section headed ‘‘Directors, senior management and employees ’’in this
prospectus for further information abou t our Directors and management team.
BUSINESS STRATEGIES
According to the CIC Report, the industries in which our Group operates are expected to see
considerable growth in the coming years. In parti cular, (i) as downstream industries are expected to
continue to carry out digitalisation transformati on, the demand for ICT integration services is
expected to increase in the future and the total revenue of the ICT integration service industry in
the PRC is expected to grow from approximately RMB168.7 billion in 2022 to approximately
RMB254.0 billion in 2027, with a CAGR of 8.5%; ( ii) as telecommunication operators are expected
to continue to improve telecommunication network service quality in the future, the market size of
the wireless telecommunication network enhan cement service industry in the PRC is expected to
increase from approximately RMB12.2 billion in 2022 to approximately RMB15.5 billion in 2027,
with a CAGR of approximately 4.9%; and (iii) owing to the development of 5G which brought new
demand for telecommunication network-related softw are, the total revenue of the telecommunication
network-related software products and development service industry in the PRC is expected to grow
from approximately RMB1,027.3 million in 2022 to approximately RMB1,620.3 million in 2027,
with a CAGR of 9.5%.
In order to capture the anticipated growth of the relevant industries in the PRC, we plan to
further strengthen and expand our business opera tions while maintaining a competitive standing
through the following strategies:
(I) Strengthening our financial capabilities in order to be in position to undertake more and
larger ICT integration projects
During FY2020, FY2021, FY2022, 6M2022 and 6M2023, we recorded stable growth in our
ICT integration services busines s, which generated revenue of a pproximately RMB38.5 million,
RMB42.5 million, RMB54.6 milli on, RMB34.8 million and RMB 35.6 million respectively,
representing a CAGR of approximately 19.1% from FY2020 to FY2022 and a 2.3% growth from
6M2022 to 6M2023. Our Directors consider that if we are to expand our business and undertake
more and larger ICT integration projects, we need to continue to enhance our available financial
resources for paying the initial costs for project s that may potentially be awarded to us. Such initial
project costs may include hardware, software and o ther equipment and subcontracting charges. As
such, to enable the continued growth and expansio n of our ICT integration services business and to
capture the opportunities arising in relatin g to favourable government policies such as the
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Development Plan for the Digital Economy of the 14th Five-Year Plan* ( ‘‘十四五’’數字經濟發展規
劃) issued by the State Council in 2021, we plan to allocate more financial resources to developing
our ICT integration services. Upon the Listing, our Directors believe that the net proceeds from the
Share Offer will strengthen our available financi al resources to satisfy th e initial project costs
requirements for our ICT integration projects in t he future and enable us to undertake more and
larger ICT integration projects which are generally cash flow demanding.
(II) Improving our service capabilities, qua lity and offering by co nducting research and
development to develop new software and know-how
In addition, we plan to continue to enhance the capabilities, quality and offering of our
services through pursuing new research and development undertakings in order to meet the market
requirements for rapid advancement and to improve customer satisfaction and confidence in our
Group. The telecommunication network support service industry and ICT integration service
industry are filled with new challenges and opportunities. Apart from the process of
commercialisation and application of 5G techno logy, 6G technology is also in a preparatory and
inception stage and more resources are expected to be invested by telecommunication-related
industry players in its study and development in t he coming years. For more information about 6G,
please refer to the section headed ‘‘Industry overview ’’in this prospectus. As such, our Directors
consider that substantial industry advancements will continue to arise in the future, and it is
imperative for market players like our Company to allocate sufficient resources to continuing
research and development. Given these rapid adva ncement of telecommunication technologies, in
particular the development of 5G technology in this stage, we need to keep abreast of the new
developments and offer modified or upgraded serv ices and software that are compatible with the
latest technologies and enhance user ex perience in order to satisfy customers ’ correspondingly
changing needs and requirements. As such, we pla n to continue to invest in various research and
development undertakings concerning 5G indust ry application and telecommunication network
enhancement based on end-user data. Given our track record and the experience of our Directors
and senior management team in the telecommuni cation industry and our strength in research and
development, our Directors believe that we are w ell positioned to pursue the new research and
development undertakings to improve the capabil ities, quality and offeri ng of our services, which
may in turn create more business opportunities fo r us. Our Directors consider that, this will also
place us in a more advantageous position to adapt to and leverage future industry advancements.
(III) Expanding the pool of target users of our t elecommunication network-related software
Our Directors consider that traditional teleco mmunication network te sting and analytical
software are generally designed for personnel with technical knowledge in the field of
telecommunication network enhancement. Neverthe less, we believe that there is market demand for
more user-friendly telecomm unication network testing and analyt ical software which targets users
who may not possess substantial technical knowle dge and expertise but nevertheless may purchase
such software for different purposes. As such, we plan to invest in the development of wireless
telecommunication network testing software whi ch will be positioned as an easy-to-use software
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and target ordinary non-technical users. Our Direct ors believe that such software will enable us to
expand the pool of target users of our software, which may in turn boost the revenue growth of our
software sale business.
(IV) Strengthening our capability in exploring and undertaking new business opportunities
In anticipation of our plans in achieving business expansion and revenue growth in our major
business lines which are expected to bring in more new projects, more personnel, especially those
who oversee the implementation of a project, will be required. We plan to invest resources in
expanding our workforce by employing more proj ect managers whose role will be instrumental in
the course of project planning, implementation and coordination.
In addition, during the Track Record Period, our regional managers and regional business
departments were mainly responsible for attending t o customer enquiries, exploring and identifying
business opportunities, and liaising with custom ers, details of which are set out in the paragraphs
headed ‘‘Sales and marketing ’’in this section. To enhance our sales and marketing efforts in
promoting the upgraded or new solutions and software expected to be developed from our research
and development undertakings as well as our existi ng services and software, we plan to invest more
financial resources in our sales and marketing operations, including to hire more sales and
marketing personnel and to fund our sales and marketing activities. Our Directors believe that this
strategy will enable us to more effectively explo re and identify potential business opportunities
from existing and potential customers.
In view of the above, our Group will strive to leverage our various experiences and expertise
to implement the above business strategies in ord er to capture more business opportunities and
strengthen our position in the market. For fu rther details of our implementation of the
aforementioned business strategies , please refer to the section headed ‘‘Future plans and use of
proceeds — Implementation plan ’’in this prospectus.
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OUR BUSINESS MODEL
We provide customised and comprehensive servi ces that cover (i) teleco mmunication network
support services mainly encompassing wireless telecommunication network enhancement services
and telecommunication network infrastructure maintenance and engineering services; (ii) ICT
integration services; and (iii) software develop ment services. We are also engaged in the sales of
software developed by us. The following diagram sets out our business model and position in the
service supply chain:
● Suppliers of
telecommunication
 and electronic
equipment
● Suppliers of other
general hardware and
software
● Telecommunication
operators
● Telecommunication
network equipment
manufacturers
● Telecommunication
network and technical
service providers and
general contractors
● Others
Our suppliers
Our Group’s businesses Our customers
► Wireless telecommunication network
enhancement services
● Routine telecommunication network
enhancement services
● Specific telecommunication network
enhancement services
► Telecommunication network infrastructure
maintenance and engineering services
► Customised software development services
► Sales of our software
Telecommunication network support
services
ICT integration services
Telecommunication network-related
software development
In terms of our roles and focuses in the market, we mainly act as a servicer, integrator and
developer, respectively, in provision of our various kinds of services.
(i) Servicer — Provision of telecommunication network support services
Our role as a servicer mainly involves the provision of telecommunication network
support services which can be sub-categorised as follows:
(a) wireless telecommunication ne twork enhancement services: our wireless
telecommunication network enhancement s ervices are intended for customers which
require an efficient wireless telecommu nication network. It typically involves
collection of telecommunicat ion network data in a particular area, performance of
tests, analysis of test results, diagnosi s of problems (e.g. misconfiguration and
misallocation of bandwidth usage), and lastly, implementation of enhancement
solutions. Hence, this business line is of an ‘‘enhancement ’’nature. Our wireless
telecommunication network enhancemen t services mainly include (a) routine
telecommunication network enhancement services, which involve enhancement
works and testing carried out upon receipt of end-user reports or upon detection of
issues in the course of testing, with a view to detecting and solving problems in
connectivity, quality, coverage, end-user experience, etc. of a telecommunication
network; and (b) specific telecommunicat ion network enhancement services, which
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are intended to troubleshoot specific netwo rk issues or improve t elecommunication
network by designing and implementing enhancement solutions tailored to the needs
of our customers; and
(b) telecommunication network infrastructur e maintenance and engineering services:
over the course of day-to-day usage, certa in components of a telecommunication
network infrastructure may malfun ction to varying extents. Our Group ’s
telecommunication network infrastructur e maintenance services mainly target to
address problems typically through inspections of relevant telecommunication
network infrastructures (e.g. base stati ons) to identify issues and testing of their
performance and functionalit y; examining and analysing issues (e.g. malfunctioning
of base station components) that are disco vered, and performing necessary repair or
maintenance work to restore their performance and functionality. Thus, this
business line is of ‘‘maintenance ’’nature. Examples of our maintenance services
include inspection and testing of the e quipment, cables and power system of base
stations, formulation and execution of repair solutions such as restoration and
replacement of any malfunctioning co mponents and/or arrangement for
subcontractors to carry out emergency repair works.
In addition, we also provide telecommunica tion network infrastru cture engineering
services, including provision of labour and engineering services in projects
involving construction of telecommunica tion network infrastructure. Our Group
typically participate in and/or engage suitable subcontractors to perform
construction and set-up works (such as excavation, cabling and construction of
telecommunications pipeline) with a view to building and setting up new
telecommunication network infrastructure. Thus, this business line is of
‘‘engineering ’’nature.
To facilitate our rendering of services, we purchase from our suppliers necessary
hardware, such as portable data terminals, a nd also make use of our own telecommunication
network analysis and testing software which se rve to gather and analys e telecommunication
network parameters.
(ii) Integrator — ICT integration services
Our role as an integrator mainly involves the provision of our ICT integration services.
In this respect, we are typically engage d in (i) customising our customers ’ computer system
design for providing business-specific systems for our customers; (ii) procuring equipment,
hardware and software and engaging of third- party subcontractors within our customers ’
budget; (iii) assembling equipment, hardwa re, software and other equipment to form a
functional and inter-connected system according to the integration plan, and ensuring the
compatibility of both; and (iv) providing follow-up services such as advising customers on
operation and management of the integrated system, which aims to cater for our customers ’
specific needs or requirements, such as integrat ion of a communication n etwork system for the
purposes of e-commerce. Thus, this business line is of an ‘‘integration ’’nature. We purchase
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from suppliers necessary hardware and software (such as servers, storage devices, cables and
optical fibers, security software and operating system software), the specifications of which
may be designated by our customers.
(iii) Developer — Telecommunication network-related software development
Our role as a developer mainly involves (i) development and sale of software and (ii)
provision of customised software development s ervices. Software developed by us is capable
of performing various functions (such as collect ing data relating to tel ecommunication network
performance and analysing the data collected) f or evaluation, enhancement and maintenance of
wireless telecommunication networks of t elecommunication operators. Apart from
complementing our core business in relation to provision of telecommunication network
support services and ICT integration services , software developed by us are also sold to
customers, including telecommunication ope rators, telecommunication network and
telecommunication equipment manufacturers and telecommunication network and technical
service providers and general contractors tha t use our software to facilitate their analysis,
enhancement and maintenance of wireless tel ecommunication networks. We also develop
customised software (including telecommunication network supp ort, platform and application
software) for our customers to cater to their sp ecific needs on, for instance, data sharing and
management platform. The focus of this busines s line is therefore on the research, design and
programming leading to the development of software. Thus, this business line is of a
“software development ” nature.
For details about the scope, particulars and exa mples of our various services, please refer to
the paragraphs headed ‘‘Our services ’’below in this section.
Our Directors consider that owing to the differe nces in nature of our various services, there is
no material risk of cannibalisation among these se rvices. In fact, our div ersified services have
expanded our target market by catering to the different demands of our customers — (i) for
improving connection quality of existing telecommunication network, we provide wireless
telecommunication network enhancement services; (ii) for maintaining and repairing existing
telecommunication facilities, we provide telecomm unication network infrastructure maintenance
services; (iii) for constructing new telecommuni cation facilities, we prov ide telecommunication
network infrastructure engineering services; (iv) f or customising digitalised communication network
of interconnected devices to cater for specific needs of our customers, we provide ICT integration
services; and (v) for developing telecommunication network-related software tailored to serve
particular purposes, we provide software develo pment services. Please refer to the paragraphs
headed ‘‘Our services ’’below in this section for details about the differences among our services.
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OUR BUSINESS OPERATIONAL FLOW
The following diagrams set out our overall business operational flow:
Our telecommunication network support services,
ICT integration services and
software development services
1.
Identifying and
securing business
Identifying demand and
conducting market
research
Designing and
developing software
prototypes
Conducting
preliminary testing on
prototypes
Using our
software to
support our
services
Launching software to
our customers for sale
Applying for intellectual
property rights and make
continuous adjustments
and modifications
Feasibility studyFeasibility study and submit tenders and/or quotations
Business identification
Entering into service agreements with customers
Arranging site visits (if necessary)
Devising and modifying implementation plans
Placing orders with hardware and/or software suppliers
► Wireless telecommunication network
enhancement services
● Routine telecommunication network
enhancement services
● Specific telecommunication network
enhancement services
► Telecommunication network infrastructure
maintenance and engineering services
Engaging third-party services providers and/or subcontractors
Quality control by a series of tests throughout the provision,
and at the completion, of services
Performance assessment conducted by customers
Gathering feedback from customers and making modifications
or adjustments
Maintenance and support services during warranty period
2.
Preparation and
planning
ICT
integration
services
Telecommunication network
support services
Software
development
services
3.
Provision of
services
4.
Quality control
5.
Performance
review
6.
After-sales and
post-service
support
Our telecommunication
network-related software
development and sale process
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Business identification
We generally identify potential business thro ugh browsing tender invitations launched by our
existing or potential customers which are publicl y available on the internet or through invitations
for quotations followed by discussions and negotia tions with potential customers. For open tenders,
our customers may post the invitation to tender online or through other public means whenever
their need for particular services arises. We t herefore keep an eye on such open invitations to
identify potential new projects. On the other hand, upon expiry of fixed-term agreements in relation
to routine telecommunicat ion network enhancement projects a nd/or telecommunication network
infrastructure maintenance projects secured by u s through open tenders, the agreement would be
open for tender again rather than renewed. In such circumstances, we would generally participate in
the tender process and submit our bids. In additi on, we may also receive invitations for quotation
from (i) existing or past customers which are s atisfied with the services we have provided in
previous projects, or (ii) new customers introdu ced or referred to us by our existing customers or
business partners, or who learn of us through othe r means, such as through internet searches. Our
revenue generated from projects awarded through open tenders during the Track Record Period
amounted to approximately RMB85.1 milli on, RMB124.7 million, RMB138.8 million and
RMB63.6 million, respectivel y. For each of FY2020, FY2021, FY2022 and 6M2023, a majority of
our revenue derived from the provision of telecommunication network support services was
generated from projects awarded through open t enders. For our ICT integration services, more
revenue was generated from projects obtained through open tenders for each of FY2020 and
FY2021 while more revenue was generated through non-tender methods for FY2022 and 6M2023.
In contrast, the sale of software normally did not involve any open tender process during the Track
Record Period. As for our software development ser vices, revenue generated from projects obtained
through open tenders and through non-tender met hods was relatively comparable in FY2020, but
notably more revenue was generated from projects obtained through non-tender methods than open
tenders in FY2021, FY2022 and 6M2023.
According to our PRC Legal Advisers, customers who source and engage service providers for
(i) large infrastructure and public utility projects that concern public interest or security; (ii)
projects that are invested completely or partly wi th state-owned funds or financed by the state; or
(iii) projects using loans or aid funds from international organisations or governments of other
countries, are required under relevant PRC laws a nd regulations to go through the process of open
tenders or requisite non-tender methods such as invi tation for quotations. For further details, please
refer to the paragraphs headed ‘‘Regulatory overview — Laws and regulations in relation to our
Group ’s business in the PRC — Bid invitation and bidding ’’in this prospectus. Furthermore, in
addition to the legal requirements, a potential customer may also opt for sourcing required services
by open tender based on its own internal policies.
In the course of business identification, we are usually provided with preliminary
specifications, customers ’ requirements and/or relevant timefra mes for completing a project, which
are, for instance, contained in a tender invitatio n. The information that may be contained in tender
invitations may vary from customer to custome r and from project to project, but a typical tender
invitation generally includes: (i) project overvi ew and technical specifications; (ii) the required
professional qualifications expected of the tend erer; (iii) tendering procedures and evaluation
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standards; (iv) documents required to be submitted b y the tenderer (typically including its business
licence, certificates, technical tender documents, etc .); (v) contract template and salient terms; and
(vi) other requirements of the customer.
During the Track Record Period, for some of the projects for which our Group had submitted
tenders, no precise contract price was contai ned in the tender invitations. In such case, an
alternative indication of project size, such as the works required to be perfo rmed together with the
corresponding unit price, would generally be includ ed in the tender invitations instead. Based on
the aforesaid indication including the unit price, coupled with our estimation of the scale or volume
of works of a potential project on the basis of past dealings with existing customers or the general
market practice, we could perform a preliminary as sessment on the profitability of the project to
decide whether to tender for such project.
Feasibility study and preparati on of tenders and/or quotations
After identifying a prospective customer ’s demand, our management team, primarily led by
Mr. Jia, Mr. Cong and Ms. Liu, with the assistance o f our technical, sales and finance personnel,
will make a preliminary technica l and financial assessment of a prospective project based on the
specific requirements and other relevant infor mation provided by the potential customer. In
considering whether to undertake a prospectiv e project, we generally take into account, among
others, the following factors: (i) the budget of the po tential customer, if disclosed, and the expected
profitability of the project; (ii) the feasibility of undertaking the project with reference to technical
requirements and specifications, our capability and expertise, and our capacity with reference to the
expected project schedule (including the available w orkforce and financial resources); and (iii) any
relevant risks associated with undertaking the project. If a tender or quotation invitation does not
contain a specific contract price, we typically as sess the profitability based on the alternative
indication of contract size including unit price for required works contained in an invitation.
Before preparing tender or quotation documents, we will hold a meeting among our sales and
marketing team and the personnel responsible for pr eparing tender/quotation documents in relation
to each project to discuss key issues. Our busines s department will supervise, among others, the
overall preparation of tender/quotation document s. When the draft tender/quotation documents are
ready, they will first be submitted to our Direct ors for review and approval. If our Directors
consider that a project is commercially viable an d technically feasible, our sales and marketing
team will proceed to submit the tender or quotation to our customers.
Our technical and sales personnel will then prep are a preliminary solution plan with a view to
addressing the prospective customer ’s needs.
After submission of our tender, pursuant to the relevant PRC laws and regulations and
typically under the internal control policy of our customer, we are not allowed to contact the
customer before the tender selection result is rel eased. In contrast, in relation to a quotation, the
prospective customer may raise enquiries or arrange for interviews with us where we may be
requested to explain the details of our quotation and solution plan before the project is awarded to
us.
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Our submitted tenders and successful tenders during the Track Record Period
As an invitation to tender may cover more than one kind of services or one project of the
same customer, succeeding in a tender may entail the securing of several projects and contracts.
The number of tenders we had submitted and the number of successful tenders secured by us by
business line during the Track Record Period are summarised in the table below:
FY2020 FY2021 FY2022 6M2023
Wireless telecommunication network
enhancement services
Number of tenders submitted 68 67 73 17
Number of successful tenders 39 52 48 12
Success rate (approximately) (%) 57.4 77.6 65.8
(Note 3) 70.6
Telecommunication network infrastructure
maintenance and engineering services
Number of tenders submitted 15 19 39 18
Number of successful tenders 10 13 20 15
Success rate (approximately) (%) 66.7 68.4 51.3
(Note 3) 83.3
ICT integration services
Number of tenders submitted 2 14 22 20
Number of successful tenders 1 10 15 12
(Note 4)
Success rate (approximately) (%) 50 71.4 68.2 (Note 3) 60.0
Software development services (Notes 1 & 2)
Number of tenders submitted 13 7 21 4
Number of successful tenders 10 2 17 3
Success rate (approximately) (%) 76.9 28.6 81.0 75.0
Notes:
1. Under our software development o peration, the sale of our software no rmally did not involve open tender
during the Track Record Period.
2. The decrease in the number of tenders submitted and successful tenders from FY2020 to FY2021 and the
decrease in tender success rate in FY2021 for our softwar e development services were mainly attributable to
that our Group did not have sufficient capacity to take up more projects at the time, as we had secured a
number of projects through non-tender methods for F Y2020 and FY2021 and we were constrained from
bidding for more tenders for FY2021. Despite the decrease in the number of submitted and successful tenders,
the number of our Group ’s new projects for provision of software development services awarded (through
both tender and non-tender methods) increased fro m nine for FY2020 to 12 for FY2021. The number of
tender submitted and successful tenders for our soft ware development services returned to normal in FY2022
and recorded an increase from seven to 21 and two to 17 from FY2021 to FY2022, respectively.
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3. The decrease in the tender success rate from FY2021 to FY2022 was mainly attributable to the increase in the
number of tenders submitted by our Group for the relevant services from FY2021 to FY2022 in alignment
with our business expansion with a view to undert aking more and new business opportunities.
Notwithstanding such decrease in the tender success rate, the number of successful tenders for our
telecommunication network infrastructure maintenance and engineering services and ICT integration services
recorded an increase from FY2021 to FY2022, whereas the number of successful tenders for our wireless
telecommunication network enhancement services in FY2022 was comparable to FY2021 and represented an
increase of approximate 23% from FY2020.
4. Apart from the 12 successful tenders, there was one tender the results of which had yet to be announced by
the customer as at the Latest Practicable Date.
The table below further sets out the number of successful tenders by business line and range
of contract amount during the Track Record Period:
Year/
period
Contract
amount up to
RMB1
million
Contract
amount more
than RMB1
million and
up to RMB2
million
Contract
amount more
than RMB2
million and
up to RMB3
million
Contract
amount more
than RMB3
million and
up to RMB4
million
Contract
amount more
than RMB4
million
Number of
successful
tenders
Number of
successful
tenders
Number of
successful
tenders
Number of
successful
tenders
Number of
successful
tenders
Wireless telecommunication
network enhancement
services
FY2020 29 4 2 — 2
F Y 2 0 2 1 3 73323
FY2022 30 7 6 — 5
6M2023 9 2 —— 1
Telecommunication network
infrastructure
maintenance and
engineering services
FY2020 6 2 —— 3
FY2021 9 2 —— 3
FY2022 15 —— 23
6M2023 13 1 — 1 —
ICT integration services FY2020 ——— 1 —
FY2021 4 2 2 — 2
F Y 2 0 2 2 1 01121
6M2023 4 1 1 3 3
Software development services FY2020 8 2 ———
FY2021 2 ————
FY2022 12 2 — 12
6M2023 — 12 ——
Total F Y 2 0 2 0 4 38215
F Y 2 0 2 1 5 27528
F Y 2 0 2 2 6 71 0 7 51 1
6M2023 26 5 3 4 4
Note: For certain successful tenders of our Group during the T rack Record Period, there were cases where (i) there
was no contract amount stipulated in the awarded tend er and in such cases, our customers would enter into a
framework agreement with us first and placed orders with specific contract amount subsequently; and (ii) the
contract amount of certain awarded tenders was an es timated amount with reference to the tender documents
as formal agreements had not been signed as at 30 June 2023.
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Our submitted quotations and successful q uotations during the Track Record Period
The number of quotations we had submitted and t he number of successful quotations secured
by us by business line during the Track Record Period are summarised in the table below:
FY2020 FY2021 FY2022 6M2023
Wireless telecommunication network
enhancement services
Number of quotations submitted 44 36 28 9
Number of successful quotations 38 32 25 (Note) 8
Success rate (approximately) (%) 86.4 88.9 89.3 88.9
Telecommunication network infrastructure
maintenance and engineering services
Number of quotations submitted 13 28 20 11
Number of successful quotations 11 21 16 (Note) 8
Success rate (approximately) (%) 84.6 75.0 80.0 72.7
ICT integration services
Number of quotations submitted 16 30 32 15
Number of successful quotations 14 26 24 (Note) 13
Success rate (approximately) (%) 87.5 86.7 75.0 86.7
Telecommunication network-related
software development
Number of quotations submitted 27 32 22 12
Number of successful quotations 24 27 19 (Note) 9
Success rate (approximately) (%) 88.9 84.4 86.4 75.0
Note: The decrease in the number of successful quotations for our Group ’s services from FY2021 to FY2022 was
mainly attributable to the decrease in the number of quotations submitted by our Group for most of our
business lines. Nevertheless, despite such decrease i n the number of successful quotations, the aggregate
contract amount awarded to our Group under all of our Group ’s service lines through non-tender methods
recorded a significant increase from approximately RMB64.4 million in FY2021 to approximately RMB117.7
m i l l i o ni nF Y 2 0 2 2 .
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The table below further sets out the number o f successful quotations by business line and
range of contract amount during the Track Record Period:
Year/
period
Contract
amount up to
RMB500,000
Contract
amount more
than
RMB500,000
and
up to RMB1
million
Contract
amount more
than RMB1
million and
up to
RMB1.5
million
Contract
amount more
than RMB1.5
million and
up to RMB2
million
Contract
amount more
than RMB2
million
Number of
successful
quotations
Number of
successful
quotations
Number of
successful
quotations
Number of
successful
quotations
Number of
successful
quotations
Wireless telecommunication
network enhancement
services
F Y 2 0 2 0 1 88336
F Y 2 0 2 1 1 7 1 0113
F Y 2 0 2 2 1 63114
6M2023 3 3 2 ——
Telecommunication network
infrastructure
maintenance and
engineering services
F Y 2 0 2 0 32231
FY2021 14 5 — 11
F Y 2 0 2 2 55132
6M2023 — 2 — 42
ICT integration services FY2020 9 2 — 12
F Y 2 0 2 1 1 53233
F Y 2 0 2 2 1 42512
6M2023 3 6 1 — 3
Telecommunication network-
related software
development
F Y 2 0 2 0 1 16142
F Y 2 0 2 1 1 66221
FY2022 12 6 —— 1
6M2023 2 1 1 3 2
Total FY2020 41 18 6 11 11
F Y 2 0 2 1 6 2 2 4578
F Y 2 0 2 2 4 7 1 6759
6M2023 8 12 4 7 7
Notes: For certain successful quotations of our Group during the Tr ack Record Period, there were cases where (i) there was no
contract amount stipulated in the awarded quotation and in such cases, our customers would enter into a framework
agreement with us first and placed orders w ith specific contract amount subsequently; and (ii) the contract amount of certain
awarded contracts was an estimate amount with reference to the quotation documents as formal agreements had not been
signed as at 30 June 2023.
Contract formation
After a customer has accepted our tender or quota tion, we would generally enter into a service
agreement with the customer which would set out ou r scope of services and other terms, details of
which are set out under the paragraphs headed ‘‘Our customers — Salient terms of our service
agreements ’’below in this section. In cases where the specific contract price is not provided by our
customers from the outset of a project, our custom ers may first enter into a framework agreement
with our Group and subsequently award ancill ary contracts or orders to us under the framework
agreement which will specify the nature, specifi cations and charges of the works required, and the
final contract price for the project is calculate d based on the actual works performed by us upon
completion of the project and accepta nce assessment by our customers.
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For our routine telecommunication network enh ancement services and/o r telecommunication
network infrastructure maintenance services, despite the continuous nature of our customers ’
demand for such services, our customers general ly enter into a service agreement with us for a
fixed term typically of approximately one to two years and, after the expiration of which, we are
generally required to tender for the project agai n and, if such tender is accepted, enter into a new
service agreement for a fresh term. As for our other services, there is no fixed term and the contract
term of a project is determined based on the customer ’s requirements taking into account various
factors, including the complexity of the project.
The following table sets out the average and range of duration of our Group ’sp r o j e c t s
commenced and/or completed during the Track Record Period by business line:
Longest project
duration (Notes 1 & 2)
Shortest project
duration (Note 1)
Average project
duration (Note 1 & 3)
(approximately) (approximately) (approximately)
(in month(s)) (in month(s)) (in month(s))
Wireless telecommunication network
enhancement services 57 Less than 1 14
Telecommunication network infrastructure
maintenance and engineering services 71 Less than 1 18
ICT integration services 43 Less than 1 10
Telecommunication network-related software
development 27 Less than 1 6
Notes:
1. The project duration of a project is the period between (i) the date of commencement as stipulated in the
contract awarded to us in that project with the earliest commencement date; and (ii) the actual or expected/
estimated date of completion of the contract awarded und er the same project with the latest completion date
falling in or after the Track Record Period.
2. The longest project duration may be longer than the le ngth of the Track Record Period as certain projects
commenced before the Track Record Period are expected/estimated to complete after the Track Record Period.
3. The average project duration is the average amount of time (in months) that our Group takes to complete (or
expects/estimates to complete) a project, which is calculated by summing up the durations of individual
projects divided by the total number of projects.
Preparation and planning
After entering into a service agreement with our customers, we will form an execution team
generally comprising a project manager and supported by engineers and technicians for project
execution, the composition of which may vary acco r d i n gt ot h et y p ea n dc o m p l e x i t yo fs e r v i c e st o
be rendered. Our project managers are mainly responsible for formulating project solutions,
implementation plans and contingency plans, a s well as project cost and personnel planning,
whereas our engineers and technicians are respon sible for implementing formulated solutions.
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If our execution team considers it necessary, it m ay arrange for a site visit with our customers
to inspect the relevant premises and facilities for designing, reviewing and adjusting the proposed
solutions prior to implementation. For instance, for our ICT integration services, our execution team
may pay a visit to the premises designated for hous ing the necessary equipment and devices, for the
purposes of devising and modifying a more detai l e dp l a ni nr e l a t i o nt ot h es e t t i n go ft h es y s t e m
infrastructure. They would also closely liaise with our customers to discuss, modify and eventually
finalise the solutions to be adopted and implemented.
If necessary, our procurement team would place orders with suppliers to procure necessary
hardware and equipment, monitor the shipment and logistics progress, and ascertain the quality and
quantity of the purchased goods. For our wireless telecommunication network enhancement services
and telecommunication network in frastructure maintenance and engineering services, we generally
purchase necessary equipment, such as portable da ta terminals and signal acq uisition devices, which
can generally be used repeatedly for multiple pro jects. As for our ICT integration services, we
generally purchase equipment, devi ces and software system such as se rvers, storage devices, cables
and optical fibers, security software and so ftware for customisation of our customers ’ computer
system design.
Some projects may involve work which is out of our usual scope of services, in which case we
would engage third-party subcontractors to pe rform the work. Examples include emergency power
supply for our telecommunication network infrastru cture maintenance and engineering services, and
installation of cabling and associated dev ices for our ICT integ ration services.
For further details, please refer to the paragraphs headed ‘‘Our suppliers ’’ and ‘‘Our
subcontractors ’’below in this section.
Provision of services
After the proposed solutions are finalised and the necessary hardware and software are in
place, our project managers would arrange for the l ogistics for the implementation of the proposed
solutions by our engineers and technicians. For m ore details about the operational flow and scope
of our services, please refer to the paragraphs headed ‘‘Our services ’’below in this section.
Quality control and performance review
Throughout the provision of our services, our engineers and technicians will generally conduct
a series of quality control tests which typically in clude testing the performance and connectivity of
a telecommunication network or ICT system (as the case may be) against the individual customer ’s
specifications and requirements. Furthermore, for our software (both for sale and under software
development), quality control is typically conducte d through unit testing (testing of individual units
and components of the software) and system testin g (testing of the software as a fully-integrated
system), followed by continuous adjustments and modifications. If any defect or problem is
identified during the tests, we will rectify the sa me before reporting completion of services to our
customers. In normal circumstances, at each progre ss checkpoint or after delivering our report of
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completion, our customers would conduct their own assessments and may request adjustments to
the settings of their telecommunication network or ICT system. Upon confirmation of satisfaction
by our customers, a project is deemed to be completed.
As for our routine telecommunication network enhancement services, due to its continuous
nature, there is no particular quality control sta ge at a specific point of time. Our services are
constantly performed over the contract period and are thus evaluated based on continuous
assessment by our customers for each instance of performance of enhancement services.
After-sales and post-service support
We generally provide a warranty period of approximately one to three years in connection
with work delivered under our services, except for our routine telecommunication network
enhancement services and telecommu nication network infrastructur e maintenance services. During
the warranty period, depending on the type of services rendered, we may offer remote and/or on-
site maintenance and support services to our customers. Customers may also contact us via our
hotline, email and through instant messaging. For instance, after we have rendered ICT integration
services, customers may contact us for assistanc e if they encounter a technical issue or require
guidance as to the operation and man agement of the integrated system.
Furthermore, our Directors and members of our management team maintain regular
communications with our customers regarding their needs and feedbacks on the quality of our
services and through which, our Directors bel ieve that we are able to better understand our
customers ’ needs as well as the latest market trends on a timely basis.
Research and development
We also design and develop software for our provi sion of telecommunication network support
services, in particular, in testing and anal ysing the performance and connectivity of a
telecommunication network in order to identify if t here are any technical issues and to resolve the
issues. We also develop other software such as pla tform and application software tailored to the
needs of our customers in specifi c application such as 5G technology. The software developed by
us are also made available for sale to customers.
The work flow in relation to the developmen t of new software generally comprises (i)
identification of customer or general market d emands for software for performing a particular
function; (ii) research on whether similar software is available in the market; (iii) examination of
the feasibility of developing proposed software b y taking into account the commercial value of the
software, relevant technical development require ments, our then capacity and expertise, our then
available research and development workforce a nd financial resources, etc.; (iv) development
stages, which include preliminary concept design, detailed design and development of functions and
features; (v) testing stages, which include unit testing (testing of individual units and components
of the software) and system testing (testing of the software as a fully-integrated system), followed
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by continuous adjustments and modifications; (vi) s oftware launch and application for intellectual
property rights; and (vii) continuous modifica tions to the software with reference to users ’
feedback.
For further details of our software, please refer to the paragraphs headed ‘‘Our software ’’
below in this section and ‘‘B. Further information about the business of our Group ’’in Appendix IV
to this prospectus.
OUR SERVICES
Wireless telecommunication is a method of tr ansmitting information and data from one point
to another and comprises, among other things, (i) a core network being the backbone of a
telecommunication network supported by communication facilities and maintained by
telecommunication operators to provide telecommun ication services to end-users; and (ii) an access
network which mainly serves to receive and tr ansmit signals between end-user devices and
telecommunication operators with the use of base st ations and other teleco mmunication devices.
Core network and access network are connected by be arer network which enables data transmission
by means of cables, optical fibers and/or any phy sical medium. Meanwhile, end-user devices are
connected to the access network via telecommunications network that spans over a land area and
connected wirelessly by transceivers at fixed locat ions. i.e. base stations. The services of our Group
mainly focus on the bearer network, the access network and the wireless network between end-users
and base stations. The diagram below illustrates th e basic structure of a wire less telecommunication
layout and the respective positioning of our Group ’s services in different parts of the layout.
End-user devices
such as mobile phones
Wireless network
Bearer Network
(e.g. connected by cables and
optical fibers)
Access Network Core Network
Telecom server rooms
Telecommunication network
infrastructure engineering services
Telecommunication
network infrastructure
maintenance services
Base stations
Wireless telecommunication network
enhancement services
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Based on the nature and scope of works we are engaged by our customers to perform as
stipulated in our contracts and orders, our services can be broadly classified into (i)
telecommunication network support services, in cluding wireless telecommunication network
enhancement services and telecommunication netwo rk infrastructure maintenance and engineering
services; (ii) ICT integration services; and (iii) s oftware development servi ces. For the distinctions
in the primary scope of work among our wireles s telecommunication network enhancement
services, telecommunication net work infrastructure maintenance and engineering services and ICT
integration services, please refer to the paragraphs headed ‘‘Key distinctions among our wireless
telecommunication network enhancement services , telecommunication net work infrastructure
maintenance and engineering services and ICT integration services ’’below.
(I) Telecommunication Network Support Services
The diagram below illustrates the overview o f our telecommunication network support
services:
End-users
connectivity
user experience
Wireless network
Telecommunication
network
enhancement
services
Telecommunication network
support services Telecommunication
network
infrastructure
maintenance services Base stations
Routine/specific
enhancement
(a) Wireless telecommunication n etwork enhancement services
Our wireless telecommunication network enha ncement services comprise (i) routine
telecommunication network enhancement services and (ii) specific telecommunication network
enhancement services.
i. Routine telecommunication network enhancement services
Wireless telecommunication network requires enhancement and maintenance from
time to time and is affected by various external environmental factors, such as weather,
landscape and physical obstructions, and end- user activities, such as business-related
activities (email and other instant communi cation, etc.) and online entertainment (live-
streaming, gaming, etc.), each of which may require a different amount of bandwidth and
exert different levels of load on a telecomm unication network. In their daily course of
operations, telecommunication operators may encounter various telecommunication
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network issues or failures, such as network congestion, interference and coverage holes
(areas where no signal can be received from a wireless telecommunication network),
which are prone to affect the connection of t heir end-users. These issues have a number
of causes and may recur from time to t ime. As such, by providing routine
telecommunication network enhancement services to our customers over a fixed period
and through the deployment of relevant technol ogies, skills, equipment and personnel, we
help our customers identify and solve the problems in a timely manner in order to
improve end-user experience and maintai n the service quality of our customers.
The chart below illustrates our general ope rational flow in the provision of routine
wireless telecommunication n etwork enhancement services:
I
II
III
IV
V
Detection of telecommunication network issues/Receipt of issue reports
● Detection of telecommunication network issues in the course of network testing
● Report of telecommunication network issues to us/our customers by end-users
Deployment of execution team
● Deployment of engineers and technicians to perform on-site/remote examination
Collection and execution of data
● Collection and analysis of telecommunication network data and parameters in order to identify specific issues and
causes thereof
Formulation and execution of enhancement solutions
● Formulation and execution of the most suitable solutions to enhance telecommunication network performance, thus
improving user satisfaction rate
Testing and assessment
● Testing on the telecommunication network performance again using our software such as Wangyou Renwoxing Wireless
Network Testing and Analysis System to ensure that a problem is properly dealt with
By performing testing on different coverage areas of our customers ’ wireless
telecommunication network , we keep a close eye on the real-time conditions of the
telecommunication network and report any i rregularities detected to our customers.
Further, when end-users encounter a teleco mmunication network issue, they may also
report the issue to our customers which would then notify our customer service personnel
to respond to such issue. We generally respond to any issue reported on a 24 hours a day
and seven days a week basis and then deploy our execution team during working hours.
Our execution team, which consists of engin eers and technicians, in the proximity will
perform an on-site or remote examination of t he telecommunication network status,
settings and/or relevant hardware, depen ding on the nature of the issues in question.
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In the stage of collection and analysis of data, we would generally collect and
analyse, with the assistance of our soft ware such as Wangyou Renwoxing Wireless
Network Testing and Analysis System, tel ecommunication network data and parameters
which quantify and reflect the performance of a telecommunication network, such as:
— Network coverage: measurement of the geographic coverage of base stations
which enable telecommuni cation network connection;
— Coverage performance: measurement of the rate of information transfer and
signal level over a wireless telecomm unication network by certain indicators,
such as SINR (signal-to-interference- plus-noise ratio), which reflects the
strength of the received signal relative to the strength of the interference and
noise, and RSRP (reference signal recei ved power), which reflects the strength
of power received from a single reference signal;
— Network latency: measurement of delays that occur in data transmission (i.e.
time taken for a picture or sound or text to be transmitted to end-users); and
— Service performance: measurement of indicators that suggest the quality of
telecommunication network service, su ch as user download and upload speed,
webpage access success and delay rate, etc.; and
— Performance maintenance: measurement of whether a connection to a
telecommunication network can be mainta ined without disruption, such as the
testing of disconnection rate.
Furthermore, formulation of enhancement solutions would largely depend on the
nature of the telecommunication network issues. Some of the common issues and
corresponding solutions we provide are set forth in the table below:
Common issues Examples of corresponding solutions
Misconfigured network
parameters, such as System
Information Block Type 2
(SIB2), Physical Uplink
Shared Channel (PUSCH),
etc.
Adjusting the relevant parameters to ensure an
suitable and efficient set ting and configuration.
Different brands of telecommunication network
equipment may require different settings and
configuration.
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Common issues Examples of corresponding solutions
Slow network speed due to
failure to handover
(transferring an ongoing call
or data session from one
base station coverage area to
another base station as the
device connected to the
telecommunication network
crosses different areas)
Troubleshooting to confirm the reason(s) for the
failure to handover; depending on the problems
identified, re-enabling the handover by (i)
lowering or cancelling the telecommunication
network interference that prevents the base
stations from receiving reports in relation to
movement of the device; and/or (ii) fixing the
issues that prevents the base stations from giving
instructions to handover, such as irregularities in
t h et r a n s m i s s i o nr o u t eo fthe telecommunication
network.
Network congestion caused by
inefficient use of bandwidth
Adopting traffic shaping technique to enhance the
bandwidth usage efficien cy by prioritising and
allocating bandwidth to important functions as
designated by customers, thus shortening the
response time of such functions. For instance, the
amount of bandwidth consumed by entertainment
applications can be restricted to improve
telecommunication net work performance for
business and mission critical applications in
business and financial districts.
Telecommunication network
interference caused by, for
instance, excessive
overlapping network
coverage of multiple base
stations in close proximity;
and network coverage holes
caused by, for instance,
insufficient reach of base
stations
Modifying the coverage area by various means,
such as antenna tilt, sectorisation, etc.
Sectorisation refers to a technique whereby omni-
directional antennas (w ith a 360° coverage) are
replaced by multi-sector antennas (composed of
three or six directional antennas), or upgrading
existing multi-sector antennas, to enhance
Telecommunication network performance. Multi-
sector antennas are better suited for densely
populated areas with a larger number of end-
users as they minimise interferences from
neighbouring base stations and provide flexibility
in adjusting tilt angle of antennas and
transmission power.
General underperformance of
telecommunication network
equipment, such as
monitoring module, base
station board and antenna,
etc.
Troubleshooting and adjusting the settings or
parameters of the relevant equipment in response
to the level and nature of underperformance.
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Common issues Examples of corresponding solutions
Overload of base stations Prioritisi ng maintenance and enhancement tasks
such as troubleshooting, adjustment of
telecommunication net work parameters, radio
frequency enhancement and so on. For areas
where adjustment of parameters cannot alleviate
the heavy load of the base station, implementing
channelling solutions on the hardware such as
adjustment of covera ge area, instalment of
telecommunication n etwork enhancement
equipment such as a remote radio unit to extend
t h ec o v e r a g eo ft h eb a s es t a t i o n .
Examples of other general
enhancement strategies
. Data deduplication: eliminating excessive
duplicate copies of repeating data to be sent
across a telecommunication network by
sending references instead of the actual
data;
. Data caching: a data storage method
w h i c hs p e e d su pt h er e t r i e v a lo fd a t a ;
. Data compression: limiting data size to
lower bandwidth usage;
. Data protocol streamlining: bundling data
from various applications into one.
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Set out in the table below are some exam ples of the routine telecommunication
network enhancement projects completed or undertaken by us which contributed revenue
of over RMB4 million during the Track Record Period and the services rendered by us
thereunder:
Project name
Project
period Description of project
Examples of services
rendered by us
Revenue
accumulated
during the Track
Record Period Completion date
RMB million
(approximately)
DX Qinghai Routine
Network
Telecommunication
Enhancement
Project
FY2020 –
FY2021
Routine telecommunication
network enhancement
services for a major
telecommunication
operator in Qinghai
. overall test, analysis and
enhancement of
telecommunication
network
. user complaint analysis
and handling.
. telecommunication
network interference
screening
4.1 15 December 2021
DX Shijiazhuang
Routine
Telecommunication
Network
Enhancement
Project
FY2020 –
FY2021
Routine telecommunication
network enhancement
services for a major
telecommunication
operator in Shijiazhuang
. telecommunication
network performance
assurance and basic data
maintenance
. daily telecommunication
network test, analysis
and basic enhancement
. user complaint analysis
and handling
. telecommunication
network interference
screening
10.1 15 January 2022
ii. Specific telecommunication network enhancement services
Apart from providing routine wireless t elecommunication network enhancement
services, we also design and execute cu stomised enhancement solutions for
telecommunication network issues or improvement objec tives which are specifically
identified and targeted by our customers.
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Some of the common specific issues o r objectives to which we had provided
solutions during the Track Record Period are set out in the table below:
Specific issues or objectives Solutions
Inefficient telecommunication
network infrastructure (such
as base station) affecting the
rate of data transmission
Identifying, upgrading, updating and/or
modifying substandard components in the base
station through collecting and analysing various
network parameters, such as bandwidth usage,
traffic patterns and connection lag, failure and
recovery records, in order to improve
telecommunication n etwork performance.
5G energy saving solutions Through real-time monitoring and prediction of
telecommunication net work load change and the
relevant network parameters, adjusting the
operational modes or the functional modules of a
base station in order to achieve energy saving.
Base station enhancement Gathering and analysing various network
parameters such as bandwidth usage, traffic
pattern, connection lags and faults and records of
recoveries to assess telecommunication network
performance and identify the substandard
components of a base station which may require
upgrading, updating or modification for
regulatory compliance and enhancement of
performance.
Coverage enhancement Enhancing telecommunication network coverage
of a base station by, among other things, (i)
enhancing signal coverage through ensuring the
RSRP and/or SINR in the target network area is
up to standard for supporting a wireless
telecommunication netwo rk; (ii) resolving issues
identified through troubleshooting, such as
interference and an improper area for triggering a
handover.
Upon completion of the implementation of s pecific solutions, our customers will
assess our performance by evaluating the results of the enhancement.
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Set out in the table below are some exampl es of the specific telecommunication
network enhancement projects completed or undertaken by us which contributed revenue
of over RMB1.5 million during the Track Record Period and the services rendered by us
thereunder:
Project name
Project
period Description of project
Examples of services
rendered by us
Revenue
accumulated
during the Track
Record Period Completion date
RMB ’million
(approximately)
DX Guangzhou 5G
Network Testing
Project
FY2020 –
FY2021
5G network testing and
analysis of 5G
commercial
applications in
Guangzhou and other
major PRC cities
. a s s i s t i n gt od e s i g nt e s t i n g
implementation plans
. 5G network coverage
t e s t i n gi ns p e c i f i cs c e n a r i o
. experience testing of the
customer ’sm o b i l en e t w o r k
services
. data collection and analysis
1.7 Completed in
September 2021
DX 5G Mobile
Network Testing
Project
FY2021 –
FY2022
5G mobile network data
and perception
testing and analysis
in major cities,
expressways and
high-speed railway
lines in the PRC
. data checking for automatic
drive test system
. 5G drive test data
collection and analysis for
PRC major cities
. testing of various 5G
wireless network
management system
. 5G network coverage
t e s t i n gi ns p e c i f i cs c e n a r i o
. experience testing of the
customer ’sm o b i l en e t w o r k
services
3.2 Completed in
December 2022
(b) Telecommunication network infrastructu re maintenance and engineering services
i. Telecommunication network infrastructure maintenance services
The infrastructure that forms the foundation of a wireless telecommunication
network is a base station, which is essential ly a transceiver station that facilitates
wireless telecommunication between end-user devices and a telecommunication network.
A base station is a complicated device and is susceptible to breakdown and failure
caused by external environmental factors and internal mechanical problems. If a base
station malfunctions or shuts down due to faulty parts or power outage, a
telecommunication network served by such base station will inevitably be affected or
even disconnected. To prevent or remedy such i ncidents, our customers mainly engage us
to inspect, maintain and/or repair their b ase stations and relevant equipment.
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The chart below illustrates our general operational flow in the provision of
telecommunication network infras tructure maintenance services:
I
II
III
IV
V
General inspection or receipt of issue reports
● Routine inspection of base stations
● Report of telecommunication network irregularities or base station issues to us by our customer
Deployment of execution team
● Deployment of engineers and technicians to perform on-site/remote examination
Inspection and troubleshooting
● Performing inspection of base station functions in order to ensure proper conditions
● Inspection and troubleshooting in order to identify specific issues and causes thereof
Formulation and execution of repair or maintenance solutions
● If issues are detected, formulation and execution of suitable solutions to maintain or repair the base stations
● Arrangement for subcontractors to perform maintenance and repair, if necessary
Testing and assessment
● Testing on the functionality of the base station again to ensure that a problem is properly dealt with
We generally respond to customers ’ demand on a 24 hours a day and seven days a
week basis and deploy our execution t eam to render telecommunication network
infrastructure maintenance services to our cu stomers during working hours, examples of
which include:
Service categories Particulars and examples
General inspection and
maintenance
We carry out regular on-site inspection of base stations
and transmission equipment to ensure their proper
conditions and operation. Depending on the terms of
an agreement, inspection usually takes place on a
regular basis (such as monthly, quarterly and semi-
annually) or at the request of a customer. Standard
inspection procedures generally apply, which typically
include running diagnostic software, testing the
functionality of hardware such as fibre optical cables
and distribution box, connectors, jump cables, feeders,
panel, antennas, etc., and examining the status of the
power supply system and its backup generator.
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Service categories Particulars and examples
Repair Upon discovery of, or receipt of report of, base station
malfunction, we would deploy our engineers and
technicians to perform on-site examination and
troubleshooting. After identifying the problem, our
engineers and technicians will then follow our repair
protocols to formulate an d execute a repair plan.
Common repair carried out to base stations include
adjustment, restoration and replacement of any
malfunctioning components, such as monitoring
module, base station board and antenna, etc.
Emergency power supply and
restoration
Where there is a power failure at a base station which
has caused the whole or part of its functions to
collapse, we will arrange for power to be temporarily
supplied to the base station while power restoration is
in progress. This could extend the uptime of a
telecommunication network and mitigate any adverse
impact caused to end-users. We generally engage a
subcontractor to perform this service. For more details,
please refer to the paragraphs headed ‘‘Our
subcontractors ’’below in this section.
Set out in the table below are some examples of the telecommunication network
infrastructure maintenance projects completed or undertaken by us which contributed
revenue of over RMB7 million during the Track Record Period and the services rendered
by us thereunder:
Project name Project period Description of project Examples of services rendered by us
Revenue accumulated
during the Track
Record Period
Completion date/Expected
completion date
RMB ’000
(approximately)
CX Heilongjiang
Maintenance Project I
FY2019 –
FY2021
Telecommunication base station and
pipeline maintenance services in
certain cities in Heilongjiang province
Our services mainly included:
. maintenance of wireless
telecommunication network base
stations
. maintenance of ancillary equipment
in telecommunication equipment
room
. maintenance of main optical fibers
pipeline
42,534 Completed in May 2022
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Project name Project period Description of project Examples of services rendered by us
Revenue accumulated
during the Track
Record Period
Completion date/Expected
completion date
RMB ’000
(approximately)
ZY Zhuhai Pipeline
Alteration Service
Project
FY2021 –
present
Maintenance and modification of
telecommunication pipeline
Our services mainly included:
. maintenance and adjustment of
telecommunication pipeline
. modification of telecommunication
pipeline
. modification of cable TV line,
broadband internet line and power
cable
8,323 Expected to be completed in
December 2023, subject to the
final assessment of the customer
ii. Telecommunication network infra structure engineering services
Furthermore, we also provide various kinds of telecommunication network
infrastructure engineering services for various parts and sub-tasks of the same project at
our customers ’ request. We have obtained the relevant certification (please refer to the
paragraphs headed ‘‘Licences, approvals and permits ’’in the section for further details)
to perform such engineering works which typically involve general labour and
construction work.
The chart below illustrates our general opera tional flow in relation to our provision of
telecommunication network infrast ructure engineering services:
I
II
III
IV
V
Preliminary logistics and personnel planning
● Upon finalisation of the services to be provided, formulating plans as to the logistics, manpower, timetable, etc. in
relation to the project
Engagement of subcontractors
● Engaging subcontractors for the provision of general labour and/or technical service required for the engineering project
Performance of services
● Performance of the specific services as requested by customers under the engineering project
Monitoring and supervision of subcontractors
● Deployment of our in-house engineers as project managers to monitor, inspect and advise on the works being performed
by the subcontractors
Assessment and completion
● Upon completion of works, assessment of quality and standard of works together with our customers in accordance with
the terms and the standards set out in the agreement
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To illustrate the nature of our work in provision of telecommunication network
infrastructure engineering services, set ou t in the table below are some examples of the
engineering projects completed or undertaken by us which contributed revenue of over
RMB500,000 during the Track Record Period and the engineering services rendered by us
thereunder:
Project name Project period Description of project Examples of services rendered by us
Revenue accumulated
during the Track
Record Period
Completion date/Expected
completion date
RMB ’000
(approximately)
YX Doumen
Cables Improvement
Project
FY2020 –
present
Improvement on the setting of electricity,
telecommunications and cable television
cables of an area involving 14 villages
. performing generic and optical
fibre cabling work
. installation of optical fiber junction
boxes
. installation of server racks
. performing cement road excavation
works
642 Expected to be completed in
December 2023, subject to the
final assessment of
the customer
JY Tangjia
Telecommunication
System
Redevelopment
Project
FY2020 –
present
Redevelopment of telecommunications system
of an old district
. dismantling and installation of
cables
. construction of telecommunications
pipeline
1,193 Expected to be completed in
December 2023, subject to the
final assessment of
the customer
YD Guangdong
Telecommunication
Room Project
FY2020 –
FY2022
Provision of supporting services to the
construction of telecommunication rooms
. providing supporting services to
the construction, expansion and
reconstruction of
telecommunication rooms and
micro base stations
. external power access
. construction of ground
telecommunication network
infrastructure
1,542 Completed in June 2022
(II) ICT Integration Services
In addition to wireless telecommunication network support services which focus on
enhancement and maintenance, we also offer I CT integration services of which our emphasis
is on customisation of our customers ’ computer system design for p roviding business-specific
systems catering for their needs along with equi pment and material procurement, installation
and implementation, and system commissioni ng. We offer our ICT integration services to
businesses and organisations from d ifferent fields and industries.
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The chart below illustrates our general operational flow in the provision of ICT
integration services:
I
II
III
IV
V
Design and review of ICT communication network layout
● Discussion with customers to understand their requirements, particularly in the industry they are engaged in and their busine ss
● Planning the layout and equipment required for the customisation of system
● Modification and/or finalisation of integration plan
Execution of integration plan
● Formation of customised system by bringing together the constituent parts
● Testing and conducting compatibility check on the functioning components of the customised system
● Submission of progress reports
Preparation and procurement
● Preparation for execution of the plan, including procurement of necessary hardware and software
● Design and development of customised software, if necessary
Completion and final testing of system
● Final test of the overall functionality of the integrated system and completion of project delivery
Technical support and warranty service
● Providing customers with technical support on operation and management of the integrated system and warranty service
We generally start with a detailed discuss ion with our customers to understand their
objectives and needs and then design the implem entation plan in customising our customers ’
computer systems for providing business-spe cific systems. Once the customised design is
finalised, we will decide the choic e of equipment within the customer ’s budget in relation to
the ICT integration system. We would then present the integration plan to our customers and
if necessary, make modifications as requested be fore finalisation. After that, we would embark
on the practical preparations for executing the plan and setting up the system, such as
procurement of hardware and software and engag ement of third-party subcontractors (such as
subcontractors for carrying out cabling work and for installation of associated devices). The
type and combination of system components wou ld vary on a case-by-case basis depending on
the specific needs of our customers. Some comm on hardware and software required for ICT
integration include servers, storage devices, cables and optical fibers, security software,
operating system software, etc.
Where the necessary system components are i n place based on our implementation plan,
we would assemble and bring together the necess ary hardware, software and other equipment
together form a functional and customised sys tem. This includes physical arrangement of
hardware, installation of software and ensuri ng the compatibility of both, together with
ancillary works to enable the functionality of the ICT integrated system, such as cabling
works. Our execution team will perform tests o n the functions and compatibility between
various functional components of the system at each stage of the execution process, and a
final test on the system as a whole would be conducted upon completion of the integration.
We also provide progress reports to our customer s as stipulated under the service agreement.
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When all requisite tests have been performed and satisfactory results are achieved, we
would arrange a session to explain to our customers the essential functions and principles of
ICT system whose design are customised to cat er for the specific needs of the business, and
advise them on the operation and management o f the system, such as allocation of personnel
who are to manage the system, how the personnel should operate the system in the course of
daily operation and important aspects of the system, etc.
To illustrate the nature of our work in provisi on of ICT integration services, the table
below sets out some examples of the ICT integration projects completed or undertaken by us
which contributed revenue of over RMB4 million during the Track Record Period:
Project name Project period Description of project
Examples of services
rendered by us
Major hardware and/or software
used for integration
Revenue
accumulated
during the Track
Record Period Completion date
RMB million
(approximately)
CX Dataroom Equipment
Procurement and
Services Project
FY2020 The ICT project was related to
the upgrade of a data
server room and relevant
technology to cater for the
business needs of the
customer.
W ew e r ee n g a g e dt ou p g r a d et h e
data room infrastructure at the site.
Our services mainly included:
. understanding customer ’sn e e d s
and requirements through
meeting and discussion with
the customer;
. research and design of the data
room upgrade and produce the
customised implementation
plan;
. procurement, installation and
integration of data room
equipment and software;
. performing test run of system;
and
. user training and technical
support.
. Servers
. Nodes (a device that receives,
transmits and distributes
information)
. Storage devices
. Storage controllers (a device
that integrates and manages the
memory areas in multiple
storage devices)
7.5 Completed in
November 2020
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Project name Project period Description of project
Examples of services
rendered by us
Major hardware and/or software
used for integration
Revenue
accumulated
during the Track
Record Period Completion date
RMB million
(approximately)
CX Smart Construction
Site ICT Project
FY2020 The ICT project was related to
and formed part of a
construction of project
involving an event block,
an ancillary building
together with the open
area to cater for the
business needs of the
customer
W ew e r ee n g a g e dt os e tu pt h e
communication network infrastructure
at the site. Our services mainly
included:
. understanding customer ’sn e e d s
and requirements through
meetings and discussions with
the customer;
. procurement and integration of
the equipment for an
exhibition hall;
. performing generic and optical
fibre cabling work;
. setting up server and network
equipment rooms;
. setting up a data centre and
its management and monitoring
platform;
. performing test run of system;
and
. user training and technical
support.
. Servers
. Monitors
. Display screens
. Optical fibre and other cables
. Network system such as
wireless access points (a
networking hardware device
that allows other Wi-Fi devices
to connect to a wired network)
and routers
. Server room power supply
system such as distribution box
. Data centre management and
monitoring system
. Access control system such as
electromagnetic locks and
security software
9.7 Completed in
December 2020
CX Zhongshan
E-commerce
Management Project
FY2021 In relation to the setting up of
ae - c o m m e r c ez o n ei na
PRC city in support of the
e-commerce business in
the city, we rendered
services for the
customisation and
integration of a e-
commerce management
platform, which mainly
serves to allow
standardised exchange of
information between
customs, taxation and other
government authorities on
the one hand, and e-
commerce and logistics
enterprises on the other.
To ensure the functionality of the
said platform, our services mainly
included:
. understanding customer ’sn e e d s
and requirements through
meetings and discussions with
the customer;
. research and customise the
design of the communication
network component of the
system;
. procurement, installation and
integration of system
equipment and software;
. performing test run of system;
and
. user training and technical
support.
. Servers
. Monitors
. Operating system software
. Database software
. Antivirus and security software
. Server management software
11.5 Completed in March
2021
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Project name Project period Description of project
Examples of services
rendered by us
Major hardware and/or software
used for integration
Revenue
accumulated
during the Track
Record Period Completion date
RMB million
(approximately)
CX Harbin Ice Rink
Project
FY2020 –
FY2021
The ICT project was related to
and formed part of the
construction project of an
ice hockey arena
W ew e r ee n g a g e dt os e tu pt h e
light-current power system of the
ice hockey arena. Our services
mainly included:
. understanding customer ’sn e e d s
and requirements through
meetings and discussions with
the customers;
. research and customise design
of the intelligent sport facility
systems;
. procurement and integration of
system equipment and software;
. installation and adjustment of
information and
communications system,
security system and building
and sport facilities management
system;
. performing test tun of system;
and
. user training and technical
support.
. Network switches;
. Television and telephone
sockets
. Cable
8.8 Completed in June
2021
YD Doumen Integrated
Services Project
FY2021 The ICT project was related to
and part of the setting up
for a local public authority
of a real-time management
system which serves to
ensure the proper operation
of the mobile terminal
(terminal for mobile access
and transfer of safety-
related information by
public officers).
To ensure the functionality of the
said system, our services mainly
included:
. procurement, installation and
integration of system
equipment and software;
. performing test run of system;
and
. user training and technical
support.
. Mobile terminal devices 4.5 Completed in
September 2021
CC IDC Room ICT
Project
FY2022 The project was related to
setting up of an Internet
data centre for a securities
company
Our services mainly included:
. procurement, installation and
integration of network
equipment and software;
. performing test run of system;
and
. user training and technical
support.
. Servers
. Network devices
.
Storage devices
15.6 Completed in
June 2022
In certain instances depending on the nature o f the relevant projects (and in particular
concerning ICT integration services projects ), the cost of acquiring necessary hardware,
software or equipment sourced from third-party vendors or suppliers may constitute a material
portion of the contract sum of the relevant c ontracts. For example, a material part of the
revenue generated relating to the YD Doumen Integrated Services Project in FY2021 set out
above concerned the cost of acquiring mobile phones which we charged on our customer.
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Key distinctions among our wireless teleco mmunication network enhancement services,
telecommunication network infrastructure maintenance and engineering services and ICT
integration services
The table below summarises the key distincti ons among our wireles s telecommunication
network enhancement services, telecommunicatio n network infrastructure maintenance and
engineering services and I CT integration services:
Wireless telecommunication
network enhancement services
Telecommunication network
infrastructure maintenance and
engineering services ICT integration services
Target customers . Telecommunication operators
. Telecommunication network
equipment manufacturers
. Telecommunication network
and technical service
providers
. Other customers including
PRC government departments,
universities, research
organisations, etc.
. Telecommunication operators
. Telecommunication network
equipment manufacturers
. Telecommunication network
and technical service
providers
. Telecommunication network
and technical service
providers
. Telecommunication operators
. Telecommunication network
equipment manufacturers
. Other customers including
PRC government departments,
universities, research
organisations, etc.
Primary scope of work Routine telecommunication
network enhancement services:
. Performing routine
examination and enhancement
of the quality of a
telecommunication network in
terms of, for instance,
network coverage, data
transmission speed and signal
interference
. Handling end users ’ request
for technical assistance or
complaints in respect of
telecommunication network
connectivity
Specific telecommunication
network enhancement services:
. Improving the quality of a
telecommunication network
from a more particular and
in-depth perspective, such as
5G network enhancement and
improvement of base station
performance
Telecommunication network
infrastructure maintenance
services:
. Performing inspection,
maintenance and repair of
telecommunication network
infrastructure (e.g. base
stations) to ensure their
normal and stable operation
Telecommunication network
infrastructure engineering
services:
. Participating in the
construction works of
telecommunication network
infrastructure
. Designing the plan for
customising our customers ’
computer systems for
providing industry-specific
systems for their business and
implementing solutions which
digitalise and enhance
efficiency of business, public
or other specific operations
by procuring and installing
various devices and/or
software to form a customised
communication network of
interconnected devices
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Wireless telecommunication
network enhancement services
Telecommunication network
infrastructure maintenance and
engineering services ICT integration services
Case study example of
general operational
procedures involved
Routine telecommunication
network enhancement services:
Where we are engaged to perform
routine telecommunication network
enhancement services in respect of
the telecommunication network of
an area, we will:
1. deploy testing and data
collection personnel to collect
telecommunication network
data in the area, and/or
receive end user feedback in
respect of connection issues;
2. deploy technical personnel to
perform detailed examination
and analysis where issues are
discovered (e.g.
misconfiguration of
telecommunication network
settings and network
congestion due to
misallocation of bandwidth
usage);
3. perform necessary
enhancement solutions (such
as adjusting the relevant
parameters according to the
brand of telecommunication
network equipment and
reallocating bandwidth to
usages in high demand); and
4. perform testing to assess
whether the issues are
resolved.
Telecommunication network
infrastructure maintenance
services:
Where we are engaged to, for
instance, maintain a number of
base stations in an area, we will:
1. deploy maintenance personnel
to perform general inspection
of base stations including
testing of their functionality,
and/or receive report of
irregularities;
2. deploy technical personnel to
perform detailed examination
and analysis where issues are
discovered (e.g.
malfunctioning of base station
components);
3. perform necessary repair or
maintenance solutions (such
as repair and/or replacement
of malfunctioning
components);
4. If necessary, arrange for
subcontractors to provide
specialised services (e.g.
emergency power supply and
restoration); and
5. perform testing to assess
whether the issues are
resolved.
Where we are engaged to, for
instance, set up a smart facility
management system based on the
customer ’s blueprint and their
specific requirements for a
building, we will:
1. review and customise the
design of customer ’sI C T
communication network
layout of the stadium, such as
the locations of management
devices (e.g. temperature and
lighting control devices) and
the server room settings;
2. procure the necessary
hardware (e.g. control
devices, monitors, display
screens and servers) and
software (e.g. antivirus and
security software) for
implementation of the
customised system;
3. install the hardware and
software and ensure
compatibility; and
4. testing of various parts of the
customised system
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Wireless telecommunication
network enhancement services
Telecommunication network
infrastructure maintenance and
engineering services ICT integration services
Specific telecommunication
network enhancement services:
Where we are engaged to perform
specific telecommunication
network enhancement services in
respect of, for instance, a newly
established wireless
telecommunication network, we
will:
1. deploy testing and data
collection personnel to collect
telecommunication network
data in fixed areas to test the
network performance of
certain areas with heavy
network use;
2. deploy testing and data
collection personnel to
perform drive test (testing
along major roads of an area
in a moving vehicle) to test
the telecommunication
network performance of a
wider area;
3. analyse testing results to
locate areas for improvement
and implement enhancement
solutions; and
4. perform testing to assess
whether the wireless
telecommunication network is
improved.
Telecommunication network
infrastructure engineering
services:
Where we are engaged to, for
instance, participate in a project in
respect of the redevelopment of
telecommunication network cabling
system in a town, we will:
1. plan for the logistics,
manpower, timetable, etc. in
relation to the project;
2. engage suitable subcontractors
to perform specific
engineering works (e.g.
cement road excavation,
cabling and construction of
telecommunications pipeline);
and
3. deploy our project managers
to oversee the works of the
subcontractors.
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Wireless telecommunication
network enhancement services
Telecommunication network
infrastructure maintenance and
engineering services ICT integration services
Major areas of
technologies or
techniques involved in
the provision of services
. Wireless telecommunication
network testing and data
collection
. Analysis of
telecommunication network
data collected
. Knowledge of
telecommunication network
parameters and how to adjust
the parameters
. Knowledge of a range of
enhancement solutions
Telecommunication network
infrastructure maintenance
services:
. Telecommunication network
infrastructure inspection,
maintenance and repair
. Knowledge of base station
components, settings and
adjustments to perform testing
and repair
Telecommunication network
infrastructure engineering
services:
. Knowledge of the setting of
telecommunication network
infrastructure
. Project planning and
management
. Supervision of works and
services of subcontractors
. Knowledge of various layout
for integrating a
communication network of
interconnected devices that
can meet the specific needs
of different customers
engaged in different
industries
. Knowledge of a range of
communication network
devices and software
. Customised software
development
. Project planning and
management
. Supervision of works and
services of subcontractors in
implementation of customised
systems
Basic differences with the
other business lines
Unlike telecommunication network
infrastructure maintenance
services:
. Involve the enhancement of a
wider wireless
telecommunication network
instead of the maintenance of
individual base stations
. Focus on performance of
telecommunication network as
a whole instead of conditions
of base stations and relevant
facilities
Unlike wireless telecommunication
network enhancement services:
. Focus more on on-site labour
construction and maintenance
and less on virtual adjustment
of settings
Unlike wireless telecommunication
network enhancement services:
. Focus on formation of
industry-specific ICT system
instead of improvement of
existing telecommunication
network
. Focus on the communication
network performance of a
fixed site or for a fixed
purpose rather than the
performance of a wider and
more general wireless
telecommunication network
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Wireless telecommunication
network enhancement services
Telecommunication network
infrastructure maintenance and
engineering services ICT integration services
Unlike telecommunication network
infrastructure engineering
services:
. Focus on improvement of
existing telecommunication
network instead of the
construction of new
infrastructure
. Involve more technical and
less labour works
Unlike ICT integrations services:
. Focus on improvement of
existing telecommunication
network instead of the
integration of a new
communication system
. Do not typically involve the
design of communication
network layout
Unlike ICT integrations services:
. Do not typically involve the
design of communication
network layout
Unlike telecommunication network
infrastructure maintenance
services:
. Focus on formation of
business-specific ICT system
customised for different
customers engaged in
different industries instead of
improvement of existing
telecommunication facilities
Unlike telecommunication network
infrastructure engineering
services:
. Include more industry
applications
. Involve more technical and
usually less labour works
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(III) Software Development Services
Since as far back as to 2003, we engaged in the research and development of a wireless
network test and analysis software for testing and analytical work concerning PHS. Since then,
we have continued to provide software development services for our customers who look for
customised software. After the development o f a software tailor-made for a customer is
completed, ownership of the software would belong to the customer.
The chart below illustrates our general operational flow in the provision of software
development services:
I
II
III
IV
Design and initial review of software development plan
● Discussion with customers to understand their requirements
● Preliminary design of development plan including software features
● Modification and/or finalisation of development plan
Completion and final testing of software
● Final test of the overall functionality of the software
● Modification of software features on customers’ request
● Delivery of software and ownership to customers
Development stage
● Development of prototype
● Continuous testing including unit testing and system testing
Follow-up services
● Advising customers on operation of software
● Provision of maintenance services within the warranty period
We generally start with a detailed discuss ion with our customers to understand their
particular objectives in respect of the softw are to be developed by us and then design the
preliminary features of the soft ware that can fulfil their requ irements. After modifying and
finalising the design and development plan, we will proceed to the development stage. For
details of the workflow in relation to the dev elopment of new software, please refer to the
paragraphs headed ‘‘Our business model — Research and development ’’above in this section.
When the development and testing of the soft ware is completed, we will demonstrate the
software to our customers for assessment and m odification (if necessary). We also provide
customers with user manual for software applicat ion, and free maintenance services within the
warranty period. Depending on the contract term s, some customers will conduct a trial run of
the software and pass signed user acceptance form or report to us.
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To illustrate the nature of our work in the pr ovision of software development services,
the table below sets forth some examples of the software development projects completed or
undertaken by us which contributed revenue of over RMB500,000 during the Track Record
Period:
Software development
project Project period Feat ures of software developed
Revenue
accumulated
during the Track
Record Period Completion date
RMB million
(approximately)
YD Zhuhai Information
Sharing and
Management
Platform Project
FY2020 . Device compatibility: mobile devices and
computers
. Main functions:
— Centralised data management
— Cloud-based information sharing
— Security management platform
. Main areas of application: general
application for most enterprises
1.7 Completed in
December 2020
YD Zhuhai On-site
Telecommunication
Network
Enhancement
Platform Project
FY2021 . Device compatibility: mobile devices and
computers
. Main functions:
— On-site telecommunication network
enhancement system
— Contract management system
— Project management system
— Financial management system
— Proposal management system
— Safety control system
— Personnel and trai ning management
system
— Data summary management system
— Data report management system
. Main areas of application: telecommunication
network testing
2.3 Completed in
September 2021
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Software development
project Project period Feat ures of software developed
Revenue
accumulated
during the Track
Record Period Completion date
RMB million
(approximately)
DX Guangdong Handy
Software
Development
Project
FY2020 . Device compatibility: mobile devices
. Main functions:
— Mobile signal testing
— Website speed testing
— Video testing
— Provision of base station information
. Main areas of application:
general application for most enterprises
0.8 Completed in January
2021
LC Mobile Safety Flow
Protection Project
FY2021 . Device compatibility: mobile devices and
computers
. Main functions:
— Cloud security technology that secures
cloud computing environments against
cybersecurity threats
— Cloud deployment
. Main areas of application: for supporting a
customer ’s IoT and data platform with cloud
security and services
2.3 Completed in
December 2021
YD Bridge Safety
Monitoring and
Warning System
Development
Project
FY2022 —
FY2023
. Device compatibility: mobile devices and
computers
1.7 Completed in
November 2022
. Main functions:
— Acquisition, analysis and transmission
of the data affecting the safety of
bridge such as ship course and speed
and water level, etc.
— Edge computing
— AI automatic scheduling and control
. Main area of application: monitoring the
ships sailing close to a bridge, assessing the
risks of collision between the ships and the
bridge and issuing warnings to the ships to
prevent collision
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Interactions, synergies and canni balisation risk among our services
The services we offer under different business lines are complementary to one another and to
our research and development operations. For in stance, (i) our self-developed software can be
employed in our wireless telecomm unication network enhancemen t services, telecommunication
network infrastructure maintenance and engineer ing services and ICT integration services; (ii) our
experience accumulated and data collected in the c ourse of providing enhancement, maintenance
and ICT integration solutions to our customers can in turn enable us to develop or upgrade testing
and analysis software which more accurately address and tackle common issues in day-to-day
operations, and facilitate our other research and d evelopment activities; and (iii) more generally,
since our services on the whole share similar technical foundation in the field of
telecommunication, certain knowledge, experie nce and equipment of one service line may be
utilised in others. Our Directors believe such in teractions among our services and research and
development operations serve to foster the syne rgistic effects and quality enhancements among
them.
Despite sharing similar technical foundation , our wireless telecommunication network
enhancement services, telecommunication netwo rk infrastructure maintenance and engineering
services, ICT integration services and software de velopment services are distinct from one another,
especially in terms of focus and scope of work and operational procedures involved as set out in the
table above. Thus, our Directors consider that th ere is no material risk of cannibalisation among
these services. On the contrary, the provision of t hese services has expanded our target market by
catering to the different demands of our customers, as evidenced by the fact that we have been able
to cross-sell our services to our customers, su ch as Customer A which en gaged us for services
under all our business lines during the Track Record Period.
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Revenue contribution and movement of backlog of our services
The table below sets out a breakdown of our Group ’s revenue by the type of services rendered
by us during the Track Record Period:
FY2020 FY2021 FY2022 6M2022 6M2023
RMB ’000 % RMB ’000 % RMB ’000 % RMB ’000 % RMB ’000 %
(approximately) (approximately) (approximately) (approximately) (approximately)
(unaudited)
Telecommunication network support services
— Wireless telecommunication
network enhancement services 93,673 47.9 100,085 49.2 102,136 45.1 39,413 38.2 42,404 37.3
— Telecommunication
network infrastructure
maintenance and
engineering services 39,654 20.3 41,787 20.6 44,516 19.7 21,244 20.6 18,709 16.4
Sub-total 133,327 68.2 141,872 69.8 146,652 64.8 60,657 58.8 61,113 53.7
ICT integration services 38,515 19.7 42,505 20.9 54,592 24.1 34,756 33.6 35,550 31.2
Telecommunication network-related software development
— Sales of software 11,522 5.9 9,672 4.8 3,524 1.6 2,195 2.1 4,508 4.0
— Software development services 12,206 6.2 9,287 4.5 21,745 9.5 5,629 5.5 12,667 11.1
Sub-total 23,728 12.1 18,959 9.3 25,269 11.1 7,824 7.6 17,175 15.1
Total 195,570 100 203,336 100 226,513 100 103,237 100 113,838 100
Note: figures may not add up due to rounding.
The table below sets out the movement in terms of number of projects undertaken by us
during the Track Record Period by business line:
FY2020 FY2021 FY2022 6M2023
Number of projects outstanding as at the beginning of the year/period (Note 1)
Telecommunication network support services
— Wireless telecommunication
network enhancement services 40 57 56 67
— Telecommunication network
infrastructure maintenance
and engineering services 17 28 31 37
Sub-total 57 85 87 104
ICT integration services 71 01 42 5
Telecommunication network-related software development
— Sales of software 3 1 — 4
— Software development services 3 4 3 10
Sub-total 653 1 4
Total 70 100 104 143
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FY2020 FY2021 FY2022 6M2023
Number of new projects during the year/period (Note 2)
Telecommunication network support services
— Wireless telecommunication
network enhancement services 52 47 49 22
— Telecommunication network
infrastructure maintenance
and engineering services 17 17 18 14
Sub-total 69 64 67 36
ICT integration services 11 18 27 21
Telecommunication network-related software development
— Sales of software 6 12 10 7
— Software development services 9 12 20 8
Sub-total 15 24 30 15
Total 95 106 124 72
Number of projects completed during the year/period
(Note 3)
Telecommunication network support services
— Wireless telecommunication
network enhancement services 35 48 38 9
— Telecommunication network
infrastructure maintenance
and engineering services 6 15 12 1
Sub-total 41 63 50 10
ICT integration services 81 41 61 5
Telecommunication network-related software development
— Sales of software 8 13 6 7
— Software development services 8 13 13 9
Sub-total 16 26 19 16
Total 65 103 85 41
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FY2020 FY2021 FY2022 6M2023
Number of projects outstanding as at the end of the year/period (Note 4)
Telecommunication network support services
— Wireless telecommunication
network enhancement services 57 56 67 80
— Telecommunication network
infrastructure maintenance
and engineering services 28 30 37 50
Sub-total 84 85 104 130
ICT integration services 10 14 25 31
Telecommunication network-related software development
— Sales of software 1 — 44
— Software development services 4 3 10 9
Sub-total 5 3 14 13
Total 100 103 143 174
Notes:
1. The number of projects outstanding as at the beginni ng of the year/period represents the total number of
projects carried forward from the last year/period which had not been completed as at the beginning of the
year/period indicated.
2. The number of new projects during the year/period re presents the total number of new projects awarded to our
Group during the relevant year/period indicated.
3. The number of projects completed during the year/per iod represents the total number of projects which had
been completed during the relevant year/period indicated.
4. The number of projects outstanding as at the end of th e year/period represents the total number of projects
which had not yet been completed as at the end of the relevant year/period indicated.
5. Some of our customers had awarded to us more than one contract under a single project during the Track
Record Period.
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The table below sets out the movement of contract amount and reve nue generated from our projects during the Track Record Period by
business line:
FY2020 FY2021 FY2022 6M2023
Telecommunication
network support
services
ICT
integration
services
Telecommunication
network-related
software
development Total
Telecommunication
network support
services
ICT
integration
services
Telecommunication
network-related
software
development Total
Telecommunication
network support
services
ICT
integration
services
Telecommunication
network-related
software
development Total
Telecommunication
network support
services
ICT
integration
services
Telecommunication
network-related
software
development Total
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
Outstanding contract amount
as at the beginning of
the year/period (Note 1) 86,163 17,838 4,117 108,118 116,736 27,299 1,132 145,166 86,415 27,937 711 115,063 110,764 23,371 6,571 140,706
Add: Additional contract amount
secured during the
year/period (Note 2) 163,900 47,976 20,743 232,620 111,551 43,143 18,538 173,232 171,003 50,026 31,129 252,158 64,319 51,754 17,654 133,727
Less: Contract amount
recognised as revenue
during the year/period
(Note 3) (133,327) (38,515) (23,728) (195,570) (141,872) (42,505) (18,959) (203,336) (146,652) (54,592) (25,269) (226,513) (61,113) (35,550) (17,175) ( 113,838)
Outstanding contract amount
as at the end of the
year/period ( N o t e4 ,5 ,6 ) 116,736 27,299 1,132 145,166 86,339 28,014 711 115,063 110,766 23,371 6,571 140,708 113,893 39,652 7,050 160,595
Notes:
1. The outstanding contract amount as at the beginning of the year/period r epresents the opening contract amount as at the start of the relevant year/p eriod indicated
which was carried forward from the previous year in relation to (i) works whi ch had not yet been completed by our Gr oup; (ii) works which had been complet ed
but not yet been recognised as revenue by our Group; and (iii) variable consideration.
2. Additional contract amount secured during the year/period represents t he additional contract amount awarde d to our Group during the relevant yea r/period indicated
in relation to (i) new projects and/or new contracts under existing project s awarded by our customers and/or (ii) new and/or varied orders issued by ou rc u s t o m e r s
for additional or varied works under existing contracts.
3. Contract amount recognised as revenue during the year/period represents t he part of the outstanding contract am ount (carried forward from the pre vious year/period
or newly secured during the relevant year/period indicated) which was rec ognised as revenue during the relevant year/period indicated upon complet ion of certain
projects or part of those projects by our Group.
4. The outstanding contract amount as at the end of the year/period represen ts the closing contract amount as at the end of the relevant year/period ind icated in
relation to (i) works which had not yet been completed by our Group; (ii) work s which had been completed but not yet been recognised as revenue by our Grou p;
and (iii) variable consideration.
5. The outstanding contract amount as at the end of a year/period also repre sents the difference between (i) the sum of the outstanding contract amount as at the
beginning of that year/period and the additional contract amount secured during the same year/period and (ii) the contract amount recognised as reve nue during that
year/period.
6. The slight discrepancy between the outstanding amount as at the beginning of a year/period and that as at the end of the immediately previous year was due to the
reclassification of our projects under relevant business lines.
7. For certain contracts of our Group during the Tr ack Record Period, there were cases where (i) there was no contract amount stipulated in the awarded c ontract and
in such cases, our customers would enter into a fra mework agreement with us first and place orders with specific contract amount subsequently; and (ii ) the contract
amount of certain awarded contracts was an estimate amount with reference t o the quotation documents or tender doc uments as formal agreements had not been
signed as at 30 June 2023.
8. Figures may not add up due to rounding.
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Subsequent to the Track Record Period and up to the Latest Practicable Date, (i) we had been
awarded approximately 28 new projects with a n aggregate contract amount (excluding tax)
estimated to be more than approximately RMB56.1 m illion; (ii) we had completed approximately 14
projects, with an aggregate recognised revenue of more than approximately RMB5.9 million; and
(iii) we had approximately 186 outstanding proj ects as at the Latest Practicable Date, with an
aggregate outstanding contr act amount estimated to be approximately RMB195.1 million. For
certain projects awarded during or subsequent to the Track Record Period, there were cases where
the relevant contract amounts were estimated amo unts with reference to the quotation documents or
tender documents as formal agreements had not been signed as at the Latest Practicable Date.
OUR SOFTWARE
For enhancing our efficiency in providing tele communication network support services and
ICT integration services, we have developed softwa re for testing, evaluating, analysing, maintaining
and improving the performance of telecommunication networks. Ou r software is the result of our
extensive research and development and under lines our continuous effort in innovation. Our
Directors believe that our ability to upgrade our e xisting software and introduce new software that
adapts to evolving wireless tel ecommunication netwo rk technology standards and customers ’ needs
has contributed to our success in the industry.
Apart from using our self-developed software for the provision of our services, we also offer
our software for sale to our customers, which from our Directors ’ point of view. can enhance
customers ’ reliance on and confidence in our services because: (i) the telecommunication network
analysis software developed and sold by us enable s our customers to carry out network testing and
alert them to the needs for enhancement; (ii) in using our software our customers still need the
input from our technical personnel for implementing the enhancement and maintenance solutions;
and (iii) our capabilities can be showcased by the software we develop, which in turn may enhance
customers ’ confidence in our services. During the Track Record Period, our revenue derived from
the sale of software amounted to approximately RMB11.5 million, RMB9.7 million, RMB3.5
million and RMB4.5 million for FY2020, FY2021, FY 2022 and 6M2023, respectively, the majority
of which was derived from four of our software, namely Wangyou Renwoxing Wireless Network
Testing and Analysis System* ( ‘‘網優任我行’’移動網絡測試分析系統)( ‘‘Wangyou Renwoxing ’’),
Smart Bee Network Performance Handy Testing System* ( 小蜜蜂Smart-bee 網絡性能便捷測試系
統)( ‘‘Smart Bee ’’), Wireless Network Real-time Video Control Software* ( 無線網絡實時視訊管控
軟
件)( ‘‘Wireless Network Real-time Video Control Software ’’) and Maintenance and Operation
Support System based on Wireless Internet Data* ( 基於移動互聯網數據的維護和運營支撐系統)
(‘‘Maintenance and Operation Support System ’’) (collectively the ‘‘Major Software ’’).
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The table below sets out breakdown of our revenue generated from each of our Major Software, together with number of such software
sold and number of customers who pur chased such software, for each year/period during the Track Record Period:
FY2020 FY2021 FY2022 6M2023
Number of
software sold
Number of
customers
(Note 4) Revenue
Number of
software sold
Number of
customers
(Note 4) Revenue
Number of
software sold
Number of
customers
(Note 4) Revenue
Number of
software sold
Number of
customers
(Note 4) Revenue
RMB ’000 RMB ’000 RMB ’000 RMB ’000
(approximately) (approximately) (approximately) (approximately)
Wangyou Renwoxing 158 12 5,212 64 5 3,527 19 5 1,460 44 4 2,325
Smart Bee 34 4 1,818 26 4 1,151 36 4 1,731 —— —
Wireless Network Real-time Video
Control Software 7,970 2 2,680 2,105 1 708 —— ——— —
Maintenance and Operation Support
System 4 2 1,681 7 4 3,088 —— — 114 7 0
Others (Note 3) 3 1 131 27 4 1,198 8 2 333 26 5 1,713
Total 8,169 17 11,522 2,229 15 9,672 63 11 3,524 71 9 4,508
Notes:
1. The software in the table include their initial and subsequent versions.
2. A large number of Wireless Network Real-time Video Control Software* ( 無線網絡實時視訊管控軟件) was sold to a customer which was installed to the
customer ’s numerous real-time video devices. Each devic e requires the installation of one software.
3. Other software includes 5G Wireless Network Testing and Analysis System V1.0* (5G 無線網絡測試分析系統V1.0), Network Enhancement Assistant APP Software
V1.0* ( 網優助手APP軟件V1.0) and Mobile Communication Auxiliary Equipment Netwo rk Management, Monitoring And Analysis System V1.0* ( 移動通信附屬設
備網管監控分析系統V1.0), etc.
4. Four, three, nil and one customers purchased two kinds of software in FY2020, FY2021, FY2022 and 6M2023, respectively.
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Our Group will provide remote technical support and training on the operation and
maintenance of our software sold to customers. Due to the intangible nature of software, our sale
of software is generally not subject to product recall or product return. Our PRC Legal Advisers
confirmed that during the Track Record Period and up to the Latest Practicable Date, there was no
foreseeable or pending legal proceedings or ar bitration against our Group or our Directors,
including those in relation to product or service lia bility, that could, individually or in aggregate,
have a material adverse effect on our business, fi nancial condition or results of operations.
Set out below are the particulars of our Major Software available for sale during the Track
Record Period:
Principal products Main functions of products Target customers
Wangyou Renwoxing . Collection of data transmitted through 4G/
5G network
. Providing a summary of the
telecommunication network information
with parameter
. Testing and analysis of the data collected
in respect of quality of telecommunication
network connection
. Generating testing and analysis reports
. Telecommunication network issue
diagnosis
Telecommunication
operators and other
companies in the
telecommunication
industry
Sample interface:
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Principal products Main functions of products Target customers
Smart Bee . One-stop handy collection and presentation
of enhancement-related information, such
as telecommunication network
performance, network testing and so on
. Providing information on the distribution
and operation of base stations in the
vicinity
. Real-time upload o f data collected to
servers for back-end analysis in respect of
telecommunication network quality
Telecommunication
operators and other
companies in the
telecommunication
industry
Sample interface:
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Principal products Main functions of products Target customers
Wireless Network
Real-time Video
Control Software
. Remote control and management of the
maintenance progress of base stations by
real-time and mobile communication and
exchange of data, including on-site
photographs and videos
. Functions which assist the performance of
base station maintenance, including
formulation and monitoring of inspection
plans, assessment of maintenance services
and collecting information on base station
engineering parameters
Telecommunication
operators and other
companies in the
telecommunication
industry
Sample interface:
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Principal products Main functions of products Target customers
Maintenance and
Operation Support
System
. Performing statistical analysis based on the
large data sets collected through data
mining, telecommunication network traffic
conditions and distribution of base stations
. Providing information on
telecommunication network coverage and
quality over a specific district based on the
statistical analysis performed
. Presentation of the said information in a
visualised manner in the form of a map
showing the telecommunication network
condition of selected districts
Telecommunication
operators and other
companies in the
telecommunication
industry
Sample interface:
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The table below summarises the key difference among our Major Software available for sale
during the Track Record Period:
Wangyou Renwoxing Smart Bee
Wireless Network
Realtime Video
Control Software
Maintenance and
Operation Support
System
Main technologies
involved
. Collection of data relating
to telecommunication
network
. Testing and analysis of
data relating to
telecommunication network
. Generation of testing and
analytic reports
. Collection of data relating
to telecommunication
network
. Testing of data relating to
telecommunication network
. Collection of data relating
to base station
. Monitoring of
telecommunication
equipment conditions
. Process management for
maintenance of
telecommunication
equipment
. Collection and analysis of
big data from
telecommunication network
Main functions . Sharing of data collected
among different users
. On-site collection of
telecommunication network
data of a specific location
. Detailed analysis of
telecommunication network
performance of a specific
location
. On-site examination of base
station conditions such as
layout and operation status
. On-site collection of
telecommunication network
data of a specific location
. Detailed analysis of
telecommunication network
performance of a specific
location
. Remote and real-time
monitoring of the operation
status of telecommunication
equipment
. Online designation of
relevant maintenance
personnel to attend to the
maintenance and repair of
telecommunication
equipment once an issue is
identified through remote
monitoring
. Collection of mass
telecommunication network
data in a city or over a
large area
. Analysis of
telecommunication network
performance over a large
area
. Providing information of
base stations such as layout
and operation status
Summary of key
features distinct
from the other
three major
software
. Analysis of
telecommunication network
at specific locations
. Data and results sharing
. Analysis of
telecommunication network
at specific locations
. Providing information on
base stations (on-site)
. Monitoring and
management of
telecommunication
equipment such as base
station equipment (remote
and real-time)
.
Analysis of
telecommunication network
over a large area
. Macro-evaluation of
telecommunication
infrastructure distribution
over a large area
Operational flow . The operational flow of Wangyou Renwoxing, Smart Bee and Maintenance and Operation Support System mainly involves the collection,
selection, analysis and presentation of t elecommunication-related data, and commonl y includes: (i) source data acquisition — collection
of specific data required for different purposes and analysis; (ii) data analysis — processing of selected data relevant to a particular
purpose and analysis; and (iii) results presentation — generation of results to users who would then apply the results for their own use.
Apart from other variations in features of each of such software (such as interface, results extracting and sharing function and
geographical scale of analysis), the major differences among the se software in their operational flow is the data to be acquired and
analysed, including advanced telecommunication network parame ters for Wangyou Renwoxing, diverse telecommunication and base
station data for Smart Bee, and mass telecommunication data over a la rge geographical area for Maintenance and Operation Support
System.
. As for Wireless Network Realtime Video Control Software, its operational flow includes: (i) base station maintenance instructions
(customised according to customers ’ needs) to be sent to maintenance personnel by customers or the system automatically via the
software; (ii) upon receiving the instructions, maintenance perso nnel to attend site to perform maintenance in accordance with the
instructions; (iii) maintenance process to be recorded and saved by the software with connected video devices and sent to server; and
(iv) customers to access the recorded maintena nce process for checking or further follow-up.
Key benefits . Efficient data sharing
. Focus on specific locations
. More comprehensive data
collection
(telecommunication network
and base stations)
. Focus on specific locations
. Remote and real-time
management of base
stations
. Facilitating maintenance
works
. Analysis of larger data sets
and over a wider area
Mode of payment Purchase price (paid in lump sum or by instalmen ts) rather than subscription based payments
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The software we sell to customers does not typically have an expiry date or specific product
life cycle as they are generally designed to be compatible for further upgrade so as to adapt to new
broadband technology. For instance, since our so ftware may interact dir ectly with the wireless
telecommunication network, the development o f broadband technology (e.g. from 4G to 5G)
applicable to such network may affect the functionality and applicability of our software. However,
we can upgrade our software so that it can adapt to the latest broadband technology. We generally
do not charge our customers additional fee for software upgrade unless the software needs to be
upgraded to a different generation of broadband technology. During the Track Record Period, our
Directors confirm that there is no material change in the major software we offered for sale.
OUR CUSTOMERS
We have established business relationships with various major PR C telecommunication
operators, and other prominent customers in th e PRC, such as China Comservice and a leading PRC
telecommunication tower infrastructure service p rovider. Our customers during the Track Record
Period can be categorised into: (i) telecommuni cation operators; (ii) telecommunication network
equipment manufacturers; (iii) telecommunication n etwork and technical serv ice providers; and (iv)
others. All of our customers during the Track Record Period had their principal place of business in
the PRC. For FY2020, FY2021, FY2022 and 6M2023, we had a total of 65, 81, 78 and 64
customers, respectively. We have achieved a high customer retention rate, as evidenced by the fact
that repeat customers (being customers in a parti cular year/period during the Track Record Period
who have engaged us for our service or purchased our software at least once in the three financial
years immediately preceding that particular year) contributed revenue of approximately RMB163.0
million, RMB174.6 million, RMB 198.3 million and RMB88.1 million, representing over 83.3%,
85.9%, 87.6% and 77.4%, respectively, of our total revenue during the Track Record Period.
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The following table sets forth the breakdown of our revenue by customer type and services,
and the respective percentage of our total r evenue during the Tra ck Record Period:
FY2020 FY2021 FY2022 6M2022 6M2023
RMB ’000 % RMB ’000 % RMB ’000 % RMB ’000 % RMB ’000 %
(approximately) (approximately) (approximately) (approximately) (approximately)
(unaudited)
Telecommunication operators (Note 1)
— Telecommunication network support services 41,646 21.3 51,128 25.1 52,295 23.1 22,402 21.7 20,805 18.3
— ICT integration services —— 8,684 4.3 12,409 5.5 5,176 5.0 10,801 9.5
— Telecommunication network-related software
development 5,238 2.7 5,358 2.6 8,050 3.5 4,583 4.4 2,623 2.3
Subtotal 46,884 24.0 65,170 32.0 72,754 32.1 32,161 31.1 34,229 30.1
Telecommunication network equipment manufacturers
(Note 2)
— Telecommunication network support services 8,028 4.1 9,035 4.4 8,364 3.7 2,239 2.2 5,425 4.8
— ICT integration services —— —— 249 0.1 —— ——
— Telecommunication
network-related software development 2,579 1.3 2,727 1.4 526 0.2 526 0.5 ——
Subtotal 10,607 5.4 11,762 5.8 9,139 4.0 2,765 2.7 5,425 4.8
Telecommunication network and technical service
providers and general contractors (Note 3)
— Telecommunication network support services 82,040 41.9 77,185 38.0 83,370 36.8 35,834 34.7 31,646 27.8
— ICT integration services 32,819 16.8 29,462 14.5 40,380 17.8 28,467 27.6 21,016 18.5
— Telecommunication
network-related software development 14,556 7.4 10,642 5.2 16,692 7.4 2,715 2.6 14,552 12.8
Subtotal 129,415 66.1 117,289 57.7 140,442 62.0 67,016 64.9 67,214 59.0
Others (Note 4)
— Telecommunication network support services 1,613 0.9 4,524 2.2 2,623 1.2 183 0.2 3,235 2.8
— ICT integration services 5,696 2.9 4,359 2.2 1,555 0.7 1,113 1.1 3,733 3.3
— Telecommunication
network-related software development 1,355 0.7 232 0.1 —— —— ——
Subtotal 8,664 4.5 9,115 4.5 4,178 1.9 1,296 1.3 6,968 6.1
Total 195,570 100 203,336 100 226,513 100 103,237 100 113,838 100
Notes:
1. Telecommunication operators are companies which p rovide landline, mobile and Internet access services.
2. Telecommunication network equipment manufactur ers are companies which mainly engage in the sale of
hardware used for the purpose of telecommunication.
3. Telecommunication network and technical service p roviders and general contractors are companies which
provide telecommunication network s upport and other technical services.
4. Other customers include PRC government departme nts, universities, research organisations, etc.
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As noted in the table above, we obtained our bu siness from a variety of customers, including
general contractors and other service providers and manufacturers. The nature of our customers may
indicate the manner in which we undertake proje cts (e.g. as an individual contractor or a sub-
contractor). During the Track Record Period, w e mainly undertook our projects in the following
manners: (i) we secured the whole project or part of the works in a project directly from end
customers such as telecommunication operators; o r (ii) after a general contractor secured a project
from the project owner and divide it into various sub-projects or works, we may be assigned one or
more of such sub-projects or works from the gene ral contractor. In both cases, we generally
underwent the same open tender or non-tender process and were subject to assessment by the
general contractor and/or the project owner in acco rdance with the terms of the relevant contract.
Accordingly, the capacities in which our Group obtained business or undertook a project (i.e.
whether we act as a subcontractor or contractor) did not have a material implication on the
operations or standard of services of our Group. The table below sets out a breakdown of our
Group ’s revenue by our service capacity (i.e. wheth er we act as a subcontractor or contractor)
during the Track Record Period:
Our service capacity FY2020 FY2021 FY2022 6M2023
RMB ’000
(approximately)
%R M B ’000
(approximately)
%R M B ’000
(approximately)
%R M B ’000
(approximately)
%
As a subcontractor 88,036 45.0 81,013 39.8 101,115 44.6 38,715 34.0
As a contractor 107,534 55.0 122,323 60.2 125,398 55.4 75,123 66.0
Total 195,570 100 203,336 100 226,513 100 113,838 100
Note: For the purposes of the above classification of our service capacity as a subcontractor or contractor, we are
generally regarded as a subcontractor if there is a back -to-back arrangement under which a customer has the
right to pay us after collection of payments from a third party end customer; and/or the acceptance assessment
for works performed by us shall be conducted by or on behalf of a third party end customer. In the absence of
any of the above provision, we will be deemed as a contractor.
Revenue by places of registration of our customers
Our business mainly originated from the pr ovinces city of Guangdong, Beijing, Hebei,
Guangxi and Qinghai in the PRC. The table below sets out a breakdown of our Group ’s revenue by
places of registration of our custome rs during the Track Record Period:
Province/municipal city FY2020 FY2021 FY2022 6M2022 6M2023
RMB ’000 % RMB ’000 % RMB ’000 % RMB ’000 % RMB ’000 %
(approximately) (approximately) (approximately) (approximately) (approximately)
(unaudited)
Guangdong 133,786 68.4 129,278 63.6 143,967 63.5 72,994 70.7 66,882 58.7
Beijing and Hebei 18,730 9.6 16,153 7.9 12,671 5.6 5,934 5.8 10,676 9.4
Guangxi 4,529 2.3 12,382 6.1 9,710 4.3 4,015 3.9 6,438 5.7
Shanghai and Jiangsu 6,258 3.2 11,583 5.7 18,763 8.3 6,021 5.8 14,199 12.5
Qinghai 4,896 2.5 4,637 2.3 5,446 2.4 2,255 2.2 1,988 1.7
Others 27,371 14.0 29,303 14.4 35,957 15.9 12,018 11.6 13,655 12.0
Total 195,570 100 203,336 100 226,513 100 103,237 100 113,838 100
The other locations include Guizhou province, Zhejiang province, Sichuan province, etc.
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Where a customer requires our services (especi ally telecommunication network support
services) at a designated location, if necessary, o ur technical personnel or subcontractors will be
temporarily stationed at the server rooms or othe r locations as may be designated by the customer
for rendering the services.
Revenue by location of our projects
During the Track Record Period, our te lecommunication net work enhancement,
telecommunication network infrastructure mai ntenance and engineerin g and ICT integration
projects were mainly located in the Guangdong province, with some of our projects spanning
multiple provinces. Set out below is a breakdown of our revenue by project location (in terms of
province/city) during the Track Record Period:
Location of our projects
(Province/municipal city) FY2020 FY2021 FY2022 6M2023
RMB ’000 % RMB ’000 % RMB ’000 % RMB ’000 %
(approximately) (approximately) ( approximately) (approximately)
Guangdong 61,400 31.4 79,790 39.2 118,926 52.5 62,449 54.9
Heilongjang 28,227 14.4 24,023 11.8 10,538 4.7 47 —
Beijing and Hebei 18,042 9.2 10,333 5.1 10,213 4.5 5,354 4.7
Guangxi 7,939 4.1 16,963 8.4 13,401 5.9 6,438 5.7
Qingahai 4,896 2.5 4,637 2.3 5,285 2.3 1,987 1.7
Hubei 2,046 1.1 4,403 2.2 6,149 2.7 3,172 2.8
Others (Note 1) 17,821 9.1 15,687 7.7 15,654 6.9 7,393 6.5
Inter provincial locations (Note 2) 31,471 16.1 28,541 14.0 21,078 9.3 9,823 8.6
Unspecified location (Note 3) 23,728 12.1 18,959 9.3 25,269 11.1 17,175 15.1
Total 195,570 100 203,336 100 226,513 100 113,838 100
Notes:
1. Other provinces/municipal cities include Sha nghai, Jiangsu, Sichuan, Hainan, Guizhou, etc.
2. Some of our projects involved the provision of our services in multiple provinces/cities and it is not
practicable to derive further breakdown of the revenu e generated from such projects by province/city.
3. Our telecommunication network-related software de velopment business involvi ng software development
services and software sale is generally non-location specific due to its virtual nature.
The majority of our projects were located in the Guangdong province where our headquarters
is located. While we do not at this stage have any definite target for increasing the proportion of
revenue contribution from other provinces, we consider that we are well-equipped and prepared to
provide our services in other provinces and cities and are proactively open to such expansion shall
such opportunities arise. In particular, our Directors do not anticipate any material difficulties for
our Group to carry out our business in locations outside the Guangdong province, taking into
account that (i) our Group has historically been providing our services to numerous locations
outside Guangdong, including not less than 25 prov inces/municipal cities during the Track Record
Period; (ii) our solution-focused operation with the use of subcontracting arrangements allows us to
undertake projects in locations and regions outside our headquarters, without the need to make mass
deployment of our own employees and resources; and (iii) our services to be rendered in different
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provinces and cities in the PRC are of the same nature and follow the same operational flow since
there is no material difference in telecommunicatio n protocol, infrastructure and settings across the
PRC.
During the Track Record Period, our te lecommunication net work enhancement,
telecommunication network infrastructure mai ntenance and engineerin g and ICT integration
projects were located to a larger extent in first and second tier cities in the PRC and to a lesser
extent in the third, fourth and fifth tier cit ies in the PRC, with some of our projects spanning
multiple provinces and/or cities. Set out below is a breakdown of our revenue by project location
(in terms of city tier) during the Track Record Period:
Location of our projects (city tier) FY2020 FY2021 FY2022 6M2023
RMB ’000 % RMB ’000 % RMB ’000 % RMB ’000 %
(approximately) (approximately) ( approximately) (approximately)
First and second tier cities (Note 1) 65,095 33.3 66,032 32.5 91,940 40.6 45,525 40.0
Third, fourth and fifth tier cities
(Note 2) 40,854 20.9 43,568 21.4 49,079 21.7 29,000 25.5
Inter city tier locations (Note 3) 65,893 33.7 74,776 36.8 60,226 26.6 22,138 19.4
Unspecified location (Note 4) 23,728 12.1 18,959 9.3 25,268 11.2 17,175 15.1
Total 195,570 100 203,336 100 226,513 100 113,838 100
Notes:
1. First and second tier cities (classified based on the city tier ranking published by an urban data research
institute operated by a provincial media group where our projects were located during the Track Record
Period included more than 20 cities in the PRC such as Beijing, Shanghai, Shenzhen, Guangzhou, Zhuhai,
Chengdu, Haerbin and Guiyang.
2. Third, fourth and fifth tier cities (classified based on the city tier ranking published by an urban data research
institute operated by a provincial media group where our projects were located during the Track Record
Period included more than 60 cities in the PRC such as Shantou, Guigang, Liupanshui, Mianyang, Langfang.
3. Some of our projects involved the provision of our servi ces in multiple cities which are in different city tier
categories (i.e. first and second tier category and third, forth and fifth tier category) and it is not practicable to
derive further breakdown of the revenue g enerated from such projects by city tier.
4. Our telecommunication network-related software de velopment business involvi ng software development
services and software sale is generally non-location specific due to its virtual nature.
We consider that the concentration of our proj ects in first and second tier cities in the PRC is
consistent with the fact that first and second ti er cities are typically more densely populated and
with more economic and commercial activities an d network usage than cities in other tiers, thus
necessitating more sophisticat ed telecommunication network infrastructure and ICT systems
supporting those activities. As a result, the demand for telecommunication support and ICT
integration services is correspondingly higher in first and second tier cities.
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Our five largest customers
As at 30 June 2023, the length of our business relationships with our five largest customers
ranged from approximately 2 to 16 years. The revenue generated from our five largest customers in
each year/period during the Track Record Peri od in aggregate amounted to approximately
RMB116.8 million, RMB123.9 million, RMB115.6 million and RMB53.3 million, representing
approximately 59.6%, 61.0%, 51.0% and 46.8% of our total revenue, respectively. The revenue
generated from our largest customer in each year /period during the Track Record Period amounted
to approximately RMB41.5 million, RMB48.8 m illion, RMB53.9 million and RMB25.7 million,
representing approximately 21.2%, 24.0%, 23.8% and 22.6% of our total revenue, respectively. The
following tables set out brief information concerni ng our five largest custom ers in each year/period
during the Track Record Period:
For FY2020
Customer
Principal business activities
of customer
Major services provided by
o u rG r o u pf o rt h ey e a r
Credit
term (2)
Payment
method
Commencement
year of business
relationship
Revenue
generated from
the customer
As a percentage
of our total
revenue
days RMB ’000 %
approximately approximately
1 Customer A Provision of fundamental
telecommunications
businesses including
comprehensive wireline
communications service,
mobile communications
service, value added
telecommunications
service such as Internet
access service,
information service and
other related service
Wireless telecommunication
network enhancement
service,
telecommunication
network infrastructure
maintenance and
engineering service, and
software development
service
0–180 Bank transfer 2007 41,502 21.2
2 Customer C Telecommunication network
infrastructure maintenance
and engineering service
ICT integration service and
telecommunication
network infrastructure
maintenance service
7–60 Bank transfer 2014 38,679 19.8
3 Customer B Provision of
telecommunication
network consulting,
planning and design,
construction service and
network communication
services
Wireless telecommunication
network enhancement
service and
telecommunication
network infrastructure
maintenance and
engineering service
30–90 Bank transfer 2009 23,163 11.8
4 Guangzhou
Chengxiang
ICT integration service,
system development and
sales renting services of
telecommunication
equipment
ICT integration service 30 Bank transfer 2012 7,516 3.8
5C h i n a
Comservice
Provision of
telecommunications
infrastructure service,
business process
outsourcing service
Wireless telecommunication
network enhancement
service and
telecommunication
network infrastructure
engineering service
Nil Bank transfer 2018 5,894 3.0
Total 116,754 59.6
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Notes:
1. Figures may not add up due to rounding.
2. Credit term of each of the customers during the Track Record Period.
For FY2021
Customer
Principal business activities
of customer
Major services provided by
o u rG r o u pf o rt h ey e a r
Credit
term (2)
Payment
method
Commencement
year of business
relationship
Revenue
generated from
the customer
As a percentage
of our total
revenue
days RMB ’000
approximately
%
approximately
1 Customer A Provision of fundamental
telecommunications
businesses including
comprehensive wireline
communications service,
mobile communications
service, value added
telecommunications
service such as Internet
access service,
information service and
other related service
Wireless telecommunication
network enhancement
service,
telecommunication
network infrastructure
maintenance and
engineering service and
ICT integration service
0–180 Bank transfer 2007 48,768
(3) 24.0
2 Customer C Telecommunication network
infrastructure maintenance
and engineering service
Wireless telecommunication
network enhancement
service, ICT integration
service and
telecommunication
network infrastructure
maintenance and
engineering service
7–60 Bank transfer 2014 39,376 19.4
3 Customer B Provision of
telecommunication
network consulting,
planning and design,
construction service and
network communication
services
Wireless telecommunication
network enhancement
service and
telecommunication
network infrastructure
engineering service
30–90 Bank transfer/Bill
of exchange
2009 15,141 7.4
4 Customer D Provision of
telecommunication service
and sales of
telecommunication
equipment and other
devices
Wireless telecommunication
network enhancement
service, ICT integration
service and software
development service
15–30 Bank transfer 2009 12,565 6.2
5 Customer E Provision of
telecommunication,
software and information
technology services
Wireless telecommunication
network enhancement
service,
telecommunication
network infrastructure
maintenance and
engineering service, ICT
integration service and
software development
services
30 Bank transfer 2020 8,053 4.0
Total 123,903 61.0
Notes:
1. Figures may not add up due to rounding.
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2. Credit term of each of the customers during the Track Record Period.
3. Our revenue generated from Customer A increased fr om approximately RMB41.5 million for FY2020 to RMB48.8
million for FY2021 mainly due to our Group ’s active efforts in expanding its business in the Guangdong province in
FY2021 and an increase in revenue of approximately RMB7.5 million from the projects in relation to 5G.
For FY2022
Customer
Principal business activities
of customer
Major services provided by
o u rG r o u pf o rt h ey e a r
Credit
term (2)
Payment
method
Commencement
year of business
relationship
Revenue
generated from
the customer
As a percentage
of our total
revenue
days RMB ’000
approximately
%
approximately
1 Customer A Provision of fundamental
telecommunications
businesses including
comprehensive wireline
communications service,
mobile communications
service, value added
telecommunications
service such as Internet
access service,
information service and
other related services
Wireless telecommunication
network enhancement
service,
telecommunication
network infrastructure
maintenance and
engineering service, ICT
integration service and
software development
service
0–180 Bank transfer 2007 53,917 23.8
2 Customer E Provision of
telecommunication,
software and information
technology services
Wireless telecommunication
network enhancement
service
30 Bank transfer 2020 16,112 7.1
3 Guangzhou
Chengxiang
ICT integration service,
system development and
sales renting services of
telecommunication
equipment
ICT integration services 60 Bank transfer 2012 15,568 6.9
4 Customer D Provision of
telecommunication service
and sales of
telecommunication
equipment and other
devices
Wireless telecommunication
network enhancement
service, ICT integration
service,
telecommunication
network-related software
development service
15–30 Bank transfer 2009 15,048 6.6
5 Customer F Provision of
telecommunication,
software and information
technology services
Wireless telecommunication
network enhancement
service, ICT integration
service and
telecommunication
network-related software
development service
10–30 Bank transfer 2021 14,973 6.6
Total 115,618 51.0
Notes:
1. Figures may not add up due to rounding.
2. Credit term of each of the customers during the Track Record Period.
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For 6M2023
Customer
Principal business activities
of customer
Major services provided by
our Group for the period
Credit
term (2)
Payment
method
Commencement
year of business
relationship
Revenue
generated from
the customer
As a percentage
of our total
revenue
days RMB ’000
approximately
%
approximately
1 Customer A Provision of fundamental
telecommunications
businesses including
comprehensive wireline
communications service,
mobile communications
service, value added
telecommunications
service such as Internet
access service,
information service and
other related services
Wireless telecommunication
network enhancement
service,
telecommunication
network infrastructure
maintenance and
engineering service, ICT
integration service and
software development
service
0–180 Bank transfer 2007 25,710 22.6
2 Customer E Provision of
telecommunication,
software and information
technology services
Wireless telecommunication
network enhancement
service
30 Bank transfer 2020 9,276 8.1
3 Guangzhou
Chengxiang
ICT integration service,
system development and
sales renting services of
telecommunication
equipment
ICT integration service 60 Bank transfer 2012 7,073 6.2
4 Customer G Provision of network
technology services, IoT
technology services and
telecommunication
network infrastructure
engineering service
Wireless telecommunication
network enhancement
service and
telecommunication
network infrastructure
maintenance and
engineering service
10 Bank transfer 2021 6,438 5.7
5 Customer H Provision of mobile network
enhancement service
Wireless telecommunication
network enhancement
service
Nil Bank transfer 2019 4,804 4.2
Total 53,301 46.8
Notes:
1. Figures may not add up due to rounding.
2. Credit term of each of the customers during the Track Record Period.
The amount of revenue generated from Customer B, a long-term customer of our Group in
respect of our telecommunication network suppo rt services, had gradually decreased from
a p p r o x i m a t e l yR M B 2 3 . 2m i l l i o ni nF Y 2 0 2 0t oa p p r o x i m a t e l yR M B 1 5 . 1m i l l i o ni nF Y 2 0 2 1a n dt o
approximately RMB0.7 million in FY2022 and nil in 6M2023.
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Such reduction in revenue was mainly attributab le to the conscientious and conscious decision
of our Directors to gradually reduce our provision of our services to Customer B taking into
account the following:
(i) the services required by Customer B under th e awarded contracts were generally labour-
intensive in nature, and required significant diversion of our human capital across a vast
geographical landscape (given that the tel ecommunication network support services
required the deployment of a material number of personnel across numerous and often
distant locations in the PRC). This is costly from the perspectives of logistics in terms of
deployment as well as additional administrative work involved; and
(ii) taking into account the above, the Director s consider that it would be more commercially
sensible to limit excessive outlay and e xpenses associated with employing a large
number of employees and dedicated staff to serve Customer B across geographical
locations requiring service, but rather strat egically shift our focus to hiring project
managers to supervise a team of dedicated staff to service targeted geographical
locations. It is considered that such approach would also be preferable to engaging
subcontractors across different geographical locations as such engagement is likely to be
more costly, and we may have difficulty super vising work delivery, maintaining service
quality and responding promptly and effici ently to client feedback and enquiries.
To the best knowledge of our Directors after maki ng all reasonable enquiries, as at the Latest
Practicable Date, all of our Group ’s five largest customers in each year/period during the Track
Record Period were Independent T hird Parties, and none of our Dir ectors, their respective close
associates or any Shareholders (who or which, t o the best knowledge of our Directors, owned more
than 5% of the issued share capital of our Company as at the Latest Practicable Date) has any
interest in any of our five largest customers in each year/period during the Track Record Period.
Our Directors confirm that during the Track Record Period and up to the Latest Practicable
Date, our Group had not experienced any major dis ruption in business due to material delays or
defaulting payments by our customers owing to the ir financial difficulties. Our Directors further
confirm that they are not aware of any of our ma jor customers that are in material financial
difficulty that may adversely affect our Group ’s businesses.
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Salient terms of our service agreements
Project-based services
Regarding our specific wireless telecommun ication network enhancement services, ICT
integration services and telecommunication n etwork infrastructure engineering service, we
generally enter into service agreements with our customers on a project-by- project basis pursuant
to which we are required to provide customis ed telecommunication network enhancement,
integration or engineering solutions to our custome rs, which comprise telecommunication operators,
PRC government departments and other customer s. Set out below is a summary of the salient terms
of our service agreements for provision of such services:
Contract price The contract sum of our agreements is mainly a lump sum
fixed price, which would also include hardware and
software procurement costs and other incidental expenses
incurred by us such as labour cost and travelling expenses.
Services to be rendered A brief description of the project and services to be
rendered is generally set out in the agreements.
Duration of projects Both the expected commencement date and completion date
of a project are generally set out in the agreements.
Payment and credit terms A lump sum payment or progress payments by bank transfer
within a credit period of generally up to 90 days.
Hardware, software,
equipment and labour
Depending on the requirements and specifications of the
relevant project or service required, we may be capable of
providing all necessary hardware, software, equipment and
labour for carrying out required services. In some instances
(particularly in connection with the provision of ICT
integration services) however, we may procure or acquire
necessary hardware, software o r equipment from third-party
vendors or suppliers, the relevant expenses of which may be
covered by, and constitute a material portion of, the contract
sum we charge on our customers.
Means of assessment
conducted by customers
Assessments of our service are conducted in accordance
with the standards specified in the agreements, and
generally the customer will issue an assessment form and/or
a completion form upon passing of assessment or
completion of the project.
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Warranty ICT projects : typically ranges from one to three years
Specific telecommunication ne twork enhancement services :
t y p i c a l l yn ow a r r a n t yp e r i o d
Telecommunication network infrastructure engineering
services : typically one-year warranty period
Completion Services are generally regarded as completed on the
completion date set out in the agreement and/or when we
meet the requirements of the customers ’ assessments
Termination clause ICT integration services and sp ecific network enhancement
services : may vary from contract to contract — some
examples include provisions for termination of agreement
by customer upon material default by our Group and/or
termination by either party upon events of force majeure.
Telecommunication network infrastructure engineering
services : may vary from contract to contract — some
examples include provisions for termination of agreement
by the non-defaulting party upon material default by our
Group or the customer with/without prior notification.
Fixed-term on-demand services
As to our routine telecommunication network enhancement services an d telecommunication
network infrastructure maintenance services , we generally enter into fixed-term framework
agreements with our customers. Where our services are required, our customers may place separate
orders with us which typically include (i) descript ion of the type of services required; (ii) charges
of such services; (iii) payment terms; and (iv) s ervice delivery time. Once we have accepted the
orders, the terms and conditions thereof will become binding contracts between our Group and the
customers. Set out below is a summary of the salient terms and conditions of our fixed-term service
agreements with our customers:
Services to be performed Scope and nature of the services to be provided are
generally set out in the agreements and our right to charge
for service out of the specified scope is generally reserved.
Contract price The contract sum is mainly a fixed price, including all
incidental expenses incurred by us such as labour cost and
travelling expenses.
Duration of projects The term of the agreements is generally one to two years.
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Payment and credit terms Routine telecommunication ne twork enhancement services :
progress payments by bank transfer within a credit period of
g e n e r a l l yu pt o3 0d a y s
Telecommunication network infrastructure maintenance
services : progress payments by bank transfer within a credit
period of generally up to 5 days to 30 days
Hardware, software,
equipment and labour
Generally, we will provide all necessary hardware, software,
equipment and labour for carrying out our services, except
for the hardware, software and devices that are to be
installed or set up at a customer ’s premises or on its system
or telecommunication netwo rk , which will be at the costs
of the customers.
Means of assessment
conducted by customers
Assessments of our services by our customers are generally
conducted by giving scores t o the services rendered. Our
customers will evaluate our services according to a list of
performance standards, etc., typically based on the
functionality and performan ce of telecommunication
network in the course of or after provision of our services.
Warranty Routine telecommunication ne twork enhancement services
and telecommunication network infrastructure maintenance
services : typically no warranty period
Completion Services are generally regarded as completed when the
contract term ends.
Termination clause May vary from contract to contract — some examples
include provisions for termination of agreement by customer
upon material default by our Group and/or termination by
either party upon events of force majeure.
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Software development services
For our software development services, we gener ally enter into service agreements with our
customers pursuant to which, we are required to pr ovide customised softw are development services
to our customers. Set out below is a summary of th e salient terms of our service agreements for
software development services:
Contract price The contract sum of our agreements is mainly a lump sum
fixed price.
Services to be rendered The general requirements for the software to be developed
are generally set out in the agreements.
Duration of projects Both the expected commencement date and completion date
of the development are generally set out, which ranged from
3 months to 6 months during the Track Record Period.
Payment and credit terms A lump sum payment or progress payments by bank
transfer, cheque or cash within a credit period of generally
up to 30 days.
Means of assessment
conducted by customers
Assessment of our services is conducted by our customers
in accordance with the standards or procedures as set out in
the agreement, and generally the customer will issue an
assessment report or certificate to us after passing of
assessment upon completion of the project.
Warranty Warranty period typically ranges from one to three years.
Completion Services are generally regarded as completed when we have
passed the customers assessment and balance of contract
price is released.
Termination provisions May vary from contract to contract — some agreements
include provisions for termination by customer if the
software developed by us does not conform to the
specifications or requirement s prescribed in the agreement
or if the rendering of services by us is materially delayed
and/or termination by either party upon events of force
majeure.
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Sale of software
For sales of our software, we generally enter in to sales agreements with our customers. Set out
below is a summary of the salient terms of our s ales agreements for the sale of our software:
Product price The unit price of our software is set out in the agreements.
Products details The name and specifications of the software and the number
of units purchased are set out in the agreements.
Acceptance test Customers will normally perform acceptance test on the
functionality of our software and sign a confirmation upon
acceptance of our software.
Payment and credit terms A lump sum payment or instalment payments by bank
transfer or banker ’s acceptance within a credit period of
g e n e r a l l yu pt o3 0d a y s .
Post-sales services Our Group will provide remote technical support and
training on the operation and m aintenance of our software.
Termination provisions Generally no termination provisions.
Entities which are our customers and a lso our suppliers or subcontractors
Owing to the nature of our business, some of our customers are also our suppliers or
subcontractors, from which we have procured various services or products. While none of our major
customers was also our suppliers or subcontract ors for 6M2023 and none of our major suppliers or
subcontractors was also our customer for 6M2023, three of our major customers (namely China
Comservice, Customer A and Customer F, two major PRC telecommunication o perators) were also
our subcontractors and two of our major subcontr actors (namely Subcontractor B and Subcontractor
F) were also our customers from FY2020 to FY2022. To the best knowledge and belief of our
Directors, these overlapping enti ties and their ultimate benefici al owners are Independent Third
Parties. For information about the business act ivities of the aforementioned customers and
subcontractor, please refer to the paragraphs headed ‘‘Our customers — Our five largest customers ’’
and ‘‘Our subcontractors — Our five largest subcontractors ’’respectively in this section.
Major customers which are also our subcontractor or supplier from FY2020 to FY2022
From FY2020 to FY2022, some of our major customers were telecommunication operators and
telecommunication network and technical service p roviders and general contractors which engaged
us for our telecommunication network suppor t services, ICT integration services and
telecommunication network-related software dev elopment services in the course of their daily
operations or for their end-customers. During th e same period, we had procured certain materials
from them or subcontracted the whole or part of our projects to these entities when our capacity
was full or when we required their expertise t o complete a project. From FY2020 to FY2022, our
(i) revenue generated from sales of services and/ or software to three of our major customers which
are also our subcontractors/suppliers amount ed to approximately RMB49.1 million, RMB70.0
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million and RMB74.8 million, representing approximately 25.1%, 34.5% and 33.1% of our total
revenue, respectively; and (ii) project level pro fit (calculated by deducting the Major Operating
Costs from revenue of the project) generated fro m the same amounted to approximately RMB16.4
million, RMB18.8 million and RMB23.8 million, representing approximately 29.4%, 35.2% and
36.2% of our total operating profit (which has als o taken into account other expenses), respectively.
From FY2020 to FY2022, our subcontracting charges and material costs for the same years to these
entities amounted to approxim ately RMB14.2 million, RMB9.4 million and RMB6.5 million,
respectively. In particular, the subcontractin g charges paid to Subcontractor B for FY2020 and
FY2021 amounted to approximately RMB13.3 million and RMB8.9 million, respectively, and were
related to two of our projects which, in aggregate, contributed revenue of (i) over RMB5 million
during the Track Record Period; or (ii) over RMB3 million during any of FY2020, FY2021,
FY2022 and 6M2023 (the ‘‘Major Projects ’’).
Major subcontractors which are als o our customers from FY2020 to FY2022
From FY2020 to FY2022, two of our major subcontractors were also our customers, one of
which provided subcontracted services to us in our ICT integration project, had also procured
mainly wireless telecommunication network enha ncement services from us and the other provided
cloud service and research and development services to us while had also procured mainly ICT
integration services, telecommuni cation network related software development services and wireless
telecommunication network enhancement servi ces from us. From FY2020 to FY2022, our (i)
revenue generated from such entities amounted to approximately RMB43.2 million, RMB61.3
million and RMB53.9 million, respectively; and (ii) p roject level profit (calculated by deducting the
Major Operating Costs from revenue of the pro ject) generated from the same amounted to
approximately RMB15.4 million, RMB17.3 m illion and RMB16.3 million, representing
approximately 27.3%, 28.6% and 24.8% of our profit (which has also taken into account other
expenses), respectively. From FY2020 to FY2022, our purchase from such major subcontractors
which are also our customers amounted to approx imately RMB13.8 million, RMB8.9 million and
nil, respectively, which were re lated to two of our Major Projects during the Track Record Period.
One of the major subcontractors above (name ly Subcontractor B) is also one of our major
customers (namely Customer A) of our Group described under ‘‘Major customers which are also
our subcontractors ’’ above, but our transactions were conducted with a number of different
subsidiaries of the same group co mpany (i.e. Subcontractor B/Customer A) operating in different
provinces. The subsidiary which we engaged as our subcontractor had not engaged us to provide
any service during the Track Record Period. Our Directors believe that such arrangement is
commercially sensible considering that: (i) w e procured services from Subcontractor B mainly in
relation to two Major Projects in Heilongjiang where we did not have material operations and to
subcontract works to Subcontractor B was considered more cost-effective as our management
considered that it had the necessary experience and r esources in providing the required services and
were able to offer competitive trading terms, and the customers in these projects were not Customer
A or its subsidiaries; (ii) this group company is a major state-owned telecommunication operator in
the PRC which has a large number of subsidiaries operating different businesses in different
provinces, including ICT integration service providers (such as the subsidiary under Subcontractor
B) and telecommunication service providers (s uch as the subsidiaries under Customers A), and
these subsidiaries generally have separate opera tions; (iii) due to the different natures of these
subsidiaries, they may have the services that we r equire (e.g. subcontracted services for our ICT
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integration services) in our operation or may need to procure our services (e.g. wireless
telecommunication network enhancement services) in their operations; and (iv) overlapping of sales
to and purchases from Customer A/Subcontractor B only took place at the group company level, but
no such overlapping existed when considering our transactions with each of these subsidiaries
separately.
The other major subcontractor referred to above (namely Subcontractor F) is also one of our
major customers (namely Customer D). Our D irectors believe that such arrangement is
commercially sensible considering that: (i) w e procured cloud services from Subcontractor F in
relation to a project in Zhuhai where we mainly subcontracted works related to cloud safety service
and cloud storage service to Subcontractor F as our management considered that it had the
necessary experience and resources in providing the required services and was able to offer
competitive trading terms, the arrangement was more cost-effective, and the customers in these
projects were not Customer D or its associated co mpanies; (ii) we also procured research and
development services mainly in relation to cloud and big data analysis from Subcontractor F as our
management considered that they had more research resources and expertise in these areas
compared to our Group and the arrangements were mo re efficient and cost-effective; (iii) this group
company is a major state-owned telecommunicat ion operator in the PRC which has a large number
of subsidiaries and branch companies operatin g different businesses i n different geographic
locations, including ICT integration service providers (such as the branch company under
Subcontractor F) and telecommunication service providers (such as the subsidiaries and branch
companies under Customers D), and these subsid iaries and branch companies generally have
separate operations; and (iv) due to the different natures of these subsidiaries and branch
companies, they may have the services that we requ ire in our operation (e.g. cloud service) or may
need to procure our services (e.g. ICT integratio n service and telecommunication network related
software development service) in their operations.
According to the CIC Report, it is common in the telecommunication network service industry
that a supplier or subcontractor of a market player may also be its customer or vice versa, due to
their different specialities, geographical marke ts and labour resources, and the level of our Group ’s
overlapping of customers and suppliers/subcontractors is not anomalous compared with the industry
norm.
Negotiations of the terms of our sales to and pu rchases from these entities were conducted
separately and independently, and the sales and p urchases were neither inter-connected nor inter-
conditional with each other. Given that (i) th e prices of our services are determined by our
management team independently on a cost-plus basis; (ii) our service agreements with these
overlapping customers and suppliers are in standa rd forms adopted by thes e customers and similar
to those we entered into with our other major custo mers; and (iii) the credit period granted to these
overlapping entities is in line with the credit period we granted to our other customers, our
Directors are of the view that the sales to and purchases from these entities were conducted in the
ordinary course of our business under normal commercial terms and on an arm ’s length basis.
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Pricing policy
Our pricing policy aims to achieve a profitabl e and sustainable growth of our business. We
generally determine the pricing of our services on a cost-plus basis, taking into account a
combination of a number of factors, which are set out below:
General factors to be considered in pricing
Common factors for
determining the
pricing of all types of
services to be
provided by us
. Nature and complexity of the se rvices or software required;
. Indicative price range specifi ed by our customers in their
invitation of tenders or request for quotation, if any;
. Market demand and customer recognition of our services or
products;
. Prevailing market prices of similar services or software
offered by our competitors; and/or
. Level of market competition.
Specific factors to be considered in pricing
Wireless
telecommunication
network enhancement
services
— Routine
telecommunication
network enhancement
services
. Estimated cost of provision of services (such as equipment
procurement cost, labour cost and travel expenses).
— Specific
telecommunication
network enhancement
services
. Estimated cost of provision of services (such as equipment
procurement cost, labour cost and travel expenses).
Telecommunication
network
infrastructure
maintenance services
. Specific maintenance services required;
. Estimated cost of provision of services (such as equipment
procurement cost, labour cost and travel expenses); and/or
. Whether similar services have been rendered in the past for
customers.
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Telecommunication
network
infrastructure
engineering services
. National construction fee pricing standards set out in the
Code of Bills of Quantities and Valuation for Construction
Works* (《建設工程工程量清單計價規範》) published by the
Ministry of Housing and Urban-Rural Development of the
PRC ( 中華人民共和國住房和城鄉建設部) and the General
Administration of Quality Supervision, Inspection and
Quarantine of the PRC ( 中華人民共和國國家質量監督檢驗
檢疫總局), and other similar standards, which shall be
adjusted according to the complexity of the engineering
works.
ICT integration business
lines
. Estimated cost of the hardware and software specified for an
integration project;
. Nature of integration procedures, such as extent and
proportion of physical (such as setting up of server rooms)
and virtual (such as installation of software) integration
required; and/or
. Estimated cost of provision of services (such as labour cost
and travel expenses).
Software development
services
. Estimated cost of software development (based on, for
instance, the number of personnel designated and resources
and time spent for the development taking into account the
complexity and variety of the software ’s functions).
Sale of software . Our Group ’s price list for software, each price being fixed
mainly based on the cost of development of the software
which is determined by, for instance, the number of
personnel designated and resources and time to be spent for
the development taking into account the complexity and
variety of the software ’s functions.
Save for the sale of software the pricing of which is mainly based on our Group ’sp r i c el i s t ,
after identifying prospective bus iness opportunities, our manage ment team, with the assistance of
our technical, sales and finance personnel, wil l make a preliminary financial assessment of a
prospective project based on the above general and specific facto rs in order to either decide the
contract price to propose to a customer or evaluate whether a contract price offered by a
prospective customer is acceptable. Our Director s confirm that during the Track Record Period, we
had not offered any rebate or sales incentive to any of our customers.
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Set out below is the average and range of contract sum of projects awarded to our Group
during the Track Record Period by business line:
FY2020 FY2021 FY2022 6M2023
RMB ’000 RMB ’000 RMB ’000 RMB ’000
(approximately) (approximately) (approximately) (approximately)
Wireless telecommunication n etwork enhancement services
Highest contract sum awarded 21,781 7,440 10,433 9,268
Lowest contract sum awarded 11 15 1 12
Average contract sum awarded 1,808 1,075 1,571 1,086
Total contract amount awarded (Note) 135,600 59,127 108,415 34,742
Telecommunication network inf rastructure maintenance and
engineering services
Highest contract sum awarded 6,239 19,565 20,590 6,378
Lowest contract sum awarded 19 44 51 44
Average contract sum awarded 1,489 2,621 2,407 1,344
Total contract amount awarded (Note) 28,300 52,424 62,588 29,576
ICT integration services
Highest contract sum awarded 16,373 11,454 15,568 7,073
Lowest contract sum awarded 105 64 12 97
Average contract sum awarded 3,998 2,054 1,725 1,991
Total contract amount awarded (Note) 47,976 43,143 50,026 51,754
Telecommunication network-related software development
Highest contract sum awarded 3,287 2,312 9,494 3,412
Lowest contract sum awarded 72 47 72 221
Average contract sum awarded 830 662 943 1,038
Total contract amount awarded (Note) 20,743 18,538 31,129 17,654
Note: Such amounts included the total c ontract amount awarded through public tender and non-tender methods,
details of which are further summarised below:
Total contract amount awarded through public tender
FY2020 FY2021 FY2022 6M2023
RMB ’000 RMB ’000 RMB ’000 RMB ’000
(approximately) (approximately) (approximately) (approximately)
Wireless telecommunication network enhancement
services 55,569 43,465 60,701 11,281
Telecommunication network infrastructure
maintenance and engineering services 19,038 33,900 43,329 6,174
ICT integration services 31,068 27,574 11,533 24,650
Telecommunication network-related software
development 1,004 3,528 18,896 5,926
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Total contract amount awarded through non-tender methods
FY2020 FY2021 FY2022 6M2023
RMB ’000 RMB ’000 RMB ’000 RMB ’000
(approximately) (approximately) (approximately) (approximately)
Wireless telecommunication network enhancement
services 80,550 17,001 19,259 23,461
Telecommunication network infrastructure
maintenance and engineering services 9,262 18,524 47,714 23,402
ICT integration services 16,908 13,859 38,493 27,104
Telecommunication network-related software
development 19,739 15,010 12,233 11,728
Note: For certain contracts of our Group during the Track Record Period, there were cases where (i) there
was no contract amount stipulated in the awarded contract and in such cases, our customers would
enter into a framework agreement with us first and place orders with specific contract amount
subsequently; and (ii) the contract amount of cert ain awarded contracts was an estimate amount with
reference to the quotation or tender documents as fo rmal agreements had not been signed as at 30 June
2023.
For some of our projects, in particular, those related to our telecommunication network
support services, our customers may rate our servi ce performance by way of assessment pursuant to
the standards and specifications set out in the s ervice agreements between our customers and us.
Some examples of such standards and specificati ons include: (i) object ive telecommunication
network quality parameters, such as connection su ccess rate and dropped-calls rate; (ii) performance
in project execution, such as efficacy (i.e. whether our solutions are able to resolve the particular
issues) and punctuality (i.e. whether solutions ar e delivered within a specified time) of our service
performance and customer complaint handling; ( iii) performance in project management, such as
whether we have provided on-site trainings to the executive personnel whose knowledge for
carrying out relevant services would be teste d and graded by our customers, and whether our
enhancement data and document management con form to the standards set out in agreements; and
(iv) performance in communication with customer s, such as punctual participation in regular and
emergency meetings held by customers and submission of satisfactory enhancement plans and
progress reports to customers. If our performance in the above areas falls below a pre-set level or
score, certain amount of the contract price may be deducted. During the Track Record Period, (i)
the number of projects of which the contract price had been deducted by our customers after the
said assessment accounted for less than 6% of the total projects completed by us; (ii) the amount of
contract price deducted in aggregate amoun ted to approximately RMB180,000, RMB62,000,
RMB201,000 and RMB28,000 for FY2020, FY2021, FY2022 and 6M2023 respectively; and (iii)
there had not been any material dispute over the said deduction of contract price between us and
our customers.
As a result of our pricing strategy, our Director s believe that our Group was generally able to
pass the risks arising from any fluctuation in the costs of the hardware, software or equipment to
our customers during the Track Record Period. We will continue to keep ourselves abreast of
changes in market price, conduct regular reviews o no u rp r i c i n gp o l i c ya n dp a yc l o s ea t t e n t i o nt o
our customers ’ responses to the pricing of our services and software. Our Group may adjust our
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pricing policy to ensure that we are responsive to market price changes and customer feedback in a
timely manner to avoid any material adverse imp act on our market position, competitiveness,
performance and financial conditions.
Taking into account the revenue which had been recognised and is expected to be recognised
by our Group for each project, we did not have any loss-making project during the Track Record
Period.
Credit policy
The service fees we charge our customers may be settled in one lump sum upon their
acceptance of our services rendered or by instalm ents according to the payment schedules as set out
in the agreements. During the Track Record Period, t he credit terms in relation to the settlement of
our fees varied from project to project. In general , the credit term typically ranged from 15 to 180
days from the invoice date. The following table sets forth the common payment terms for each of
our business lines:
Common payment terms
Wireless telecommunication network enhancement services
— Routine
telecommunication
network enhancement
services
. Invoices are generally issued after passing periodic
acceptance assessments conducted by customers
. Credit period: generally 15 to 90 days
— Specific
telecommunication
network enhancement
services
. Invoices are generally issued after passing the acceptance
assessment conducted by customers upon completion of
services
. Credit period: generally 15 to 90 days
Telecommunication network infrastruct ure maintenance and engineering services
— Telecommunication
network infrastructure
maintenance services
. Invoices are generally issued after passing acceptance
assessment conducted by customers
. A certain amount of the contract sum may be retained by
customers as quality assurance deposit and released to us
after passing the final acceptance assessment
. Credit period: generally 15 days
— Telecommunication
network infrastructure
engineering services
. Invoices are generally issued after passing the acceptance
assessment conducted by customers
. Credit period: generally 15 to 60 days
ICT integration services . Invoices are generally issued after passing the acceptance
assessment conducted by customers
. Credit period: generally 15 to 60 days
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Common payment terms
Telecommunication network-re lated software development
— Software development
services
. Invoices are generally issued after passing the acceptance
assessment conducted by customers
. Credit period: generally 15 to 90 days
— Sale of software . Payment shall be made generally within 15 to 30 days after
delivery and acceptance of the software
. On some occasions, customers are required to pay deposits
We generally accept payment from customers by bank transfer or banker ’s acceptance. Our
Directors confirm that during the Track Record Pe riod, our Group had not experienced any material
difficulty in collecting payments from our custom ers which would cause a significant adverse
impact on our business and operation. Our trade receivable turnover days during the Track Record
Period were approximately 51.5 days, 52.0 day s, 53.9 days and 67.5 days for FY2020, FY2021,
FY2022 and 6M2023, respectively. The relative ly long trade receivable days of our Group were
mainly attributable to the timing difference between recognition of our Group ’s revenue (i.e. the
time when our services for a project are completed) and actual payment of fees by our customers
(i.e. after the acceptance assessment is conducted a nd passed). Furthermore, as our Group usually
only undertakes a part of a telecommunication net work infrastructure engineering project or ICT
integration project, even if we have completed th e part of works for which we are responsible and
recognised revenue according to our accounting pol icy, the actual payment by customers generally
takes a longer time and is not made until comp letion and passing of acceptance assessment in
relation to the entire project. According to the CIC Report, due to the aforementioned reasons,
having a long trade receivables collection perio d is common in the industry of telecommunication
network support services, ICT integration service s and telecommunication network infrastructure
engineering services.
In relation to collection of over due trade receivables, our Group ’s finance department monitors
overdue payments closely and prepares aging reports showing the customers ’ overdue amounts.
Where appropriate, we will take follow-up actions to collect the overdue trade receivables from a
customer, such as communicating with the relev ant department of the customer responsible for
processing payments and so on. To discourage overdue trade receivables, our Group may also
suspend our services if any of the foll owing events arises: (i) a customer ’s payments are overdue;
(ii) a customer faces financial hardships or operational setback; or (iii) termination of business
relationship with a customer.
Customer complaint policy
Our regional managers and regional business depa rtments are responsible for handling external
liaisons with customers in different regions. W e have adopted a customer complaint policies and
procedures to guide the handling of complaints received by our Group. When we receive any
complaints of a customer in the course of provision of our services or software, we will attend to
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such complaints on a timely basis by, among others, communicating with the customer to
understand the nature of its complaint, investigat ing the underlying issues and, where necessary,
sending our personnel to the customer ’s site to identify the cause of the defects or issues in relation
to our services and software. Depending on the cause and seriousness of the defects or issues
identified, we will (i) carry out remedial actions, s uch as performing further enhancement and/or
maintenance and replacement of defective hardw are, etc., and provide technical support to our
customers; and (ii) if the customer ’s complaint relates to matters that require our management ’s
attention, report to the relevant regional manager and/or the management team of our Group for
formulating solution or improvement pressure s. Our regional managers and personnel of our
regional business departments will also conduct r egular customer satisfaction review to obtain
feedback from our customers. If customers are diss atisfied with our services, we shall invite such
customers to express their opinions which wil l be followed up by us promptly after receipt of
opinions. The customer feedback and opinions collected by us will be shared with for the relevant
departments and personnel for improvement of our service quality. During the Track Record Period
and up to the Latest Practicable Date, our Directors confirm that we had not received any material
customer complaints. The amoun t of our contract price deducted after assessment of service
performance by our customers, in aggregate, amounted to only approximately RMB180,000,
RMB62,000, RMB201,000 and RMB28,000, respectively, during the Track Record Period and
approximately RMB30,000 after the Track Record Period and up to the Latest Practicable Date. For
further information, please refer to the paragraphs headed ‘‘Our customers — Pricing policy ’’above
in this section.
OUR SUPPLIERS
During the Track Record Period, our suppli ers mainly included (i) suppliers of
telecommunication and electronic equipment (such as portable data terminals and signal acquisition
devices) required for provision of our teleco mmunication network support services; and (ii)
suppliers of other general hardware (such as serve rs, cables and optical fibers) and software (such
as security software and operating system so ftware) required for the provision of our ICT
integration services. Our Group ’s suppliers are mainly companies in the PRC. As such, in the
supply chain of telecommunication and electronic equipment, our suppliers may rely on
components, products and/or equipment sourced fr om multinational conglomerates and technology
corporations (including telecommunications n etwork equipment and device makers) that are
headquartered in the PRC owing to their prominence in the competitive market and the popularity
of their products. It is possible that these multinat ional conglomerates and technology corporations
headquartered in the PRC and/or their products ma y be subject to export/import restrictions and/or
sanctions imposed by certain foreign countries fo r use in these foreign countries from time to time.
In certain instances, such restrictions and/or sa nctions may have implications on their downstream
supply. On the other hand, like their upstream players in the supply chain, our suppliers may also
be subject to import/export restrictions, full or partial sanctions by foreign countries. As such, in
the purchase of telecommunication equipment, elec tronic devices or computers from our suppliers,
we will exercise caution in ensuring that our p urchase would not fall within the scope of the
restrictions against the relevant suppliers. If the export/import res trictions or the scope and coverage
of any sanction against these upstream players or our suppliers and/or their products escalate or
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expand further, these upstream players may not be able to source components from certain overseas
countries and thus, the development and supply of their telecommunication products would be
disrupted, which would in turn disrupt the suppl y of telecommunication products to our suppliers
directly and to us indirectly.
Notwithstanding the above, given that (i) our Group does not provide any services or export
any products to foreign customers and we derive our revenue solely from the PRC; (ii) our Group
does not itself source supplies of goods from foreign sources and does not have any foreign
suppliers that are relevant to our provisio n of services; (iii) based on our Directors ’ assessment, our
Group would not directly deal or transact, at p resent or expected in the near future, with our
suppliers in the PRC which would result in the transactions falling within the scope of the import/
export restrictions and/or sanctions imposed on them by any foreign countries; and (iv) our Group
is a provider of telecommunications network rel ated services and not en gaged in the trading of
telecommunication equipment, electronic devices or computers supplied by suppliers (or their
upstream players), our Directors are of the view t hat the potential impact and risks to our Group in
respect of any export/import restrictions and/or sanctions that may be imposed on our suppliers (or
their upstream players) will not be significant. In addition, our Directors confirm that during the
Track Record Period, there has not been any materia l disruption to our supplies sourced from any
of our suppliers by reason of any export or import restrictions or other sanctions imposed on any of
our suppliers, their upstream players or their produc ts. Furthermore, our Directors believe that, after
seeking the views of our PRC Legal Advisers, our purchase of supplies from our current suppliers
is not within the scope of any sanctions. Nevertheless, our Directors will continue to monitor and
observe the scope of the sanctions to be imposed on its suppliers, if any, from time to time.
Our Directors confirm that during the Track Record Period and up to the Latest Practicable
Date, our Group did not have any difficulty in procuring hardware and software from our suppliers.
As there are plenty of suppliers providing simila r goods that we require, our Directors consider that
the risk of shortage or delay in the supply of n ecessary goods is low and we are unlikely to
encounter any material difficulty in engaging a s ubstitute supplier on similar terms if need be.
Selection of suppliers
Our Group maintains a list of approved suppliers which is subject to periodic review and
update from time to time. We generally purchase t elecommunication and electronic equipment such
as portable data terminals and general hardwar e and software from our approved suppliers. To
become our approved supplier, a new supplier is required to fill in an application form and provide
certain requisite documents (suc h as its business certificate and licence for opening enterprise ’s
banking accounts) to us for our review and co nsideration. As at 30 June 2023, there were
approximately 119 suppliers for hardware and 2 3 suppliers for software on our list of approved
suppliers.
Our criteria for selection of suppliers mainl y include, the reputation and background of the
suppliers, product quality, pricing and supply capab ility. In general, we either purchase (i) general
hardware and software on an as-needed basis for the p rovision of services; or ( ii) specific hardware
and software according to the technical speci fication provided by our customers. In some
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circumstances and mainly for our ICT integration s ervices, our customers will specify the detailed
models, types or specifications of hardware to be us ed. If we confirm the suitability and quality of
such designated hardware for a particular pro ject, we will proceed to purchase the same from the
relevant suppliers. The contract price of a project generally includes the procurement cost of such
hardware.
We regularly pay attention to the market price of relevant hardware, software or equipment
which we typically purchase, and any fluctuations thereof. When there are fluctuations in prices of
hardware, software or equipment, these would gen erally be taken in account when we assess and/or
determine the contract price and budget for future projects, or when we evaluate whether a project
is worth undertaking in te rms of profitability.
Salient terms of our purchase orders for products
During the Track Record Period, to maintain f lexibility in supplier selection, we had not
entered into any long-term supply agreement with a ny of our major suppliers. We generally placed
purchase orders with our suppliers for procure ment. Our Group would issue a standard purchase
order or use an order form provided by our suppli ers. Our purchase orders generally contain the
following salient terms:
Product description Product code, quantity required and unit price of the
ordered products.
Payment and credit terms A lump sum payment or progress payments by bank transfer
or cheque within a credit period of generally up to 30 days.
Place of delivery Products are generally delivered to premises designated by
us (for hardware).
Delivery lead time Generally not more than seven days (for hardware).
Warranty Warranty period generally ranges from one to three years
(for hardware).
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Our five largest suppliers
Purchases from our five largest suppliers in each year/period during the Track Record Period
in aggregate amounted to approximately RMB 17.5 million, RMB11.4 million, RMB23.7 million
and RMB9.6 million, representing approximately 70.7%, 54.9%, 79.7% and 88.2% of our total
project supplies cost, respective ly, while purchases from our largest supplier in each year/period
during the Track Record Period amounted to appr oximately RMB5.4 million, RMB3.0 million,
RMB18.2 million and RMB5.2 million, represen ting approximately 21. 8%, 14.6%, 61.4% and
47.5% of our total project supplies cost. The followi ng tables set forth certain information relating
to our five largest suppliers in each year/period during the Track Record Period:
For FY2020
Supplier
Principal business activities
of the supplier
Major equipment provided
to our Group for the year
Credit
term (2)
Payment
method
Commencement
year of business
relationship
Total project
supplies cost
attributable to
the supplier
As a percentage
of our total
project supplies
cost (3)
days RMB ’000 %
(approximately) (approximately)
1 Supplier A (4) Distribution of ICT products,
mobile devices and
provision of ICT service
Server Nil Bank transfer/
cheque
2019 5,405 21.8
2 Shanghai
Cooltech
Sales of generator set
products, and distribution
of vehicle power products
Outdoor diesel generator set Nil Bank transfer 2020 4,531 18.3
3 Supplier B Sales of lighting and sound
equipment and electronic
products
Projection equipment and
Liquid crystal display
7 Bank transfer 2020 3,710 14.9
4 Supplier C Provision of ICT solution
and service
Hard drive, liquid crystal
display and server
30 Bank transfer 2020 2,175 8.8
5 Supplier D Provision of ICT service
and digital transformation
solution
Server Nil Bank transfer 2020 1,717 6.9
Total 17,538 70.7
Notes:
1. Figures may not add up due to rounding.
2. Credit term of each of the suppliers during the Track Record Period.
3. Project supplies costs include, without limitation, the c osts of procurement of hardware and software (such as
computers, mobile handsets, operating systems and servers) for projects.
4. In relation to the risk of our Group ’s potential reliance on Supplier A and other major suppliers to supply necessary
equipment, hardware and software for the provision of our services, please refer to the paragraphs headed ‘‘Risk
Factors — Risks relating to our business — We rely on our major suppliers to supply necessary equipment and
hardware for the provision of our services, and any shortag e of, or delay in, the supply may significantly impact on
our business and results of operation. ’’
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For FY2021
Supplier
Principal business activities
of the supplier
Major equipment provided
to our Group for the year
Credit
term (2)
Payment
method
Commencement
year of business
relationship
Total project
supplies cost
attributable to
the supplier
As a percentage
of our total
project supplies
cost (3)
days RMB ’000
(approximately)
%
(approximately)
1 Zhuhai Dongda Sales of telecommunication
and electronic equipment
Mobile phone Nil Bank transfer 2021 3,048 14.6
2 Zhuhai Hongyuan Sales of telecommunication
and electronic equipment
Signal test cards 5 Bank transfer 2016 2,823 13.5
3 Supplier E Provision of ICT integration
service and sales of
telecommunication and
electronic equipment
Server, switch, and security
software
Nil Bank transfer 2020 2,331 11.2
4 Supplier F Provision of ICT integration
service, software
development and
distribution of products
for ICT service
Storage server and
interface card
Nil Bank transfer 2020 2,183 10.5
5 Supplier G Sales of telecommunication
equipment and software
System hardware and
software
Nil Bank transfer 2021 1,062 5.1
Total 11,447 54.9
Notes:
1. Figures may not add up due to rounding.
2. Credit term of each of the suppliers during the Track Record Period.
3. Project supplies costs include, without limitation, the costs of procurement of hardware and software (such as computers,
mobile handsets, operating systems and servers) for projects.
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For FY2022
Supplier
Principal business activities
of the supplier
Major equipment provided
to our Group for the year
Credit
term (2)
Payment
method
Commencement
year of business
relationship
Total project
supplies cost
attributable to
the supplier
As a percentage
of our total
project supplies
cost (3)
days RMB ’000
(approximately)
%
(approximately)
1 Supplier A (4) Distribution of ICT products,
mobile devices and
provision of ICT service
Server, network equipment
and data storage
equipment
Nil Bank transfer 2019 18,219 61.4
2 Zhuhai Zhongao Computer software and
hardware development,
equipment installation and
repair, technical services
and engineering
Signal test cards 5 Bank transfer 2019 1,699 5.7
3 Shenzhen Vavitel Provision of
telecommunication
network related solution
with 4G and 5G base
station relocated
technology
Repeater system Nil Bank transfer 2021 1,549 5.2
4 Guangdong
Yuhui
Provision of
telecommunication
engineering design and
construction service and
ICT integration service
and sales of
telecommunication and
electronic equipment
Intelligent door lock and
outdoor protection box
30–180 Bank transfer 2019 1,101 3.7
5 Supplier H Telecommunication network
repair and maintenance,
system integration and
engineering, software
development and
environment related retail
and services
Chemical and water quality
online analyzer,
conductivity detector,
video surveillance camera
10 Bank transfer 2021 1,089 3.7
Total 23,657 79.7
Notes:
1. Figures may not add up due to rounding.
2. Credit term of each of the suppliers during the Track Record Period.
3. Project supplies costs include, without limitation, the costs of procurement of hardware and software (such as computers,
mobile handsets, operating systems and servers) for projects.
4. The increase in the Group ’s purchase from Supplier A from FY2021 to FY2022 was mainly attributable to a Major Project
in FY2022 in relation to the provision of ICT integration services which contributed revenue of approximately RMB15.6
million. We were required to procure a number of telecommunication equipment of a particular brand specified in the
project and Supplier A was a sales agent of the relevant e quipment at the tim e. In relation to the risk of our Group ’s
potential reliance on Supplier A and other major suppliers to supply necessary equipment, hardware and software for the
provision of our services, please refer to the paragraphs headed ‘‘Risk Factors — Risks relating to our business — We rely
on our major suppliers to supply necessary equipment and hardware for the provision of our services, and any shortage of,
or delay in, the supply may significantly impact on our business and results of operation. ’’
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For 6M2023
Supplier
Principal business activities
of the supplier
Major equipment provided
to our Group for the period
Credit
term (2)
Payment
method
Commencement
year of business
relationship
Total project
supplies cost
attributable to
the supplier
As a percentage
of our total
project supplies
cost (3)
days RMB ’000
(approximately)
%
(approximately)
1 Supplier A (4) Distribution of ICT products,
mobile devices and
provision of ICT service
Servers Nil Bank transfer 2019 5,175 47.5
2 Supplier I (5) Design, developing,
manufacture and sales of
mobile phones, personal
computers and tablets,
wearables, mobile
broadband terminals,
home terminals, terminal
clouds, and other
telecommunication
equipment
Desktop computers and
laptop computers
Nil Bank transfer 2023 2,075 19.1
3 Shenzhen
Zhiheng
Jinrui
Sales of communication
equipment and provision
of telecommunication
engineering services
Communication equipment 30 Bank transfer 2019 1,575 14.5
4 Zhuhai Zhongao Computer software and
hardware development,
equipment installation and
repair, technical services
and engineering
Signal test cards 5 Bank transfer 2019 509 4.7
5 Shenzhen Vavitel Provision of
telecommunication
network related solution
with 4G and 5G base
station relocated
technology
Repeater system Nil Bank transfer 2021 265 2.4
Total 9,598 88.2
Notes:
1. Figures may not add up due to rounding.
2. Credit term of each of the suppliers during the Track Record Period.
3. Project supplies costs include, without limitation, the c osts of procurement of hardware and software (such as
computers, mobile handsets, operating systems and servers) for projects.
4. In relation to the risk of our Group ’s potential reliance on Supplier A and other major suppliers to supply necessary
equipment, hardware and software for the provision of our services, please refer to the paragraphs headed ‘‘Risk
Factors — Risks relating to our business — We rely on our major suppliers to supply necessary equipment and
hardware for the provision of our services, and any shortag e of, or delay in, the supply may significantly impact on
our business and results of operation. ’’
5. Supplier I has been placed on a trade list by the U.S since 2019 which restricts most U.S. suppliers from shipping
goods and technology to it unless they are granted licences issued by the Federal Communications Commission of
the U.S. Supplier I is still subject to partial U.S. sanctions. During the Track Record Period, our Group had
purchased desktop and laptop computers directly from Supplier I as directed by a customer in an ICT integration
project. Our Directors take the view that the purchase o f desktop and laptop computers from Supplier I for use
within the PRC does not fall within the scope of the partial sanctions against Supplier I.
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The five largest suppliers of our Group varied for FY2020, FY2021, FY2022 and 6M2023,
which was mainly due to the fact that (i) the Group was obliged to select suppliers according to
particular projects ’ needs and customers ’ requirements, resulting in the selection of different
suppliers for different projects; and (ii) we devel oped and established business relationships with
more new suppliers to meet our increasing procurement demand in line with the business expansion
of our Group during the Track Record Period.
To the best knowledge of our Directors after maki ng all reasonable enquiries, as at the Latest
Practicable Date, all of our Group ’s five largest suppliers in each year/period during the Track
Record Period were Independent T hird Parties, and none of our Dir ectors, their respective close
associates or any Shareholders (who or which, t o the best knowledge of our Directors, owned more
than 5% of the issued share capital of our Compa ny as at the Latest Practicable Date) had any
interest in any of our five largest suppliers in each year/period during the Track Record Period.
Our Directors confirm that during the Track Record Period and up to the Latest Practicable
Date, (i) we had not relied on any single source of supply of equipment, hardware, software, or
services; (ii) we had not received any material com plaint from our customers on the quality of the
equipment, hardware, software and the services provided by our suppliers during the Track Record
Period; (iii) we had not experienced any mate rial disruption or dispute in supply that may
materially and adversely affect or delay our deli very of services or products to our customers; and
(iv) we had not experienced any material de lay in making payments to our suppliers.
OUR SUBCONTRACTORS
To free up our resources and capacity to focus on our strengths, such as devising solution
plans to tackle telecommunication network iss ues for our customers and to leverage skills and
specialities of our subcontractors that we do not have, we engage subcontractors located in the PRC
for carrying out (i) labour services for non-tech nical works such as installation of cabling and
associated devices in our ICT proj ects, wiring and installation of d ata collection devices; and (ii)
certain technical services such as supplying emer gency power supply to base stations and other
works which require specific technical skills and knowledge, such as electrical works for
telecommunication network infrast ructure engineering services.
During the Track Record Period, our subcontr acting charges amounted to approximately
RMB69.2 million, RMB86.6 million, RMB121.6 million and RMB63.2 million, respectively,
representing approximately 42.6%, 51.5%, 64.1% and 69.2% of our total operating expenses (being
the aggregate of our employee benefit expenses, subcontracting charges, material, supplies and
other project costs, depreciation and amortisatio n, net impairment losses of contract assets and trade
receivables and other operating expenses) in the corresponding years/period, respectively.
In particular, the services provided by our subcontractors, as is consistent with our business
lines, can generally be categorised into (i) wir eless telecommunication network enhancement
services, accounting for approximately 28.5%, 37.0%, 48.4% and 40.6%; (ii) telecommunication
network infrastructure maintenan ce and engineering services, accounting for approximately 39.7%,
33.8%, 24.5% and 20.6%; (iii) ICT integration s ervices, accounting for approximately 24.3%,
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25.5%, 13.8% and 26.8%; and (iv) software relate d services, accounting for approximately 7.5%,
3.8%, 8.6% and 10.7%, respectively, of our total subcontracting charges, during the Track Record
Period.
Our Directors confirm that during the Track Record Period and up to the Latest Practicable
Date, our Group did not have any difficulty in procuring services from our subcontractors.
Common services required fr om our subcontractors
Some examples of the services provided to us by our subcontractors during the Track Record
Period include (i) telecommunication network test ing and data collection services for our wireless
telecommunication network enhancement proje cts; (ii) equipment maintenance, repair and
replacement services for our telecommunication net work infrastructure maint enance projects; (iii)
cabling and installation of associated devices fo r our telecommunication n etwork infrastructure
engineering projects; and (iv) cabling and insta llation of data collection devices for our ICT
integration projects. The table below further sets out the common subcontracted services we
required for each of our business lines.
Business lines Common subcontracted services
Wireless telecommunication network enhancement services
— Routine
telecommunication
network enhancement
services
. Low-skilled routine maintenance and testing works related
to enhancement, such as on-site data and signal collection
and analysis, antenna and parameter adjustments
— Specific
telecommunication
network enhancement
services
. Low-skilled routine maintenance and testing works related
to enhancement, such as on-site data and signal collection
and analysis, antenna and parameter adjustments
Telecommunication network infrastruct ure maintenance and engineering services
— Telecommunication
network infrastructure
maintenance services
. Routine works or services out of our ambit of service, such
as routine inspection and emergency power supply
— Telecommunication
network infrastructure
engineering services
. Construction works to be conducted, such as cabling works,
pipeline works, antenna improvement works, works on base
station accessory equipment, a nd other common engineering
works
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Business lines Common subcontracted services
ICT integration services . Construction and relevant labour works involved in an ICT
integration project, such as t he physical setting up of server
rooms, cabling works for transmission system, setting up of
data collection equipment (e.g. cameras and sensors)
Telecommunication network-re lated software development
— Software development
services and sale of
software
. Trial run and/or functional t esting before delivery to
customers
. Generally no material subcontracting or outsourcing
arrangement
Rationale for and increasing use of our subcontracting arrangement
Along with our business expansion and in order to free up our resources to our solution-
focused operations, we had outsourced certain labour works, such as low-skilled routine
maintenance and testing works and occasionall y some specific technical works which are only
required on an ad hoc basis to our subcontractors. Given that our projects involve the provision of
services of various natures and are often scattered across different regions in the PRC, our Directors
consider that the subcontracting arrangement enabled us to lower our costs for labour and other
resources and concentrate our resources on sol ution design and implementation planning and
management. Meanwhile, it also allows us to undert ake projects in locations and regions where we
do not have significant operations and where the mass deployment of own employees and resources
will result in unjustified costs and delays arisi ng from, for instance, travel to and from project
location, accommodation and potent ial quarantine requirements and other control measures imposed
by the PRC government in certain cities or provinces to combat the spread of COVID-19.
We recorded a steady increase in our subcontract ing charges during the Track Record Period,
which was mainly attributable to the aforesaid shift in our Group ’s strategic focus towards the
adoption of subcontractors ’ services to save ongoing operating c osts and enhance our flexibility in
securing projects in different geographic locati ons. Although our revenue has grown at a lower rate
than the increase of our subcontracting charges , our Directors consider that the benefit of our
subcontracting arrangement consists not only in revenue growth but also in, to a larger extent, the
saving of operating and management costs by (i) reducing our salary expenses and other employee
benefit expenses that would otherwise be inc urred in connection with employment of staff; in
particular, employees the works of which are ei ther low-skilled or of a specific technical nature
(such as technicians qualified and specialised in the conducting for specific types of work, such as
working at heights at telecommunication towers or carrying out high voltage electric work) but
which is less frequently required and/or is required on an ad hoc on-demand basis, and hence does
not justify continuous employment; (ii) reducin g incidences of imbalance between the available
permanent labour force and the number of projects we have secured at the same location, and
p r o v i d i n ga d d e df l e x i b i l i t yi na l l o c a t i o no fo u rresources and manpower; particularly given that
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many of our services are provided on a project basi s and may be carried out in different geographic
locations; (iii) reducing our operating costs i n the regions where we have only a small number of
our projects on hand, including the costs incurred for deployment of employees from one region to
another region; and (iv) minimising management r esources and attention re quired in dealing with
matters relating to employment, such as hiring, employee training, app raisal and assessment,
resolution of disputes, compliance w ith relevant laws and regulations.
For instance, we have recorded a decrease in employee benefit expenses from approximately
RMB55.7 million for FY2020 to approximately R MB20.0 million for FY2022. While our revenue
grew year-on-year at a rate of approximately 4.0% and 11.4% in FY2021 and FY2022 (as compared
with FY2020 and FY2021) respectively, our major o perating costs (i.e. the aggregate of employee
benefit expenses, subcontracting charges, and ma terials, supplies and other project costs, which
amounted to approximately RMB156.7 million, RMB162.2 million and RMB179.9 million
respectively for FY2020, FY2021 and FY2022) increased at a lower rate of approximately 3.5%
and 10.9% in FY2021 and FY2022 (as compared with FY2020 and FY2021) respectively. Further,
without taking into account our Listing expenses, our net profit margin during the Track Record
Period remained relatively stable at the rate o f approximately 15.7%, 16.3%, 15.2% and 18.1%
respectively. In view of the above, our Directors c onsider that the increase in our subcontracting
charges during the Track Record Period did not have an adverse impact on our financial
performance.
In addition to cost saving, our Directors are of the view that subcontracting specific technical
works which are only required on an ad hoc on-demand basis from our customers and of which we
have no expertise would also reduce our risks and pot ential liabilities arising from the employment
of unsuitable personnel.
Although we had relied on subcontracting arrang ement during the Track Record Period, our
Directors consider that there is no undue reliance on our part considering that (i) we had not relied
on any single subcontractor for the provision o f subcontracted services during the Track Record
Period; (ii) we had not experienced any material disruption in obtaining subcontracted services
which may materially and adversely affect or dela y our delivery of services or products to our
customers during the Track Record Period; and (ii i) there are plenty of subcontractors providing
similar services in the market and thus the risk o f shortage or delay in the provision of necessary
services is low and we are unlikely to encounter any material difficulty in engaging a substitute
subcontractor on similar terms if needs arise.
Going forward, we expect to continue the subcontracting arrangement in the course of our
business in order to focus our resources on devisi ng solutions, project management and quality
assurance. As we expand our business scale in accordance with our expansion plan, our
subcontracting charges are also expected to incre ase in the future. Nevertheless, by reason of the
aforesaid benefits of our subcontracting arrangem ent, we expect that our net profit margin (without
taking into account any Listing expenses) will remain at a similar level as that during the Track
Record Period.
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Quality control
Notwithstanding the subcontracting arrangem ents, we maintain substantial control on the
quality and works performed by our subcontractors. In selecting our subcontractors, we mainly take
into account factors including (i) the necessary li cences to carry out the relevant services; (ii) their
industry reputation; (iii) the pricing of their services; and (iv) their performance in prior
engagements (if any). Furthermore, our project managers will closely supervise the services
provided by our subcontractors, perform quality ch eck and follow up on any issues or difficulties
encountered by the subcontractors. For details, please refer to the paragraphs headed ‘‘Quality
control — Quality control on our subcontracted services ’’in this section.
Our value to customers and risk of disintermediation in light of our subcontracting
arrangement
While we make effective use of subcontractors t o lower operating and management costs and
associated risks, our Directors believe we create s ignificant value for our customers by taking up
the role of project management and we are unlikely to be disintermediated despite our
subcontracting arrangement, having considered the following factors:
(i) We are in charge of the design of solutions and execution plans
As a solution-focused service provider, a significant part of our value consists in our
ability to design solutions and execution plans f or customers that can fulfill their specific
requirements. For instance, (i) we devis e implementing strategies for wireless
telecommunication network enha ncement and infrastructure maintenance solutions in respect
of, for instance, locations, frequency and extent of enhancement and maintenance, deployment
and allocation of labour (including various types of subcontractors), budget planning, etc.; (ii)
we provide ICT integration solutions which involve the customisation in the design of a
communication network layout, choosing or as sessing the choice of equipment required,
developing customised software to be used in the layout, etc. Meanwhile, our subcontractors,
usually providing labour-intensive services, only execute our plans by performing services on
their parts in accordance with our instructions.
(ii) We serve to ensure the quality and conformity to contractual specifications of the our
subcontractors ’ work
We maintain substantial control on the quality and works performed by our
subcontractors. Selection of subcontractors cons titutes the first stage of our quality control.
We deliver our value to customers by shortl isting, assessing and selecting quality
subcontractors based on their credentials, tech nical capabilities, experience, past records of
service quality, availability of labour resources, reputation and safety compliance.
In addition, through undertaking a project managerial and supervisory role, we oversee
and supervise the works performed by our subcontractors in order to facilitate the completion
of the projects up to standards, on time and within budget. In particular, we focus on (i) the
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supervision of the works carried out by our subc ontractors to ensure their conformity to the
contractual standards and speci fications required by our customers; (ii) the overall planning
and management of work schedules and logistic arrangements in relation to site workers,
hardware, software and other resources required at work sites with a view to ensuring smooth
and timely project completion; and (iii) inspec tion of works completed by our subcontractors
in respect of work quality, occupational safety and environmental protection as well as the
requirements of our customers.
Without our close management and supervision, end customers may encounter substantial
difficulty in managing project standards and sche dule, especially in large-scale projects which
involve a large number of subcontractors.
(iii) Our subcontractors may not h ave sufficient financial resources for the payment of
initial project costs
We typically incur a substantial amount of costs in advance (including, without
limitation, costs of hardware and software an d other equipment and subcontracting charges
which may be incurred/expensed immediatel y, or prepaid in advance) for the purpose of
carrying out work or performing services for our customers before we are entitled to charge
for the work done or services performed. The av erage percentage of initial project costs
(excluding staff cost) to awarded contract value for our ICT integration projects which
required initial project costs was approximat ely 58.9%, 55.7%, 70.6% and 64.0% for FY2020,
FY2021, FY2022 and 6M2023, respectively. The service providers have to maintain sufficient
reserve for the execution and ongoing operations of the projects. Our subcontractors may not
have sufficient financial resources to fund the initial project costs.
(iv) We maintain long-term relationship with our major customers and understand our
customers ’ needs
Over the years, we have developed a wealth of knowledge, experience and understanding
on our customers ’ needs which may not readily be replicated by our subcontractors. As at 30
June 2023, the length of our business relationshi p with our five largest customers for each of
FY2020, FY2021, FY2022 and 6M2023 ranged from approximately two to 16 years and
particularly, we have commenced business with our largest customer (i.e. Customer A) for
each of FY2020, FY2021, FY2022 and 6M2023 s ince 2007. Although w e have not entered
into any long-term agreement with our custom ers and we are generally required to undergo
tender or quotation process to obtain new proj ects, our Directors are of the view that we are
unlikely to be disintermediated by our custome rs by reason of the following strengths that we
have accumulated in the long-term business coope ration with them: (i) our track record and
experience in the provision of services including our dedication to understanding our
customers ’ needs and demands, and our ability to respon d to their requests; (ii) our delivery of
satisfactory services to them; and (iii) the mit igation of their concerns of uncertainties and
additional time that would be incurred in selecting and engaging subcontractors directly.
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In light of the above, our Directors consi der that notwithstanding our continuing
subcontracting arrangement, we are able to mini mise our risk of disintermediation and our
customers will continue to award projects to us ins tead of directly dealing with our subcontractors.
Salient terms of our subcontracting agreements
Depending on the nature of the services sought, we may enter into a project-based service
agreement or a framework agreement or alterna tively place individual orders with our major
subcontractors for provision of sub-contract ed technical services and labour services. Our
agreements with subcontractors generally contain the following salient terms:
Contract price The contract sum of our agreements is mainly a lump sum
fixed price inclusive of the subcontractors ’ fees and the cost
for procurement of relevant hardware, software and
equipment.
Service to be rendered General introduction of the project and services to be
rendered are set out in the agreements.
Duration of projects Both the expected commencement dates and completion
dates of a project are generally set out.
Payment and credit terms A lump sum payment or progress payments by bank transfer
or cheque within a credit period of generally up to 30 days.
Means of assessment Assessment is conducted in accordance with the standards
specified by our customers under the relevant project, and
generally an assessment report o r certificate would be issued
by our customers.
Warranty Warranty period generally ranges from one to three years,
which shall be consistent with the warranty period we
provide to our customers under the relevant project.
Completion Services are generally regarded as completed when the
assessment by customers is passed, balance of contract price
is released and warranty ends.
Termination clause Generally an agreement may be terminated by our Group if
the subcontractor fails to deliv er services within the agreed
time which will or may cause our Group to be penalised by
our customer; an agreement may also be terminated by our
Group or the subcontractor if the other party materially
breaches the agreement and fails to rectify within 30 days
after receiving the written notice from the non-defaulting
party.
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Our five largest subcontractors
Subcontracting charges paid to our five largest subcontractors in each year/period during the
Track Record Period in aggregate accounted for a pproximately 57.2%, 54.5%, 56.5% and 61.2%,
respectively, of our total subcontracting charges , while subcontracting charges paid to our largest
subcontractor in each year/period during the Tr ack Record Period accounted for approximately
21.5%, 21.9%, 19.9% and 22.6%, respectively, of our total subcontracting charges. These
subcontracting charges generally covered both the service fees of the subcontractors, the hardware,
software, electronic components and equipment procured by the s ubcontractors and their labour
costs. The following tables set forth certain information relating to our major subcontractors during
the Track Record Period:
For FY2020
Subcontractor Principal business activities
Major services provided
to our Group for the year
Credit
term (2)
Payment
method
Commencement
year of business
relationship
Total
subcontracting
charges paid
to the
subcontractor
As a percentage
of our total
subcontracting
charges
days RMB ’000 %
(approximately) (approximately)
1 Subcontractor A Provision of human resource
management service, business
process outsourcing service
and labour dispatch service
Wireless telecommunication
network enhancement
service
10–15 Bank transfer 2019 14,857 21.5
2 Subcontractor B
(3) Provision of ICT integration
service
ICT integration service 15 –22 Bank transfer 2019 13,317 19.2
3 Guangdong Yizhong Provision of telecommunication
engineering, network
engineering and network
enhancement services
Wireless telecommunication
network enhancement
service
5 Bank transfer 2020 3,939 5.7
4 Zhuhai Nade Provision of telecommunication
network infrastructure design
and engineering services
Telecommunication network
infrastructure
engineering service
22 Bank transfer 2018 3,793 5.5
5 Subcontractor C Provision of telecommunication
lines and equipment
installation service
Wireless telecommunication
network enhancement
service
22–60 Bank transfer 2020 3,697 5.3
Total 39,603 57.2
Notes:
1. Figures may not add up due to rounding.
2. Credit term of each of the subcontractors during the Track Record Period.
3. Subcontractor B is also Customer A.
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For FY2021
Subcontractor Principal business activities
Major services provided to
our Group for the year
Credit
term (2)
Payment
method
Commencement
year of business
relationship
Total
subcontracting
charges paid
to the
subcontractor
As a percentage
of our total
subcontracting
charges
days RMB ’000
(approximately)
%
(approximately)
1 Subcontractor A Provision of human resource
management service,
business process
outsourcing service and
labour dispatch service
Wireless telecommunication
network enhancement
service
10–15 Bank transfer 2019 18,991 21.9
2 Subcontractor B
(3) Provision of ICT integration
service
ICT integration service 15 –22 Bank transfer 2019 8,899 10.3
3 Subcontractor D Provision of human resource
management service and
software outsourcing
service
Wireless telecommunication
network enhancement
service
Nil Bank transfer 2020 6,845 7.9
4 Zhuhai Nade Provision of
telecommunication
network infrastructure
design and engineering
services
Telecommunication network
infrastructure engineering
service
22 Bank transfer 2018 6,444 7.4
5 Guangzhou Luyue Provision of ICT integration
service
ICT integration service 22 Bank transfer 2021 6,059 7.0
Total 47,238 54.5
Notes:
1. Figures may not add up due to rounding
2. Credit term of each of the subcontractors during the Track Record Period.
3. Subcontractor B is also Customer A.
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For FY2022
Subcontractor Principal business activities
Major services provided to
our Group for the year
Credit
term (2)
Payment
method
Commencement
year of business
relationship
Total
subcontracting
charges paid
to the
subcontractor
As a percentage
of our total
subcontracting
charges
days RMB ’000
(approximately)
%
(approximately)
1 Subcontractor D Provision of human resource
management service and
software outsourcing
service
Wireless telecommunication
network enhancement
service
Nil Bank transfer 2020 24,181 19.9
2 Subcontractor A Provision of human resource
management service,
business process
outsourcing service and
labour dispatch service
Wireless telecommunication
network enhancement
service
15 Bank transfer 2019 23,839 19.6
3 Zhuhai Nade Provision of
telecommunication
network infrastructure
design and engineering
services
Wireless telecommunication
network enhancement
service
22 Bank transfer 2018 8,270 6.8
4 Subcontractor E Design, planning,
construction and
operation of smart
industrial parks
Telecommunication network-
related software
development service
15 Bank transfer 2020 6,566 5.4
5 Subcontractor F
(3) Provision of
telecommunication service
and sales of handsets,
ICT equipment and other
smart devices
Wireless telecommunication
network enhancement
service and research and
development service
20 Bank transfer 2009 5,886 4.8
Total 68,742 56.5
Notes:
1. Figures may not add up due to rounding.
2. Credit term of each of the subcontractors during the Track Record Period.
3. Subcontractor F is also Customer D.
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For 6M2023
Subcontractor Principal business activities
Major services provided to
our Group for the period
Credit
term (2)
Payment
method
Commencement
year of business
relationship
Total
subcontracting
charges paid
to the
subcontractor
As a percentage
of our total
subcontracting
charges
days RMB ’000
(approximately)
%
(approximately)
1 Subcontractor D Provision of human resource
management service and
software outsourcing
service
Wireless telecommunication
network enhancement
service
Nil Bank transfer 2020 14,293 22.6
2 Subcontractor A Provision of human resource
management service,
business process
outsourcing service and
labour dispatch service
Wireless telecommunication
network enhancement
service
15 Bank transfer 2019 9,094 14.4
3 Zhuhai Pengyuan Provision of building
intelligent system design
service and software
development
ICT integration service 10 Bank transfer 2023 7,622 12.1
4 Subcontractor H Provision of professional
management consulting
services and information
technology solutions for
enterprises
Software development service 7 Bank transfer 2023 4,073 6.4
5 Zhuhai Nade Provision of
telecommunication
network infrastructure
design and engineering
services
Wireless telecommunication
network enhancement
service
22 Bank transfer 2018 3,602 5.7
Total 38,684 61.2
Notes:
1. Figures may not add up due to rounding.
2. Credit term of each of the subcontractors during the Track Record Period.
To the best knowledge of our Directors after maki ng all reasonable enquiries, as at the Latest
Practicable Date, all of our Group ’s major subcontractors during the Track Record Period were
Independent Third Parties, and none of our Direct ors, their respective close associates or any
Shareholders (who or which, to the best knowledge of our Directors, owned more than 5% of the
issued share capital of our Company as at the Late st Practicable Date) had any interest in any of
our major subcontractors during the Track Record Period.
IMPACT OF THE COVID-19 OUTBREAK ON OUR BUSINESS
The outbreak of COVID-19 was first reported in late 2019 and has spread within the PRC and
globally. In January 2020, the PRC government announced a series of interim measures including
restricting travel, suspending or limiting busi ness operations and lockdown of certain cities and
regions to combat the spread of the pandemic. With the effective COVID-19 control measures in
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the PRC, the business operations of our Group gradually returned to normal from the second
quarter of 2020. Our Directors confirm that, during the Track Record Period and up to the Latest
Practicable Date, the COVID-19 outbreak includi ng the recent emergence of Omicron variant did
not have any material adverse impact on our business and results of operations.
Our business operations
Our Group was subject to the PRC government ’s requirement to extend the final day of the
Chinese New Year Holidays from 30 January 2020 until 9 February 2020 (the ‘‘Extension of
Chinese New Year Holidays ’’) and had temporarily suspended our operations during the period.
We resumed operations gradually starting from 10 February 2020. Further, according to the
Guidelines on the Prevention and Control of COVID-19 for migrant workers returning to
Guangdong* ( 外來務工人員返粵新型冠狀病毒感染的肺炎預防控制指引) issued by the Health
Commission of Guangdong Province ( 廣東省衛生健康委員會), our migrant staff, who returned
from places where COVID-19 pandemic occurred, were subject to the arrangement of home
quarantine for 14 days. Nevertheless, our Directors confirm that the above measures had no
material adverse impact on our project schedule because (i) according to the CIC Report, the period
around the Chinese New Year Holidays is a relativ e low season for telecommunication network
support service industry and ICT integration service industry; and (ii) we had reduced the number
of employees and, in substitute of which, increased t he use of external subcontractors in the vicinity
of our projects for provision of technical and labour services. This could avoid possible delays and
inconvenience that may be caused by quarantine r equirements, and has effectively enhanced our
Group ’s ability to mobilise workforces (including ou r own employees and subcontractors) whilst
mitigating adverse impact that may be brought on our Group by the pandemic. According to the
CIC Report, government in China has implemente d systematic prevention measures to combat the
spread of COVID-19, including restrictions of crowd gathering and health QR code system, and
such measures are widely applied nationwide and have proven effective in pandemic control and
therefore, the COVID-19 pandemic in China is generally under control. In 2022, there were further
waves of recurrence of COVID-19 cases in certain cities across China, attributed to the Delta and
Omicron variants, which lead to the imposition of certain travel restrictions and other limitations in
various places across China (the ‘‘2022 PRC Outbreak ’’). Our Directors consider that the 2022
PRC Outbreak had not resulted in material adverse impact on our business and financial
performance up to the Latest Practicable Date because: (i) the 2022 PRC Outbreak has been largely
contained since December 2022; (ii) the progress of our projects engaged by our customers had not
been materially and adversely affected as most of our services were not delivered in the provinces
or cities where the lockdown restrictions we re imposed; (iii) our Group had not received any
request from our customers to terminate our services up to the Latest Practicable Date; (iv) up to
the Latest Practicable Date, there had been no ma terial impact on the provision of supplies or
services by our suppliers and subcontractors to us as a result of the 2022 PRC Outbreak and none
of our suppliers and subcontractors had informed us of any material impact on their operations; and
(v) up to the Latest Practicable Date, the Guangdong Province, where our headquarter is located,
had not been imposed on long-time or stringent lock-downs despite the 2022 PRC Outbreak. Our
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Directors confirm that as at the Latest Practicab le Date, our Group had resumed our businesses in
full operation and all our workforce had retu rned to work as the COVID-19 pandemic has been
effectively controlled in the PRC.
Our customers
During the Track Record Period, all our custom ers were located in the PRC. During the Track
Record Period and up to the Latest Practicable Date, we have not received any request from our
customers to cancel their orders or to terminate our services due to the outbreak of COVID-19 or its
variants. Our Directors confi rm that during the Track Record Period and up to the Latest
Practicable Date, there was no material delay in di scharging our obligations under any projects or
orders from our customers due to the COVID-19 ou tbreak and we had not been subject to any late
charges or penalties imposed on us by our customers due to any delay caused by the COVID-19
outbreak. Furthermore, the outbreak of COVID-19 and its variants did not have any material
adverse impact on our billing progress or collect ion of trade and bills receivables from customers.
As at the Latest Practicable Date, approximatel y 48.0% of our contract assets as at 30 June 2023
had been billed and reclassified to trade receivabl es and approximately 61.7% of our trade and bills
receivables as at 30 June 2023 had been subsequently settled.
Our procurement from suppliers or subcontractors
As our suppliers and subcontractors are predomin antly located in the PRC, they were therefore
subject to the Extension of Chinese New Year Holi days and other quarantine measures imposed by
their local governments, and had temporarily suspended their services from 30 January 2020 until
10 February 2020. To the best knowledge and belief of our Directors, the operations of our major
suppliers and subcontractors in relation to their pr ovision of supplies or services to us had not been
materially affected during the T rack Record Period and up to the Latest Practicable Date. Apart
from the said short-term disruption, we had not enc ountered any material disruption in procuring
products or services from our suppliers or subcont ractors which had a material adverse impact on
our business.
Our financial position
Even in the worst-case scenario where our business has to be suspended due to the prolonged
outbreak of COVID-19 or its variants, our Directors estimate that we will be financially viable for
not less than 12 months, taking into account (i) our cash and cash equivalents as at 30 June 2023;
(ii) the estimated net proceeds from the Share Offer expected to be used for working capital
purpose; and (iii) our prudent estimates of the set tlement of trade receivables and trade payables,
based on the historical settlement pattern; an d based on the key assumptions that: (i) we will
complete the projects in respect of which we had already received an order from, or entered into a
service agreement with, our customers on or before 30 June 2023 and the relevant customers will
settle the payments under the projects accordingl y; (ii) save for the payments from customers under
item (i), we will not generate revenue due to any sus pension of businesses; (iii) we will not incur
purchase cost due to any suspension of businesses; (iv) we will incur fixed costs including staff
costs and operating lease rentals to maintain our operations at a minimal level; (v) our outstanding
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bank borrowings as at 30 June 2023 is repaid and pledged bank deposits are released upon
repayment; (vi) the outstanding trade payables, ot her payables, accruals and contract liabilities as at
30 June 2023 are settled when they are due; and (vii) there will not be any internal or external
financing from banks or Controlling Shareholders. Our Directors believe that the impact of the
COVID-19 outbreak on our financial results would be short term and the above analysis under the
worst-case scenario is for illustrative purpose only.
As we mainly engage in providing telecomm unication network support services, ICT
integration services and telecommunication networ k-related software development to our customers,
particularly those in the telecommunication in dustry, our Directors believe the COVID-19 outbreak
will not have a long-term impact on our customers or their demand for our services. According to
the CIC Report, the outbreak of COVID-19 and its va riants had no material adverse effect on the
construction of 5G network in the PRC. In alignment with the rapid 5G development in the PRC,
our revenue for FY2022 increased by 15.8% compared to FY2020. Based on the aforementioned
factors including (i) the absence of material adverse impact on our business operations subsequent
to the Extension of Chinese New Year Holidays; (ii) the absence of any material delay due to the
COVID-19 outbreak in our project delivery sch edule subsequent to 31 January 2020; (iii) the
absence of material difficulties in collecting tra de and bills receivables from our customers; (iv) the
absence of material disruption in procuring services and products from our suppliers and
subcontractors; and (v) the worst-case scenario an alysis as demonstrated above, our Directors are
of the view that the outbreak of COVID-19 and its variants did not and are not expected to have
any material adverse impact on our bu siness and results of operations.
SALES AND MARKETING
Our Directors believe that our continuous efforts t om a i n t a i nh i g hq u a l i t yservices, competitive
prices and timely delivery are the key to ou r strong relationship with our customers.
As at 30 June 2023, we had a sales and marketing team of approximately 10 personnel who
were responsible for processing service orders, overseeing our project progress as well as arranging
customer visits and communications with custom ers. During the Track Record Period, our staff
costs for our sales and marketing team and other related expenses incurred amounted to
approximately RMB2.2 million, RMB2.9 million, RMB2.7 million and RMB1.3 million,
respectively.
Our regional managers and regional business depa rtments are responsible for handling external
liaisons with customers in different regions and the ir duties mainly involve (i) attending to query or
request from existing or potential new customers in relation to potential business opportunities (for
business secured through non-tender methods) ; (ii) exploring the market to identify and
communicate with potential new customers and a rranging for visit and presentation in order to
promote our services and software (for business secured through non-tender methods); (iii)
regularly paying attention to available open tende rs posted online or otherwise advertised in order
to identify new business opportunities (for business secured through open tenders); and (iv)
communicating with our existing customers to coll ect and understand their feedback on the quality,
preferences, improvements, service or product de mands. They will then report potential business
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opportunities identified to our sales and marketin g department which will then, with the assistance
of our regional managers, prepare a quotation or tender with the proposed solution, quotations and
bidding documents.
INVENTORY CONTROL
Our Group generally places orders for necessa ry hardware, equipment and software with our
suppliers on a project-by-project basis upon signing of service agreements with our customers or
confirming their purchase orders. Our Group did not maintain inventory or stock of supplies during
the Track Record Period.
QUALITY CONTROL
Our Directors consider service and product quality to be critical to the success of our Group ’s
business. We have a quality control team respon sible for overseeing the quality control of our
services, our software and hardware and services procured from our suppliers and subcontractors.
As at 30 June 2023, our quality control team (headed by Mr. Jia, chairman and chief executive
officer of the Company) consisted of 31 employees.
We devote significant efforts and emphasis to our quality control system, which complies with
ISO 9001: 2015 and requires that our services be implemented through procedures and processes
which allow our Group to monitor performance and control output quality.
During the Track Record Period and up to the Latest Practicable date, we had not encountered
any material issues or disputes concerning the safeness or quality of our products and services.
Quality control on hardware procured from our suppliers
During the Track Record Period, our principal hardware procurement included equipment and
devices used for our wireless telecommunication n etwork enhancement servi ces, telecommunication
network infrastructure maintenance and engineer ing services and ICT integration services, such as
portable data terminals and signal acquisition de vices. We generally first seek quotations from not
less than two suppliers on our list of approved suppliers and compare their terms and offers. Before
engaging any suppliers or placing orders with them for the first time, we will obtain and examine
their business licence(s), requisi te certifications and credit infor mation and assess their background
to our satisfaction. Furthermore, the hardware and equipment procured will be directly delivered to
project site and subject to inspect ion by our on-site execution team to ensure their conformity with
the agreed specifications set out in the purchase o rders or service agreemen ts. For instance, our on-
site execution team will check if there is any damage to the physical packaging of the products
received. We will also check and ensure that all hardware come with proper warranty and/or a
back-to-back return policy arrangement such that any products that are defective or do not comply
with stated product specificati ons within the warranty period will be replaced by the suppliers.
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Quality control on our services
We primarily control service quality through standardising our service procedures and
specifications, strict compliance with project acc eptance guidance as well as carefully selecting
suppliers. Please refer to the paragraphs headed ‘‘Our business model — Quality control and
performance review ’’above in this section for details of our own quality control tests. We will also
use our own developed software Wangyou Renw oxing Wireless Network Testing and Analysis
System to carry out on-site test and data col lection for performing enhancement work.
Quality control on our software
Our quality control procedures for software development involve continuous testing,
adjustment and improvement made in the course of the development process. For details about the
development of our software, please refer to the paragraphs headed ‘‘Our business model —
Research and development ’’above in this section. Upon installation of our software on a customer ’s
system, our execution team will generally perform an integration test to ensure compatibility of our
software with the customers ’ infrastructure and/or the quality of connectivity. We seek customer
feedback during the testing stage of our software and while we perform after-sale maintenance and
upgrading services. Based on the customer feedb ack, we re-evaluate and improve our software
design and quality control standards, in or der to ensure customer satisfaction.
Quality control on our subcontracted services
Our Group maintains a list of approved subcon tractors which is subject to our review and
update from time to time and we generally select subcontractors from our approved list. If we find
it necessary to engage a new subcontractor which is not in our approved list, the new subcontractor
is required to fill in an application form and pr ovide certain requisite documents (such as its
business certificate and licences) to us for our review and approval. Our subcontractors for
technical services and labour services are req uired to carry out services that meet relevant
governmental and industrial standards in the PRC and/or such other quality standards as agreed
between our Group and our customers. The servic es provided by our subcontractors, together with
those provided by us on our own, are subject to our customers ’ acceptance assessments. Our
subcontractors for services are responsible for r ectifying any quality defects as identified by our
customers arising from the services they are pr ovided with. Our project manager for each project
will also oversee and coordinate the project pr ocess including the services provided by our
subcontractors.
RESEARCH AND DEVELOPMENT
We believe one of our main strengths is our resea rch and development cap ability. In order to
keep up with fast-changing market demand in a lignment with the mature application of 4G
technology, the gradual application of 5G t echnology and the study of 6G in the PRC, and
diversified customers ’ needs for ICT integration services and telecommunication network-related
software development, we place emphasis on our in -house research and development capabilities.
We adopt a research and development team with collaborations of multiple departments of the
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Company, which is led by Mr. Xian Zhigang, who has about 12 years of experience in research and
development in software design and system architecture, to ensure that our research and
development results are consistent with the mar ket demands and industry developments. As at 30
June 2023, our research and development operation consisted of 69 technical and support personnel
such as engineers and technicians. Most of our engineers hold a bachelor ’s degree or have received
tertiary education in the field of computer netwo rk technology, computer science, communication
engineering and technology, etc. Our 69 techni cal and support personnel in our research and
development team are fully dedicated to our in-h ouse research and development initiatives for
developing solutions and software for our own use in providing various kind s of telecommunication
network support services and ICT integration se rvices and for sale to customers (under software
sale, software development services and for ICT integration project). Owing to the nature of our
services, some personnel in our research and dev elopment team may be required to, on an ad hoc
and as-needed basis, attend to the needs of our cu stomers and conduct testing or reviewing of the
practical implementation and functionalities of our newly developed solutions and software or
customized solutions and software. Any data and research findings by our research and
development team are useful in enhancing the level of applicability of our solutions and software
in different industries and strengthening our res earch and development capabilities in the long run.
Our Group has over 19 years of experience in research and development in the field of
wireless telecommunication n etwork since the establishment of our in-house research and
development operation in 2003. The main research focus of our Group includes (i) application of
5G and IoT; (ii) wireless telecommunication; and (ii i) big data and signal and d ata analysis, details
of which are set out in the table below:
Area of research focus
Examples of research and
development Research timeline Software developed
(1) Research and development on
the application of 5G and
IoT
(Note 1) ,s u c ha st h e
development of related
software and platforms, the
results of which can mainly be
utilised in our ICT integration
services.
. a mobile traffic violation
snapshot system capable of
automatically identifying
incidences of traffic
violations, taking
photographs as evidence
and uploading the same
online;
(i) Project feasibility study and project
establishment: December 2017
(ii) Commencement of development:
January 2018
(iii) Software testing: November 2018
(iv) Completion: December 2018
. Software copyright: Mobile
Traffic Violation Snapshot
System V1.0* ( 可移動式交
通違法抓拍系統V1.0)
. research on integrating the
technology of wireless
network data analysis and
transmission into the law
enforcement system to
enable the real-time upload
of terminal location and
audio and video taken
during law enforcement,
and transmission of distress
signal.
(i) Project feasibility study and project
establishment: December 2017
(ii) Commencement of development:
January 2018
(iii) Software testing: July 2018
(iv) Completion: December 2018
. Software copyright: Mobile
Network Data Analysis and
Transmission System V1.0*
(移動網絡數據分析和傳輸
系統V1.0)
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Area of research focus
Examples of research and
development Research timeline Software developed
(2) Research and development on
wireless communication, such
as the development of wireless
testing software and
applications, the results of
which can be utilised in our
wireless telecommunication
network enhancement services
and telecommunication network
infrastructure maintenance
services.
. a mobile wireless network
testing application which
replaces the traditional
signal testing devices
which are more bulky;
(i) Project feasibility study and project
establishment: January 2018
(ii) Commencement of development:
January 2018
(iii) Software testing: November 2018
(iv) Completion: December 2018
. Software copyright:
Handheld Portable 5G
Wireless Network Quality
Testing and Analysis
System V1.0* ( 手持便攜式
5G無線網絡 質 量測試及分
析系統V1.0)
. an integrated
telecommunication network
management system which
can monitor and manage
small and micro base
stations and affiliated
equipment and monitor and
analyse the operation
condition of
telecommunication network
and equipment in a
centralised manner.
(i) Project feasibility study and project
establishment: February to March 2019
(ii) Commencement of development:
March 2019
(iii) Software testing: October 2019
(iv) Completion: December 2019
. Software copyright: LTE
Integrated Micro Base
Station Network
Management System V1.0*
(LTE 一體化小微基站綜合
網管系統V1.0)
(3) Research and development on
big data and signal and data
analysis.
. a telecommunication
network maintenance and
operation support system
which can analyse the base
station coverage, regional
telecommunication network
quality and other
information based on the
massive data uploaded on
the telecommunication
network, and display the
information geographically
on a map.
(i) Project feasibility study and project
establishment: December 2018
(ii) Commencement of development:
January 2019
(iii) Software testing: August 2020
(iv) Completion: August 2020
. Software copyright:
Maintenance and Operation
Support System based on
Wireless Internet Data
V1.0* ( 基
於移動互聯網數
據的維護和運營支撐系統
V1.0)
Note:
1. Physical objects connected to a communication netwo rk so as to allow them to transmit and receive data
through sensors, software, etc., often to enable remote access, control and management.
As at the Latest Practicable Date, attributable t o the research, design and development efforts
of our Group, we have obtained 73 software copyrights, two invention patents in the PRC. For
further details, please refer to the paragraphs headed ‘‘Intellectual property ’’in this section.
Our expenditure relating to research and development mainly comprises salary of our research
and development staff and materi als, and hardware and software used in research and development
activities. The research and development expenditu re incurred in the research stage is recognised as
expense, and among other things , when our research and development activities come to a stage
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where they become more feasible and our Direct ors believe they are able to bring us certain
economic benefits, the expense wil l be capitalised. Based on the above, our expenditure on research
and development was recognised as expense during the Track Record Period.
During the Track Record Period, our resear ch and development expenses amounted to
approximately RMB16.3 million, RMB10.8 mil lion, RMB16.6 million and RMB5.4 million,
respectively. The decrease in our Group ’s research and development expenses in FY2021 compared
with FY2020 was mainly attributable to the facts that (i) an R&D project in relation to 5G and IoT
application testing and analysis system (i.e. our software 5G Wireless Network Testing and
Analysis System V1.0* (5G 無線網絡測試分析系統V1.0)), which commenced in 2018, was
c o m p l e t e di nF Y 2 0 2 0( e x p e n s e sr e l a t i n gt ow h i c ha m o u n t e dt oa p p r o x i m a t e l yR M B 4 . 4m i l l i o nf o r
FY2020); (ii) certain amount of expenditures i n FY2021 arising from performing groundwork
testing involving data acquisition for R&D purp oses was recognised, after audit, as the cost
incurred under several projects which had also u tilised the data collected, rather than as R&D
expenses; and (iii) approximately RMB1.6 mi llion of R&D expenses was capitalised in FY2021,
while the amount of such capitalisation in FY2020 was approximately RMB501,000.
According to the CIC Report, China will acceler ate the construction of telecommunication
network industry and encourage the commercial use of 5G internet. Along with the construction of
5G base stations and related facilities and the growing demand from downstream markets, the
market size of telecommunication network enhancement service, the telecommunication network
infrastructure maintenance and engineering service and third-party ICT integ ration service industry,
respectively, is expected to further increase to R MB15.5 billion, RMB598. 7 billion and RMB254.0
billion in 2027, representing a CAGR of 4.9%, 8 .3% and 8.5% over the period from 2022 to 2027,
respectively. On the other hand, the market partic ipants in the telecommunication network service
industry will have to upgrade their knowledge, tech nology and software to adapt to the transition of
telecommunication network technology from 4G to 5 G. Our Directors believe that with our research
and development capabilities and experiences, th e Group is not only able to continue to provide our
customers with high quality services, but also to explore various plausible solutions through 5G to
better serve our customers ’ needs.
INSURANCE
Our Group maintains social security insurance for our employees and personal accident and
injury insurance for the employees who engage in dangerous works (such as working at height on
telecommunication towers). We also maintain ins urance for motor vehicles, to cover third-party
losses or liabilities as well as impairment on m otor vehicles in case of m otor accidents. We have
not purchased any insurance in connection with c laims concerning our services. Our Directors
confirm that our Group ’s insurance coverage is adequate for our operations and is in line with
industry practice.
During the Track Record Period, our total insu rance expenses amounted to approximately
RMB37,000, RMB117,000, RMB150,000 and RMB36,0 00, respectively. During the Track Record
Period and up to the Latest Practicable Date, our Directors confirm that we had not made, or been
the subject of, any material insurance claim or product liability claims.
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MARKET AND COMPETITION
There are various entry barriers for new market players to enter the telecommunication
network service industry in the PRC. According to t he CIC Report, these include the need to obtain
specific licenses and qualifications, the require ments for technology and research and development
capabilities, the need to establish a stable and lar ge-scale professional ser vice team with technical
experience and the need to keep good relationship with downstream customers.
Please refer to the section headed ‘‘Industry Overview ’’ in this prospectus for further
information on the competitive landscape of the te lecommunication network service industry in the
PRC.
SEASONALITY
Our Directors believe that the industry in which we operate does not exhibit any significant
seasonality. As such, our business i s not tied to any seasonal factors.
EMPLOYEES
As at 30 June 2023, we had a total of 145 full-time employees based in the PRC a breakdown
by function of which is set out below:
Functions
Number of
employees
Directors and senior management 6
Administration 9
Accounting and finance 7
Research and development (Note) 69
Technical services (Note) 13
Quality control 31
Sales and marketing 10
Note: The 69 technical and support personnel in our resear ch and development team are mainly entrusted with
developing solutions and software for our own use in pr oviding various kinds of telecommunication network
support services and ICT integration services and fo r sale to customers. Though they may be required to, on
an ad hoc and as-needed basis, attend to the needs of our customers by testing or reviewing of the practical
implementation and functionalities of our newly devel oped solutions and software or customized solutions
and software which cater for the specific needs of indi vidual customers, their works are therefore research
oriented with a view to gathering data and information on the practical implementation of our solutions and
software and thus, enhancing the level of applicability of our solutions and software in different industries
and strengthening our research and development capab ilities in the long run. On the other hand, the staff for
provision of technical services are mai nly personnel who attend our customers ’sites for delivery of services,
including to oversee the works of our subcontractor s in maintaining or repairing our customers ’
telecommunication network or installing hardware and software in our customers ’ sites during the course of
provision of our ICT integration services.
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Relationship with employees and recruitment policies
Our Directors believe that loyalty, professi onal knowledge and expertise of our employees is
of the essence to our business and operation and hence a crucial asset of our Group. Therefore, we
place great emphasis on our management policies , working environment, employee development
opportunities and employee benefits to maintai n good employer-employee relations and attract
talents.
We generally recruit employees in open market by placing recruitment adve rtisements online.
We select suitable applicants based on a number of factors such as their working experience,
professional qualification, educational backgr ound and vacancy needs. During the Track Record
Period, we had not recruited any employees through employment agents.
Our Directors consider that we have maintained good relationships with our employees. As at
the Latest Practicable Date, we had a workers ’ union which was set up with a view to safeguarding
the rights and welfare of our employees and for organi sing team building and entertaining activities
for our employees. Our workers ’ union consists of our employees only and is chaired by our
employee. Our Directors confirm that we have not experienced any significant problems with our
employees or any disruptions to our operations due to labour disputes nor have we experienced any
difficulties in the recruitment or retention of exp erienced staff or skilled personnel during the Track
Record Period and up to the Latest Practicable Date.
Employee training
In order to strengthen the overall competitiveness of our employees, to attract and retain
talents and to strengthen their knowledge and skills, we place strong emphasis on training
employees. We provide trainings to our employees across different levels and areas, including
induction training for new employees and on-the- job trainings to enhance our employees on the
safety measures when performing their work. We also provide ongoing training and development
programmes which cover technical and functional courses to our employees.
Remuneration policy
We entered into a labour contract with our employees in accordance with the applicable labour
laws of the PRC, which cover matters such as wages, employee benefits and grounds for
termination. Our employees are g enerally remunerated by way of combination of fixed salary,
discretionary bonuses and allowances . In general, we determine an employee ’s salary based on each
his/her qualifications, experience and capabilit y and the prevailing market remuneration rate. Our
Group adopts an appraisal system for our empl oyees and considers the appraisal results of
individual employees when conducting their sal ary reviews, making promotion decisions and
determining the amount of bonuses. Our employee s are also entitled to paid leave and various
subsidies.
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Social Welfare Scheme and Housing Provident Funds
According to the Law of Social Insurance of the PRC ( 中華人民共和國社會保險法), our
major operating PRC subsidiaries, namely WellCell Technology and WellCell Intelligent, are
required to make social insurance fund contribut ions for their employees in the PRC, which shall
cover basic pension insurance, basic medical insura nce, maternity insurance, worker related injury
insurance and unemployment insurance. WellCell Technology and WellCell Intelligent are also
required under the Regulation on Management of Housing Provident Fund* ( 《住房公積金管理條
例》) to deposit housing provident funds to its employees in the PRC. For further details, please
refer to the paragraphs headed ‘‘Regulatory overview — Laws and regulations in relation to our
Group ’sb u s i n e s si nt h eP R C— Labour Protection ’’in this prospectus.
HEALTH AND WORK SAFETY
Our Group ’s operations do not involve any manufacturing process and hence would not result
in production of any harmful products. Our Group has established policies to provide our staff with
a safe and healthy working environment by providing work safety rules for our staff to comply
with. Such work safety rules relate to, amongst others, procedures regarding the proper installation
and usage of IT products and equipment. We have provided our employees with guidance and
training on work safety laws and regulations from time to time to ensure that our employees are
well acquainted with our safety procedures and policies. Our Group believes that high standards in
these areas do not only protect our employees from injuries, but also mitigate our Group ’sr i s ko f
loss and enhance our competitiveness a nd employee loyalty and commitment.
Owing to the nature of our services, in particu lar telecommunication network support services
and ICT integration services, our employees may have to work in or visit outdoor environments
such as rural areas or construction sites. In view of the inherent risks of accidents and injuries, we
have implemented a system in recording and handling accidents during our business operations. We
require our employees to report any accidents to the ir supervisor in a timely manner. The supervisor
should then report the same to the project manager and our human resources department, which will
then make record of the accidents and follow up on the condition of the inju red employee. During
the Track Record Period and up to the Latest Pract icable Date, we had not recorded any material
accident or work safety incident in the course of our operations, nor had we received any material
claim from our employees in relation to any personal or property damage.
In view of the spread of the COVID-19 and its variants in the PRC since December 2019, as
part of our Group ’s risk management regarding the COVID- 19 pandemic, in order to minimise the
risk of contagion among our employees and to mitigate the adverse impact of the COVID-19
pandemic that may cause to our business and ope rations, we had implemented the following
preventive measures to monitor the health co nditions of our employees and maintain a hygienic
working environment in our offices:
(i) ensuring that we have sufficient stock of personal protective equipment, hand sanitizer
and disinfection products, etc.;
(ii) requiring all employees to wear surgical masks at all times in our offices;
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(iii) requesting employees to avoid visitin g areas with serious outbreak of COVID-19;
(iv) forbidding employees who have fever , cough, fatigue, trouble breathing or any
respiratory disease symptoms from entering into our offices and requiring such
employees to see doctors;
(v) taking temperature of all employees and k eeping a register of the temperature taken
before they are allowed to enter into our offices and keep records on the attendance of
our employees;
(vi) if we find it necessary, requesting our employees to have COVID-19 tests on a regular
basis;
(vii) forbidding communal meals, social gathering and celebration events; and
(viii) carrying out daily disinfection work inside our offices.
ENVIRONMENTAL COMPLIANCE
Our Directors believe that our business activit ies and operations generally do not result in the
production of pollutants. The impact of our operations on the environment is minimal.
As confirmed by our PRC Legal Advisers, we do not have construction projects that require
environmental impact assessment and/or approval, and we do not currently have any environmental
liabilities and do not expect to incur any environ mental liabilities that could have any material
impact on our financial condition or business operations.
OUR ENVIRONMENTAL, SOCIAL AND GOVERNANCE POLICIES
Our Directors recognise environmental protection, social interest and corporate governance as
important social responsibilities of our Group. Hence, we strive to adhere to the environmental,
social and governance ( ‘‘ESG’’) directions that target to effectively identify and manage material
ESG issues and risks, and assess our ESG policies and measures accordingly.
Identification, management and assessment approaches
Our Directors consider that establishing an di m p l e m e n t i n ga nE S Gp o l i c yw i l le n h a n c et h e
investment value of our Group and is in the long-te rm interest of our stakeholders in general. Our
Board is principally responsible for overseeing t he formulation and reporting of our ESG directions
and strategies, determining the ESG-related risks, and monitoring and reviewing our ESG
performances. Furthermore, our Board also clo sely follows the latest ESG-related laws and
regulations and correspondingly updates our ESG m easures to ensure that we comply with the latest
regulatory regime. Upon the Listing, we will e stablish an ESG manag ement committee (the ‘‘ESG
Management Committee ’’) to support our Board in formulating and implementing ESG policies
and preparing the ESG report.
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Our Board will adopt the following approaches to identify, manage and assess material ESG
issues:
Identification . Our Directors, with the assistance from the ESG Management Committee, will
discuss major ESG issues with key stakeholders, i ncluding our major customers, major suppliers,
our management team and other employees, and collect their views on our existing or proposed
ESG measures and practices. We expect that this will help us better identify, understand and
prioritise the ESG issues and risks inherent in our business operations and formulate new or
enhanced ESG measures to mitigate those risks. O ur Directors believe that open dialogue with
stakeholders will play a significant role in m aintaining our busin ess sustainability.
Management . As the environmental and social conditions and the regulatory regime evolve,
our ESG policies may have to be adjusted or modifi ed accordingly. Likewise, any changes to our
business operations may also necessitate such adju stment or modification. In this connection, the
ESG Management Committee will remain watchf ul of the latest developments both within our
Group and in the overall business and regulatory environment when reviewing our ESG measures
and policies, major plans of actions, and budge t in implementing our measures, policies and
business plans, and, where appropriate, recommend to the Board the suitable amendments to be
made to our measures and plans in light of these developments.
Assessment . Apart from assessing the performance of our ESG measures through discussions
among our Directors and our stak eholder, if our Board deems it necessary, we may also engage an
independent ESG consultant to assist our Group i n assessing our level of compliance with the ESG-
related laws and regulations, identifying specific risks and areas for improvement, and
recommending courses of action which target such risks and areas, if any.
Environmental policies
Since our founding, we have been committe d to environmental, social and corporate
responsibility matters. Given that the majority of our operations are service offerings and software
development, our business and operations have lim ited impact on the environment. As at the Latest
Practicable Date, our Group had not come across a ny material non-compliance issues in respect of
any applicable laws and regulatio ns on environmental protection.
Although our business had not had material impact on the environment during the Track
Record Period, in preparation for any possible c hanges in our operations in the future which may
require greater attention and commitment to envir onmental protection from us, our Board will adopt
the following policies and measures:
(a) the ESG Management Committee will assist our Board to oversee and monitor the
implementation of our environm ental strategies and directives and report to our Board
regularly;
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(b) the ESG Management Committee will also re gularly review the nature of the projects we
undertake and our Group ’s responsibilities therein to assess whether our operations have
any material impact on the environment;
(c) in the event the ESG Management Committee considers it appropriate, we may engage an
independent ESG consultant to advise us on compliance matters in respect of
environmental protection covering, for ins tance, discharge of industrial waste, air
pollution and climate changes, i f applicable to our business; and
(d) we will continue to explore ways to further i mprove energy efficiency and environmental
protection, such as the possibility of using m ore environmentally friendly raw materials
and equipment from suppliers with a commi tment to carbon emission reduction.
Social policies
Our Group are committed to corporate social r esponsibilities. We have put in place a set of
social policies to promote equality and diversity in our recruitment and promotion as follows:
(a) we have a policy of providing equal opportunities in employment and career
development regardless of gender, marital status, disability, family status, race, age and
religion;
(b) we have strictly abided by the requirements of the Labour Law of the PRC ( 《中華人民共
和國勞動法》). It is our policy and we also require our suppliers to avoid any hiring of
child or forced labour in our business operations and firmly insist on a zero-tolerance
approach to child or forced labour in any form; and
(c) we provided various functions of trainings to our employees on safe use of machinery
and performing their work, such as induction training for new employees and on-job
trainings.
For details, please refer to the paragraph headed ‘‘Employees ’’above in this section.
Corporate Governance policies
Anti-corruption and anti-bribery
We adopt a zero-tolerance approach to corruption and bribery and are committed to acting
fairly and with integrity in all our business deali ngs and relationships. In order to comply with the
applicable laws and regulations in relation to anti -corruption and anti-bribery, we have established
and implemented anti-corruption and anti-bribe ry policy and measures to prohibit all forms of acts
related to corruption and bribery or intention of such acts. Examples of such acts include:
(a) soliciting or accepting any advantages from others as a reward for or inducement to
d o i n ga n ya c ti nr e l a t i o nt oo u rG r o u p’s business;
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(b) offering any advantages to an agent of another as a reward for or inducement to doing
any act in relation to the latter ’sb u s i n e s s ;
(c) offering any advantages to a government or public servant as a reward for or inducement
to performing any act in his/her official capaci ty, or while having business dealings with
the government department or public body he/she belongs to;
(d) our Directors or staff soliciting or accepti ng advantages from persons having business
dealings with them (e.g. suppliers and contractors); and
(e) the offering of advantages to the directors or staff of other companies having business
dealings with our Group.
The policy also sets out the approach of dealing w ith any potential conflicts of interest, the
requirements of a company-wide anti-bribery-and- corruption training and disciplinary actions to be
taken in situation of violation of the policy and /or relevant laws and regulations, including
termination of employment/service and bringing forward to legal proceedings.
During the Track Record Period, there was no l egal proceedings regarding corrupt practices
brought against us or any of our directors and employees.
Corporate governance
We will comply with the Corporate Governan ce Code. We have established three board
committees, namely the Audit Committee, the Nomination Committee and the Remuneration
Committee, with respective terms of reference in c ompliance with the Corporate Governance Code.
In particular, one of the primary duties of the Aud it Committee is to review the effectiveness of our
internal audit activities, internal controls and r isk management systems. For further details of the
three board committees, please refer to the paragraphs headed ‘‘Directors, senior management and
employees — Board committees ’’ in this prospectus. Our Directors will review our corporate
governance measures and our compliance with the Corporate Governance Code every financial
year.
PROPERTIES
Owned properties
Our Group did not have any owned property as at the Latest Practicable Date.
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Leased properties
Details of the property we leased as at the Latest Practicable Date are set out as follows:
Address Use of property Gross floor area
Term of
the tenancy
(sq.m.)
(approximately)
Rooms 2101, 2102, 2105, 21 st Floor, Building
2, Meixi Commercial Plaza, 168 Lvyou
Road, Xiangzhou District, Zhuhai, PRC*
(珠海市香洲區旅遊路168 號梅溪商業
廣場2棟21層2101 、2102 、2105 室)
Office 583 From 21 March 2021
to 20 March 2024
2321-1, Area C, 23rd Floor, 108 Huitong Third
Road, Hengqin New District, Zhuhai, PRC
(珠海市橫琴新區匯通三路108 號23樓C區
2321-1)
Office 32 From 1 January 2023
to 31 December 2026
Our right-of-use assets recognised in relatio n to the above leased properties as at 31 December
2020, 2021 and 2022 and 30 June 2023 amounted to approximately RMB0.5 million, RMB0.4
million, RMB44,000 and RMB0.2 million, respectively and depreciation charged for our right-of-
use assets were approximately RMB0.3 million, RMB0.3 million, RMB0.2 million and RMB0.1
million for FY2020, FY2021, FY2022 and 6M2023, respectively.
On the other hand, our property rentals and related expenses in relation to the short-term
property leased by us were approximately RMB0. 1 million, nil, RMB0.1 million and RMB2,000 for
FY2020, FY2021, FY2022 and 6M2023 respectively.
INTELLECTUAL PROPERTY
Our Directors believe that the copyrights for ou r software, our patents and other intellectual
property rights are critical to our success. We rely on a combination of laws and regulations
including but not limited to copyright, patent a nd trademark laws, as well as confidentiality
agreements signed by our senior management and key staff to protect our intellectual property
rights. As at the Latest Practicable Date, we had successfully registered five trademarks, two
domain names, two patents and 73 copyrights in the PRC. For details of our intellectual property
rights, please refer to the paragraphs headed ‘‘Statutory and general information — B. Further
information about the business of our Group — 2. Intellectual property rights of our Group ’’in
Appendix IV to this prospectus.
Our Directors confirm that we were not involved in any dispute or claim concerning any
infringement to our intellectual p roperty during the Track Record Period. During the Track Record
Period, the Directors confirmed that we had not received any infringement claims nor had we filed
any infringement claims against any third pa rties. Please refer to the paragraphs headed ‘‘Risk
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factors — Risks relating to our business — We may not be able to adequately protect our
intellectual property rights ’’in this prospectus for the possible risk in relation to infringement of
intellectual property rights.
LITIGATION AND NON-COMPLIANCE
Our PRC Legal Advisers confirmed that during the Track Record Period and up to the Latest
Practicable Date, there was no foreseeable or pending legal proceedings or arbitration against our
Group or our Directors that could, individually or in aggregate, have a material adverse effect on
our business, financial condition or results of oper ations. Our Directors have confirmed that, during
the Track Record Period and as at the Latest Practicable Date, there was no legal proceedings or
claim pending or threatened against us or our Dire ctors that could, individually or in aggregate,
have a material adverse effect on our business, fi nancial condition or results of operations.
Pursuant to the applicable PRC laws and regulations, employers are required to make
contributions to, and employees are required t o participate in, social insurance and housing
provident fund. WellCell Technology has failed to m ade full social insurance and housing provident
fund contributions for its employees as required by relevant PRC laws in FY2020 and FY2021. The
unpaid amount for FY2020 and FY2021 was (i) approximately RMB0.7 million and RMB1.0
million, respectively, with respect to social insu rance payments and (ii) approximately RMB0.4
million and RMB0.3 million, respectively, with re spect to housing provident fund contributions. To
the best knowledge of our Directors, the non-compliance incidents were primarily due to the
shortfall in contributions made in line with the w ill of relevant employees. According to the Social
Insurance Law of the PRC* ( 中華人民共和國社會保險法) and other relevant regulations, the
relevant government authority may require a non -compliant company to make up the outstanding
contribution with an additional late paymen t fee at a daily rate of 0.05% of the outstanding
contribution from the due date within a given period, and if the company fails to do so, a fine may
be imposed on the company ranging from one to thre e times of the total amount of the outstanding
contribution. Our Directors confirm that we will m ake up for the previously underpaid contributions
within the prescribed time upon request by the relevant PRC authorities, and on this basis, we
estimate that our maximum late payment fee for exposure for the aforesaid non-compliance
incidents in relation to social i nsurance contributions is approximately RMB3.0 million as at 30
June 2023. Meanwhile, according to the Regulati ons on Management of Housing Provident Fund*
(住房公積金管理條例) of the PRC, if a company fails to pay or does not contribute to the housing
provident fund within the prescribed time period, the relevant government authority may order it to
make up the outstanding contributions within the p rescribed time limit, failing which the relevant
authority may apply for compulsory enforcement by a People ’s Court. According to our PRC Legal
Advisers, interviews had been conducted with the s upervisory authorities for labour-related issues
of WellCell Technology, namely Zhuhai Soc ial Insurance Fund Management Center* ( 珠海市社會
保險基金管理中心)( ‘‘ZSIFMC ’’) and Zhuhai Housing Provident Fund Management Center* ( 珠
海
市住房公積金管理中心)( ‘‘ZHPFMC ’’), which confirmed that (i) t hey would not initiate any
request for payment of the outstanding balance of the social insurance and housing provident fund;
(ii) they would not admini ster any penalties in relation to the above non-compliance incidents; (iii)
WellCell Technology and its directors, legal repre sentative and members of its management team
would not be held liable for the above non-compliance incidents; and (iv) WellCell Technology had
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not been subject to any administrative penalty for violation of the laws and regulations relating to
social insurance or housing provident fund duri ng the Track Record Peri od. According to our PRC
legal advisers, (i) ZSIFMC, as the subordinate organisation of Zhuhai Human Resources and Social
Security Bureau* ( 珠海市人力資源和社會保障局), is responsible for implementing the national,
provincial and municipal laws, regulations and policies in relation to social insurance; (ii) the
ZSIFMC officer with whom our PRC legal advisers had the said interview is in charge of, among
other things, matters related to social insurances laws and regulations including consultation made
in that regard; (iii) ZHPFMC is tasked with the enforcement of administrative penalties in
connection with housing provident fund laws an d regulations; and (iv) the ZHPFMC officer with
whom our PRC legal advisers had the said interview is in charge of, among other things, matters
related to registration and collection of housing pr ovident fund contributions. In light of the above,
our PRC legal advisers are of the view that ZSIF MC and ZHPFMC are the competent authorities,
and the officers with whom our PRC legal advisers had the said interview are the competent
persons, to opine on the non-compliance of our Group as concerns social insurance contributions
and housing provident fund contributions, r espectively, and to make the aforementioned
confirmations. Based on the above, our PRC Legal Advisers are of the view that the risk of
WellCell Technology being punished or claimed by reason of the above non-compliance incidents
is remote. Our Group has fully complied with all applicable PRC laws and regulations in relation to
social insurance and housing provident fund since November 2021.
To minimise the legal and financial implications of the above non-compliance on our Group,
we have obtained written confirmation of the relevant employees confirming that they have no
dispute or claim with WellCell Technology in respect of the applicable PRC laws and regulations
on labour matters including social insurance and ho using provident contributions. In addition, Mr.
Jia and Mr. Lin will also undertake to indemnify ou r Group against any damages, liabilities, claim
or losses suffered by our Group as a result of the above non-compliance incidents.
In view of the remote risk of penalty and claim and the undertaking of indemnity by Mr. Jia
and Mr. Lin as more fully set forth above, no provision was made in the financial statements of our
Group in respect of the aforementioned non-compliance.
In order to prevent potential future non-complia nce incidents in relation to social insurance
and housing provident fund contributions and proce dures, the following enhanced internal control
measures will be adopted by us:
i. we have consulted our PRC Legal Advisers on the contribution basis of social insurance
and will have regular consultation and, if nece ssary, will seek legal advice on this matter
in the future;
ii. require that our financial controller, Ms. Chen, to review and approve the amount of
contributions to be made on a monthly basis; and
iii. advise our employees on the policy and pr ocedures of social insurance and housing
provident fund contribution and t he relevant legal requirements.
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Considering (i) the nature of and the circumsta nces pertaining to such incidents as discussed
above, which did not give rise to indication that our Directors and senior management members had
a wilful tendency to operate the business of our Group in a non-compliant manner, and which did
not involve any intentional misconduct, fraud, dishonesty or corruption on the part of our Directors;
(ii) the remedial actions (grant of indemnity b y our Controlling Shareholders and employees ’
confirmation as described above) taken; (iii) the amount of the maximum aggregate penalties that
may be imposed on us; and (iv) the view of our PR C Legal Advisers that the risk of WellCell
Technology being punished or claimed by reason of the above non-compliance incidents is remote,
our Directors and the Joint Sponsors are of the view that the above non-compliance incidents do
not cast any doubt on the suitability of our Directors under Rules 3.08 and 3.09 of the Listing
Rules or our Company ’s suitability for Listing under R ule 8.04 of the Listing Rules.
Our PRC Legal Advisers confirmed that we had ob tained all relevant licences, permits and
approvals required for our business operation in the PRC, and such licences, permits and approvals
were valid and remained in effect as at the Latest Practicable Date. Further, save as disclosed
above, as advised by our PRC Legal Advisers, there had not been any material or systemic non-
compliance with respect to PRC laws and/or regulations applicable to our Group during the Track
Record Period and as at the Latest Practicable Date.
LICENCES, APPROVALS AND PERMITS
As at the Latest Practicable Date, our PRC L egal Advisers confirmed that our Group had
obtained the requisite governmental licences, appr ovals and permits and renewal which are material
to our operations. Details of our key licences, appr ovals, permits and recognitions are as below:
Name of licence/
approval/permit Issuing authority
T y p e ( s )o fw o r k sa n d / o r
services covered/level
of certification Expiry date
Permit for Installation
(Repair, Trial) of Electric
Power Facilities*
(承裝(修、試)電力設施許
可證)
National Energy
Administration Southern
Regulatory Bureau*
(國家能源局南方監管局)
(Installation Level 4, Repair
Level 4, Trial Level 4*
(承裝類四級，承修類四
級、承試類四級)
30 December
2027
Construction Enterprise
Qualification Certificate*
(建築業企業資質證書)
Housing and Urban-Rural
Development Bureau of
Zhuhai City* ( 珠海市住房
和城鄉建設局)
Construction labour*
(施工勞務不分等級)
21 November
2027
Work Safety Permit*
(安全生產許可證)
Housing and Urban-Rural
Development Department
of Guangdong Province*
(廣東省住房和城鄉建設
廳)
Construction work 29 March 2024
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Name of licence/
approval/permit Issuing authority
T y p e ( s )o fw o r k sa n d / o r
services covered/level
of certification Expiry date
Certificate of Service
Capability Assessment for
Communication Network
Enhancement Enterprise*
(通信網絡優化企業服務能
力評定證書)
China Association of
Communication
Enterprises
(中國通信企業協會)
Network Enhancement
Capability Level B*
(網絡優化能力乙級)
17 August
2027
Certificate of Service
Capability Assessment for
Telecommunication
Network Maintenance
Enterprise* ( 通信網絡代
維企業服務能力評定
證書)
China Association of
Communication
Enterprises
(中國通信企業協會)
Base station (main, auxiliary
and accessory equipment)
Professional Level C*
(基站(主設備，配套設
備，附屬設備)丙級)
17 August
2027
Certificate of Service
Capability Assessment for
Telecommunication
Network Maintenance
Enterprise* ( 通信網絡
代維企業服務能力評定
證書)
China Association of
Communication
Enterprises
(中國通信企業協會)
Line Capability Level C*
(綫路能力等級丙級)
17 August
2027
Construction Enterprise
Qualification Certificate*
(建築業企業資質證書)
Housing and Urban-Rural
Development Department
of Guangdong Province*
(廣東省住房和城鄉建設
廳)
General Contractor for
Telecommunication
Engineering Construction
Level 3* ( 通信工程施工總
承包三級)
31 December
2024
Guangdong Province Safety
Technology Preventive
System Design,
Construction and
Maintenance Qualification
Certificate* ( 廣東省安全
技
術防範系統設計、施
工、維修資格證)
Zhuhai City Public Security
Bureau Safety Technology
Preventive Management
Office*
(珠海市公安局安全技術防
範管理辦公室)
Design, construction and
maintenance of safety
technology preventive
system, Level 4
20 December
2024
Construction Enterprise
Qualification Certificate*
(建築業企業資質證書)
Housing and Urban-Rural
Development Bureau of
Zhuhai City* ( 珠海市住房
和城鄉建設局)
Professional Contractor for
Electronic and Intelligent
Engineering Level 2,
Professional Contractor
for Steel Structure
Engineering Level 3 ( 電子
與智能化工程專業承包二
級、鋼結構工程專業承包
三級
)
6 December
2028
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RECOGNITIONS, AWARDS AND CERTIFICATIONS
We have received a number of recognitions, awards and certifications over the past years,
among which are the followings:
Award/Recognition Issuing authority/institution
Year of
latest award Expiry date
2021 –2022 Zhuhai
Communication Network
Application and Testing
Enhancement Engineering
Technology Research Center*
(2021 –2022 年度珠海市通信網
絡應用及檢測優化工程技術研
究中心)
Zhuhai Science & Technology
Innovation Bureau* ( 珠海市科技創
新局)
2022 —
High and New Technology
Enterprise Certificate*
(高新技術企業證書)
Department of Science and
Technology of Guangdong
Province* ( 廣東省科學技術廳),
Department of Finance of
Guangdong Province* ( 廣東省財政
廳), Guangdong Provincial Tax
Service, State Taxation
Administration* ( 國家稅務總局廣東
省稅務局)
2021 19 December
2024
Certificate of Enterprise Credit
Grade (Grade AAA)*
(企業信
用等級證書(AAA 級))
China Association of Communications
Enterprises
(中國通信企業協會)
2022 9 May 2025
Guangdong Tel ecommunication
Network Application and
Testing Enhancement
Engineering Technology
Research Center 2021* (2021 年
度廣東省通信網絡應用及檢測
優化工程技術研究中心)
Department of Science and
Technology of Guangdong Province
(廣東省科學技術廳)
2021 —
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Award/Recognition Issuing authority/institution
Year of
latest award Expiry date
Zhuhai Enterprise Famous
Brand Top 100*
(珠海企業知名品牌100強)
Zhuhai Enterprise and Entrepreneur
Union* ( 珠海市企業與企業家
聯合會), Zhuhai Economic
Development and Promotion
Association* ( 珠海市經濟發展
促進會)
2021 —
Title of Zhuhai Outstanding
Enterprise* ( 珠海市優秀企業)
Zhuhai Enterprise and Entrepreneur
Union* ( 珠海市企業與企業家聯合
會), Zhuhai Economic Development
and Promotion As sociation* ( 珠海市
經濟發展促進會)
2021 —
Title of Zhuhai Advanced Unit of
Science and Technology
Innovation* ( 珠海市
科技創新先進單位)
Zhuhai Enterprise and Entrepreneur
Union* ( 珠海市企業與企業家聯合
會), Zhuhai Economic Development
and Promotion As sociation* ( 珠海市
經濟發展促進會)
2020 —
Title of Zhuhai Outstanding
Enterprise* ( 珠海市優秀企業)
Zhuhai Enterprise and Entrepreneur
Union* ( 珠海市企業與企業家聯合
會), Zhuhai Economic Development
and Promotion As sociation* ( 珠海市
經濟發展促進會)
2020 —
Zhuhai Integrity Operation
Demonstration Unit*
(珠海市誠信經營示範單位)
Zhuhai Enterprise and Entrepreneur
Union* ( 珠海市企業與企業家聯合
會), Zhuhai Economic Development
and Promotion As sociation* ( 珠海市
經濟發展促進會)
2020 —
T o p5 0G r o w i n gH i g ha n dN e w
Technology Enterprises in
Xiangzhou District 2019*
(香洲區2019 年高新技術企業
成長50強)
Guangdong R&D Center for
Technological Economy ( 廣東省技
術經濟研究發展中心),
Science and Technology and
Industrial Information Bureau of
Xiangzhou District, Zhuhai city,
Guangdong Province* ( 珠海市香洲
區科技和工業信息化局)
2020 —
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Certificate Issuing authority Certification Expiry date
CMMI Maturity Level 3 CMMI Institute Maturity level 3
Defined (CMMI-DEV),
version 2.0 Staged
Representation
4 December
2024
Quality Management
System Certificate*
(質量管理體系認證證書)
Guangdong Zhongqi
Certification Service Co.,
Ltd.* ( 廣東中企認證服
務有限公司)
GB/T 19001-2016/
idt ISO 9001:2015
2J a n u a r y
2026
Environmental Management
System Certificate*
(環境管理體系認證證書)
Guangdong Zhongqi
Certification Service Co.,
Ltd.* ( 廣東中企認證服
務有限公司)
GB/T 24001-2016/
idt ISO 14001:2015
2J a n u a r y
2026
Occupational Health and
Safety Management
System Certificate*
(職業健康安全管理體系
認證證書)
Guangdong Zhongqi
Certification Service Co.,
Ltd.* ( 廣東中企認證服
務有限公司)
GB/T 45001-2020 idt
ISO 45001:2018
2J a n u a r y
2026
Information
Technology-Service
Management
Certification of
Conformity
(信息技術服務管理體系
認證證書)
Beijing Zhongan Quality
and Environmental
Certification Center Co.,
Ltd.* ( 北京中安質環認
證中心有限公司)
ISO/IEC 20000-1:2018 26 December
2024
INTERNAL CONTROL AND RISK MANAGEMENT MEASURES
Our Board is responsible for establishing ou r internal control system and reviewing its
effectiveness. We have engaged an internal control consultant (the ‘‘Internal Control Consultant ’’)
to conduct a review of our internal control system and have implemented (or will implement no
later than the Listing) the relevant suggestions pr oposed by our internal control consultant. From
April to May 2021, the Internal Control Consulta nt conducted an internal control review and
recommended remedial actions in relation to the w eaknesses or deficiencies identified during the
review process, and the management of our Group had implemented a series of remedial controls
based on the comments of the Internal Control C onsultant. The Internal Control Consultant
conducted five follow-up reviews from August to September 2021 and January to February 2022
and in September 2022, February 2023 and August 2023, respectively, and confirmed that these
rectifications are in place. In particular, the I nternal Control Consultant also reviewed the
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implementation status of the internal control m easures taken by our Group to prevent recurrence of
the non-compliance incidents as stated under the paragraphs headed ‘‘Litigation and non-
compliance ’’in this section. Based on the findings, recommendations and follow-up reviews of the
Internal Control Consultant, our Di rectors evaluated the status of the remedial actions and results of
the Internal Control Consultant ’s follow-up reviews, and consider that the remedial actions have
been fully implemented and are sufficient to rem ediate the relevant deficiencies, the enhanced
internal control measures are adequate and effective, and our Group ’s internal control system is
sufficient and effective for our operation. As our business continues to expand, we will review,
refine and enhance our internal control system on an ongoing basis to respond to the evolving
requirements of our business operations and to ens ure due compliance with the applicable laws and
regulations.
Further, we have decided to adopt the following measures to ensure on-going compliance with
the applicable laws and regulations and to strengthen our internal control upon the Listing:
(i) our Board will continuously monitor, evalua te and review our internal control system to
ensure compliance with the applicable legal and regulatory requirements and will adjust,
refine and enhance our internal control system as appropriate;
(ii) our Board includes three independent non- executive Directors to ensure transparency in
management and fairness in business decisions and operations. Our independent non-
executive Directors contribute to the enhancement of our corporate value by providing
advice and insights based on their extensi ve experience and specialised knowledge;
(iii) internal control policies and procedures on corporate governance, employees, auditing,
etc. will be established, setting out the internal approval and review procedures pursuant
to which our employees at relevant departments shall comply with, and the policies and
procedures shall be reviewed periodically and approved by the Board;
(iv) the Audit Committee comprising our inde pendent non-executive Di rectors will provide
an independent view of the effectiveness of the financial reporting process, supervise and
provide guidance on the internal control and risk management systems of our Group, and
oversee the audit process, etc.; and
(v) external professional advisers (including the Compliance Adviser with effect from the
Listing) will be engaged to provide professional advice and guidance to our Group to
ensure compliance with the Listing Rules a nd the applicable laws and regulations.
Based on the above, our Directors are of the view that our Group has taken reasonable steps to
establish an internal control system and procedures to enhance the control environment at both the
working and management levels, and that the int ernal control measures are adequate and effective
for our business operations.
In addition, our risk management process start s with identifying the major risks associated
with our corporate strategy, busin ess operation, finance and asset s and compliance with applicable
laws and regulations. We have adopted risk mana gement policies to assess our risks in terms of
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their likelihood and potential impacts, and then p rioritise and pair each risk with a risk response
plan. We provide training to our employees an d encourage an all-embracing culture of risk
management ensuring that all employees are awa re of and responsible for managing risks. Each of
our operating departments is responsible for ide ntifying and analysing risks associated with its
function under the supervision of our risk management committee, audit department and ultimately
our Directors. Our risk management measures for s ome of the more particular risks include the
following:
. Liquidity risk management
. Our Directors believe that we might face liquidity risk from time to time as a result
of the mismatch of our operating cash flow arising from significant net cash
outflow during the early stages of a project, where our cash outflow for our
payables have not yet been recovered by our receivables for a prolonged period of
time, until the accumulated progress p ayments received from our customer can
materially cover the aggregate cost we have i ncurred. For details, please refer to the
paragraphs headed ‘‘Risk factors — Our inability to manage cash flow mismatch
arising from the incurring of material initial project costs for projects/work
performed before these are recoverable/r ecovered may damage our financial position
and prospects and give rise to liquidity or insolvency risks ’’in this prospectus. In
order to mitigate our liquidity risk which may intensify along with our anticipated
business growth, we have put in place the following internal control measures and
procedures to strengthen our liquidity management:
i. we would closely monitor o ur liquidity position and ensure sufficient working
capital for our business operation, in both the short run and long run, through
consistently reviewing our revenue proj ection on a regular basis and budgeting
the initial project costs required for each of our projects in the pipeline from
time to time;
ii. in the course of preparing tenders and/or quotations, we would consider the
nature and size of business of a customer and the number of trade receivable
turnover days with the customer (if ascertainable) as compared with our
overall trade payable turnover days, wh ich aims at maintaining our liquidity
position while preserving the growth in our business;
iii. we would closely monitor our cash and bank balance through constantly
reviewing our internal records and banking account. When we identify any
potential shortfall in our cash position, we would strive to negotiate for earlier
settlement from our customers and/or request a longer credit period from our
suppliers and subcontractors in order to mitigate the cash flow mismatch;
iv. we would perform aging analysis of bot h trade receivables and payables at the
end of each month, which will be regularly submitted to our management
members for review and approval;
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v. where appropriate, we would take follow-up actions to collect the overdue
trade receivables from customers, suc h as actually communicating with the
relevant department of the customer res ponsible for processing payments; and
vi. if any receivables past due cannot be recovered and if our Group does not
possess sufficient working capital to pay our suppliers or subcontractors on a
timely basis, our Group will consider to obtain banking facilities.
. Operational risk management
. We have set up examination and approval procedures for operational issues such as
contract signing with our customers, su ppliers and subcontractors, employees ’
attendance management and repair and maintenance of fixed assets.
. Our whistle blower policy provides a channel for our employees to report and
investigate any suspected misconduct, malpractice, irregularity, unlawful or
improper incidents.
. For details of our risk management measu res in relation to quality management,
please refer to the paragraphs headed ‘‘Quality control ’’in this section.
. Credit risk management
. Our finance department is responsible fo r monitoring overdue payments closely and
prepares aging reports showing the customers ’ overdue amounts. We monitor and
evaluate overdue payments on a case-by-cas e basis and consider appropriate follow-
up actions such as actively communicating with customers and temporarily
suspending the provision of services until payment. We also have an internal
assessment system in place to assess the credit rating of our customers.
. Market risk management
. We are exposed to general market risks related to changes in macroeconomic
policy, technical evolution, market demand, competitive landscape and other market
changes. Our executive Directors are re sponsible for identifying and assessing
potential market risks and from time to time discussing with other operating
departments to formulate policies and me asures to mitigate these market risks.
The risk management committee consists of three members, namely Mr. Jia, Ms. Chen and
Mr. Yao Min. The chairman of the risk management committee is Mr. Jia. For details of
qualifications and experience of Mr. Jia, Ms. Chen and Mr. Yao Min, please refer to the section
headed ‘‘Directors, senior management and employees ’’in this prospectus. The risk management
committee of our Group is primarily responsible for the establishment and supervision of the risk
management system, assessment o f significant risks that we may be exposed to, allocation of our
human resources for implementation of our risk ma nagement policies and arrangement of related
trainings and reporting to our Directors any signi ficant risk management m atters identified. Our
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Audit Committee, internal financ e personnel and senior managemen t team together will monitor the
implementation of our risk management policies on an ongoing basis to ensure that our policies and
implementation are effective and sufficient.
We strive to foster a strong compliance c ulture among our employees. To achieve and
maintain such compliance culture and set the expectations for individual behavior across our Group,
we will regularly conduct internal compliance checks and inspections and conduct compliance
training to ensure the compliance with our inte rnal control and risk management policies.
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CONTROLLING SHAREHOLDERS OF OUR COMPANY
Immediately following completion of the Capit alisation Issue and the Share Offer (assuming
that the Over-allotment Option is not exercised and without taking into account Shares which may
be issued pursuant to the exercise of any options that may be granted under the Share Option
Scheme), WellCell Group will be interested in appr oximately 75% of the issued share capital of our
Company and will accordingly be a Controlling Shareholder within the meaning of the Listing
Rules.
Furthermore, WellCell Group is owned as to 51.5%, 37.5%, 5%, 4% and 2% by Shine
Dynasty, Cheer Partners, Golden Concord, Dazzl ing Power and Diamond Skyline, respectively,
which are in turn wholly owned by Mr. Jia, Mr. Lin, Mr. Fung, Mr. Cong and Ms. Chen,
respectively. Since Shine Dynasty, Cheer Partne rs, Golden Concord, Dazzling Power and Diamond
Skyline have decided to restrict their ability to ex ercise direct control over our Company by holding
their interests through WellCell Group, they and t heir respective ultimate beneficial owners are
regarded as a group of Controlling Shareholders of our Company together with WellCell Group
under the Listing Rules based on relevant guidance of the Stock Exchange. For details of the
background of the Controlling Shareholders, please refer to the section headed ‘‘History,
reorganisation and corporate structure ’’in this prospectus.
The following diagram illustrates the ultim ate beneficial interest of our Controlling
Shareholders immediately following the completion of the Share Offer (assuming that the Over-
allotment Option is not exercised and without t aking into account Shares which may be issued
pursuant to the exercise of any options that may be granted under the Share Option Scheme):
100%100%100% 100% 100%
2%
75%
37.5%51.5% 4% 5%
Mr. Jia Mr. Lin Ms. Chen Mr. Cong Mr. Fung
Shine Dynasty
(BVI)
Cheer Partners
(BVI)
Diamond Skyline
(BVI)
Dazzling Power
(BVI)
Golden Concord
(BVI)
WellCell Group
(BVI)
our Group
(Cayman Islands)
Among our Controlling Shareholders, Mr. Jia and Mr. Cong are our executive Directors,
whereas Mr. Lin is our non-executive Director. For further information about them, please refer to
the section headed ‘‘Directors, senior management and employees ’’in this prospectus.
RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS
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Save as disclosed above, there is no other p erson who will, immediately following the
completion of the Capitalisation Issue and the Share Offer (assuming that the Over-allotment
Option is not exercised and without taking into account Shares which may be issued pursuant to the
exercise of any options that may be granted u nder the Share Option Scheme), be directly or
indirectly interested in 30% or more of the Share s then in issue or have a direct or indirect equity
interest in any member of our Group representing 30% or more of the equity in such entity.
INDEPENDENCE FROM OUR CONTROLLING SHAREHOLDERS
Our Directors do not expect that there will be a ny significant transactions between our Group
and our Controlling Shareholders and their respective close associ ates upon or shortly after the
Listing. Having considered the following factors, our Directors believe that our Group is capable of
carrying on our business independently from our Cont rolling Shareholders and t heir respective close
associates after the Listing.
Management independence
The day-to-day management and operation of our Group will be the responsibility of all our
executive Directors and senior management of ou r Company who possess the requisite expertise
and experience to lead our operations, implement o ur business plans as well as achieve our business
objectives. The Board consists o f seven Directors, including three executive Directors, one non-
executive Director and three independent non-ex ecutive Directors. Although Mr. Jia, Mr. Cong, Mr.
Lin and Ms. Chen, being the Controlling Shareholde rs, also hold directorship or senior management
position in our Company, we consider that our Boa rd and senior management team will function
independently from our Controlling Shareholders, taking into account the following factors:
(a) each Director is aware of his or her fiduciary duties as a Director which require, among
others, that he or she acts for the benefit and in the best interest of our Company and
Shareholders as a whole (but not merely in the interest of the Controlling Shareholders)
and does not allow any conflict between his or her duties as a Director and his or her
personal interests;
(b) Mr. Lin is a non-executive Director of our Company. He does not take part in the day-to-
day management and operation of our Group but oversees the performance of our senior
management team, especially with regard to the progress made towards achieving our
business strategies and o bjectives from time to time;
(c) the decision-making mechanism of our Boar d as specified in our Articles of Association
has set out relevant provisions to avoid confli cts of interest, including but not limited to
(i) disclosure of conflicting interest to the Board; and (ii) that if the relevant proposal
causes conflicts of interest between our Group and our Controlling Shareholder(s), the
Director(s) associated with our Controllin g Shareholders should abstain from voting and
should not attend or be included in the quorum of the meeting of the Board;
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(d) our three independent non-executive Direct ors have sufficient and competent knowledge
and experience, and will bring independent j udgment to the decision-making process of
the Board; and
(e) save for Ms. Chen, our senior manag ement members are independent from our
Controlling Shareholders and have served our Group for a sufficient length of time
during which they have demonstrated their capability of discharging their duties
independently from our Controlling Shareholders.
Based on the above, our Directors are of the view that the Board is capable of managing our
Group ’s business independently of the Controlling Shareholders after the Listing.
Operational and administrative independence
Our Group has established our own organisa tional structure comprising individual
departments, such as the research and development department, business operation department and
financial department, each with specific areas of responsibilities. Our Group has not shared our
operational resources or general administration r esources with the Controlling Shareholders and/or
their respective close associates. We have our ow n and independent access to customers, suppliers
and subcontractors who are not related to our Controlling Shareholders or their respective close
associates. Our Group has also established a set o f internal controls to facilitate the effective
operation of our business.
In light of the above, our Directors are of the view that our Group is capable of operating its
business independently of the Controlling Shareholders upon and after the Listing.
Financial independence
Our Group has its own financial management and accounting systems and functions and
makes financial decisions according to our own business needs. Further, we maintained our own
bank accounts, make our own tax filings and make s our own financial decision according to our
business need. As such, our Directors consider that our Group has the ability to operate
independently of the Controlling Shareholders from a financial perspective.
During the Track Record Period, our Group had certain amounts due to our Controlling
Shareholders and related parties for funding the Reorganisation of our Group and payment of
Listing expenses and other corporate expense. Suc h amounts will be settled before the Listing. In
addition, during the Track Record Period, Mr. Jia, one of our Controlling Shareholders, and his
spouse had provided personal guarantees and charged a land-use-right held by them for obtaining
bank borrowings used by our Group. As at the Latest Practicable Date, all such personal guarantees
and pledge had been released. For details of the above, please refer to notes 23 and 26 to the
Accountant ’s Report set out in Appendix I to this prospectus. It is expected that the financial needs
of the Group following Listing will be satisfied by income generated from our ordinary course of
business, the proceeds from the Share Offer and, whe re necessary, from capital raising activities on
a stand-alone basis without relianc e on our Controlling Shareholders.
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Save as disclosed above, our Directors are of the view that our Group is not financially
dependent on the Controlling Shareholders or the ir respective close associates in our business
operations and our Group is able to obtain external financing on market terms and conditions for
our business operations as and when required without reliance on the Controlling Shareholders after
the Listing.
Having considered the above factors, our Directors consider that our Group is able to maintain
financial independence from the Controlling Shareho lders and their respective close associates after
the Listing.
NON-COMPETITION UNDERTAKINGS
In order to avoid any future competition between our Group and the Controlling Shareholders,
the Controlling Shareholders as covenantors (each of them, a ‘‘Covenantor ’’and collectively, the
‘‘Covenantors ’’) executed the Deed of Non-competition in favour of our Company (for itself and as
trustee for and on behalf of its subsidiaries).
In accordance with the Deed of Non-competitio n, the respective undertakings of each
Covenantor shall be conditional upon Listing. Set out below is a summary of the principal
undertakings and provisions under the Deed of Non-competition:
1. Non-competition
Each of the Covenantors shall irrevocably and unc onditionally, jointly and severally, warrant
and undertake that they will not, and will procure that its/his/her close associates (except any
member of our Group) will not, either on its/hi s/her own account or in conjunction with or on
behalf of any person, firm or company, joint venture or other contractual arrangement directly or
indirectly, among other things, carry on, partici pate or be interested or engaged in or acquire or
h o l da n yr i g h to ri n t e r e s t( i ne a c hc a s ew h e t h e ra s an investor, shareholder, principal, partner,
director, employee, consultant , agent or otherwise and whether for profit, reward, interest or
otherwise), or otherwise be involved in any bus iness which is or may be in competition, whether
directly or indirectly, with the business carried on or contemplated to be carried on by any member
of our Group in the PRC or any place where our Group has conducted business as at the date of the
Deed of Non-competition or may conduct business from time to time in the future (the ‘‘Restricted
Business ’’).
2. New business opportunity
Neither it/he/she nor any of its/hi s/her close associates currentl y carries out, participates in or
is interested or engaging in, invests in, acquire s or holds, directly or indirectly (in each case
whether as a shareholder, director, partner, agent or otherwise and whether for profit, reward,
interest or otherwise) or otherwise is involved i n the Restricted Business other than through our
Group.
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Each of the Covenantors further undertakes to refer to our Company within 10 days any and
all new opportunities in connection with the Restricted Business (the ‘‘New Business
Opportunity ’’) which are identified by or made available to any of them.
Notwithstanding the aforesaid, the Deed of Non-competition does not apply where:
(i) any opportunity to invest, participate, be engaged in and/or operate with a third party any
Restricted Business has first been offered or made available to our Group by written
notice, and that the offer should contain all information reasonably necessary for our
Group to consider whether (i) such opportunit y would constitute any R estricted Business;
and (ii) it is in the interest of our Group and the Shareholders as a whole to pursue such
opportunity, and our Company has, after review by the independent non-executive
Directors, declined such opportunity to inve st, participate, be engaged in or operate the
Restricted Business with such third party or together with the Covenantor and/or its/his/
her close associate(s), provided that the principal terms under which that Covenantor (or
its/his/her close associate(s)) subsequently invests, partic ipates, engages in or operates
the Restricted Business are not more favourable than those disclosed to our Company. A
Covenantor may only engage in the New Business Opportunity if (i) a notice is received
by the Covenantor from our Company confirming that the New Business Opportunity is
not accepted and/or does not constitu te the Restricted Business (the ‘‘Non-acceptance
Notice ’’); or (ii) the Non-acceptance Notice is not received by the Covenantor within 30
days after the proposal of the New Business Opportunity is received by our Company, or
such longer period of time, not longer than 180 days to be specified by our Company by
notice in writing to the Covenantor, where our Company ’s acceptance of the New
Business Opportunity is subject to the approval of the Stock Exchange or the
independent Shareholders or governmental or regulatory authorities;
(ii) the Covenantors have interest in the shares or other securities of a company whose shares
are listed on a recognised stock exchange (the ‘‘Relevant Company ’’) provided that:
(a) any Restricted Business conducted or engaged in by the Relevant Company (and its
assets relating thereto) accounts for less than 10% of the Relevant Company ’s
consolidated turnover or consolidated assets , as shown in its latest audited accounts;
or
(b) the total number of the shares held by a Covenantor and/or its/his/her respective
close associates in the Relevant Company or in which they are together interested
does not exceed 5% of the issued shares of that class of the Relevant Company,
provided that (1) the total number of the Covenantor ’s representatives on the board
of directors of the Relevant Company is not significantly disproportionate with
respect to the Covenantor ’s shareholding in the Relevant Company; and (2) at all
times there is a holder of such shareholding (together, where appropriate, with its
close associates) with a larger percentage of the shares in question than the
aggregate percentage of shareholding of th e Covenantor and its/his/her respective
close associates; or
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Our independent non-executive Directors will be responsible for reviewing, considering and
deciding whether or not to take up the New Business Opportunity. Any Directors who have an
interest shall abstain from voting. In assessing whether or not to exercise the right to acquire the
New Business Opportunity, our Directors will con sider a range of factors including any feasibility
study, counterparty risk, estimated profitability, our Group ’s business and the legal, regulatory and
contractual landscape with a view to arriving at a decision which is in the best interests of our
Shareholders and our Group as a whole.
3. Further undertakings
Pursuant to the Deed of Non-competition, each Covenantor has further undertaken, among
other things, that it/he/she:
(i) shall not make use of any confidential or proprietary information of our Group to any
person or use any of such information without our written consent;
(ii) shall, upon request of our independent non-executive Directors, provide our independent
non-executive Directors with all information n ecessary for their review of the compliance
with and implementation of the Deed of Non-competition by our Controlling
Shareholders and their resp ective close associates;
(iii) shall keep us informed of and provide all information required by our Board to assist our
Directors in their consideration of any New Business Opportunities;
(iv) agrees that our Company will disclose the decisions made by our independent non-
executive Directors on the compliance w ith and implementation of the Deed of Non-
competition in our annual reports or announcements;
(v) shall provide a confirmation annually on compliance with the terms of the Deed of Non-
competition to our Company to facilitate our m aking of relevant disclosure in our annual
reports; and
(vi) shall indemnify our Group against any loss resulting from any breach of the non-
competition undertakings by it/him/her or it s/his/her respectiv e close associates.
4. Termination
The Deed of Non-competition shall continue to be effective until the earlier of the occurrence
of the following events:
(i) the date on which each Covenantor and its/his/her subsidiaries, in aggregate, directly or
indirectly hold less than 30% of the entire issued share capital of our Company;
(ii) the date on which the Covenantors beneficially own or become interested in the entire
issued share capital of our Company; or
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(iii) the date on which the Shares cease to be listed on the Stock Exchange.
5. Corporate Governance Measures
In order to ensure the performance of the above non-competition undertakings, the
Covenantors will:
(i) as required by our Company, provide all information which is necessary for our
independent non-executive Directors to conduct annual examination with regard to the
compliance with the terms of the Deed of Non- competition and the enforcement thereof;
(ii) procure our Company to disclose to the public either in the annual report of our
Company or by issuing a public announcemen t in relation to any decisions made by our
independent non-executive Directors with regard to the compliance with the terms of the
Deed of Non-competition and the enforcement thereof;
(iii) where our independent non-executive Dir ectors shall deem fit, make a confirmation in
relation to the compliance with the terms of the Deed of Non-competition in the annual
report of our Company, and ensure that the disclosure of information relating to
compliance with the terms of the Deed of Non- competition and the e nforcement thereof
is in accordance with the require ments of the Listing Rules; and
(iv) during the period when the Deed of Non-co mpetition is in force, fully and effectually
indemnify our Company against any losses, liab ilities, damages, costs, fees and expenses
as a result of any breach on the part of such Covenantor of any statement, warranty or
undertaking made under the Deed of Non-competition.
The Deed of Non-competition and the rights and obligations thereunder are conditional upon
(a) the Listing Committee granting the listing of, and the permission to deal in, the Shares, as
described in this prospectus, and (b) the Listing a nd dealings in the Shares on the Stock Exchange
taking place.
As the Covenantors have given the non-competition undertakings in favour of our Company,
and none of them has interests in other businesses that compete or are likely to compete with the
business of our Group, our Directors are of the view that they are capable of carrying on our
Group ’s business independently of the Covenantors upon and following the Listing.
RULE 8.10 OF THE LISTING RULES
To the best of their knowledge, information and belief having made all reasonable enquiries,
our Controlling Shareholders, our Directors and th eir respective close associates do not have any
interest in a business apart from our Group ’s business which competes or is likely to compete,
directly or indirectly, with our Group ’s business and would require disclosure under Rule 8.10 of
the Listing Rules.
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DIRECTORS AND SENIOR MANAGEMENT
The following table sets out certain inf ormation concerning our Directors:
Name Age Position
Date of
appointment
Date of
joining our
Group Role and responsibilities
Relationships
amongst
Directors
and senior
management
Executive Directors
Mr. Jia Zhengyi
(賈正屹)
50 Executive Director,
chairman of our
Board and chief
executive officer
14 September
2021
March 2003 Responsible for overall
business strategic
direction, planning and
execution of our Group
None
Ms. Liu Ping
(劉萍)
48 Executive Director 14 September
2021
March 2003 Responsible for overseeing
the business in the
western region of the
PRC
None
Mr. Cong Bin
(叢斌)
43 Executive Director 14 September
2021
March 2008 Responsible for overseeing
the business in the
northern region of the
PRC
None
Non-executive Director
Mr. Lin Qihao
(林啟豪)
42 Non-executive
Director
14 September
2021
September
2018
Responsible for providing
strategic advice to our
Group and developing
business strategy
None
Independent non-executive Directors
Mr. Wu Wing
Kuen, B.B.S.
(胡永權)
66 Independent non-
executive Director
15 December
2023
15 December
2023
Providing independent
advice to the Board,
advising on corporate
governance matters and
serving as a member of
each of the Audit
Committee, Remuneration
Committee and
Nomination Committee
None
Dr. Leung
Kwong Sak
(梁廣錫)
68 Independent non-
executive Director
15 December
2023
15 December
2023
Providing independent
advice to the Board,
advising on business and
strategic matters and
serving as a member of
each of the Audit
Committee, Remuneration
Committee and
Nomination Committee
None
Mr. Yu Chi Wing
(于志榮)
40 Independent non-
executive Director
15 December
2023
15 December
2023
Providing independent
advice to the Board,
advising on corporate
accounting and
financial matters and
serving as the chairman
of each of the Audit
Committee, Remuneration
Committee and
Nomination Committee
None
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The following table sets out certain infor mation concerning our senior management:
Name Age Position
Date
of joining
our Group Role and responsibilities
Relationships
amongst
Directors
and senior
management
Ms. Chen Shenmao
(陳申茂)
41 Vice general manager
and financial
controller of
WellCell
Technology
March 2016 Responsible for supervising
finance, administration and
human resources functions of
WellCell Technology and
WellCell Intelligent
N/A
Mr. Yao Min ( 姚敏) 37 Vice general manager
of WellCell
Technology
April 2008 Responsible for overseeing the
business of central region of
the PRC
N/A
Mr. Xu Shengjian ( 徐聖堅) 41 Supervisor and
regional manager
of WellCell
Technology
March 2008 Responsible for overseeing the
business of Hunan Province of
the PRC
N/A
DIRECTORS
Our Board of Directors consists of seven Directo rs, comprising three executive Directors, one
non-executive Director and three independent non- executive Directors. Our Board of Directors is
responsible for and has general powers for the management and conduct of our business. The
functions and duties of our Board include, but are not limited to, convening Shareholders ’
meetings, reporting the Board ’s work at Shareholders ’ meetings, implementing resolutions passed at
Shareholders ’ meetings, setting strategic directions of our Group, determining our business and
investment plans as well as exerc ising powers, functions and duties as conferred by the Articles of
Association of our Company.
We have entered into a service contract with eac h of our executive Directors and a letter of
appointment with each of our non-executive Direct or and independent non- executive Directors.
Pursuant to our Articles of Association, our Directors shall be subject to retirement by rotation at
least once every three years, who shall then be eligi ble for re-election. Each of the service contracts
with our executive Directors is for an initial term of three years commencing from the Listing Date,
renewable upon re-election and re-appointment and subject to the applicable provisions of the
Listing Rules and/or other applicable laws and regulations.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
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The biographies of our Directors are set out below:
Executive Directors
Mr. Jia Zhengyi ( 賈正屹), aged 50, was appointed as our executive Director on 14 September
2021 and as our chairman of the Board and chief executive officer on 31 May 2022. Mr. Jia is the
co-founder of our Group and is primarily responsible for overall business strategic direction,
planning and execution of our Group. As at the Lat est Practicable Date, Mr. Jia was the chairman
of the board of directors and general manager of WellCell Technology and a director of all
subsidiaries of our Group.
Mr. Jia has more than 20 years of experience in the information technology and
telecommunication industry. Before establishing our Group, Mr. Jia had worked in various
positions in the information technology sector. From April 1998 to April 1999, he worked as an
electrical technician at China Construction Sevent h Engineering Bureau Installation Engineering
Co., Ltd (Fuzhou Branch) ( 中國建築第七工程局安裝工程有限公司福州分公司). From June 2000
to April 2002, he served as a sales engineer at Zhuhai Wanhe Technology Limited* ( 珠海萬禾技術
有限公司)( ‘‘Zhuhai Wanhe ’’). In March 2003, Mr. Jia co-founded WellCell Technology, an
indirect wholly-owned subsidiary of our Group , and successively served as chairman and general
manager since May 2009.
Mr. Jia obtained a bachelor ’s degree in applied physics from Northeastern University （東北大
學）in the PRC in July 1997. He was awarded a certification of certified project manager (IPMA
Level C) issued by the China Certification Manage ment Board of the Project Management Research
Committee ( ‘‘CPMRC ’’) from June 2016 to June 2021. He also hold electronic technology engineer
(intermediate) comp etency certificate* ( 電子技術工程師(中級)職稱證書) issued by Zhuhai Human
Resources and Social Security Bureau* ( 珠海市人力資源和社會保障局) in December 2018.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
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Mr. Jia was a director of the following PRC com panies prior to their respective dissolution:
Name of company Nature of business Date of dissolution
Means of
dissolution
Guizhou WellCell
Communication
Technology Co., Ltd.*
(貴州經緯天地通訊技
術有限公司)
(‘‘Guizhou WellCell ’’)
Provision of
telecommunication
network support services
12 February 2018 Deregistration
Zhuhai Yuanpeng
Communication
Technology Co., Ltd.*
(珠海市遠鵬通訊技術
有限公司)
Development and
maintenance of software;
development and
application of geographic
information systems,
wholesale of electronic
products and
telecommunication
equipment (excluding
mobile communication
terminal equipment)
5 January 2023 Deregistration
(Note 1)
Note 1: The business license of Zhuhai Yuanpeng Communication Technology Co., Ltd.* ( 珠海市遠鵬通訊技術有
限公司) had been automatically revoked in November 2004 prior to its deregistration, since it did not
conduct the required annual review procedures with in the time limit. As confirmed by our PRC Legal
Advisers, the revocation of the business license of such company did not and will not affect Mr. Jia ’s
qualification to act as a director, supervisor or seni or management of a PRC company. Mr. Jia confirmed
that (i) the Company had no business operation immediately prior to its revocation of business license; (ii)
he was not responsible for company secretarial matte rs such as the conduct of annual review procedures of
the company, which was assigned to certain specified staff of the company; and (iii) there was no
wrongdoing, dishonest or fraudulent act on his part in respect of the said revocation. Mr. Jia further
confirmed that up to the Latest Practicable Date, he h ad not received, in relation to the revocation, any (i)
claims or legal proceedings made or commenced agai nst him by any creditors of the above mentioned
company or any third parties; (ii) notice or sanctio n by any relevant government authorities against him
imposing any penalty or order for rectification or alle ging that he is personally liable for the revocation; or
(iii) notice of disqualification by relevant authorities requiring him to cease to act as director of any PRC
companies.
Mr. Jia confirmed that there was no wrongful act on his part leading to the revocation or
deregistration of the companies above, which were so lvent prior to their respective 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 revocation or deregistration of these companies.
For more details about Guizhou WellCell (a former subsidiary of WellCell Technology prior
to its deregistration), pleas e refer to the paragraphs headed ‘‘History, Reorganisation and Corporate
Structure — Establishment and development of our Company and our major subsidiaries —
Guizhou WellCell (deregistered) ’’in this prospectus.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
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Ms. Liu Ping ( 劉萍), aged 48, was appointed as our executive Director on 14 September
2021. Ms. Liu is the co-founder of our Group and is responsible for overseeing the business of
western region of the PRC. As at the Latest Practicable Date, Ms. Liu was a director, vice general
manager and secretary of the board of directors of WellCell Technology and the general manager
responsible for the business in the western region of the PRC.
Ms. Liu has more than 20 years of experience in the information technology and
telecommunication industry. In April 1998, she worked at Zhuhai Wanhe and left in February 2003
with her last position as a marketing manager. In March 2003, Ms. Liu co-founded WellCell
Technology, an indirect wholly-owned subsidiary of our Group, and successively served as a
secretary of the board, vice general manager and d irector of WellCell Technology since April 2016.
Ms. Liu obtained a bachelor ’s degree in international trade from Sichuan University ( 四川大
學) (formerly known as Sichuan United University* ( 四川聯合大學) in the PRC in July 1996. She
was awarded a certification of certified projec t manager (IPMA Level C) by the CPMRC from June
2016 to June 2021.
Mr. Cong Bin ( 叢斌), aged 43, was appointed as our executive Director on 14 September
2021. Mr. Cong is primarily responsible for overseeing the business in the northern region of the
PRC. As at the Latest Practicable Date, Mr. Cong was a director, the vice general manager and the
general manager responsible for the business in t he northern China region of WellCell Technology,
and the general manager of WellCell Intelligent.
Mr. Cong has more than 19 years of experience in the information technology and
telecommunication industry. From November 2003 to March 2008, he worked at Zhuhai Hart
Technology Co., Ltd* ( 珠海哈特科技有限公司), as a sales manager, where he was primarily
responsible for conducting market research, imple menting sales plans, tracking project progresses
and providing solutions for the company ’s image and video products. In March 2008, he joined our
Group as regional manager of the eastern region of the PRC, and has been the general manager
responsible for business in the northern region of the PRC since April 2011. Mr. Cong has been a
director and vice general manager of WellCel l Technology since April 2016 and November 2018,
respectively.
Mr. Cong obtained a diploma in communication engineering from Jilin University ( 吉林大學)
in the PRC in December 2002. He was later awarded a certification of certified project manager
(IPMA Level C) by the CPMRC in June 2017. He was awarded a qualification of
telecommunication professional in terminal and bu siness profession at the intermediate level ( 通信
專業技術人員職業資格(終端與業務)(中級)) by the Ministry of Human Resources and Social
Security of the PRC ( 中
華人民共和國人力資源和社會保障部) and Ministry of Industry and
Information Technology of the PRC* ( 中華人民共和國工業和信息化部) in October 2018, and an
electronic engineer (intermediate) competency certificate* ( 電子技術工程師(中級)職稱証書)b y
Zhuhai Human Resources and Social Security Bureau* ( 珠海市人力資源和社會保障局)i n
December 2018. In May 2019, Mr. Cong obtained a qualification of associate constructor (level 2)
*( 二級建造師執業資格) by the Department of Human Resources and Social Security of
Guangdong Province ( 廣東省人力資源和社會保障廳) and Department of Housing and Urban-Rural
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
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Development of Guangdong Province ( 廣東省住房和城鄉建設廳). In October 2019, Mr. Cong was
selected as an Industrial Young Talent in ‘‘Cultivation Program for Industrial Young Talent in
Zhuhai City ’’by Zhuhai Human Resource Leading Group Office ( 珠海市人才工作領導小組辦公
室). In September 2020, Mr. Cong obtained a qualification of constructor (level 1)* ( 一級建造師執
業資格) by the Ministry of Human Resources and Social Security of the PRC ( 中華人民共和國人
力資源和社會保障部) and Ministry of Housing and Urban-Rural Development of the PRC ( 中華人
民共和國住房和城鄉建設部).
Non-executive Director
Mr. Lin Qihao ( 林啟豪), aged 42, was appointed as our non-executive Director on 14
September 2021. Mr. Lin is responsible for provi ding strategic advice to our Group, and developing
and implementing our business strategies. As at t he Latest Practicable Date, Mr. Lin was a director
of all subsidiaries of our Group.
Mr. Lin has more than 23 years of experience in the electronic technology industry. He was a
director of Zhuhai Special Economic Zone Lij ia Electronic Develop ment Co., Limited* ( 珠海經濟
特區利佳電子發展有限公司) from 1999 to August 2016, and has been a supervisor since August
2016, responsible for supervision of company ope rations. In June 2005, Mr. Lin began working at
Zhuhai Qishuo Electronic Development Co., Limited* ( 珠海啟爍電子科技有限公司)w h e r eh ew a s
a director and manager, primarily responsible for overall management. In September 2018, Mr. Lin
joined our Group as a director of WellCell Technology.
Mr. Lin was a director of the following company which was incorporated in Hong Kong prior
to its respective dissolution:
Name of company Nature of business
Date of
dissolution Mean of dissolution
Zhuhai Shi Chuang
Import and Export
Company Limited
(珠海世創進出口
有限公司)
Trading 13 July 2018 Deregistration under section
751 of the Companies
Ordinance Note 1
Note 1: Under section 751 of the Companies Ordinance, dere gistration refers to the process whereby a private
company or a director or a member of a private compa ny incorporated under the Companies Ordinance
which has ceased its operation and is not insolvent applies to the Registrar of Companies in Hong Kong of
Hong Kong for deregistration. Such application can only be made if (a) all members of the company agree
to the deregistration; (b) the company has not commenced operation or business, or has not been in
operation or carried on business during the 3 months i mmediately before the application; (c) the company
has no outstanding liabilities; (d) the company is not a party to any legal proceedings; (e) the company ’s
assets do not consist of any immovable property situ ate in Hong Kong; and (f) if the company is a holding
company, none of its subsidiary ’s assets consist of any immovable property situate in Hong Kong.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
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Independent Non-executive Directors
Mr. Wu Wing Kuen, B.B.S. (胡永權), aged 66, was appointed as our independent non-
executive Director on 15 December 2023. He is a member of each of the Audit Committee, the
Remuneration Committee and the N omination Committee. He is primarily responsible for providing
independent advice to the Board and advis ing on corporate governance matters.
Mr. Wu has more than six years of experience in corporate management and governance of
listed companies. He is currently the director of Jet View Investment Limited, which he joined in
December 1991, and Jade Mind Investment Limit ed, which he joined since October 2004. Mr. Wu
is also an independent non-executive director of (i) Nanfang Communication Holdings Limited, a
company listed on the Main Board of the Stock Exchange (stock code: 1617) since November
2016; (ii) HG Semiconductor Limited (formerly known as HongGuang Lighting Holdings Company
Limited), a company listed on the Main Board of the Stock Exchange (stock code: 6908) since
December 2016; and (iii) EFT Solutions Holdi ngs Limited, a company listed on the GEM of the
Stock Exchange (stock code: 8062) since March 2019. Mr. Wu was an independent non-executive
director of (i) Million Cities Ho ldings Limited, a company listed on the Main Board of the Stock
Exchange (stock code: 2892), from June 2018 to D ecember 2021; and (ii) Palinda Group Holdings
Limited (formerly known as Food Idea Holdings Limited), a company listed on the GEM of the
Stock Exchange (stock code: 8179) from January 2019 to December 2022.
Mr. Wu was a director of the following Hong Kong companies prior to their respective
dissolution:
Name of company Nature of business
Date of
dissolution Means of dissolution
Frankie Development
Limited ( 富僑發展有限
公司)
Property
investment
29 May 2020 Deregistration under section
751 of the Companies
Ordinance (Note 1)
Honest Supreme Limited
(洪寶有限公司)
Trading 10 July 2009 Deregistration under
section 291AA of the
Predecessor Companies
Ordinance (Note 2)
Janie Michele (H.K.)
Knitters Limited
Manufacturing
of garment
19 May 2006 Deregistration under
section 291AA of the
Predecessor Companies
Ordinance (Note 2)
Jenzon Investment
Limited ( 真誠投資有限
公司)
No active
business
activities
5 January 2007 Deregistration under
section 291AA of the
Predecessor Companies
Ordinance
(Note 2)
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Name of company Nature of business
Date of
dissolution Means of dissolution
Join Profit Industrial
Limited ( 三豐實業有限
公司)
No active
business
activities
17 November
2006
Deregistration under
section 291AA of the
Predecessor Companies
Ordinance
(Note 2)
Joint Victory Holdings
Limited
No active
business
activities
28 December
2012
Deregistration under
section 291AA of the
Predecessor Companies
Ordinance (Note 2)
J o yL u c kI n t e r n a t i o n a l
Limited ( 喜運國際有限
公司)
No active
business
activities
9 November
2007
Deregistration under
section 291AA of the
Predecessor Companies
Ordinance (Note 2)
Joy Point Development
Limited ( 向欣發展有限
公司)
No active
business
activities
4 January 2019 Deregistration under
section 751 of the
Companies Ordinance (Note 1)
Joy Profit (Hong Kong)
Limited ( 利欣(香港)有
限公司)
No active
business
activities
1 February
2019
Deregistration under
section 751 of the
Companies Ordinance (Note 1)
Joy Treasure
Development Limited
(怡寶發展有限公司)
No active
business
activities
1 March 2019 Deregistration under
section 751 of the
Companies Ordinance (Note 1)
King Brain Investment
Limited ( 帝聰投資有限
公司)
No active
business
activities
20 July 2001 Deregistration under
section 291AA of the
Predecessor Companies
Ordinance
(Note 2)
Land Treasure Limited
(田珍有限公司)
No active
business
activities
8 June 2001 Deregistration under
section 291AA of the
Predecessor Companies
Ordinance
(Note 2)
Notes:
1. Under section 751 of the Companies Ordinance, dere gistration refers to the process whereby a private
company or a director or a member of a private company incorporated under the Companies Ordinance which
has ceased its operation and is not insolvent applies to the Registrar of Companies in Hong Kong for
deregistration. Such application can only be mad e if (a) all members of the company agree to the
deregistration; (b) the company has not commenced operation or business, or has not been in operation or
carried on business during the 3 months immediatel y before the application; (c) the company has no
outstanding liabilities; (d) the company is not a party to any legal proceedings; (e) the company ’s assets do
not consist of any immovable property situate in Hong Kong; and (f) if the company is a holding company,
none of its subsidiary ’s assets consist of any immovable property situate in Hong Kong.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
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2. Under section 291AA of the Predecessor Companies Ordinance, an application for deregistration can only be
made by the company, a director of the company or a m ember of the company if (a) all the members of such
company agreed to such deregistration; (b) such compa ny has never commenced business or operation, or has
ceased to carry on business or ceased operation for more than three months immediately before the
application; and (c) such company has no outstanding liabilities.
Mr. Wu confirmed that there was no wrongful act on his part leading to the dissolution of the
companies above, which were solvent immediately prior to dissolution, and he is not aware of any
actual or potential claim that has been or will be ma de against him as a result of the dissolution of
these companies.
Mr. Wu was awarded a Bronze Bauhinia Star by the HKSAR Government in July 2012. Mr.
Wu is currently a voting member of the Hong Kong Jockey Club and the president of the Sha Tin
District Community Fund. He was a member of the Appeal Tribunal Panel of the Appeal Tribunal
(Buildings) constituted under section 48 of the Buildings Ordinance (Chapter 123 of the Laws of
Hong Kong).
Dr. Leung Kwong Sak ( 梁廣錫), aged 68, was appointed as our independent non-executive
Director on 15 December 2023. He is a member o f each of the Audit Committee, the Remuneration
Committee and the Nomination Committee. He is prim arily responsible for providing independent
advice to the Board and advising on business and strategic matters.
Dr. Leung has more than 30 years of experience in computer science and engineering. Dr.
Leung joined the Chinese University of Hong Kong ( ‘‘CUHK ’’) as a full-time lecturer of the
department of computer science and engineering in August 1985, and served as a senior lecturer
from August 1990 to December 1995. Dr. Leung was the chairman of the department of computer
science and engineering of CUHK from August 1999 to July 2005. Between January 1996 and July
2002, Dr. Leung served as a reader (carrying the academic title of ‘‘Professor I ’’) of the department
of computer science and engineering, and from August 2002, he was a professor of computer
science and engineering until July 2018. Dr. Leung retired from CUHK in August 2018, and was
subsequently appointed by CUHK as a research pro fessor serving his tenure until July 2021. From
January 2014 to July 2021, he was appointed by CUHK as an associate director of the Institute of
Future Cities concurrently. Dr. Leung was awarded the title of emeritus professor by CUHK with
effect from August 2018. Dr. Leung has been a disti nguished professor of Department of Applied
Data Science of Hong Kong Shue Yun University since November 2022.
Dr. Leung obtained a bachelor of science (engi neering) degree in electrical and electronics
engineering and a degree of doctor of philosophy from the University of London in the United
Kingdom in August 1977 and December 1980, respect ively. He was one of the chairpersons of the
Association for Computing Machinery — Hong Kong Chapter and a council member of the Hong
Kong Computer Society from 1993 to 1996. He was one of the distinguished fellows of Hong Kong
Computer Society in 2000. He is also a fellow of The Hong Kong Institution of Engineers, a
member of both The Institution of Engineering a nd Technology and Association for Computing
Machinery, and a life senior member of The Institu te of Electrical and Electronics Engineers, Inc..
Dr. Leung was registered as a chartered engineer by The Engineering Council (UK) in July 1986,
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
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and was admitted as a member of and has been a Chart ered Electrical Engine er of The Institute of
Electrical Engineers (currently known as The Institution of Engineering and Technology (UK))
since January 1986.
Dr. Leung was a director of the following ent ity which was incorporated in Hong Kong before
its dissolution:
Name of entity Nature of business
Date of
dissolution Means of dissolution
Well Giant Investment Limited
鉅佳投資有限公司
No active business
activities
29 August 2014 Struck off
Dr. Leung confirmed that there was no wrongful act on his part leading to the dissolution of
the entity above, which was solvent immediatel y prior to dissolution, and he is not aware of any
actual or potential claim that has been or will be ma de against him as a result of the dissolution of
the above company.
Mr. Yu Chi Wing ( 于志榮), aged 40, was appointed as our independent non-executive
Director on 15 December 2023. He is the chairman of each of the Audit Committee, the
Remuneration Committee and the N omination Committee. He is primarily responsible for providing
independent advice to the Board and advising on c orporate accounting and financial matters.
Mr. Yu has more than 15 years of experience in ad visory, accounting, taxation and auditing.
From June 2005 to June 2014, Mr. Yu worked at RSM Hong Kong, with his last position as
manager. From June 2014 to May 2015, he worked as the financial controller at Niche-Tech (Hong
Kong) Limited. Since June 2015, he has worked as the financial controller of Tactful Building
Company Limited. Mr. Yu commen ced his business of audit and assurance services under his name
in March 2015 and founded JR & Co., Certified Publ ic Accountants in September 2016, and later
co-founded Emerald Capital CPA & Co. in May 2021. He has also been an independent non-
executive director of Fameglow Holdings Limite d (stock code: 8603) since September 2018, Wah
Wo Holdings Group Limited (stock code: 9938) since January 2020 and GC Construction Holdings
Limited (stock code: 1489) since October 2022.
Mr. Yu obtained a bachelor of arts degree with a major in accountancy from The Hong Kong
Polytechnic University in December 2005. He was admitted as a member of the Hong Kong
Institute of Certified Public Accountants in January 2012 and is currently a practising member.
Other disclosure pursuant to Rul e 13.51(2) of the Listing Rules
Save as disclosed in this section and the section headed ‘‘Relationship with our Controlling
Shareholders ’’, each of our Directors confirms with respect to himself or herself that: (i) he or she
is independent of and had no other relationships with any Directors, members of our senior
management, Substantial Shareholde rs or Controlling Shareholders as at the Latest Practicable Date;
(ii) apart from our Company, in the last three years leading up to and as at the Latest Practicable
Date, he or she was not holding, nor had he held directorships in any other public company the
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
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securities of which are listed on a ny securities market in Hong Kong and/or overseas; (iii) he or she
did not hold other positions in our Company or other members of our Group as at the Latest
Practicable Date; (iv) he or she does not have any in terests in our Shares within the meaning of Part
XV of the SFO, save as disclosed in the section headed ‘‘Substantial Shareholders ’’ of this
prospectus; (v) he or she does not have any interes ts in any business which competes or is likely to
compete, directly or indirectly, with our Group ’s business, which is disclosable under the Listing
Rules and (vi) to the best of the knowledge, information and belief of our Directors having made all
reasonable enquiries, there are no additional information relating to our Directors or senior
management that is required to be disclosed purs uant to Rule 13.51(2) of the Listing Rules and no
other matters with respect to their appointments that need to be brought to the attention of our
Shareholders as at the Latest Practicable Date.
SENIOR MANAGEMENT
Our senior management members are respons ible for the day-to-day management and
operation of our business and report to our Directors. The biographies of our senior management
team are set out below:
Ms. Chen Shenmao ( 陳申茂), aged 40, is the vice general manager and financial controller of
our Group and primarily responsible for supervis ing finance, administration and human resources
functions of WellCell Technolo gy and WellCell Intelligent.
Ms. Chen has over 16 years of experience in the accounting and financing field. She started
her career in AAFUD Industry (Zhuahai) Co., Ltd* ( 珠海雅富興源食品工業有限公司) (formerly
known as Zhuhai Special Economic Zone Kanglong Xingyuan Food Industry Co., Limited* ( 珠海經
濟特區康龍興源食品工業有限公司)) in July 2005 and left as an accounting supervisor of the
finance department in February 2009. From February 2009 to July 2012, she worked as a finance
manager in Zhuhai Heyi Decoration Engineering Co., Limited* ( 珠海市合藝裝飾工程有限公司)
where she was primarily responsible for accountin ga n dt a xf i l i n g .S h et h e ns e r v e da saf i n a n c e
manager in Zhuhai Jindian Cinema Co., Limited* ( 珠海今典影院有限公司) from December 2012 to
May 2015, where she was responsible for the overa ll accounting and tax operation management. In
March 2016, she joined our Group as a finance manager of WellCell Technology and has been the
vice general manager and a director of We llCell Technology since November 2018.
Ms. Chen Shenmao obtained a diploma in com puterised accounting from Hunan Economic
Management Cadre Institute* （湖南經濟管理幹部學院）in the PRC in June 2003 and a bachelor ’s
degree in accounting from Hunan University ( 湖南大學) in the PRC in June 2008. Ms. Chen was
recognised as an intermediate accountant ( 中級會計師) and a senior accountant ( 高級會計師)b y
Guangdong Human Resources a nd Social Security Bureau* ( 廣東人力資源與社會保障廳)i nM a y
2010 and May 2020, respectively. She was awarded a Certificate of Zhuhai Industrial Young Talent
(珠海市產業青年優秀人才證書) by Zhuhai Human Resource Leading Group Office ( 珠海市人才工
作領導小組辦公室) in December 2020. She was elected as a representative of 10th People ’s
Congress of Xiangzhou District, Zhuhai, Guangdong Province ( ‘‘Xiangzhou People ’s Congress ’’)
in October 2021 and was appointed as a member of Meihua Sub-district Work Committee of
Xiangzhou People ’s Congress in April 2022.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
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Mr. Yao Min ( 姚敏), aged 37, is the vice general manager of our WellCell Technology and
primarily responsible for overseeing the business of central region of the PRC.
Mr. Yao has over 13 years of experience in the network computing and telecommunications
industry. He joined our Group in April 2008 as a tel ecommunication network enhancement engineer
and successively worked as a project manager f or business of central region from April 2010 to
April 2012, a regional manager for business of central region from May 2012 to November 2018,
an employee supervisor of WellCell Technology from April 2016 to September 2018, and a vice
general manager of WellCell Technology and gener al manager responsible for business of central
region of the PRC since November 2018.
Mr. Yao Min obtained a diploma in software technology from Guangdong Vocational College
of Science and Technology* ( 廣東科學技術職業學院) in the PRC in June 2008. He was awarded a
Certificate of Zhuhai Industrial Young Talent ( 珠海市產業青年優秀人才證書) by Zhuhai Human
Resource Leading Group Office ( 珠海市人才工作領導小組辦公室) in December 2020.
Mr. Xu Shengjian ( 徐聖堅), aged 41, is the supervisor and regional manager of WellCell
Technology and primarily responsible for business of Hunan Province of the PRC.
Mr. Xu has over 13 years of experience in the n etwork computing and telecommunication
industry. He joined our Group in March 2008 as a manager of Beijing office of WellCell
Technology and worked as a manager of the engine ering department of WellCell Technology from
January 2011 to December 2014. Mr. Xu was the chairman of the supervisory board of WellCell
Technology from April 2016 to September 2018, and has been a regional manager and supervisor
of WellCell Technology since March 2015 and September 2018, respectively.
Mr. Xu Shengjian ob tained a bachelor ’s degree in compute science and technology from
Beijing Normal University (Zhuhai Campus) ( 北京師範大學(珠海校區)) in the PRC in July 2006.
Saved as disclosed above, as at the Latest Pr acticable Date, none of our senior management
had any directorships in any listed company over the past three years and none of our senior
management had any relationship with any Director , senior management, Substantial Shareholders
or Controlling Shareholders.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
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COMPANY SECRETARY
Mr. Yiu Chun Wing ( 姚俊榮) (formerly known as Yiu Ka Wai ( 姚家煒)), aged 42, is our
company secretary, primarily responsible for finan cial reporting, financial planning, financial
control and the overall secretarial matters of our Group. He joined our group in July 2021.
Mr. Yiu has over 15 years of experience in auditing, accounting and financial management.
Prior to joining our Group, he had been a semi-senior auditor at Lau Leigh Choi Consultants
Limited from August 2004 to October 2005, an accountant at HLB Hodgson Impey Cheng Limited
from November 2005 to December 2007 where his last position was a senior accountant, and a
deputy assistant audit manager of ZYCPA Company Limited from August 2008 to December 2010.
He later worked successively as an audit supervising senior and an audit supervisor at Moore
Stephens Associates Limited from December 2 010 to November 2012. In February 2014, he was a
senior officer of accounts and finance department of Promise (Hong Kong) Co., Limited until April
2015, when he then immediately took up the role of f inancial controller and company secretary of
Zhejiang United Investment Holdings Group Limit ed (formerly known as Fraser Holdings Limited),
a company listed on the Main Board of the Stock Exchange (stock code: 8366) until June 2017. He
then joined Ming Kee Cargo Company Limit ed from July 2017 to November 2017 and Unite
Intelligence Control Limited fro m February 2018 to July 2018, both as the financial controller. He
was an independent non-executive Director of B& D Strategic Holdings Limited, a company listed
on the Main Board of the Stock Exchange (stock code: 1780) from April 2019 to January 2020.
From November 2018 to June 2021, he was the financial controller and company secretary of Tin
Shing Group Holdings Limited. He has been an independent non-executive director of China Wah
Yan Healthcare Limited, a company listed on the M ain Board of the Stock Exchange (stock code:
648) since December 2022.
Mr. Yiu obtained a bachelor of business administration degree in accounting from the Hong
Kong University of Science and Technology in November 2004. He was admitted as a certified
public accountant of the Hong Kong Institute of Certified Public Accountants in May 2010.
COMPLIANCE ADVISER
We have appointed Halcyon Capital Limited as our compliance adviser pursuant to Rule
3A.19 of the Listing Rules. We will consult with and seek advice from the compliance adviser 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 our Company proposes to use the proceeds of the Share Offer in a manner
different from that detailed in this prospectus or if the business activities, developments
or results of our Group deviate from any for ecast, estimate or other information in this
prospectus; and
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
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(iv) where the Stock Exchange makes an inquiry of our Group under the Listing Rules
regarding unusual movements in the price or trading volume of the Shares.
The term of appointment of the compliance adv iser shall commence on the Listing Date and
end on the date on which we comply with Rule 13.46 of the Listing Rules in respect of our
financial results for the first f ull financial year commencing after the Listing Date and such
appointment may be subject to extension by mutual agreement.
BOARD COMMITTEES
Audit Committee
Our Company established the Audit Committ ee on 15 December 2023 with written terms of
reference in compliance with paragraphs D.3.3 and D.3.7 of Part 2 of the Corporate Governance
Code. The primary duties of the Audit Committee ar e, among other things, to review and supervise
the financial reporting process and internal control system of our Group. The Audit Committee
comprises three members, namely Mr. Wu Wing Kuen, Dr. Leung Kwong Sak and Mr. Yu Chi
Wing. Mr. Yu Chi Wing is the chairman of the Audit Committee.
Remuneration Committee
Our Company established the Remuneration Committee on 15 December 2023 with written
terms of reference in compliance with paragraph E.1.2 of Part 2 of the Corporate Governance Code.
The Remuneration Committee comprises three members, namely Mr. Wu Wing Kuen, Dr. Leung
Kwong Sak and Mr. Yu Chi Wing. Mr. Yu Chi Wing is the chairman of the Remuneration
Committee. The primary duties of the Remuneration Committee are, amongst other things, to make
recommendations to our Board on the terms of remuneration packages, bonuses and other
compensation payable to our Directors and senior management, and on our Group ’sp o l i c ya n d
structure for all remuneration of our Directors and senior management.
Nomination Committee
Our Company established the Nomination Committee on 15 December 2023 with written
terms of reference in compliance with paragraph B.3.1 Part 2 of the Corporate Governance Code.
The Nomination Committee comprises three m embers, namely Mr. Wu Wing Kuen, Dr. Leung
Kwong Sak and Mr. Yu Chi Wing. Mr. Yu Chi Wing, is the chairman of the Nomination
Committee. The Nomination Committee is mainly responsible for making recommendations to our
Board on the appointment of Directors and succession planning for our Directors.
COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE
Our company ’s corporate governance practices are bas ed on principles and code provision as
set out in the Corporate Governance Code. Except for the deviation from Corporate Governance
Code (Part 2) provision C.2.1, our Company ’s corporate governance practices have complied with
the Corporate Governance Code.
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Corporate Governance Code (Part 2) provision C .2.1 stipulates that the roles of chairman and
chief executive should be separate and should not be performed by the same individual. Mr. Jia is
the chairman of the Board and the chief executive officer of our Company. Considering that Mr. Jia
is one of the founders of our Group and has been operating and managing our Group since its
establishment in 2003, our Board believes that it is in the best interests of our Group to have Mr.
Jia holding both roles for effective management and business development. Therefore, our Directors
consider that the deviation from the Corporat e Governance Code (Part 2) provision C.2.1 is
appropriate in such circumstance.
Furthermore, we are committed to achieving high standards of corporate governance with a
view to safeguarding the interests of our Shareh olders as a whole. Our Directors are aware that
upon Listing, we are expected to comply with such code provisions. Any such deviation shall
however be carefully considered, and the reasons for such deviation shall be given in our interim
report and annual report in respect of the relevant period. Save as disclosed above, we will comply
with the code provisions set out in the Corporate Governance Code after Listing. The Board will
also regularly review the contribution required from a director to perform his responsibilities to the
Company and ensure each Director can devote su fficient time and attention to the Company ’s
affairs.
BOARD DIVERSITY POLICY
We have adopted the Board Diversity Policy which sets out the approach to achieve and
maintain an appropriate balance of diversity p erspectives of our Board that are relevant to our
business growth. Pursuant to the Board Diversi ty Policy, selection of B oard candidates will be
based on a range of diversity perspectives, inclu ding but not limited to gen der, age, cultural and
educational background, professional qualifica tions, skills, knowledge , industry experience,
ethnicity and length of service. The ultimate deci sion will be based on merit and contribution that
the selected candidates will bring to our Board.
Our Board comprises seven members, including three executive Directors, one non-executive
Director and three independent non-executive Directors. Our Directors have a balanced mix of
experiences, including informat ion technology and telecommuni cation, electronic technology,
computer science and engineering, corporate man agement and governance, advisory, accounting,
taxation and auditing. Furthermore, the ages of our Directors range from 39 years old to 68 years
old. We will take steps to promote gender diversi ty at all levels of our Company, including but
without limitation at the Board and senior management levels. While we recognise that gender
diversity at the Board level can be improved given its current composition of a majority of male
Directors, we will continue to apply the principle o f appointments based on merits with reference to
our Board Diversity Policy as a whole.
Upon Listing, one out of seven of our Directors is female. Under the objectives of the Board
Diversity Policy, we will give preference to fe male candidates in the succession planning of
Directors. As female representation in senior role s throughout the industry and the pool of qualified
females keeps growing, we expect to have more female members who would be qualified to sit on
our Board in the future.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
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We are also committed to adopting a similar app roach to promote diversity of the management
(including but not limited to the s enior management) of our Company to enhance the effectiveness
of our corporate governance.
Our Nomination Committee is responsible for en suring the diversity of our Board. After the
Listing, our Nomination Committee will review the Board Diversity Policy from time to time to
ensure its continued effectiveness and we will disc lose the implementation of the Board Diversity
Policy in our corporate governance report on an annual basis.
REMUNERATION OF DIRECTORS AND SENIOR MANAGEMENT
The aggregate amounts of compensation (includi ng fees, salaries, allowances and benefits in
kind, discretionary bonus and contributions to de fined contribution plans) which were paid to the
Directors for each of FY2020, FY2021, FY2022 and 6M2023 were approximately RMB0.7 million,
RMB0.7 million, RMB0.8 million and RMB0.3 million, respectively.
Further details of the remuneration of th e Directors are set out in the section headed
‘‘Statutory and General Information — Further information about directors, management and staff
— Directors ’ remuneration ’’in Appendix IV to this prospectus.
The five individuals whose emoluments were the highest in the Group include 2, 2, 2 and nil
directors for the years ended 31 December 2020, 2021 and 2022 and six months ended 30 June
2023. The aggregate remuneration including sa laries, allowances and benefits in kind and
contributions to defined contribution plans paid to our Group ’s five highest paid individuals
(excluding our Directors) for FY2020, FY2021, FY2022 and 6M2023 were as follows:
FY2020 FY2021 FY2022 6M2023
RMB’000 RMB ’000 RMB ’000 RMB ’000
Wages and salaries 752 1,010 1,590 1,124
Pension costs — defined contribution plans 31 57 75 95
783 1,067 1,665 1,219
D u r i n gt h eT r a c kR e c o r dP e r i o d ,n oe m o l u m e n tw a sp a i db yo u rG r o u pt oa n yo ft h eD i r e c t o r s
or the five highest paid individuals (including D irectors and employees) as an inducement to join or
upon joining our Group or as compensation for loss of office. None of our Directors has waived
any emoluments during the Track Record Period.
Except as disclosed above, no other payments of remuneration have been made, or are
payable, in respect of the Track Record Period, by our Group to or on behalf of any of the
Directors. For additional information on Directors ’ remuneration during the Track Record Period as
well as information on the highest paid indi viduals, please refer to Notes 9 and 28 in the
Accountants ’ Report set out in Appendix I to this prospectus.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
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An aggregate sum of approximately RMB0.7 million is expected to be paid to our Directors
(including non-executive Directors) as annual Directors ’ fees and other emoluments by our Group
for the year ending 31 December 2023 under the arrangements in force at the date of this
prospectus excluding discretionary bonus.
REMUNERATION POLICY
The Director ’s fee for each of our Directors is subject to the Board ’s review from time to time
in its discretion after taking into account the r ecommendation of our Remuneration Committee. The
remuneration package of each of our Directors is determined by reference to market terms,
seniority, experience, and duties and responsibilities of that Director within our Group. Our
Directors are entitled to statutory benefits as r equired by law from time to time, such as pensions.
Prior to the Listing, the remuneration policy of our Group to reward its employees and
executives is based on their performance, qualifi cations, competence demonstrated and market
comparable remuneration. A remuneration packag e typically comprises salary, contribution to
pension schemes and discretionary bonuses relating to the profit of the relevant company. Upon and
after the Listing, the remuneration package of o ur Directors and the senior management will, in
addition to the above factors, be linked to the return to the Shareholders. The Remuneration
Committee will review annually the remuneration of all our Directors to ensure that it is attractive
enough to attract and retain a comp etent team of executive members.
STAFF RELATIONS
Our Group recognises the importance of a g ood relationship with our employees. The
remuneration payable to our employees includes b asic salaries, allowan ces, commission, pension
and bonus. The ability to recruit and retain experienced and skilled labour is crucial to the growth
and development of our Group. In addition to pro viding our staff with the opportunities to receive
regular on-the-job trainings, our Group strives to create a harmonious and caring working
environment for our staff.
Our Group has not experienced any significant problems with our employees save as those
arising from the ordinary course of business or di sruption to the operations due to labour disputes,
nor has our Group experienced any difficultie s in the recruitment and retention of staff.
Please refer to the section headed ‘‘Business — Employees ’’in this prospectus for further
details relating to the number of staff, staf f benefits and training policy of our Group.
DIRECTORS ’ COMPETING INTERESTS
None of our Directors nor their respective close associates is interested in any business which
competes or is likely to compete with that of our Group.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
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SUBSTANTIAL SHAREHOLDERS
So far as our Directors are aware, immediately f ollowing the completion of the Capitalisation
Issue and the Share Offer (without taking into acco unt the exercise of the Over-allotment Option or
a n yS h a r e sw h i c hm a yb ei s s u e dp u r s u a n tt ot h ee xercise of any options that may be granted under
the Share Option Scheme), each of the following persons will have an interest or short position in
the Shares or underlying Shares which would fal l to be disclosed to our Company and the Stock
Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who are, directly or
indirectly, interested in 10% or more of the nominal value of any class of share capital carrying
rights to vote in all circumstances at general meetings of our Company:
Name
Capacity/Nature of
Interest
Number of
Shares (Note 1)
Approximate
percentage of
shareholding
WellCell Group Beneficial owner 375,000,000 (L) 75%
Shine Dynasty (Note 2) Interest in a controlled
corporation
375,000,000 (L) 75%
Mr. Jia (Note 2) Interest in a controlled
corporation
375,000,000 (L) 75%
Cheer Partners (Note 3) Interest in a controlled
corporation
375,000,000 (L) 75%
Mr. Lin (Note 3) Interest in a controlled
corporation
375,000,000 (L) 75%
Ms. Zheng Li (Note 4) Interest of spouse 375,000,000 (L) 75%
Ms. Zhong Shumin
(Note 5)
Interest of spouse 375,000,000 (L) 75%
Notes:
(1) ‘‘L’’denotes the long position in the Shares.
(2) WellCell Group is owned as to 51.5% by Shine Dynast y ,w h i c hi si nt u r nw h o l l yo w n e db yM r .J i a .A ss u c h ,
each of Shine Dynasty and Mr. Jia is deemed to be interested in all the Shares held by WellCell Group
pursuant to Part XV of the SFO.
( 3 ) W e l l C e l lG r o u pi so w n e da st o3 7 . 5 %b yC h e e rP a r t n e r s ,w h i c hi si nt u r nw h o l l yo w n e db yM r .L i n .A ss u c h ,
each of Cheer Partners and Mr. Lin is deemed to be interested in all the Shares held by WellCell Group
pursuant to Part XV of the SFO.
SUBSTANTIAL SHAREHOLDERS
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(4) Ms. Zheng Li is the spouse of Mr. Jia. Accordingly, Ms . Zheng Li is deemed to be interested in all the Shares
held by Mr. Jia under Part XV of the SFO.
(5) Ms. Zhong Shumin is the spouse of Mr. Lin. Accordingly, Ms. Zhong Shumin is deemed to be interested in
all the Shares held by Mr. Lin under Part XV of the SFO.
Save as disclosed above, our Directors are not aware of any person who will, immediately
following the completion of the Capitalisation Issue and the Share Offer (without taking into
account the exercise of the Over-allotment Option or any Shares which may be issued pursuant to
the exercise of any options that may be granted under the Share Option Scheme), have an interest
or short position in the Shares or underlying Shares which would fall to be disclosed to our
Company and the Stock Exchange 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 issued share capital
carrying rights to vote in all circumstances at general meetings of our Company.
SUBSTANTIAL SHAREHOLDERS
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SHARE CAPITAL
The following is a description of the share capital of our Company in issue and to be issued as
fully paid or credited as fully paid immediately f ollowing the Capitalisation Issue and the Share
Offer, without taking into account any Shares which may be issued pursuant to the exercise of any
options that may be granted under the Share Option Scheme or any Share which may be issued or
repurchased by our Company under the general mandate for the issue or repurchase of Shares
granted to our Directors as referred to below, a nd assuming the Over-allotment Option is not
exercised:
Authorised share capital
HK$
1,000,000,000 Shares of par value HK$0.01 each 10,000,000
I s s u e da n dt ob ei s s u e d ,f u l l yp a i do rc r e d i t e da sf u l l yp a i d
400 Shares in issue as at the date of this prospectus 4
374,999,600 Shares to be issued pursuant to the Capitalisation Issue 3,749,996
125,000,000 Shares to be issued pursuant to the Share Offer 1,250,000
500,000,000 Total Shares issued and to be issued upon completion of the
Capitalisation Issue and the Share Offer
5,000,000
ASSUMPTIONS
The above table assumes that the Capitalisation Issue and the Share Offer will become
unconditional and does not take into account the Shares to be allotted and issued upon the exercise
of the Over-allotment Option, the Shares which may be issued pursuant to the exercise of any
options which may be granted under the Share Option Scheme, or any Shares which may be allotted
and issued or repurchased by our Company pursuant to the general mandates granted to our
Directors to allot and issue or repurchase Shares as described below.
MINIMUM PUBLIC FLOAT
The minimum level of public float to be maintained by our Company at all times after the
Listing under the Listing Rules is 25% of its share capital in issue from time to time. The
125,000,000 Offer Shares represent not less than 25% of the issued share capital of our Company
upon the Listing.
SHARE CAPITAL
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RANKING
The Shares are ordinary shares in the share capital of our Company and rank equally in all
respects with all other Shares currently in issue o r to be issued as mentioned in this prospectus and,
in particular, will rank in full for all dividends or other distributions ther eafter declared, made or
paid on the Shares in respect of a record date which falls after the date of this prospectus save for
any entitlement under the Capitalisation Issue.
SHARE OPTION SCHEME
Our Company has conditionally adopted the Share Option Scheme on 15 December 2023, the
principal terms of which are summarised in ‘‘Statutory and general information — D. Share Option
Scheme ’’in Appendix IV to this prospectus. As at the Latest Practicable Date, no option had been
granted under the Share Option Scheme.
CAPITALISATION ISSUE
Pursuant to the written resolutions of our sole Shareholder passed on 15 December 2023,
subject to the share premium account of our Comp any being credited as a r esult of the issue of the
Offer Shares pursuant to the Share Offer, our Direct ors were authorised to allot and issue a total of
374,999,600 Shares credited as fully paid to the h older(s) of Shares on the register of members of
our Company at the close of business on 11 January 2024 (or as they may direct) in proportion to
their respective shareholdings (save that no Shareho lder shall be entitled to be allotted or issued any
fraction of a Share) by way of Capitalisation of t he sum of HK$3,749,996 standing to the credit of
the share premium account of our Company, and the Shares to be allotted and issued pursuant to
this resolution shall rank pari passu in all respects with the existing issued Shares (other than the
right to participate in the Capitalisation Issue).
GENERAL MANDATE TO ISSUE SHARES
Subject to the conditions set forth in the paragraph headed ‘‘Structure and conditions of the
Share Offer — Conditions of the Share Offer ’’in this prospectus being fulfilled or waived (if
applicable), our Directors have been granted a ge neral unconditional mandate to exercise all the
powers of our Company to allot, issue and deal with, otherwise than by way of rights issue or an
issue of Shares upon exercise of any subscriptio n rights attached to any warrants of our Company
or pursuant to the exercise of the Over-allotment Option or upon the exercise of any options which
might be granted under the Share Option Scheme o r under any other option scheme or other similar
arrangements providing for the allotment and issue of shares of our Company in lieu of the whole
or part of a dividend on Shares in accordance wi th the Articles of Association or a specific
authority granted by our Shareholders in genera l meeting, such number of Shares not exceeding the
aggregate of (1) 20% of the total number of our issu ed Shares as enlarged by the Capitalisation
Issue and the Share Offer (without taking into account any Shares which may be issued pursuant to
the exercise of the Over-allotment Option or upon any options which may be granted under the
Share Option Scheme) and (2) the aggregate num ber of our issued Shares repurchased by our
Company (if any) pursuant to the general mand ate to repurchase Shares as described below.
SHARE CAPITAL
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This mandate shall remain in effect until whichever is the earliest of:
(i) the conclusion of the next annual general meeting of our Company;
(ii) the expiration of the period within which the next annual general meeting of our
Company is required to be held by the Articl es of Association or any other applicable
laws of the Cayman Islands; or
(iii) the passing of an ordinary resolution of our Shareholders in general meeting revoking,
varying or renewing such mandate.
For further details of the general mandate for the allotment and issue of Shares, please refer to
‘‘Statutory and general information — A. Further information about our Group — 3. Written
resolutions of our sole Shareholder ’’in Appendix IV to this prospectus.
GENERAL MANDATE TO REPURCHASE SHARES
Subject to the conditions set forth in the paragraph headed ‘‘Structure and conditions of the
Share Offer — Conditions of the Share Offer ’’in this prospectus being fulfilled or waived (if
applicable), our Directors have been granted a ge neral unconditional mandate to exercise all the
powers of our Company to repurchase Shares not exceeding 10% of the aggregate number of our
issued Shares immediately following the completio n of the Capitalisation Issue and the Share Offer
(without taking into account any Shares which may be issued pursuant to the exercise of the Over-
allotment Option or upon any options that may be granted under the Share Option Scheme).
This mandate relates only to repurchases made on the Stock Exchange or on any other stock
exchange on which the Shares are listed (and w hich is recognised by the SFC and the Stock
Exchange for this purpose), and which are made in accordance with all applicable laws and the
Listing Rules. A summary of the re levant Listing Rules is set out in ‘‘Statutory and general
information — A. Further information about our Group — 6. Repurchase by our Company of its
own securities ’’in Appendix IV to this prospectus.
This mandate shall remain in effect until whichever is the earliest of:
(i) the conclusion of the next annual general meeting of our Company;
(ii) the expiration of the period within which the next annual general meeting of our
Company is required to be held by the Articl es of Association or any other applicable
laws of the Cayman Islands; or
(iii) the passing of an ordinary resolution of our Shareholders in general meeting revoking,
varying or renewing such mandate.
For further details of the general mandate for the repurchase of Shares, please refer to
‘‘Statutory and general information — A. Further information about our Group — 3. Written
resolutions of our sole Shareholder ’’in Appendix IV to this prospectus.
SHARE CAPITAL
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SHAREHOLDERS ’ GENERAL MEETING
The method and procedures for the holding of general meetings or class meetings of a Cayman
Islands exempted company and the circumstanc es under which such meetings are required are
prescribed under and set out in the articles of association of such company. Accordingly, our
Company will hold general meetings as prescr ibed under the Articles, a summary of which is set
out in ‘‘Summary of the Constitution of the Company and Cayman Islands Company Law ’’in
Appendix III to this prospectus.
SHARE CAPITAL
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--- page 298 ---
You should read this section in conjunction with our audited consolidated financial
statements, including the notes thereto, as set out in the Accountant ’s Report set out in Appendix
I to this prospectus. Our Group ’s consolidated financial statements have been prepared in
accordance with the Hong Kong Financial Reporting Standards ( ‘‘HKFRSs ’’). You should read
the entire Accountant ’s Report and not merely rely on the information contained in this section.
The following discussion and analysis contai n certain forward-looking statements that
reflect the current views with respect to futu re events and financial performance. These
statements are based on assumptions and analys es made by our Group in light of our experience
and perception of hi storical trends, current conditions and expected future developments, as well
as other factors our Group believes are appropr iate under the circumstances. However, whether
actual outcomes and developments will meet our Group ’s expectations a nd projections as
reflected in the forward-looking statements de pends on a number of risks and uncertainties over
which our Group does not have control. Factors that may cause future results to differ from
those set forth in the forward-looking statement s include, but are not limited to, those set out in
the ‘‘Risk Factors ’’section of this prospectus.
The following discussion and analysis also contain certain amounts and percentage figures
that have been subject to rounding adjustments. A ccordingly, figures shown as totals in certain
tables may not be an arithmet ic aggregation of the figures preceding them and all monetary
amounts shown are approximate amounts only.
Unless the context otherwise requires or exp ressly specified, financial information
described in this section is described on a consolidated basis.
OVERVIEW
We are a telecommunication network support a nd ICT integration services provider and
software developer in the PRC. Our telecommunicat ion network support services mainly include the
provision of (i) wireless telecommunicat ion network enhancement services; and (ii)
telecommunication network infrastructure mainte nance and engineering services. During the Track
Record Period, our wireless telecommunication n etwork enhancement services accounted for the
largest portion of our revenue, followed by teleco mmunication network infrastructure maintenance
and engineering services or ICT integration services, which in aggregate accounted for
approximately 87.9%, 90.7%, 88.9% and 84.9% of our revenue for FY2020, FY2021, FY2022 and
6M2023, respectively.
During the Track Record Period, we experien ced a mild increase in our revenue which
amounted to approximately RMB195.6 mil lion, RMB203.3 million, RMB226.5 million and
RMB113.8 million for FY2020, FY2021, FY2022 and 6M2023, respectively. During FY2020,
FY2021, FY2022 and 6M2023, (i) our wireless telecommunication network enhancement services
accounted for approximately 47.9%, 49.2%, 45.1% an d 37.3%, respectively, of our revenue; (ii) our
telecommunication network infrastructure maintenance and engineering services accounted for
FINANCIAL INFORMATION
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--- page 299 ---
approximately 20.3%, 20.6%, 19.7% and 16.4%, r espectively, of our revenue; and (iii) our ICT
integration services accounted for approximately 19.7%, 20.9%, 24.1% and 31.2%, respectively of
our revenue. The considerable growth experience db yo u rI C Ti n t e g r a t i o nservices during the Track
Record Period was principally attributable to th e general increasing trend in the number of Major
Projects.
As a services provider in the telecommuni cation industry in the PRC, our major costs
attributable to our projects were our staff costs, s ubcontracting charges, and materials, supplies and
other project costs. The proportion of these costs v aried project-by-project, depending on the nature
and scope of the services that we provided. During the Track Record Period, our employee benefit
expenses, subcontracting charges, and materials, supplies and other project costs, in aggregate,
represented approximately 80.1%, 79.8%, 79.4% and 76.4% of our revenue for FY2020, FY2021,
FY2022 and 6M2023, respectively.
After taking into account the Listing expense s of approximately RMB1.0 million, RMB7.5
million, RMB10.1 million and RMB5.9 million charged for FY2020, FY2021, FY2022 and
6M2023, respectively, our profit before taxation for FY2020, FY2021, FY2022 and 6M2023 was
approximately RMB34.7 million, RMB30.1 mill ion, RMB29.3 million and RMB17.7 million,
respectively. After further taking into account th e tax expenses for the respective years, our profit
and total comprehensive income for FY2020, FY 2021, FY2022 and 6M2023 were approximately
RMB29.7 million, RMB25.5 milli on, RMB24.3 million and RMB14.7 million, respectively.
Taking into account growth in revenue, but relatively mild decrease in net profit due to an
increase in the Listing expenses (which are non-recurring in nature) during the Track Record
Period, the Group has recorded an improvement i n its financial performance during the Track
Record Period. Notably, we recorded growth in revenue of approximately 4.0% for FY2021 and
11.4% in FY2022, representing a CAGR of approxima tely 7.6%. The Directors considered that such
increase is consistent with the growth of the wi reless telecommunication network enhancement
service market in China (7.4% for 2018 to 2022 and forecast growth of 4.9% for 2022 to 2027), the
telecommunication network infrastructure main tenance service market in China (10.5% for 2018 to
2022 and forecast growth of 6.8% for 2022 to 2027) a nd the third-party ICT integration services
market in China (9.7% for 2018 to 2022 and forecast growth of 8.5% for 2022 to 2027). On the
other hand, we also recorded an increase in impairm ent of our contract assets and trade receivables,
which primarily attributable to an increase in the e xpected credit loss rate, further details of which
are set in the paragraphs under the section headed ‘‘Critical accounting policies and estimates —
Impairment of receivables and contract assets ’’of this section below.
FINANCIAL INFORMATION
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BASIS OF PRESENTATION
Immediately prior to and after the Reorganisation, our Group ’s business is controlled by the
Controlling Shareholders. Pursuant to the Reorg anisation, the operating subsidiaries of our Group
were transferred to our Company. Our Company has not been involved in any other business prior
to the Reorganisation and does not meet the definiti on of a business. The Reorganisation is merely
a recapitalisation of our Group ’s business with no change in management of such business and the
ultimate owners of our Group ’s business remain the same. Accordingly, our financial information
for FY2020, FY2021, FY2022 and 6M2023 has been prepared on a consolidated basis. Details of
the basis of preparation are set out in note 1.3 to the Accountant ’s Report as set out in Appendix I
to this prospectus.
FACTORS AFFECTING OUR GROUP ’S RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
Our results of operations and financial perfor mance have been and will continue to be affected
by a number of factors, many of which may be beyond our control, including those factors set out
in the section headed ‘‘Risk Factors ’’of this prospectus and those set out below.
Introduction of new telecommunications t echnologies and product offerings by
telecommunications operato rs, and government policies
There were notable developments and changes in technology and standards in the
telecommunications industry, and the developm ents and changes are expected to continue. PRC
telecommunications operators have introduced ne w technologies into the PRC telecommunications
market. As set out in the section headed ‘‘Industry Overview ’’above, China ’s telecommunication
industry has experienced robust growth in recent d ecades, with telecommun ication technologies
evolving from the 1G stage in the 1980s to the 5G stage in the 2020s. In the 5G stage, China has
taken the lead in the world ’s communication network in terms of both technology and applications.
Meanwhile, the total number of internet users i n China reached 1,067.4 million as of December
2022, growing from 828.5 million in 2018, representing a CAGR of 6.5% from 2018 to 2022. With
the continuous development of the computer industr y and the increase in the utilisation rate of
mobile devices, the number of internet users will continue to increase, and the number of internet
users is estimated to increase t o 1,232.3 million by 2027. Furth ermore, according to the CIC
Report, the total number of base stations increas ed from 6.7 million units in 2018 to 10.8 million
units in 2022, representing a CAGR of 12.9% from 2018 to 2022, and the rapid growth in the
number of base stations over the past five years was mainly attributable to the large-scale
commercialisation of 4G, and the total number of b ase stations is expected to continue to increase
f r o m1 0 . 8m i l l i o nu n i t si n2 0 2 2t o1 3 . 0m i l l i o nunits in 2027, representing a CAGR of 3.8% from
2022 to 2027, as a result of the 5G applications.
On the other hand, there are favorable policies and regulations rolled out by the PRC
government authorities which may improve the development of the telecommunication network
service industry. For example, as set out in the section headed ‘‘Industry Overview ’’ in this
prospectus, the MIIT issued 《關於推動工業互聯網加快發展的通知工信廳
信管[2020]8 號》 (2020
FINANCIAL INFORMATION
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No 8 Notice on Promoting the Accelerated Deve lopment of Industrial Internet Information
Management Department*) in 2020 in order to speed up the network construction of new
infrastructure, promoting the developm ent of the industrial internet and 5G, and 《5G應用「揚帆」行
動計劃（2021 –2023 年）》Set Sail Action Plan for 5G Applications (2021 –2023)* ’’in 2021 which
promotes the large-scale development of 5G appl ications through a variety of measures such as
platform building, policy development, model establishment and environmental improvement. The
implementation of or change in various governme nt policies, measures and incentives, as well as
the development of the economy may have a material impact on the development of the
telecommunication network service industry w hich may in turn have a material impact on our
operations, business results and outlook.
Labour costs
Both of our telecommunication network and infrastructure related services require a
considerable amount of labour inpu t. Meanwhile, taking into account the availability of on-site
human resources and the technical requirements of the relevant projects, we may from time to time
procure certain services from third party service providers. As a result, our employee benefit
expenses and subcontracting charges were our t wo largest expense items during the Track Record
Period. For FY2020, FY2021, FY2022 and 6M2023, employee benefit expenses accounted for
approximately 34.3%, 27.6%, 10.6% and 10.0%, respectively, of our total operating expenses
(being the aggregate of our employee benefit expens es, subcontracting charges, material, supplies
and other project costs, depreciation and amortisati on, net impairment losses of contract assets and
trade receivables, and other operating expenses, ‘‘Total Operating Expenses ’’), while
subcontracting charges accounted for approximat ely 42.6%, 51.5%, 64.1% and 69.2%, respectively,
of our Total Operating Expenses. On the other hand, given that our budget and tenders would also
take into account the expected increase in labour costs, both our revenue and operating costs will
be affected by fluctuations in labour costs. Acc ording to the CIC Report, the annual salary of
technical staff in the telecommunication network support services industry in the PRC had grown at
a CAGR of approximately 7.2% from 2018 to 2022 and is expected to grow at a lower CAGR of
approximately 5.4% from 2022 to 2027.
FINANCIAL INFORMATION
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The following sensitivity analysis only illus trates the impact of hypothetical fluctuations of
our labour costs and subcontracting charges on our profit during the Track Record Period, assuming
all other variables, including our revenue, rema ined constant. Fluctuations in our labour costs are
assumed to be +9.0%, +5.0%, –5.0% and –9.0%, which are determined by reference to the highest
of: (i) historical fluctuations in our labour co sts during the Track Record Period; (ii) CAGR of
labour costs according to the CIC Report during t he Track Record Period; and (iii) CAGR of labour
costs according to the CIC Report in coming years.
FY2020 FY2021 FY2022 6M2023
Increase/
(decrease) in
staff costs and
subcontracting
charges
Increase/
(decrease)
in net
profit
Increase/
(decrease) in
staff costs and
subcontracting
charges
Increase/
(decrease)
in net
profit
Increase/
(decrease) in
staff costs and
subcontracting
charges
Increase/
(decrease)
in net
profit
Increase/
(decrease) in
staff costs and
subcontracting
charges
Increase/
(decrease)
in net
profit
RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
Change in labour costs
+9.0% 11,237 (9,552) 11,972 (10,774) 12,747 (10,835) 6,508 (5,531)
+5.0% 6,243 (5,306) 6,651 (5,986) 7,082 (6,019) 3,615 (3,073)
–5.0% (6,243) 5,306 (6,651) 5,986 (7,082) 6,019 (3,615) 3,073
–9.0% (11,237) 9,552 (11,972) 10,774 (12,747) 10,835 (6,508) 5,531
Awarding of projects
The markets in which we operate are highly competitive and we secure our projects mainly
through open tender or by private quotations. We believe that the success rate of our tenders
depends on a number of factors, including the prev ious business relationships with our customers,
our brand name and goodwill in the industry, our comp etitive advantages, resource availability,
project duration, availability of local partners and local competitors. For FY2020, FY2021, FY2022
and 6M2023, the overall success rate of our tend ers (calculated based on the aggregate number of
successful tenders divided by the aggregate numbe r of tenders submitted for all business lines) was
approximately 61.2%, 72.0%, 64.5% and 71.2% , respectively. However, if we are unable to
maintain such success rates, we may have to lower our target profit margin in tendering for other
projects.
FINANCIAL INFORMATION
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As at the Latest Practicable Date, we have been awarded the following projects which we
expect to generate revenue of over RMB5 milli on for the six months ending 31 December 2023:
Project name Type of services Expected completion
Contract sum
(excluding tax)
RMB’000
TX Mobile Network Equipment
Installation Project
Infrastructure maintenance and
engineering services
On or before
31 December 2023
20,590
DT Mobile Technical
Service Project
Telecommunication network
technical enhancement
services
On or before
31 December 2024
23,333
CX Harbin Ice Rink Project ICT integration services On or before
31 March 2024
16,373
DL Jieyang Network
Enhancement Project
Telecommunication network
technical enhancement
services
On or before
30 September 2023
21,112
ZY Zhuhai Pipeline Alternation
Service Project
Infrastructure maintenance and
engineering services
On or before
31 December 2023
17,743
GD Provincial Emergency
Department ICT Project
ICT integration services On or before
31 December 2023
6,137
Please refer to the section headed ‘‘Industry Overview ’’in this prospectus for the prospects,
development trends and drivers of the each of our business lines.
Ability to maintain service standards and work q uality, and complete our projects on a timely
basis
I ft h e r ea r eq u a l i t yp r o b l e m si nr e l a t i o nt oo u rs e r v i c e so rd e l a yi no u rp r o j e c t s ,w em a yb e
subject to claims from our customers or penalties and/or damage to our goodwill. Moreover, service
standards and work quality are usually two of the considerations in awarding tenders by our
customers. Accordingly, if we are unable to mai ntain service standards and work quality or to
complete our projects on a timely basis, our future financial performance may be adversely
affected.
Our Directors believe that the followings are the principal factors affecting the service
standards and our work quality:
Wireless telecommunication n etwork enhancement services
— Quality of human resources: the quality of the project manager, the knowledge and
technical level and awareness of the workers engaged in the project, and whether the
workers carry out their work with due care.
— Ability to formulate a proper solution: the ability to formulate a telecommunication
network enhancement solution based on, among other things, the nature of the
telecommunication network is sue, the data collected, feasib ility (technical , economical,
operational, etc.) that can effectively enha nce our service quality and speed, and lower
our cost of services.
— Quality and functionality of tools and equipment: the quality and functionality of tools
and equipment used in the projects and whether the workers have the adequate
knowledge to use the tools and equipment effectively and properly.
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— Factors leading to the relevant issue: telec ommunication network issues may be caused
by various factors in different environmen ts, such as damage to optical fibers during
roadworks, removal of base stations due to re location or demolition works in villages,
and suspension of electricity supply in base stations, and different working plans and
solutions have to be for mulated accordingly.
Telecommunication network infrastruct ure maintenance and engineering services
— Quality of human resources: the quality of the project manager, the knowledge and
technical level and awareness of the workers engaged in the project and whether the
workers carry out their work with due care.
— Quality of materials: the quality of materials that can fulfil different requirements of the
projects taking into account their compositio n, physical and chemical properties, and our
ability to control the quality of materials through quality check, selection of suppliers
and on-site monitoring.
— Quality and functionality of tools and equipment: the quality and functionality of tools
and equipment used in the projects and whether the workers have the adequate
knowledge to use the tools and equipment effectively and properly.
— Working environment: an adequate work plan has to be formulated to cater for different
environmental factors, including temper ature, humidity, possible extreme weather,
working at height and limited space work, and also to reduce the adverse impacts to the
environment.
ICT integration services
— Quality of human resources: the quality of the project manager, the knowledge and
technical level and awareness of the workers engaged in the project and whether the
workers carry out their work with due care.
— Quality of materials: the quality of materials t hat can fulfil different requirements of the
projects taking into account their compositio n, physical and chemical properties, and our
ability to control the quality of materials through quality check, selection of suppliers
and on-site monitoring.
— Ability to formulate a proper solution: the a bility to formulate and implement a proper
solution based on a combination of factors and requirements in various areas (including
technical, craftsmanship, economical, opera tional, etc.) that is feasible, economical,
technically advanced and operationally effi cient, which can effectively enhance our
service quality and speed, and lower our cost of services.
— Quality and functionality of tools and equipm ent: the quality and functionality of tools
and equipment used in the projects and whether the workers have the adequate
knowledge to use the tools and equipment effectively and properly.
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— Working environment: an adequate work plan has to be formulated to cater for different
environmental factors, including temper ature, humidity, possible extreme weather,
working at height and limited space work, and also to reduce the adverse impacts to the
environment.
Our ability to develop software to meet the needs of our customers and the market
During the Track Record Period, other than deve loping software for our internal use, we have
also developed and sold telecommunication netwo rk-related software to external parties. We were
also engaged to provide software development services pursuant to which we developed software in
accordance with the specific needs of our custom ers to cater for their specific needs on, for
instance, telecommunication net work performance monitoring an d enhancement. We will continue
to develop software for our internal use and for our customers; however, whether our software can
fulfill the relevant needs of our business and our customers largely depends on our software
development ability, and our ability to develop t he relevant software in a timely and efficient
manner. Our ability to develop software to fulfill our customers ’ needs also depends on whether we
are able to retain and/or recruit software develo per talents. As further set out in the paragraphs
headed ‘‘Business — Business strategies ’’, we plan to pursue new research and development
undertakings which include the undertaking of 5G research and development projects, developing a
telecommunication network enhancement services software based on end-user data and developing
an easy-to-use wireless telecommunication netwo rk testing software, which will enable us to keep
abreast of the latest developments in the teleco mmunications industry and the changes in customers ’
needs.
Time of recovering of contract assets and receivables
Contract assets are recognised when we recog nise revenue before being unconditionally
entitled to billing under the payment terms as set out in the contract (such as upon completion of
settlement audit or other payment milestones as s tipulated in the contract). The settlement audit
may be carried out by our customers or independe nt professional parties (such as inspection
companies) without our involvement. Meanwhile , our customers or the relevant independent
professional parties are mainly responsible for t he acceptance procedures which primarily involve
the review and examination of the whole project and we do not play a major role in evaluating such
acceptance procedures or, in some cases, we may only be involved in the early or middle stage of
the whole project. In certain pr ojects where we are only engaged to work on a part of the project or
are engaged as a subcontractor, we may only be e ntitled to receive our f ees when our customers
have received their fees from their relevant cu stomers regarding the projects. We would record
contract assets after the performance of our services but before invoices are issued to our
customers. Contract assets are reclassified to tr ade receivables when the work performed by us has
become unconditionally entitled for billing unde r the payment terms. If we are unable to recover
our contract assets and receivables in a timely man ner, our liquidity may be adversely affected.
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CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our financial information has been prepared in accordance with HKFRSs. We have identified
certain accounting policies that are critical to the p reparation of our financial information. These
accounting policies are important for an unders tanding of our financial position and results of
operations and are set out in note 2 ‘‘Summary of Significant Accounting Policies ’’ to the
Accountant ’s Report in Appendix I to this prospectus.
In addition, the preparation of the financial in formation may require our management to make
significant and subjective estimates, assumption s and judgments that affect the reported amounts of
revenue, expenses, carrying amounts of assets and liabilities, and the di sclosure of contingent
liabilities at the end of each of FY2020, FY2021, FY2022 and 6M2023. The estimates and
associated assumptions are based on experience an d other factors that are considered to be relevant
(for example, background of the relevant parties, project duration and involvement of numbers of
relevant parties in the project in assessing the variable consideration).
However, uncertainties about these assumpti ons, estimates and judgments could result in
outcomes that require a material adjustment to the carrying amounts of the assets and liabilities in
the future. These key assumptions and estimates are set out in note 4 ‘‘Critical Accounting
Estimates and Assumptions ’’to the Accountant ’s Report in Appendix I to this prospectus.
We believe the following critical accounting po licies and accounting estimates involve the
most significant or subjective judgments and est imates used in the preparation of the Accountant ’s
Report that our management considers to be critical in the portrayal of the financial position and
results of operations.
Revenue recognition
Wireless telecommunication network enhancem ent services, and teleco mmunication network
infrastructure maintenance services
Revenue is recognised over time in accordance w ith the output method for measuring progress
when the related services are rendered. Acco rding to HKFRSs, the out put method recognises
revenue on the basis of direct measurements of th e value to the customer of the goods or services
transferred to date relative to the remaining g oods or services promised under the contract.
Telecommunication network infrastructure eng ineering services and ICT integration services
Revenue is recognised when or as the engineerin g projects are transferred to the customer.
Depending on the terms of the contracts and the laws that are applicable to the contracts, control of
the engineering projects may transfer over time or at a point in time. If engineering projects create
or enhance an asset that the customer controls as t he asset is created or enhanced, we satisfy the
performance obligation over time and therefore, r ecognise revenue over time in accordance with the
output method for measuring progress.
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Sales of software
Sales of software transferred at a point in tim e are recognised when control of the goods has
transferred, being when we have delivered the p roducts to the customers and the customers have
accepted the products, the customers have full d iscretion over the products, and there is no
unfulfilled obligation that could affect the customers ’ acceptance of the products.
Software development services
Revenue from software development services is recognised over time in accordance with the
output method for measuring progress when the related services are rendered.
Assumptions and estimates
Revenue recognition of these services on an un completed project is dependent on estimating
the progress towards complete satisfaction of the performance obligation, which is based on output
method. Actual outputs may be higher or lower th an that estimated at the end of the reporting
period, which would affect the revenue recognise d in future years as an adjustment to the amounts
recorded to date.
Certain contracts entered into by us in the provision of wireless telecommunication network
enhancement services, telecommunication netwo rk infrastructure maintenance and engineering
services and information and ICT integration serv ices include performance penalties and contingent
payment clauses that give rise to variable consid eration. For variable consideration arising from
performance penalties, our entitlement to the consid eration is contingent on the meeting of specified
performance criteria as stated in the customer cont ract. For variable consideration arising from
contingent payment clauses, we are subcontracted by the customers who are engaged by the
ultimate users as contractors of projects, and therefore our receipts of payment from the customers
are in turn contractually contingent on the custo mers receiving the acceptance and payment from
the ultimate users, only after which the customers will then settle with us.
We use the expected value method to estimate the amount of variable consideration.
Accumulated historical expenses, the background of the ultimate project user, the duration of the
project and involvement of numbers of parties in the project are used to estimate and provide for
the variable consideration arisi ng from performance penalties and contingent payment clauses, using
the expected value method, and revenue is only recogn ised to the extent that it is highly probable
that a significant reversal will not occur. Ba sed on the above, our management estimated the
variable consideration arising from contingent payment clauses to be ranging from 10% to 20% of
the total consideration of the pr ojects. These variable considerations would not be recognised as
revenue until the uncertainty associated therewit h has been resolved (i.e. when the relevant amounts
are confirmed, billed and settled). At the end o f each reporting period, we update the estimated
transaction price (including updating our as sessment of whether an estimate of variable
consideration is constrained) to represent faithf ully the circumstances present at the end of each
reporting period and the change in circumstances during the reporting period. Therefore, under such
situation, even if we have fully performed our s ervices in accordance with the relevant contract
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with our customers, we may not be able to record 100% of the revenue as stipulated under the
relevant contract until it is highly probable tha t a significant reversal in the amount of cumulative
revenue recognised will not occur. In other words, we may still be able to recognise 80% to 90% of
the revenue determined based on our actual work performed ( ‘‘Net-of-VC Revenue ’’).
Set out below is a summary of projects which cont ained contingent payment clause during the
Track Record Period:
FY2020 FY2021 FY2022 6M2023
Number of projects 24 27 36 20
Contract sum
(in RMB ’000) 51,464 46,463 46,356 14,364
For FY2020, FY2021, FY2022 and 6M2023, variable c onsideration arising from new contracts
during the year/period that subject to the contingent payment clause (therefore not yet recognised as
revenue) amounting to approximately RMB7.3 million, RMB5.6 million, RMB5.5 million and
RMB1.6 million, respectively, while revenue in the amount of approximately RMB7.4 million,
RMB4.7 million, RMB9.8 million and RMB1.5 million, respectively, were recognized when the
uncertainty associated with the variable cons ideration of projects w ith previous outstanding
payments was resolved (for the avoidance o f doubt, none of such amount were recognised as
revenue before they have been confirmed, bille d and settled by our customers during the Track
Record Period). As at 30 June 2023, the accumulate d balances of variable consideration that has
arisen from the aforementioned contingent paym ent clauses and which had not been recognised as
revenue amounted to approximately RMB10.8 million, mainly attributable to the fact that the
acceptance of the relevant project and/or payment from the ultimate end-user was still outstanding.
Contract assets and contract liabilities
When either party to a contract has performed , we present the contract in the consolidated
statements of financial positio n as a contract asset or a contract liability, depending on the
relationship between our performance and the customer ’s payment. A contract asset is our right to
consideration in exchange for goods that we have transferred to a customer. Incremental costs
incurred to obtain a contract, if recoverable, are capitalised and presented as assets and
subsequently amortised when the related revenue is recognised.
If a customer pays consideration or we have a right to an amount of consideration that is
unconditional, before we transfe r the promised goods to the customer, we present the contract as a
contract liability when the payment is received or a receivable is recorded (whichever is earlier). A
contract liability is our obligation to transfer the promised goods to a customer for which we have
received consideration (or an amount of c onsideration is due) from the customer.
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Employee benefits — Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits and accumulated sick leave
that are expected to be settled wholly within twelve 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 am ounts expected to be paid when the liabilities are
settled. The liabilities are presented as current em ployee benefit obligations in the consolidated
statements of financial position.
Government grants
Grants from the government are recognised at their fair value where there is a reasonable
assurance that the grant will be received and we will comply with all attached conditions.
Government grants relating to expenses are deferred and recognised in the consolidated
statements of comprehensive income over the pe riod necessary to match them with the costs that
they are intended to compensate.
Impairment of receivables and contract assets
Our financial assets measured at amortised cos t are subject to the expected credit loss model
of HKFRS 9. We assess on a forward-looking basis the expected credit loss associated with its
assets carried at amortised cost.
For contract assets and trade receivables, we apply the simplified approach permitted by
HKFRS 9, which requires expected lifetime losse s to be recognised from initial recognition of the
contract assets and trade receivables. To measure t he expected credit losses, contract assets and
trade receivables have been grouped into two cat egories by our management based on credit risk
characteristics. The contract assets and trade recei vables from state-owned an d/or listed companies
and their subsidiaries ar e grouped as one category ( ‘‘Group 1 ’’), and the remaining contract assets
and trade receivables from other customers, bein g private companies that are neither state-owned
nor listed, are classified as another category ( ‘‘Group 2 ’’).
The Group divides the balance of contr act assets and trade receivables into ‘‘within one year ’’,
‘‘between one and two years ’’ and ‘‘over two years ’’ according to the time period which
management considered these groupings are refle cting the historical credit losses experienced,
industry credit loss rate and payment profiles o f sales of the underlying outstanding balance and
have the same credit risk characteristics. As a resu lt, the expected credit loss rate of contract assets
and trade receivables for time band ‘‘within 180 days ’’and ‘‘between 181 days and 365 days ’’
which are representing sub-division of ‘‘less than one year ’’are the same during Track Record
Period.
Based on the aforementioned approach, the Gr oup has also assessed the expected credit loss
rates for the corresponding periods of ‘‘1–180 days ’’and ‘‘181–365 days ’’respectively and there
were no material changes or differences in the expected credit risk of the contract assets and trade
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receivables balances aged in the time bands of ‘‘within 180 days ’’and ‘‘between 181 days and 365
days ’’and the same expected credit loss rates were therefore applied to these two bands during the
Track Record Period.
On these bases, the loss allowances for con tract assets and trade receivables as at 31
December 2020, 2021 and 2022 and 30 June 2023 (as extracted from the Accountant ’s Report) were
determined as follows:
Expected loss
rate
Gross
carrying
amount
Loss
allowance
Net carrying
amount
RMB’000 RMB ’000 RMB ’000
31 December 2020
Group 1
Collective basis
Contract assets 1.8% 46,330 819 45,511
Trade receivables
— Within 180 days 0.4% 12,848 48 12,800
— Between 181 days and 365 days 0.4% 1,633 6 1,627
— Between 1 year and 2 years 5.1% 39 2 37
— Over 2 years 100% 141 141 —
Group 2
Collective basis
Contract assets 3.4% 14,237 484 13,753
Trade receivables
— Within 180 days 2.3% 10,748 242 10,506
— Between 181 days and 365 days 2.3% 1,538 35 1,503
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Expected loss
rate
Gross
carrying
amount
Loss
allowance
Net carrying
amount
RMB’000 RMB ’000 RMB ’000
31 December 2021
Group 1
Collective basis
Contract assets 1.9% 70,028 1,304 68,724
Trade receivables
— Within 180 days 0.4% 22,381 89 22,292
— Between 181 days and 365 days 0.4% 4,835 19 4,816
— Between 1 year and 2 years 5.5% 1,669 92 1,577
— Over 2 years 100% 136 136 —
Group 2
Collective basis
Contract assets 4.8% 4,238 204 4,034
Trade receivables
— Within 180 days 3.6% 2,257 82 2,175
— Between 181 days and 365 days 3.6% 663 24 639
Expected loss
rate
Gross
carrying
amount
Loss
allowance
Net carrying
amount
RMB’000 RMB ’000 RMB ’000
31 December 2022
Group 1
Collective basis
Contract assets 3.1% 60,683 1,861 58,822
Trade receivables
— Within 180 days 1.5% 30,962 456 30,506
— Between 181 days and 365 days 1.5% 375 6 369
— Between 1 year and 2 years 19.4% 2,181 424 1,757
— Over 2 years 100% 1,236 1,236 —
Group 2
Collective basis
Contract assets 6.5% 9,705 632 9,073
Trade receivables
— Within 180 days 6.8% 2,454 167 2,287
— Between 1 year and 2 years 51.2% 979 501 478
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Expected loss
rate
Gross
carrying
amount
Loss
allowance
Net carrying
amount
RMB’000 RMB ’000 RMB ’000
30 June 2023
Group 1
Collective basis
Contract assets 6.0% 57,617 3,443 54,174
Trade receivables
— Within 180 days 1.6% 32,703 511 32,192
— Between 181 days and 365 days 1.6% 9,183 143 9,040
— Between 1 year and 2 years 19.8% 398 79 319
— Over 2 years 100% 935 935 —
Group 2
Collective basis
Contract assets 6.2% 7,832 486 7,346
Trade receivables
— Within 180 days 6.9% 8,140 560 7,580
— Between 1 year and 2 years 52.3% 779 408 371
Note: As mentioned above, the expected credit loss rate for both contract assets and trade receivables are
determined with reference to the aging of such balances, and the expected credit loss rate of contract assets
represented the weighted average expected credit loss rate of the contract assets which had taken into account
of the aging of the outstanding balance.
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As at 31 December 2020, 2021 and 2022 and 30 J une 2023, the balance of loss allowance in
respect of these collectively assessed contr act assets and trade receivables represented
approximately 2.0%, 1.8%, 4.9% and 5.6%, respectively, of our aggregate gross amount of contract
assets and trade receivables on the respective date. As at 31 December 2020 and 2021, we did not
have any trade receivable from Group 2 customers that were aged between 1 year to 2 years, while
the outstanding balance trade receivable of Group 2 customers that are aged between 1 year to 2
years as at 31 December 2022 was approximately RMB1 .0 million. Our expected credit loss rate for
trade receivable from Group 2 customers that ar e aged between 1 year to 2 years as at 31 December
2022 and 30 June 2023 was approximately 51.2% and 52.3%, respectively, which were primarily
determined with reference to the historical settlement pattern of trade receivable from Group 2
customers that are aged between 1 year to 2 years.
The expected credit loss rate of contract asse ts attributable to Group 1 customers increased
from approximately 1.8% as at 31 December 2020, 1.9% as at 31 December 2021, 3.1% as at 31
December 2022 and further to 6.0% as at 30 June 2023. The increase in expected credit loss rate
during FY2021 was mainly attributable to an increase in the amount of expected credit loss rate for
contract assets aged within one year which was cons istent with the increase in contract assets aged
within one year, while the increase in expected credit loss rate during FY2022 and 6M2023 was
mainly attributable to an increase in aging profiles of contract assets which was taken into account
for the measurement of expected credit loss rate. F or instance, our contract assets aged over 1 year
increased from approximately 8.6% as at 31 December 2021, to approximately 24.9% as at 31
December 2022 and to approximately 35.7% as at 30 June 2023.
The expected credit loss rate of contract asse ts attributable to Group 2 customers increased
from approximately 3.4% as at 31 December 2020, 4.8% as at 31 December 2021 and to 6.5% as at
31 December 2022, but was reduced to 6.2% as at 30 June 2023. The increase in expected credit
loss rate during FY2021 and FY2022 was principally attributable to an increase in expected credit
loss rate for contract assets aged within one year driven by the potential impact on the economy
due to COVID-19, while the drop in expected c redit loss rate in 6M2023 was principally
attributable to the reduction in portion of cont ract assets aged over one year from approximately
6.5% as at 31 December 2022 to approximately 2.7% as at 30 June 2023.
Nevertheless, during the Track Record Period, none of our contract assets and trade
receivables had become unrecoverable and been written off. Based on information available as at
the Latest Practicable Date, the Directors do not expect that there will be a material increase in
expected credit loss rate in respect of our contract assets and trade receivables in the near future.
Please refer to ‘‘Contract assets and trade receivables ’’below for further analysis of our contract
assets and trade receivables.
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RESULTS OF OPERATION OF OUR GROUP
The following table sets out our consolidat ed statements of comprehensive income for
FY2020, FY2021, FY2022, 6M2022 and 6M2023 as derived from the Accountant ’s Report set out
in Appendix I to this prospectus.
Consolidated statements of comprehensive income
FY2020 FY2021 FY2022 6M2022 6M2023
RMB’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
(unaudited)
Revenue 195,570 203,336 226,513 103,237 113,838
Other income 3,053 3,092 3,434 1,799 1,224
Other (losses)/gains, net (57) (122) (21) (45) 238
Employee benefit expenses (55,664) ( 46,425) (20,041) (9,992) (9,108)
Subcontracting charges (69,194) (86,593) (121,592) (50,085) (63,199)
Materials, supplies and other
project costs (31,854) (29,1 68) (38,220) (20,232) (14,650)
Depreciation and amortisation (1,648 ) (2,275) (3,066) (1,545) (1,219)
Net impairment losses of contract
assets and trade receivables (804 ) (173) (3,333) (1,379) (1,282)
Other operating expenses (3,180) (3,649) (3,496) (1,619) (1,848)
Listing expenses (1,014) (7,544) (10,108) (6,590) (5,945)
Operating profit 35,208 30,479 30,070 13,549 18,049
Finance income 73 47 94 49 147
Finance costs (569) (378) (896) (326) (535)
Finance costs, net (496) (331) (802) (277) (388)
Profit before income tax 34,712 30,148 29,268 13,272 17,661
Income tax expense (5,052) (4,624) (5,009) (3,901) (3,003)
Profit for the year/period
attributable to the equity
holders of the Company 29,660 25,524 24,259 9,371 14,658
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Revenue
We principally derive our revenue from our provi sion of wireless telecommunication network
enhancement services, telecommunication netwo rk infrastructure maintenance and engineering
services and ICT integration services during the T rack Record Period. The following table sets out
the breakdown of our revenue by nature for the periods indicated.
FY2020 FY2021 FY2022 6M2022 6M2023
RMB ’000
%o f
total
revenue RMB ’000
%o f
total
revenue RMB ’000
%o f
total
revenue RMB ’000
%o f
total
revenue RMB ’000
%o f
total
revenue
(unaudited)
Wireless telecommunication
network enhancement
services 93,673 47.9% 100,085 49.2% 102,136 45.1% 39,413 38.2% 42,404 37.3%
Telecommunication network
infrastructure maintenance
and engineering services 39,654 20.3% 41,78 7 20.6% 44,516 19.7% 21,244 20.6% 18,709 16.4%
ICT integration services 38,515 19.7% 42,505 20.9% 54,592 24.1% 34,756 33.6% 35,550 31.2%
Software related (Note) 23,728 12.1% 18,959 9.3% 25,269 11.1% 7,824 7.6% 17,175 15.1%
Total 195,570 100.0% 203,336 100.0% 226,513 100.0% 103,237 100.0% 113,838 100.0%
Note: Software related revenue represents the revenue derived from our sales of software and software
development.
Wireless telecommunication network enhancement services
Our revenue derived from wireless telecommun ication network enhancement services was
relatively stable, which amounted to approxim ately RMB93.7 million, RMB100.1 million and
RMB102.1 million during the Track Record Period for FY2020, FY2021 and FY2022, respectively,
and amounted to approximately RMB39.4 million and RMB42.4 million for 6M2022 and 6M2023,
respectively. While our wireless telecommuni cation network enhancement services income
accounted for approximately 47.9%, 49.2%, 45.1% and 37.3% of our revenue for FY2020,
FY2021, FY2022 and 6M2023, respectively, as we recorded growth in our total revenue which was
principally driven by the growth in the revenue of our other business segments.
Telecommunication network infrastructur e maintenance and engineering services
Telecommunication network infrastructure m aintenance and engineering services income
accounted for a relatively stable portion of our re venue which represented approximately 20.3%,
20.6%, 19.7% and 16.4% of our revenue for FY2020, FY2021, FY2022 and 6M2023, respectively.
Given we experienced an increase in revenue during FY2020 to FY2022, the revenue derived from
such segment also experienced growth during FY2020 to FY2022. The increase in
telecommunication network infrastructure maint enance and engineering services income during
FY2020 to FY2022 Period was principally att ributable to the CX Heilongjiang Telecom
Maintenance Project and CX Heilongjiang Telecom Maintenance Project II, which in aggregate
contributed revenue of approximately RMB17.1 million, RMB14.9 million and RMB10.5 million
for FY2020, FY2021 and FY2022, respectively, and the revenue derived from the GG Guangxi
Comprehensive Maintenance Project of approx imately RMB4.4 million in FY2021 and RMB8.3
million in FY2022 (as compared to nil in FY2020).
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The decrease in revenue during 6M2023, as compared to 6M2022, was mainly attributable to
the decrease in number of projects that generate d revenue of over RMB3 million during the period
from three (namely, CX Heilongjiang Telecom Mai ntenance Project II, GG Guangxi Comprehensive
Maintenance Project and ZY Zhuhai Pipeline Alt eration Service Project) during 6M2022 (which
contributed an aggregate revenue of approximately RMB12.3 million) to one (namely GG Guangxi
Comprehensive Maintenance Project) during 6M2023 (which contributed revenue of approximately
RMB6.1 million).
ICT integration services
ICT integration services income accounted for a pproximately 19.7%, 20.9%, 24.1% and 31.2%
of our revenue for FY2020, FY2021, FY2022 and 6M2023, respectively. The increase in ICT
integration services income during the Track Reco rd Period was principally attributable to our
continuous efforts in expanding and developing the s egment which was consistent with the increase
in number of projects for the business line, from 13 projects in FY2020 to 25 projects in FY2021
and 35 in FY2022, while the revenue for the business line experienced a mild growth in 6M2023 as
compared to 6M2022.
Software-related business
Revenue from our software-related business acco unted for approximately 12.1%, 9.3%, 11.1%
and 15.1% of our revenue during FY2020, FY2021, FY2022 and 6M2023, respectively. The
increase in revenue derived from our software-rela ted business in FY2022 was mainly attributable
to the revenue derived from software developm ent, from approximately RMB9.3 million for
FY2021 to approximately RMB21.7 million for F Y2022. The increase in revenue derived from our
software-related business in 6M 2023 was mainly attributable to the revenue derived from software
development, from approximate ly RMB5.6 million for 6M2022 to approximately RMB12.7 million
for 6M2023.
FINANCIAL INFORMATION
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Major projects during the Track Record Period
Set out below is the list of Major Projects (which contributed reven ue of: (i) over RMB5 million during the Track Record Period; or (ii)
over RMB3 million during any of the FY2020, FY2021, FY2022 and 6M2023), by order of the project name:
Customer Project description Type of services
Group ’sr o l e
(Note 7) Project name
Project
commencement
(month)
Actual/expected
completion
(month)
Project duration
(approximately)
(month)
(Note 1)
Total
contract sum
(excluding tax)
(Note 4)
Accumulated
revenue
recognised
prior to Track
Record Period
Revenue recognised during
Track Record Period
Major
Operating Costs
incurred during
the Track
Record Period
Percentage of
completion as
at 30 June
2023
(approximately)
Estimated
revenue to be
recognised after
30 June 2023
(Note 5)FY2020 FY2021 FY2022 6M2023
RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
PRC subsidiary of one of the
international leading providers
of Information and
Communication Technology to
service providers
Routine telecommunication network enhancement Wireless telecommunication
network enhancement services
Contractor ALX Network Enhancement
Technical Service
Project
January 2020 September 2022 33 8,249 — 4,007 3,622 620 — 6,528 100% —
A company engaged in software and
related development in the PRC
Provision of production and operation business
support system platform development services
Work-for-hire software
development services
Contractor BC Production and
Operation Business
Development Project
May 2023 June 2023 1 3,412 ———— 3,412 3,041 100% —
Guangzhou Chengxiang Provide equipment and services related to upgrade of
data rooms
ICT integration services Subcontractor CX Dataroom Equipment
Procurement and
Services Project
September 2020 November 2023 38 (Notes 2
and 3)
7,516 — 7,516 ——— 7,224 100% —
Customer C Deliver equipment and materials related to ice hockey
arena to designated sites. Provide design drawings
for project construction and project engagement
letter and be responsible for technical and safety
briefing for the project
ICT integration services Subcontractor CX Harbin Ice Rink Project December 2020 December 2022 24 (Note 2) 16,373 —— 8,841 —— 9,158 54% 7,532
(Note 6)
Customer C Relevant integration services for various systems ICT integration services Subcontractor CX Heilongjiang Intelligent
ICT Project (Phase II)
December 2019 October 2021 23 (Note 2) 11,100 — 11,100 ——— 9,731 100% —
Customer C Routine maintenance Telecommunication network
infrastructure maintenance and
engineering services
Subcontractor CX Heilongjiang Telecom
Maintenance Project I
January 2019 May 2022 41 (Note 2) 41,269 15,336 17,127 7,764 1,033 — 19,582 100% 9
Customer C Routine maintenance Telecommunication network
infrastructure maintenance and
engineering services
Subcontractor CX Heilongjiang Telecom
Maintenance Project II
June 2021 December 2022 18 16,783 —— 7,105 9,505 47 14,197 99% 126
Guangzhou Chengxiang IDC room related equipment and equipment
installation and debugging services
ICT integration services Subcontractor CX IDC Room ICT Project February 2022 June 2022 4 15,568 ——— 15,568 — 13,392 100% —
Customer C Comprehensive maintenance, cable maintenance, daily
telecommunication network enhancement
Telecommunication network
infrastructure maintenance and
engineering services
Subcontractor CX Guest Network
Comprehensive
Maintenance Project
September 2020 March 2021 7 6,391 — 3,482 2,757 —— 5,150 98% 152
Customer C Provide relevant goods for Baoding Data Centre ( 保定
市數據中心) and conduct installation
ICT integration services Subcontractor CX Smart Construction Site
ICT Project
January 2019 December 2020 23 10,667 — 5,174 21 552 — 9,699 54% 4,920
(Note 6)
Guangzhou Chengxiang Sourcing of server equipment for server centralized
procurement project and provision of services such
as equipment installation and debugging, system
integration testing, training and online operation,
software and hardware environment configuration,
etc.
ICT integration services Subcontractor CX Xinchuang ICT Project January 2023 March 2023 2 7,073 ———— 7,073 6,199 100% —
FINANCIAL INFORMATION
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--- page 318 ---
Customer Project description Type of services
Group ’sr o l e
(Note 7) Project name
Project
commencement
(month)
Actual/expected
completion
(month)
Project duration
(approximately)
(month)
(Note 1)
Total
contract sum
(excluding tax)
(Note 4)
Accumulated
revenue
recognised
prior to Track
Record Period
Revenue recognised during
Track Record Period
Major
Operating Costs
incurred during
the Track
Record Period
Percentage of
completion as
at 30 June
2023
(approximately)
Estimated
revenue to be
recognised after
30 June 2023
(Note 5)FY2020 FY2021 FY2022 6M2023
RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
Customer C Provide relevant goods for server room and conduct
installation.
ICT integration services Subcontractor CX Zhongshan E-commerce
Management Project
February 2021 March 2022 13 (Note 2) 11,454 —— 11,454 —— 10,267 100% —
A digitalization service provider in
the PRC whose shares are listed
on NEEQ
Provision of customised cloud solutions and develop a
big data platform based on cloud computing
technology
ICT integration services Contractor DL Big Data Platform
Project
April 2023 June 2023 2 3,854 ———— 3,854 3,469 100% —
A PRC telecommunication service
provider, whose shares are
listed on the Shenzhen Stock
Exchange
Routine telecommunication network enhancement Wireless telecommunication
network enhancement services
Subcontractor DL Jieyang Network
Enhancement Project
May 2020 September 2023 41 (Note 3) 21,112 — 3,601 5,852 5,696 4,804 15,347 95% 1,159
Customer E Transformer replacement procurement projects, power
distribution room renovation projects, technical
service work in accordance with the operational
specifications specified by the customer
Wireless telecommunication
network enhancement services
and telecommunication network
infrastructure maintenance and
engineering services
Subcontractor DT Technical Service
Project
May 2020 December 2023 44 (Note 3) 32,602 — 1,490 6,941 14,840 9,268 24,562 100% 63
Customer A Routine telecommunication network enhancement Wireless telecommunication
network enhancement services
Contractor DX Langfang Network
Enhancement Project
February 2020 June 2022 28 7,878 — 2,645 3,314 1,919 — 5,172 100% —
Customer A Under the principle to ensure stable operation of the
telecommunication network, conduct (including but
not limited to) the overall assessment, analysis,
enhancement and other related work for the
wireless network within the area-in-charge in
accordance with the customer ’s work arrangements
Wireless telecommunication
network enhancement services
Contractor DX Qinghai Network
Enhancement Project #1
April 2016 November 2020 55 17,268 13,430 3,838 ——— 2,949 100% —
Customer A Under the principle to ensure stable operation of the
telecommunication network, conduct (including but
not limited to) the overall assessment, analysis,
enhancement and other related work for the
wireless network within the area-in-charge in
accordance with the customer ’s work arrangements
Wireless telecommunication
network enhancement services
Contractor DX Qinghai Network
Enhancement Project #2
December 2020 December 2021 12 4,138 — 355 3,783 —— 2,858 100% —
Customer A Under the principle to ensure stable operation of the
telecommunication network, conduct (including but
not limited to) the overall assessment, analysis,
enhancement and other related work for the
wireless network within the area-in-charge in
accordance with the customer ’s work arrangements
Wireless telecommunication
network enhancement services
Contractor DX Qinghai Network
Enhancement Project #3
December 2021 December 2022 13 5,230 —— 361 4,869 — 3,896 100% —
Customer A Routine telecommunication network enhancement Wireless telecommunication
network enhancement services
Contractor DX Shijiazhuang Network
Enhancement Project
February 2020 June 2022 28 10,067 — 3,961 4,096 2,010 — 6,950 100% —
Customer A Routine telecommunication network enhancement Wireless telecommunication
network enhancement services
Contractor DX Tibet Network
Enhancement Project
April 2022 March 2023 12 5,173 ——— 3,887 1,286 3,750 100% —
FINANCIAL INFORMATION
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Customer Project description Type of services
Group ’sr o l e
(Note 7) Project name
Project
commencement
(month)
Actual/expected
completion
(month)
Project duration
(approximately)
(month)
(Note 1)
Total
contract sum
(excluding tax)
(Note 4)
Accumulated
revenue
recognised
prior to Track
Record Period
Revenue recognised during
Track Record Period
Major
Operating Costs
incurred during
the Track
Record Period
Percentage of
completion as
at 30 June
2023
(approximately)
Estimated
revenue to be
recognised after
30 June 2023
(Note 5)FY2020 FY2021 FY2022 6M2023
RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
A company engaged in PRC
telecommunication related
business and a subsidiary of a
company whose shares are listed
on the Shenzhen Stock
Exchange
Operation and maintenance of equipment and facilities
in communication rooms, as well as
communication fiber optic lines and their ancillary
facilities, including daily inspection, overhaul,
maintenance, emergency repair, maintenance
publicity, maintenance resource information
management, etc.
Telecommunication network
infrastructure maintenance and
engineering services
Contractor GG Guangxi Comprehensive
Maintenance Project
April 2021 April 2024 35 (Note 3) 19,565 —— 4,353 8,253 6,145 14,822 96% 813
A company engaged in provision of
network support service and a
subsidiary of a company whose
shares are listed on Shenzhen
Stock Exchange
System enhancement, performance analysis, data
collection
Wireless telecommunication
network enhancement services
Contractor HS Shanwei Enhancement
Project
September 2019 December 2023 51 (Note 3) 5,244 — 996 1,732 1,802 714 3,833 100% —
A company engaged in the
provision of ICT service, big
data and telecommunication
network service solution in the
PRC
Procurement of wireless supervision services regarding
utilisation of existing equipment, and to ensure
the establishment of network and wireless
equipment
Wireless telecommunication
network enhancement services
Subcontractor HS Wireless Supervision
Project
May 2021 December 2022 19 7,440 —— 2,549 4,377 — 4,643 93% 514
A private company engaged in
software and information
technology service industry in
the PRC
Mechanical equipment of external container type
diesel power generator and related parallel
machine, control system and technical service in
power supply room of cloud data centre
ICT integration services Contractor HY Data Center Equipment
Procurement Project
August 2020 January 2023 28 (Note 2) 5,366 — 5,105 — 261 — 4,595 100% —
Customer B Communication network and engineering related
technical service
Wireless telecommunication
network enhancement services
Contractor JS Technical Service
Project I
January 2015 November 2020 70 173,665 151,884 21,781 ——— 11,440 100% —
Customer B Communication network and engineering related
technical service
Wireless telecommunication
network enhancement services
Contractor JS Technical Service
Project II
December 2019 November 2021 22 14,917 —— 14,917 —— 9,668 100% —
A private construction company in
the PRC
Procurement and construction of server room
furnishing, electrical engineering, HVAC
engineering, fire engineering, weak point
engineering, lightning protection engineering,
shielded server room
ICT integration services Subcontractor JX Smart Construction Site
ICT Project
January 2020 December 2020 11 3,979 — 3,979 ——— 3,618 100% —
A communication industry solution
provider and a subsidiary of a
company whose shares are listed
on the Hong Kong Stock
Exchange
Use the cloud edge architecture to create a unified
cloud PaaS domain to ensure the security and
stability of user website business. Monitor and
discover potential security threats in a timely
manner, and effectively defend against common
attacks through professional application layer
protection technologies
Wireless telecommunication
network enhancement services
Contractor LQ Mobile Cloud Safety
Protection Service
Project
November 2021 December 2021 2 4,040 —— 79 3,961 — 3,961 100% —
FINANCIAL INFORMATION
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--- page 320 ---
Customer Project description Type of services
Group ’sr o l e
(Note 7) Project name
Project
commencement
(month)
Actual/expected
completion
(month)
Project duration
(approximately)
(month)
(Note 1)
Total
contract sum
(excluding tax)
(Note 4)
Accumulated
revenue
recognised
prior to Track
Record Period
Revenue recognised during
Track Record Period
Major
Operating Costs
incurred during
the Track
Record Period
Percentage of
completion as
at 30 June
2023
(approximately)
Estimated
revenue to be
recognised after
30 June 2023
(Note 5)FY2020 FY2021 FY2022 6M2023
RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
A communication industry solution
provider and a subsidiary of a
company whose shares are listed
on the Hong Kong Stock
Exchange
Provide high-quality digital advertising big data
services by building a digital advertising big data
analysis platform, and improve a series of
services such as basic data services, application
data services, data standard governance services,
and platform services
Wireless telecommunication
network enhancement services
& Work-for-hire software
development services
Subcontractor LQ Public Integrated
Services Project
July 2022 December 2023 17 (Note 3) 11,762 ——— 9,487 872 8,503 88% 1,403
A PRC telecommunication operator
and a state-owned enterprise
Network enhancement (including daily, special,
special, centralized assessment, etc.)
Wireless telecommunication
network enhancement services
Contractor LT Hubei Enhancement
Project
July 2021 July 2023 24 6,585 —— 1,364 3,230 1,617 5,134 94% 374
A PRC communication network
outsourcing service provider and
a subsidiary of a company
whose shares are listed on the
Stock Exchange of Hong Kong
Provide design drawings for project construction and
project engagement letter, be responsible for
technical and safety briefing for the project and
handle related technical issues on construction
Telecommunication network
infrastructure maintenance and
engineering services
Subcontractor NF Guangdong Mobile
Maintenance Project
January 2018 December 2021 48 12,273 7,679 3,625 47 673 227 1,495 100% 22
A company engaged in software and
information technology service
industry and a subsidiary of a
state-owned enterprise
Routine telecommunication network enhancement Wireless telecommunication
network enhancement services
Contractor TT Foshan Network
Enhancement Project #1
May 2020 December 2021 20 7,521 — 2,591 4,178 477 275 6,105 100% —
A company engaged in software and
information technology service
industry and a subsidiary of a
state-owned enterprise
Routine telecommunication network enhancement Wireless telecommunication
network enhancement services
Contractor TT Foshan Network
Enhancement Project #2
January 2022 December 2023 23 (Note 3) 7,828 ——— 4,734 2,223 5,540 89% 871
A communication industry solution
provider and a subsidiary of a
company whose shares are listed
on the Hong Kong Stock
Exchange
Provide customized platforms, data collection and
research and development of smart parks for
smart parks
ICT integration services Subcontractor TY 5G Smart Park Project April 2021 August 2021 4 6,223 —— 6,223 —— 5,459 100% —
A supplier in the field of electric
energy measurement and testing
in the PRC
Provision of digital information services and, based
on cloud computing technology, provision of
customized cloud solutions, data migration, system
integration services, etc., and deploy the platform
on Party B ’s customized cloud platform to achieve
remote management
ICT integration services Contractor TY Intelligent Urban
Service Project
March 2023 March 2024 12 (Notes 2
and 3)
3,664 ———— 3,664 2,375 100% —
A private company in the PRC
focused on provision of
technical service platform that
empowers intelligent products
Provide Guangzhou Futures Exchange business system
related equipment and equipment installation and
commissioning, system integration testing, training
and online operation, software and hardware
environment configuration and other related
services
ICT integration services Subcontractor XM Future Exchange
System Integration
Project
June 2022 September 2022 3 6,090 ——— 6,090 — 5,683 100% —
A private telecommunication
engineering service company in
the PRC
Premises telecommunication network construction Telecommunication network
infrastructure maintenance and
engineering services
Subcontractor XW Zhuhai Mobile
Customer Premises
Network Project
January 2019 February 2021 26 12,141 3,307 3,047 904 668 1,558 5,261 78% 2,657 (Note 6)
Customer D Unified security control and integration services for
mobile police terminals in Doumen District,
Zhuhai City
ICT integration services Contractor YD Doumen Integrated
Services Project
September 2021 March 2022 6 4,991 —— 4,424 73 — 4,368 90% 494
FINANCIAL INFORMATION
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--- page 321 ---
Customer Project description Type of services
Group ’sr o l e
(Note 7) Project name
Project
commencement
(month)
Actual/expected
completion
(month)
Project duration
(approximately)
(month)
(Note 1)
Total
contract sum
(excluding tax)
(Note 4)
Accumulated
revenue
recognised
prior to Track
Record Period
Revenue recognised during
Track Record Period
Major
Operating Costs
incurred during
the Track
Record Period
Percentage of
completion as
at 30 June
2023
(approximately)
Estimated
revenue to be
recognised after
30 June 2023
(Note 5)FY2020 FY2021 FY2022 6M2023
RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
Customer D Public communication network cluster video intercom
platform integration services, public
communication network cluster video intercom
platform maintenance services
ICT integration services Contractor YD Guangxi Integrated
Services Project
January 2021 July 2021 6 3,247 —— 3,247 —— 3,023 100% —
Customer D Development of on-site telecommunication network
enhancement system and mobile end-to-end
perception system
Software development service Contractor YD End-to-end Perceptual
Analysis Platform
Development Project
February 2022 June 2022 4 3,021 ——— 3,021 — 808 100% —
Customer D On-site network survey, network plan design,
comprehensive deployment, after-sales maintenance,
etc.
ICT integration services Subcontractor YD Zhuhai Comprehensive
Project
May 2023 December 2023 7 (Note 3) 3,698 ———— 3,698 2,534 100% —
A private company in the PRC
engaged in provision of wireless
telecommunication equipment
and wireless network technical
services
Routine management of relevant cell site area Infrastructure maintenance and
engineering services
Contractor YY Guangzhou Mobile Cell
Site Services Project
January 2022 December 2022 12 3,945
——— 3,945 — 3,551 100% —
China Comservice Renovation and intellectualization project for hospital
inpatient building
ICT integration services Subcontractor ZTF Hospital Automation
Alteration Service
Project
December 2021 December 2023 24 (Note 3) 5,579 ——— 4,519 — 3,670 81% 1,060
A company engaged in civil
engineering construction industry
and a subsidiary of a state-
owned enterprise
Collect and process information such as public
bidding and bid winning results released by
customers of the client in Guangdong Province,
and sort out the labels of each project according
to the classification requirements of the customer
unit, and track the projects related to the
customer unit
Wireless telecommunication
network enhancement services
Contractor ZY Guangzhou Chengtou
Integrated Services
Project
July 2022 December 2023 17 (Note 3) 4,969 ——— 4,552 34 3,637 92% 383
A company engaged in civil
engineering construction industry
and a subsidiary of a state-
owned enterprise
Line planning and modification, adjustment and tests
for communication (3 lines) lines in the
community; utilize Internet of Things (IoT) and
cloud computing technology to provide security
monitoring platform services to customers
Telecommunication network
infrastructure maintenance and
engineering services and
software development services
Contractor ZY Zhuhai Pipeline
Alteration Service
Project
August 2021 December 2023 28 (Note 3) 17,743 —— 2,955 5,826 340 8,663 51% 8,622
Subtotal 105,420 112,883 126,448 51,111 31,174
% of total revenue 53.9% 55.5% 55.8% 44.9%
Notes:
1. The durations were calculated based on the period from the date of comme ncement/signing of the contract to the date of completion of the respective p rojects.
2. The durations of these projects a lso included the warranty period.
FINANCIAL INFORMATION
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--- page 322 ---
3. Since these projects are still ongoing as of the Latest Practicable Date, t he durations of which were calculated based on the period from the date of c ommencement/signing
of the contract to the date as of the expected completion date of the respective projects.
4. The contract sum represented the contract amount and/or work incurred by the Company.
5. We expect to record revenue for certain projects subsequent to the end o f our service period as our revenue from these projects were contractually co ntingent and subject
to the progress of settlement of the project costs by the ultimate users to our customers.
6. We have substantially completed our work in rela tion to the project(s). However, given the relevan t contract contain a contingent payment clause t hat the settlement of our
fee is conditional on the settlement of fee by the end customer which constitute a variable consideration, we expect that part of our revenue will be rec ognised after the
Track Record Period, while the relevant costs incurred had been record ed based on the period which the respective costs were incurred.
7. For the purposes of the above classification of our service capacity as a sub contractor or contractor, we are generally regarded as a subcontractor if there is a back-to-back
arrangement under which a customer has the right to pay us after collection o f payments from a third party end customer; and/or the acceptance assessme nt for works
performed by us shall be conducted by or on behalf of a third party end custome r. In the absence of any of the above provision, we will be deemed as a contrac tor.
FINANCIAL INFORMATION
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--- page 323 ---
Please refer to the sub-section headed ‘‘Major operating costs ’’below and paragraph headed
‘‘Major Operating Costs Ratio ’’in the sub-section for information and analysis concerning overall
Major Operating Costs for different business lines of our Group (i.e. that of all projects within the
same business line of the Group) that have been record ed over the respective reported years/period
within the Track Record Period.
The Major Operating Costs Ratios of a project may vary over the duration of the project. Set
out below is an analysis of projects which recorded Major Operating Costs Ratios outside the
overall range (i.e. in respect of all projects of the Group) recorded for the business line in different
reported years/period within the Track Record Period.
Wireless telecommunication network enhancement services
Amongst our Major Projects, ALX Network Enhancement Technical Service Project, DL
Jieyang Network Enhancement Project, DT Tec hnical Service Project, DX Qinghai Network
Enhancement Project #1, DX Qinghai Network Enhancement Project #3, LQ Mobile Cloud Safety
Protection Service Project, LQ Public Integrated Services Project, LT Hubei Enhancement Project,
TT Foshan Network Enhancement Project #1, TT Foshan Network Enhancement Project #2 and ZY
Guangzhou Chengtou Integrated Se rvices Project recorded Major Operating Costs Ratio above the
upper range of 73.9%, while most of these projects still recorded a Major Operating Costs Ratio
below 85%. Given our client of the ALX Network Enhancement Technical Service Project is a PRC
subsidiary of one of the leading international providers of information and communication
technology to service providers, we were willi ng to accept a higher Major Operating Costs Ratio
for carrying out projects with the client taking into account its client profile (which may strengthen
our client portfolio and enhance the marketabil ity of our service offerings going forward). The
relatively higher Major Operating Costs Ratio r ecorded for DL Jieyang Network Enhancement
Project was principally attributable to variable consideration that cannot be recognised as revenue
upon settlement of payment(s) for the project due to the existence of contingent payment clause in
the relevant contracts. If the revenue attributable to variable consideration were to be recognised
during the period which our services were render ed, the then Major Operating Costs Ratio of the
project would fall within the range of Major Ope rating Costs Ratio of the business line. We
recorded a relatively higher Major Operating Cos ts Ratio in DT Technical Service Project as the
client of the DT Technical Service Project is our n ew client and is a state-owned enterprise. We
considered that the addition of such client can st rengthen our client portfolio and the risks of non-
payment is low. The relatively higher Major Op erating Costs Ratio in DX Qinghai Network
Enhancement Project #1 and DX Qinghai Network En hancement Project #3 was consistent with the
fact that the location of the projects were relativel y remote, involving larger coverage and highlands
which resulted in relatively high subcontractin g fee for these projects during the Track Record
Period. Similarly, we recorded a relatively h igher Major Operating Costs Ratio in LT Hubei
Enhancement Project as the project involved larger area and coverage which resulted in the
relatively high subcontracting fee as well as fuel and vehicle costs to be incurred in performing the
project. Our Major Operating Costs Ratio in TT Foshan Network Enhancement Project #1 was
relatively high as, after taking into account the b ackground (being a subsidiary of a state-owned
enterprise) and the expected creditability of the client, we strategically quoted a more competitive
FINANCIAL INFORMATION
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--- page 324 ---
price with a view to secure the project in view of potential competition. The relatively higher Major
Operating Costs Ratio in TT Foshan Network Enhan cement Project #2 was principally attributable
to variable consideration due to th e existence of contingent payment clause in the relevant contract.
If the revenue attributable to variable consideration were to be recognised during the period which
our services were rendered, the then Major Operating Costs Ratio of the project would fall within
the range of Major Operating Costs Ratio of the bus iness line. We also recorded a relatively higher
Major Operating Costs Ratio in ZY Guangzhou C hengtou Integrated Services Project as, after
taking into account the background (being a subs idiary of a state-owned enterprise) and the
expected creditability of the clie nt, we strategically quoted a more competitive price with a view to
secure the project in view of potential competit ion. During the Track Record Period, two Major
Projects in wireless telecommunication network enhancement services, namely the LQ Mobile
Cloud Safety Protection Service Project for Customer F, one of our new customers during the Track
Record Period and the LQ Public Integrated Servi ces Project recorded Major Operating Costs Ratio
of over 85%. Although the LQ Mobile Cloud Safety Protection Service Project is classified under
our wireless telecommuni cation network enhancement services, the services provided thereunder are
not similar to the traditional enhancement services p rovided by us to other customers. In particular,
the project uses cloud edge architecture to creat e a unified cloud PaaS domain to ensure the security
and stability of user website business, for which engaged a subcontractor to conduct the relevant
works, leading to a relatively higher Major Oper ating Costs Ratio. For the LQ Public Integrated
Services Project, a majority part of the proje ct was related to our work-for-hire software
development services for which we engaged subcont ractors to conduct the relevant works, leading
to a relatively higher Maj or Operating Costs Ratio.
On the other hand, we recorded a relatively lower Major Operating Costs Ratio in four of the
Major Projects, namely DX Langfang Network Enh ancement Project, HS Wireless Supervision
Project, JS Technical Service Project and JS Tech nical Service Project II. The Major Operating
Costs Ratio of three of these projects (except for J S Technical Service Project) was approximately
65.7%, 67.0% and 64.8%, respectively, which are slightly lower than the lower end of the range of
our overall Major Operating Costs Ratio of 67.2% for the wireless telecommunication network
enhancement services business line. We recorded relatively lower Major Operating Costs Ratios in
each of JS Technical Service Project and JS Tech nical Service Project II during the Track Record
Period, and such low ratio was mainly attributable to the reduction in staff resources needed to
handle the orders as the Group was able to deploy existing equipment and software of the Group
which enhance the capability of the Group ’s technicians in their performance and delivery of
required services without incurri ng material additional costs.
Telecommunication network infrastruct ure maintenance and engineering services
Amongst our Major Projects, our CX Heilongjiang Telecom Maintenance Project II, XW
Zhuhai Mobile Customer Premises Network Project, YY Guangzhou Mobile Cell Site Services
Project and ZY Zhuhai Pipeline Alteration Servi ce Project recorded Major Operating Costs Ratio
above the upper range of 83.2%. The major Operating Costs Ratio of XW Zhuhai Mobile Customer
Premises Network Project was approximately 85. 2%, slightly above high-end of the range, and the
relatively higher Major Operating Costs Ratio recorded for the project during the Track Record
FINANCIAL INFORMATION
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--- page 325 ---
Period was mainly attributable to the variable co nsideration due to the existence of contingent
payment clause in the relevant contract. If the re venue attributable to var iable consideration was
recognised during the period which our services were rendered, the then Major Operating Costs
Ratio of the project would fall within the range of Major Operating Costs Ratio of the business
line. The Major Operating Costs Ratio of CX Heil ongjiang Telecom Maintenance Project II and YY
Guangzhou Mobile Cell Site Services Project (which related to maintenance works) was
approximately 90.0% or below, while the Major Operating Costs Ratio of ZY Zhuhai Pipeline
Alteration Service Project (which related to infra structure engineering works) was approximately
95.0%, which was also attributable to the variable consideration due to contingent payment clause.
This is consistent with findings of CIC that th e margin of telecommunication infrastructure
engineering works is normally lower than that of t elecommunication infrastructure maintenance
works.
On the other hand, NF Guangdong Mobile Maintenance Project recorded a Major Operating
Costs Ratio of approximately 32.7% during the Track Record Period, which was considerably
below the lower end of range of our overall Major Operating Costs Ratio of 71.1% for the
telecommunication network infrastructure mainten ance and engineering services business line. The
low Major Operating Costs Ratio recorded by NF Guangdong Mobile Maintenance Project was
principally attributable to the fact that a majorit y part of the project was carried out prior to the
Track Record Period and part of the revenue recognised for the project during the Track Record
Period was attributable to variable considerati on, for which the corresponding costs has already
been recognised in the prior period. For instance, we have recognised revenue for the project in
each of FY2021, FY2022 and 6M2023 due to recognition of revenue attributable to variable
consideration, while no cost w as attributable to the project during each of FY2021, FY2022 and
6M2023.
ICT integration services
During the Track Record Period, four of our Major Projects, namely CX Harbin Ice Rink
Project, CX Smart Construction Site ICT Proje ct, YD Zhuhai Comprehensive Project and TY
Intelligent Urban Service Project, recorded Majo r Operating Costs Ratio fell outside the range of
the overall Major Operating Costs Ratios of the Group for our ICT integration services business
line. The Major Operating Costs Ratio of CX Harbin Ice Rink Project and CX Smart Construction
Site ICT Project exceeded the high-end of the ra nge of 99.0% and was approximately 103.6% and
168.8%, respectively, which were mainly attribu table to the fact that the recognition of part of the
revenue of each of these two projects were affect ed due to the contingent payment clause in the
relevant contracts. If the relevant revenue were to be recognized during the Track Record Period
instead, the Major Operating Costs Ratio of the se projects should fall within the range of the
overall Major Operating Costs Ratio of the Group fo r our ICT integration services business line.
The Major Operating Costs Ratio of YD Zhuhai Comp rehensive Project and TY Intelligent Urban
Service Project was below the low-end of the r ange of 77.5% and amounted to approximately
68.5% and 64.8%, respectively. The relatively l ower Major Operating Costs Ratio of these two
projects was consistent with the fact that these two projects involved the development of software
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(rather than purchasing software that was alrea dy available in the market). Meanwhile, our
bargaining power in projects that involved the de velopment of software is generally higher than
projects that involved the purchasing of software from third party vendors.
Software-related business
During the Track Record Period, our YD En d-to-end Perceptual Analysis Platform
Development Project recorded a Major Operatin g Costs Ratio of approximately 26.7% which was
below the lower end for the software-related busin esses business line of 28.5%. The project related
to the development of on-site telecommunication n etwork enhancement system and mobile end-to-
end perception system, and the Directors consider t hat its relatively lower Major Operating Costs
Ratio was mainly attributable to prior experienc es and related patents in software development
which the Group had attained in the relevant area over the years. Our BC Production and Operation
Business Development Project recorded a highe r Major Operating Costs Ratio of approximately
89.1% as we have engaged a subcontractor to deve lop part of the required software, and the
relevant subcontracting costs already represe nted approximately 83.0% of our revenue for the
project.
Other income
The following table sets out the breakdown of our other income by nature for the periods
indicated.
FY2020 FY2021 FY2022 6M2022 6M2023
RMB’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
(unaudited)
Tax credit of input tax additional
deduction and VAT refund 1,484 1,909 1,326 288 846
Government subsidies 587 873 1,800 1,426 243
Equipment rental income 963 146 286 64 89
Sundry income 19 164 22 21 46
3,053 3,092 3,434 1,799 1,224
During the Track Record Period, our other income mainly represented tax credit of input tax
additional deduction and VAT refund, government subsidies and equipment rental income. The tax
credit of input tax additional deduction and VAT refund, and equipment rental income were
recurring in nature and derived from our ordinary and usual course of business. The Directors
consider that many of the government subsidies are related to our ordinary and usual course of
business. While these subsidies are normally granted on a yearly basis, some grants may be subject
to make of an application to and obtaining of approval by relevant government authorities. The
increase in government subsidies in FY2022 was ma inly attributable to the subsidies in the amount
of (i) approximately RMB0.5 million granted to the Group as Professional, Advanced, Specialized
and New Enterprise* ( 專精特新企業) in the Xiangzhou District; (ii) approximately RMB0.3 million
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granted to the Group under the Promotion Digital Economy Industry Support Funds in Xiangzhou
District* ( 香洲區促進數字經濟產業扶持資金); and (iii) approximately RMB0.2 million granted to
the Group in recognition of Wellcell Technology being a High and New Technology Enterprise.
The decrease in other income for 6M2023, as compared to 6M2022, was principally attributable to
the decrease in government subsidies given that some grants are normally granted on a yearly basis
instead of recurring in nature.
Major operating costs
Our major operating costs mai nly comprised employee benefit expenses, subcontracting
charges; and materials, supplies and other project costs.
Employee benefit expenses
The following table sets out the breakdown of our employee benefit expenses by nature for the
periods indicated.
FY2020 FY2021 FY2022 6M2022 6M2023
RMB’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
(unaudited)
Wages and salaries 52,9 86 41,594 16,382 7,999 7,164
Pension cost — defined
contribution plans 1,8 61 4,241 3,314 1,811 1,603
Other staff welfares 817 590 345 182 341
Total 55,664 46,425 20,041 9,992 9,108
During the Track Record Period, our employee be nefit expenses were principally attributable
to the four business lines, research and develop ment, sales and marketing, and administrative
functions.
As a result of the continuous expansion of our business, we provided our services across
different areas of the PRC, including, but not limited to, Qinghai Province, Jilin Province,
Heilongjiang Province, Guangxi Province and Tibet. During the Track Record Period, we also
noted that different local government implemented di fferent measures, including travel restrictions,
quarantine requirements and/or even lockdowns, to control the spread of COVID-19.
With an aim to enhancing our competitiveness in the market, the efficiency of our resource
allocation and our capability to t ake up projects in different locations, we decided to reduce the
number of staff with lower technical level, to incr ease the use of subcontractors and to focus more
on providing services which require higher leve ls of skills and technical expertise such as ICT
integration services and software development. Part of the work previously performed by our staff
at lower technical levels were allocated to our subcontractors.
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The wages and salaries (including bonus) of our staff accounted for the largest portion of our
employee benefit expenses. The average number of our staff during FY2020, FY2021, FY2022 and
6M2023 were 603, 490, 158 and 145, respectively. On the other hand, the average wage of our
staff experienced a general increasing trend which was consistent with our plan to reduce the
number of our staff at lower technical levels and t o subcontract projects with lower requirements
for technical level staff to subcontractors.
For details of the training of our employee and our remuneration policies, please refer to the
section headed ‘‘Business — Employees ’’in this prospectus. Meanwhile, we have also conditionally
adopted the Share Option Scheme, an d the details of which are set out in ‘‘D. Share Option
Scheme ’’in Appendix IV to this prospectus.
Subcontracting charges
During the Track Record Period, our subcontract ors mainly included: (i) subcontractors
carrying out technical services in cluding services which required specific technical skills and
knowledge or license, such as electricians for teleco mmunication network infrastructure engineering
services; and (ii) subcontractors carrying out la bour services for non-technical works such as
temporary technical and maintenance works such a s installation and testing of emergency power
supply to base stations, installation of cabling and pipeline and associated devices, certain relatively
repetitive works in our ICT projects, and wiring and installation of data collection devices. Set out
below is the breakdown of subcontracting charg es by business line for the periods indicated.
FY2020 FY2021 FY2022 6M2022 6M2023
RMB’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
(unaudited)
Wireless telecommunication
network enhancement servi ces 19,743 32,018 58,845 20,312 25,681
Telecommunication network
infrastructure maintenance and
engineering services 27,473 29,252 29,843 15,744 13,032
ICT integration services 16,789 22,059 16,753 12,289 16,965
Software related 5,1 89 3,264 10,471 1,740 6,787
Other (Note) —— 5,680 — 734
Total 69,194 86,593 121,592 50,085 63,199
Note: Others principally represented the amount of subc ontracting charges in relation to our research and
development works.
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Our increase in subcontracting charges during the Track Record Period was in line with (i) the
reduction in our number of staff; and (ii) the expansions of our telecommunication network
infrastructure maintenance and engineering serv ices and ICT integration s ervices, except that we
experienced reduction in subcontracting charges for our ICT integration services for FY2022. The
subcontracting charges for our two major projec ts, namely CX Harbin Ice Rink Project and TY 5G
Smart Park Project, already amounted to approx imately RMB14.6 million for FY2021, while only
one of our ICT integration services major project s incurred subcontracting charges of over RMB3
million (amounted to approximately RMB3.7 m illion) in FY2022. We experienced increase in
subcontracting charges across our services pr ovided, except for telecommunication network
infrastructure maintenance and engineering serv ices, and such changes was generally in line with
the fluctuation of our revenue derived from the provision of these services. During 6M2023, we
have incurred subcontracting fee of over RMB3 m illion in four projec ts, namely DT Technical
Service Project, DL Jieyang Network Enhancement Project, GG Guangxi Comprehensive
Maintenance Project and DL Big Data Platform Project which amounted to approximately
RMB18.1 million in aggregate.
Materials, supplies and other project costs
Our materials, supplies and other project costs p rincipally represented the project supplies
cost, fuel costs and motor vehicle expenses, and tra velling expenses. Depending on different project
requirements, our services primarily require th e procurement of hardware and software for the
projects, for example, computers, mobile handset s, operating systems and servers. Meanwhile, as
our projects normally require the carrying out of on-site services or works by our staff and we were
engaged to provided services in different parts of the PRC during the Track Record Period, our
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project costs also included the relevant fuel co sts and motor vehicle expenses, and travelling
expenses. Set out below is the breakdown of our materials, supplies and other project costs by
n a t u r ea n db yb u s i n e s sl i n efor the periods indicated.
By nature
FY2020 FY2021 FY2022 6M2022 6M2023
RMB’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
(unaudited)
Project supplies cost 24 ,822 20,858 29,680 16,260 10,886
Fuel costs and motor vehicle
expenses 4,783 6, 244 7,282 3,463 3,184
Travelling expense 2,249 2,066 1,258 509 580
Total 31,854 29,168 38,220 20,232 14,650
By business line
FY2020 FY2021 FY2022 6M2022 6M2023
RMB’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
(unaudited)
Wireless telecommunication
network enhancement servi ces 9,931 10,881 10,469 4,261 3,645
Telecommunication network
infrastructure maintenance and
engineering services 658 1,524 1,434 526 487
ICT integration services 21,265 16,763 26,258 15,350 10,512
Software related —— 59 95 6
Total 31,854 29,168 38,220 20,232 14,650
The increase in our material costs for FY2 022 as compared to FY2021 was principally
attributable to the growth of our ICT integratio n services segment as we may be required to source
hardware and/or software for our ICT integra tion services. On the other hand, there was a
decreasing trend in travelling expense, which was mainly attributable to the increase in the use of
subcontractors which reduced the overall travel ling of our staff in our provision of wireless
telecommunication network enhancement service s. We recorded a general decrease in materials,
supplies and other project costs in 6M2023, as co mpared to 6M2022, for all services provided as
mainly driven by the decrease in project suppl ies costs of approxim ately RMB4.8 million
principally attributable to our ICT integration se rvices. We incurred materials, supplies and other
project costs of approximately RMB12.9 mi llion for our CX IDC Room ICT Project during
6M2022, while we did not incurred comparable am ount of materials, supplies and other project
costs in ICT integration service projects i n 6M2023 as we have reduced the taking of ICT
integration projects with large contract sum in v iew of the initial project cost requirement. For
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instance, the largest amount of materials, supplies and other project costs in ICT integration service
projects for 6M2023 was attributable to our CX Xinchuang ICT Project which amounted to
approximately RMB5.3 million.
Major Operating Costs Ratio
Our overall Major Operating Costs Ratio was a pproximately 80.1%, 79.8%, 79.4% and 76.4%
for FY2020, FY2021, FY2022 and 6M2023, respectively. We recorded relatively stable Major
Operating Costs Ratios during the Track Record Period, with a relatively lower Major Operating
Costs Ratios for FY2022. The reduction in Major Operating Costs Ratios for FY2022, as compared
to FY2020 and FY2021, was principally attributable to the reduction in Major Operating Costs
Ratios for our ICT integration services as we ha ve selected projects with better margins after
strengthening our presence in the market during FY2020 and FY2021. The further decrease in
Major Operating Costs Ratios for 6M2023 was m ainly attributable to the increase in revenue
derived from our software-related business, which g enerally had a relatively lower Major Operating
Costs Ratios, and the continuous reduction in Major Operating Costs Ratios for our ICT integration
services as we have selected projects with better margins after strengthening our presence in the
market. Set out below is the Major Operating Cos ts Ratio for our four business lines during the
Track Record Period:
Business line FY2020 FY2021 FY2022 6M2023
Wireless telecommunication network
enhancement services 67.2% 70.9% 72.1% 73.9%
Telecommunication network infrastructure
maintenance and engineering services 79.2% 83.2% 71.1% 73.0%
ICT integration services 99.0% 91.3% 78.9% 77.5%
Software-related business 30.4% 28.5% 49.4% 44.8%
We generally recorded relatively higher Major Operating Costs Ratio for ICT integration
services as our ICT integration services usually involve hardware and/or software procurement
which accounted for a major part of the costs for our ICT integration services. Meanwhile, we
generally recorded a lower Major Operating Cos ts Ratio for our wireles s telecommunication
network enhancement services as compared to ou r telecommunication network infrastructure
maintenance and engineering services, and our Directors believe that we are able to bargain for
better margins as wireless teleco mmunication network enhancement services generally involve a
higher level of knowledge input in the area. On the other hand, our software-related business
generally involved a relatively lower amount o f subcontracting charges and does not incur any
materials, supplies and other proj ect costs, and, therefore, our software-related business generally
record a lower Major Operating Costs Ratio. During the Track Record Period, the fluctuation in the
Major Operating Costs Ratio of our software-relate d services was consistent with the fluctuation in
the revenue contribution of our software developm ent services as we normally incurred much higher
project costs in our software development s ervices as compared to sales of software.
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During the Track Record Period, we acted as the subcontractors of our customers for some
projects and our entitlement to the consideration in certain of the contracts was contingent on the
settlement of the project costs by the ultimate us ers to our customers. In such cases, our revenue
recognition will be affected by the timing of settlement by the ultimate customers. For FY2020, the
recognition of an aggregate revenue amounting to a p p r o x i m a t e l yR M B 5 . 5m i l l i o ni nr e l a t i o nt oC X
Smart Construction Site ICT Project were subject t o the same consideration, resulting in a higher
Major Operating Costs Ratio for our ICT integrati on services for FY2020. If the relevant contingent
payment clauses were removed, the then Major Op erating Costs Ratio for the ICT integration
services in FY2020 would be comparable to FY2021.
During the Track Record Period, the overall Major Operating Costs Ratios of our Major
Projects in telecommunication network enhance ment services, telecommunication network
infrastructure maintenance and infrastructure eng ineering services, ICT integration services and
software-related business was approximately 71. 9%, 79.5%, 92.9% and 73.5%, respectively. The
reasons for deviation of Major Operating Costs Ratio of our Major Projects had been disclosed
above. The overall Major Operating Costs Ratios of the remaining projects (projects other than
Major Projects) in telecommunication network e nhancement services, telecommunication network
infrastructure maintenance and infrastructure eng ineering services, ICT integration services and
software-related business was approximately 68. 9%, 72.8%, 73.4% and 30.5%, respectively. Except
for the overall Major Operating Costs Ratio for o ur ICT integration services, all of the overall
Major Operating Costs Ratio of the remaining pr ojects for other business lines falls within the
range of the overall Major Operating Costs Ratio of the respective business line during the Track
Record Period. The relatively lower Major Operat ing Costs Ratio recorded by our other projects
concerning ICT integration services was princip ally attributable to the fact that the price of such
services was principally determined on a cost-pl us basis after taking into account, among other
things, the estimated cost of the hardware and soft ware specified for an integration project. Major
Projects in ICT integration services business line normally involved relatively higher estimated cost
of hardware and software, for which our margin in these projects (as a percentage of revenue) will
normally be lower if such hardware and/or software was procured through third-party vendors. As a
result, we normally recorded a relatively higher Major Operating Costs Ratio for Major Projects in
ICT integration services, compared with other pro jects in the business line. Among the remaining
projects of all business lines during the Track Record Period, there were 17 projects that we
considered to have a significant impact to our profi tability (being projects that generated no less
than RMB1 million project level p rofit (calculated based on revenue of the project minus its Major
Operating Cost) during FY2020, FY2021, FY2022 or 6M2023). Amongst these 17 projects, eleven
of them were related to our software segment (incl uding seven software sales projects for which
relatively lower Major Operating Costs Ratio is normally recorded as insignificant additional costs
are required), two of them were related to our wi reless telecommunication network enhancement
services, two of them were related to our telecommunication network infrastructure maintenance
and engineering services and the remaining two of them were related to our ICT integration
services. Two of the projects in our software segm ent recorded relatively lower Major Operating
Costs Ratios of approximately 6.6% and 14.3% as we were able to utilise our previous research and
development results in providing the relevant software development services. Similarly, we
recorded relatively lower Major Operating Cost s Ratios of approximately 20.8% and 50.0% in two
wireless telecommunication netw ork enhancement services proj ects and approximately 40.3% and
45.7% in two ICT integration serv ice projects as a result of the utilisation of our existing research
and development results, or existing software or p latform development resources. We did not incur
addition cost in the two telecommunication netwo rk infrastructure maintenance and engineering
services projects as the revenue recognised were r elated to recognition of revenue attributable to
variable consideration.
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Wireless telecommunication network enhancement services
The Major Operating Costs Ratio for the business line was relatively stable for FY2021,
FY2022 and 6M2023. While our Major Operating Costs Ratio for the business line was relatively
lower in FY2020 as we recorded a relatively low er Major Operating Cost s Ratio for JS Technical
Service Project I of approximately 52.5% in FY2 020, which was mainly attributable to the reduce
in staff resources needed to handle the orders.
Telecommunication network infrastructur e maintenance and engineering services
The Major Operating Costs Ratio for the business line was relatively stable for FY2020 and
FY2021. While we recorded a relatively lower Majo r Operating Costs Ratio for the business line in
FY2022 as we recognized revenue of approximat ely RMB4.3 million from NF Guangdong Mobile
Maintenance Project, XW Zhuhai Mobile Customer Premises Network Project, CX Heilongjiang
Telecom Maintenance Project I and two other projects of the business line for FY2022, which were
mainly attributable to the contingent payment recognized during the FY2022. Nevertheless, we
recorded a slight increase in Major Operating Costs Ratio in 6M2023 as compared to FY2022.
ICT integration services
For our ICT integration services, we would generally design the system layout, procure
necessary hardware and software, and integrate th e same to form a compatible functioning system
to cater for our customers ’ specific needs or requirements. However, the type and combination of
system components required by customers vary on a case-by-case basis depending on the
application and specifications of the system to b e set up. Accordingly, we experienced a relatively
larger fluctuation in Major Operating Costs Ra tio for our ICT integration services. We had a
relatively high Major Operating Costs Ratio for t he business line in FY2020 which was principally
attributable to CX Smart Construction Site I CT Project as stated above. While we successfully
lowered the Major Operating Costs Ratio for t he business line in FY2022 as we have selected
projects with better margins after strengtheni ng our presence in the market during FY2020 and
FY2021. For instance, the weighted average Maj or Operating Costs Ratio for our three ICT
integration services projects which contribute d over RMB3 million revenue for FY2022 (namely,
CX IDC Room ICT Project, XM Future Exchange System Integration Project and ZTF Hospital
Automation Alteration Service Project) was approximately 86.9%, while the weighted average
Major Operating Costs Ratio for our 11 ICT integra tion services projects which contributed revenue
ranging from RMB1 million to RMB3 million for FY 2022 (namely DX 2G Monitoring Alternation
Project, DX Jiangmen Smart Access Control ICT Project, YD Data Mobilisation Project, YD
Intelligent Office ICT Project , YD Hengqin 5G ICT Project, ZS J iangmen Bridge Project, NF
Baoan Water Monitoring ICT Project, XX 5G Edge Computing Project, YC Guangzhou South ICT
Project, GY Mobile XC Cloud Project and GY Dig ital Government, Medical, Insurance and
Disaster Recovery Project) was reduced to appr oximately 72.6%. During 6M2023, we continue to
take up more projects with lower contract sum whi ch normally require lower material costs and
yield a better margin as compared to projects with significant contract sum, and therefore, able to
record a lower Major Operating Costs Ratio as compared to FY2022.
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Software-related business
The Major Operating Costs Ratio for softwa re-related business mainly depended on the
proportion of revenue derived from sales of softwa re and our software development services as the
Major Operating Costs Ratio of sales of softwar e is much lower than our software development
services. For instance, the general increasing trend of our Major Operating Costs Ratio for
software-related business was consistent with the fact that our software development services
accounted for approximately 51.4% of revenue fro m our software-related business in FY2020 and
49.0% in FY2021, and increased to 86.1% and 73.8% in FY2022 and 6M2023, respectively.
Depreciation and amortisation
Our depreciation and amortisation expenses prin cipally represented the depreciation expenses
of furniture, fixtures and office equipment, rights-of-use asse ts and motor vehicles, and the
amortisation expenses of our sel f-developed software. During the Track Record Period, as we did
not own any property or land for self-use and there was no high-value equipment or machine
required for the provision of our services, we did not record a material amount of depreciation.
Listing expenses
Our Listing expenses represented the amount of expenses charged to our consolidated
statements of profit or loss in relation to the Listing.
Other operating expenses
Our other operating expenses principally include d our other tax and levies, professional fees,
office expenses and other expenses. Our other tax and levies mainly represented city maintenance
and construction tax and educational surcharges.
FY2020 FY2021 FY2022 6M2022 6M2023
RMB’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
(unaudited)
Auditor ’s remuneration 115 121 117 46 47
Contract bidding charge 403 644 511 303 237
Entertainment expenses 281 382 267 128 212
Expenses of short-term leases in
respect of equipment, offices
and staff quarters 95 — 145 29 2
Insurance expenses 37 117 150 30 36
Office expenses 379 511 343 116 134
Other taxes and levies 1,007 1,062 1,197 527 865
Professional fees 498 433 475 355 195
Stamp duty — 106 ———
Others 365 273 291 85 120
Total 3,180 3,649 3,496 1,619 1,848
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We experienced a generally increasing trend in our other operating expenses which was
consistent with the overall growth of our business during the Track Record Period.
Finance costs, net
Our net finance cost comprised our finance inco me and our finance costs. Our finance income
principally represented our interest income on our cash at banks and our finance cost principally
represented the interest expenses on our bank b orrowings. Given that we did not incur material
bank borrowings during the Track Record Period, we did not record a material amount of net
finance costs.
Income Tax
During FY2020, FY2021, FY2022 and 6M2023, WellCell Technology, one of our subsidiaries
in the PRC, was qualified for high and new technol ogy enterprises status and was therefore subject
to a preferential income tax rate of 15%. In a ddition to being reco gnised as high and new
technology enterprises, WellCell Technology w as recognised as a Key Software Enterprise under
relevant PRC laws and regulations for FY2021 and FY2022, and was entitled to a preferential
income tax rate of 10% for FY2021 and FY2022. WellCell Intelligent, our another subsidiary in the
PRC, was subject to a standard income tax rate of 25%.
Our subsidiary in Hong Kong and our Company are subject to Hong Kong profits tax of
16.5% on estimated assessable profit arising in Hong Kong, while we had no tax obligation arising
from Hong Kong or other jurisdictions during the Track Record Period. Nevertheless, according to
the relevant laws and regulations promulgated by t he State Administratio n of Taxation of the PRC,
enterprises engaging in research and development activities are entitled to claim 150% to 175% of
their research and development expenses incurre d as tax deductible expenses when determining
their assessable profits for that year.
Our effective tax rate for FY2020, FY2021, FY2022 and 6M2023 was approximately 14.6%,
15.3%, 17.1% and 17.0%. For FY2021, although WellCell Technology was recognised as a Key
Software Enterprise under relev ant PRC laws and regulations and entitled to a preferential income
tax rate of 10%, we still recorded a relatively hig h effective tax rate as we recorded an increase in
PRC dividend withholding tax which accounted for approximately 49.7% of our income tax
expenses in FY2021. For FY2022 and 6M2023, our relatively high effective tax rate was
principally attributable to the PRC dividend wi thholding tax, which accounted for approximately
43.9% and 56.6%, respectively of our income tax expenses for the year/period, mainly related to
the withholding tax on dividends declared and paid by our PRC subsidiary during 2022 or first half
2023.
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RESULTS OF OPERATIONS OF OUR GROUP
Our Directors anticipate that there will be no material change in our business model in the
near future and in order to allow investors to have a better understanding of our business, we
further set out below the analysis of our historical results for FY2020, FY2021, FY2022, 6M2022
and 6M2023.
6M2023 compared to 6M2022
Revenue
Our revenue increased by approximately RMB 10.6 million from approximately RMB103.2
million for 6M2022 to approximately RMB113.8 million for 6M2023, representing an increase of
approximately 10.3%. The increase was mainly attr ibutable to the increase in revenue derived from
our software related business of approximately RMB9.4 million.
We set out below the analysis of segmen tal revenue of our business segments:
. Wireless telecommunication network enha ncement services: segmental revenue
increased by approximately 7.6% from appr oximately RMB39.4 million for 6M2022 to
approximately RMB42.4 million for 6M2023. The increase was mainly attributable to the
increase in average revenue generated fro m each project from approximately RMB0.66
million for 6M2022 to approximately RMB0.74 million for 6M2023, while the number of
projects that generated revenue for the segm e n ts l i g h t l yd e c r e a s e df r o m6 0i n6 M 2 0 2 2t o
58 in 6M2023. The increase in average revenue generated from each project was
primarily attributable to the increase in revenue derived from DT Technical Service
Project of approximately RMB5.0 million for 6M2023 as compared to 6M2022.
. Telecommunication network infrastructur e maintenance and engineering services:
segmental revenue decreased by approxim ately 11.9% from approximately RMB21.2
million for 6M2022 to approximately RMB18.7 million for 6M2023. The number of
projects that generated revenue for the segment for each of 6M2022 and 6M2023 was 24,
while there was decrease in average revenue generated from each project from
approximately RMB0.9 million in 6M2022 to RMB0.8 million in 6M2023. The decrease
in average revenue generated from each project was mainly attributable to the decrease in
number of projects that generated revenue of over RMB3 million during the period from
three during 6M2022 (namely, CX Heilongjiang Telecom Maintenance Project II, GG
Guangxi Comprehensive Maintenance Project and ZY Zhuhai Pipeline Alteration Service
Project which contributed an aggregate revenue of approximately RMB12.3 million) to
one during 6M2023 (namely GG Guangxi Comprehensive Maintenance Project which
contributed revenue of appr oximately RMB6.1 million).
. ICT integration services: segmental revenue s lightly increased by approximately 2.3%
from approximately RMB34.8 million for 6 M2022 to approximately RMB35.6 million
for 6M2023. The increase was mainly attributable to the increase in the number of
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projects that generated revenue for the segment from 20 in 6M2022 to 28 in 6M2023
which was in line with our continuous expansion in the segment. On the other hand, the
average revenue generated for each project was approximately RMB1.7 million and
RMB1.3 million for 6M2022 and 6M2023, respectively. The decrease in average revenue
generated for each project was also attribut able to the decrease in revenue derived from
the highest-revenue-generating project from approximately RMB15.6 million in 6M2022
to approximately RMB7.1 million in 6M2023 and was in line with our strategy to reduce
the taking of ICT integration projects with large contract sum in view of the initial
project cost requirement.
. Software development and sales: segmental revenue increased by approximately 119.5%
from approximately RMB7.8 million for 6M2022 to approximately RMB17.2 million for
6M2023. The increase was mainly attributable to the increase in revenue derived from
software development services from appr oximately RMB5.6 million for 6M2022 to
approximately RMB12.7 million for 6M2023, as mainly driven by the increase in number
of projects that generate revenue of over RMB1 million during the period from two
during 6M2022 (namely, YD End-to-end Perceptual Analysis Platform Development
Project and YD 5G News Operating Platform Project which contributed an aggregate
revenue of approximately RMB4.1 million) to four during 6M2023 (namely, BC
Production and Operation Business Devel opment Project, YC Industrial Internet Cloud
Platform Development Project, DX New Cl oud Software Development Project and KA
Asset Management Platform Development Project which contributed an aggregate
revenue of approximately RMB9.2 million).
Employee benefit expenses
Our employee benefit expenses experienced a d ecrease from approximately RMB10.0 million
for 6M2022 to approximately RMB9.1 million for 6M2023. The decrease was principally
attributable to the decrease in wages and salarie s due to decrease in average number of employee.
Our average number of employees of each mont h decrease from approximately 160 during 6M2022
to approximately 145 during 6M2023. Nevertheless, our number of employee as at 31 December
2022 and 30 June 2023 was also 145.
Subcontracting charges
Our subcontracting charges increased by appr oximately 26.2% from approximately RMB50.1
million for 6M2022 to approximately RMB63.2 million for 6M2023. The increase was mainly
attributable to the increases in subcontractin g charges for our all four services, except for
telecommunication network infrastructure mainten ance and engineering services which we recorded
a decrease in revenue. The increase was in line with the increase in engaging subcontractor when
we reduced our staff during the Track Record Period. We have incurred subcontracting fee of over
RMB3 million in four projects, namely DT Tech nical Service Project, DL Jieyang Network
Enhancement Project, GG Guangxi Comprehensiv e Maintenance Project and DL Big Data Platform
Project which amounted to approximat ely RMB18.3 million in aggregate.
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Materials, supplies and other project costs
Our materials, supplies and other project co sts decreased by approximately 27.6% from
approximately RMB20.2 million for 6M2022 to approximately RMB14.7 million for 6M2023. The
decrease was principally attributable to the de crease in material costs for our ICT integration
services which was in line with our strategy to reduce the taking of ICT integration projects with
large contract sum in view of the in itial project cost requirement.
Depreciation and amortisation
Our depreciation and amortisation expens es decreased by approximately 21.1% from
approximately RMB1.5 million for 6M2022 to approximately RMB1.2 million for 6M2023. The
decrease was mainly attributable to the decreas es in both amortisation of intangible assets and
depreciation charges.
Other operating expenses
Our other operating expenses increased from approximately RMB1.6 million in 6M2022 to
approximately RMB1.8 million in 6M2023 as pr i m a r i l yd r i v e nb yt h ei n c r e a s ei no t h e rt a xa n d
levies due to our VAT.
Listing expenses
Our Listing expenses decreased from approximately RMB6.6 million for 6M2022 to
approximately RMB5.9 million for 6M2023.
Operating profit
Our operating profit increased by approximate ly 33.2% from approximately RMB13.6 million
for 6M2022 to approximately RMB18.0 million for 6M2023. The increase in our operating profit
was principally attributable to the increase in our revenue cope with the reduction in Major
Operating Costs Ratio as explained above.
Finance costs, net
Our net finance cost slightly increased from a pproximately RMB0.3 million for 6M2022 to
approximately RMB0.4 million for 6M2023.
Income tax expenses
Our income tax expenses reduced by approxim ately RMB0.9 million from approximately
RMB3.9 million for 6M2022 to approximately R MB3.0 million for 6M2023. The decrease was
mainly attributable to the decrease in corporate income tax mainly due to increase in super
deduction from research and dev elopment expenditure, and the decrease in withholding tax on
dividends due to reduction in dividend declared by our PRC subsidiary during 6M2023 as
compared to 6M2022.
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Profit for the period and net profit margin
As a result of the foregoing, our profit for the period increased by approximately RMB5.3
million from approximately RMB9.4 million for 6M2022 to approximately RMB14.7 million for
6M2023, representing an increase of approximatel y 56.4%. The net profit margin increased from
approximately 9.1% for 6M2022 to approximately 12.9% for 6M2023.
FY2022 compared to FY2021
Revenue
Our revenue increased by approximately RMB 23.2 million from approximately RMB203.3
million for FY2021 to approximately RMB226.5 m illion for FY2022, representing an increase of
approximately 11.4%. The increa se was mainly attributable to the overall increase in all business
lines.
We set out below the analysis of segmen tal revenue of our business segments:
. Wireless telecommunication network enhan cement services: segmental revenue slightly
increased by approximately 2.0% from approximately RMB100.1 million for FY2021 to
approximately RMB102.1 million for FY2022. The number of projects that generated
revenue for the segment slightly decreased from 93 in FY2021 to 91 in FY2022, while
the average revenue generated from each project for each of FY2021 and FY2022 was
approximately RMB1.1 million.
. Telecommunication network infrastructure m aintenance and engineering services: we
recorded an increase in revenue of approxi mately RMB2.7 million from FY2021 to
FY2022. The number of projects that generated revenue for the segment for each of
FY2021 and FY2022 was 35, and the average revenue generated from each project
slightly increased from approximately RMB1.2 million in FY2021 to approximately
RMB1.3 million in FY2022.
. ICT integration services: segmental re venue increased by approximately 28.4% from
approximately RMB42.5 million for FY2021 to approximately RMB54.6 million for
FY2022. The increase was mainly attributable to the increase in the number of projects
that generated revenue for the segment from 25 in FY2021 to 35 in FY2022 which was
in line with our continuous expansion in the segment. On the other hand, the average
revenue generated for each project slightly dropped from approximately RMB1.7 million
in FY2021 to approximately RMB1.6 million in FY2022.
. Software development and sales: segmental revenue increased by approximately 33.3%
from approximately RMB19.0 million for FY2021 to approximately RMB25.3 million for
FY2022. The increase was mainly attributable to the increase in revenue derived from
software development of approximately RMB12.5 million and partially offset by the
reduce in revenue derived from sales of soft ware of approximately RMB6.1 million. The
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increase in revenue derived from software devel opment was principally attributable to the
YD End-to-end Perceptual Analysis Plat form Development Project and LQ Public
Integrated Services Projects, being the only two Major Project for our software
development during the Track Record Period, which contributed revenue of
approximately RMB11.5 million in aggregate for FY2022.
Employee benefit expenses
Our employee benefit expenses experienced a d ecrease from approximately RMB46.4 million
for FY2021 to approximately RMB20.0 million for FY2022. The decrease was principally
attributable to the decrease in wages and salar y of approximately RMB25.2 million as a result of
the reduction in our average number of employees as stated above. Our average number of
employees of each month decreased from approximately 490 during FY2021 to approximately 158
during FY2022.
Subcontracting charges
Our subcontracting charges increased by appr oximately 40.4% from approximately RMB86.6
million for FY2021 to approximately RMB121.6 million for FY2022. The increase was mainly
attributable to the increases in subcontracting ch arges for our wireless telecommunication network
enhancement services of approximately RMB26 .8 million and subcontracting charges for our
software-related business of approximately R MB7.2 million. The considerable increase in
subcontracting charges for our wireless teleco mmunication network enhancement services was
consistent with our approach in increasing the use of subcontractors on projects with lower
technical requirements.
Materials, supplies and other project costs
Our materials, supplies and other project costs increased by approximately 31.0% from
approximately RMB29.2 million for FY2021 to approximately RMB38.2 million for FY2022. The
increase was principally attributable to the increas e in materials, supplies and other project costs for
our ICT integration services of approximately R MB9.5 million. Our materials, supplies and other
project costs for our ICT integration services for FY2022 was mainly attributable to our CC IDC
Room ICT Project and our XM Future Exchange Integrated Project, the material cost of these two
project amounted to approximately RMB18.2 million in aggregate for FY2022.
Depreciation and amortisation
Our depreciation and amortisation expens es increased by approximately 34.8% from
approximately RMB2.3 million for FY2021 to approximately RMB3.1 million for FY2022. The
increase was mainly attributable to the increas es in both amortisation of intangible assets and
depreciation charges.
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Net impairment losses of contr act assets and trade receivables
Our net impairment losses of contract asse ts and trade receivables increased from
approximately RMB0.2 million for FY2021 to approximately RMB3.3 million for FY2022. The
increase was principally attributable to the incre ase in impairment losses on expected credit loss
rate primarily due to the decrease in settlement ra te of the outstanding trade receivables aged 1 to 2
years during FY2022 and the increase in outstandin g amount of gross trade receivables aged over 1
year from approximately RMB1.8 million as a t 31 December 2021 to approximately RMB4.4
million as at 31 December 2022. Amongst such out standing balance, approximately RMB4.1
million was attributable to our customers from whom we derived an aggregate revenue of
approximately RMB55.1 million during FY2022 and the remaining balance of approximately
RMB0.3 million was attributable to three customers from whom we did not derive any revenue
during FY2022.
Other operating expenses
Our other operating expenses was relatively s table and amounted to approximately RMB3.6
million in FY2021 and approximately RMB3.5 million in FY2022
Listing expenses
Our Listing expenses increased from approximately RMB7.5 million for FY2021 to
approximately RMB10.1 million for FY2022.
Operating profit
Our operating profit slightly decrease by approximately 1.3% from approximately RMB30.5
million for FY2021 to approximately RMB30.1 million for FY2022. The decrease in our operating
profit was principally attributable to the increas es in subcontracting costs, materials, supplies and
other project costs, net impairment losses of cont ract assets and trade receivables and increase in
Listing expenses and partially offset by the increase in our revenue and decrease in staff costs as
explained above.
Finance costs, net
Our net finance cost increased from appr oximately RMB0.3 million for FY2021 to
approximately RMB0.8 million for FY2022. The increase was mainly attributable to the increase in
finance costs of approximately RMB0.5 millio n as we utilised more bank borrowings during
FY2022 as compared to FY2021 as evidenced by the increase in proceeds from bank borrowings
from approximately RMB6.0 million for FY2021 to approximately RMB30.0 million for FY2022.
The increase in indebtedness was in line with the increase in revenue derived from our ICT projects
during FY2022 which normally requires larger amount of initial project costs. For further
information of our borrowings, including their int erest rates and maturity portfolio, please refer to
the paragraphs under ‘‘Indebtedness ’’below.
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Income tax expenses
Our income tax expenses increased from appr oximately RMB4.6 million in FY2021 to
approximately RMB5.0 million in FY2022. We r ecorded increase in corporate income tax of
approximately RMB1.2 million as W ellCell Technology regained its recognition as a Key Software
Enterprise under relevant PRC laws and regulati ons for FY2021 and was, therefore, entitled to a
preferential income tax rate of 10% for FY2021, while such status for FY2022 has yet to be
confirmed, which were partially offset by the inc rease in deduction from research and development
expenditure of approximately RMB1.2 million a nd the decrease in PRC dividend withholding tax
from RMB2.3 million in FY2021 to RMB2.2 million in FY2022.
Profit for the year and net profit margin
As a result of the foregoing, our profit for th e year decreased by approximately RMB1.2
million from approximately RMB25.5 million fo r FY2021 to approximately RMB24.3 million for
FY2022, representing a decrease of approximately 5.0%. The net profit margin decreased from
approximately 12.6% for FY2021 to approximately 10.7% for FY2022 which was principally
attributable to the increases in net impairment l osses of contract assets and trade receivables and
Listing expenses.
FY2021 compared to FY2020
Revenue
Our revenue increased by approximately RM B7.7 million from approximately RMB195.6
million for FY2020 to approximately RMB203.3 m illion for FY2021, representing an increase of
approximately 4.0%. The increase was mainly attr ibutable to the overall increase in all business
lines (except for the software related segm ent which recorded a decrease in revenue).
We set out below the analysis of segmen tal revenue of our business segments:
. Wireless telecommunication network enha ncement services: segmental revenue
increased by approximately 6.8% from approximately RMB93.7 million for FY2020 to
approximately RMB100.1 million for FY2021. The increase was mainly attributable to
the increase in the average revenue generated from each project from approximately
RMB1.0 million in FY2020 to RMB1.1 million in FY2021 while there is a slight
decrease in number of projects that gener ated revenue for the segment from 95 in
FY2020 to 93 in FY2021.
. Telecommunication network infrastructure m aintenance and engineering services: there
was no significant change in segmental revenue for FY2020 and FY2021, and we
recorded an increase in revenue of approxi mately RMB2.1 million from FY2020 to
FY2021. There was an increase in number of p rojects that generated revenue for the
segment from 23 in FY2020 to 35 in FY2021, especially as we recorded an increase in
revenue from projects in Guangxi Provin ce, while there was a decrease in average
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revenue generated from each project from a pproximately RMB1.7 million in FY2020 to
RMB1.2 million in FY2021. The decrease i n average revenue generated from each
project was mainly attributable to the decrease in revenue generated from the CX
Heilongjiang Telecom Maintenance Proj ect from approximately RMB17.1 million for
FY2020 to approximately RMB14.9 million for FY2021 mainly as a result of the
decrease in order in the project.
. ICT integration services: segmental re venue increased by approximately 10.4% from
approximately RMB38.5 million for FY2020 to approximately RMB42.5 million for
FY2021. The increase was mainly attributable to the increase in the number of projects
that generated revenue for the segment from 13 in FY2020 to 25 in FY2021 which was
in line with our continuous expansion in the segment. On the other hand, the average
revenue generated from each project was a pproximately RMB3.0 million in FY2020 and
RMB1.7 million in FY2021. The decrease i n average revenue generated from each
project was principally attributable to the fact that the number of project contributing
revenue of less than RMB1 million incr eased from five in FY2020 to eighteen in
FY2021.
. Software development and sales: segmenta l revenue decreased by approximately 20.1%
from approximately RMB23.7 million for FY2020 to approximately RMB19.0 million for
FY2021. The decrease was mainly attributable to the decrease in revenue derived from
sales of software of approximately RMB1 .9 million and software development of
approximately RMB2.9 million.
Employee benefit expenses
Our employee benefit expenses experienced a d ecrease from approximately RMB55.7 million
for FY2020 to approximately RMB46.4 million for FY2021. The decrease was principally
attributable to the decrease in wages and salar y of approximately RMB11.4 million as a result of
the reduction in our average number of employees, which was partially offset by the increase in
pension costs of approximately RMB2.4 million a s the PRC government waived part of our pension
contribution obligations during FY2020 in view of the COVID-19 pandemic. Our average number
of employees of each month decreased from approx imately 603 during FY2020 to approximately
490 during FY2021.
Subcontracting charges
Our subcontracting charges increased by appr oximately 25.1% from approximately RMB69.2
million for FY2020 to approximately RMB86.6 million for FY2021. The increase was mainly
attributable to the increase in subcontracting charges for our wireless telecommunication network
enhancement services of approximately RMB12. 3 million and subcontracting charges for our ICT
integration services of approximately RMB5.3 mi llion. The considerable increase in subcontracting
charges for our wireless telecommunication netw ork enhancement services was consistent with our
approach in increasing the use of subcontractors on projects with lower technical requirements.
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Materials, supplies and other project costs
Our materials, supplies and other project costs decreased by approximately 8.4% from
approximately RMB31.9 million for FY2020 to approximately RMB29.2 million for FY2021. The
decrease was mainly attributable to the decrease in the project supplies costs which was consistent
with the decrease in materials, supplies and other p roject costs of our ICT i ntegration services.
Depreciation and amortisation
Our depreciation and amortisation expens es increased by approximately 38.0% from
approximately RMB1.6 million for FY2020 to approximately RMB2.3 million for FY2021. The
increase was mainly attributable to the increas es in both amortisation of intangible assets and
depreciation charges.
Other operating expenses
Our other operating expenses increased by approximately 14.7% from approximately RMB3.2
million for FY2020 to approximately RMB3.6 million for FY2021. The increase was mainly driven
by the increase in contract bidding charges and stamp duty charged during the year. Our other
operating expenses represented approximate ly 1.6% and 1.8% of our revenue for FY2020 and
FY2021, respectively.
Listing expenses
Our Listing expenses increased from approximately RMB1.0 million for FY2020 to
approximately RMB7.5 million for FY2021.
Operating profit
Our operating profit decreased by approximat ely 13.4% from approximately RMB35.2 million
for FY2020 to approximately RMB30.5 million for FY2021. The decrease was mainly attributable
to the increase in subcontracting charges of appr oximately RMB17.4 million and increase in Listing
expenses of approximately RMB6.5 million, whic h was partially offset by the increase in revenue
of approximately RMB7.8 million and the decrease in employee benefit expenses of approximately
RMB9.2 million.
Finance costs, net
Our net finance cost decreased by approximately 33.3% from approximately RMB0.5 million
for FY2020 to approximately RMB0.3 million for F Y2021. The decrease was mainly attributable to
the reduction in finance costs of approximately RMB0.2 million as we utilised less bank
borrowings during FY2021 as compared to FY2020 a s evidenced by the reduction in proceeds from
bank borrowings from approximately RMB23.7 million for FY2020 to approximately RMB6.0
million for FY2021. For further information of our bo rrowings, including their interest rates and
maturity portfolio, please refer to the paragraphs under ‘‘Indebtedness ’’below.
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Income tax expenses
Our income tax expenses decreased by approximately RMB0.5 million from approximately
RMB5.1 million for FY2020 to approximately RMB4.6 million for FY2021, representing a decrease
of approximately 9.8%. The decrease was mainly at tributable to the decrease in corporate income
tax of approximately RMB1.4 million as WellCell Technology regained its recognition as a Key
Software Enterprise under relevant PRC laws and regulations for FY2021 and was, therefore,
entitled to a preferential income tax rate of 10% for FY2021, which was partially offset by the
increase in PRC dividend withholding tax fro m approximately RMB1.6 million for FY2020 to
RMB2.3 million for FY2021.
Profit for the year and net profit margin
As a result of the foregoing, our profit for th e year decreased by approximately RMB4.2
million from approximately RMB29.7 million fo r FY2020 to approximately RMB25.5 million for
FY2021, representing a decrease of approximat ely 14.1%. The net profit margin reduced from
approximately 15.2% for FY2020 to approximately 12.6% for FY2021. The decrease in net profit
and net profit margin was mainly attributable to an increase in Listing expenses which amounted to
approximately RMB1.0 million for FY2020 and RMB7.5 million for FY2021, and represented
approximately 0.5% of revenue for FY2020 and 3.7% of revenue for FY2021.
MATERIAL POST BALANCE SHEET EVENTS
Save for the Reorganisation in preparation of t he Listing and the declaration and payment of
dividend as mentioned above, there was no material post-balance sheet events which had affected
our financial positions.
Further, our Directors confirm that, since the e nd of the Track Record Period up to the Latest
Practicable Date, the outbreak of COVID-19 did not have any material adverse impact on our
business and results of operations. For de tails, please refer to the paragraphs headed ‘‘Business —
Impact of the COVID-19 outbreak on our business ’’in this prospectus.
MATERIAL ACQUISITIONS AND DISPOSALS
During the Track Record Period, we did not have any material acquisitions or disposals of
subsidiaries or associated companies or joint ventures.
SIGNIFICANT INVESTMENTS
During the Track Record Period, we did n ot hold any significant investment.
LIQUIDITY AND CAPITAL RESOURCES
We have historically funded our liquidity an d capital requirements primarily through a
combination of borrowings, inflows from our operating activities and contributions from our
shareholders. Our level of borrowings during the Track Record Period and the relevant cost of
FINANCIAL INFORMATION
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borrowings are further analysed under the paragraphs under ‘‘Indebtedness ’’below. We generated
operating profit before working capital changes of approximately RMB37.7 million, RMB33.0
million, RMB36.4 million, RMB16.5 million and RMB20.6 million for FY2020, FY2021, FY2022,
6M2022 and 6M2023, respectively, which took into account the Listing expenses of approximately
RMB1.0 million, RMB7.5 million, RMB10.1 million, RMB6.6 million and RMB5.9 million for
FY2020, FY2021, FY2022, 6M2022 and 6M2023, respectively. We require cash primarily for
financing our settlements and/or prepayment of va rious project expenses, staff costs, operating
expenses, interest expenses, our research and dev elopment costs and other working capital needs, as
well as for financing our capital expenditures in co nnection with the purchase of property, plant and
equipment. As at 31 December 2020, 2021 and 2022 and 30 June 2023, we had cash and cash
equivalents of approximately RMB23.1 million, RMB21.5 million, RMB42.2 million and RMB31.5
million, respectively. Our Group ’s cash and cash equivalents ar em a i n l yh e l di nR M Ba n dt h e
remaining are held in HK$.
Meanwhile, our Directors believe that we mi ght face liquidity risk from time to time as a
result of the mismatch of our operating cash flow arising from significant net cash outflow during
the early stages of a project, where our cash outflow for our payables have not yet been recovered
by our receivables for a prolonged period of time, u ntil the accumulated progress payments received
from our customer can materially cover the aggreg ate cost we have incurred. For details, please
refer to the paragraphs headed ‘‘Risk factors — Our inability to manage cash flow mismatch arising
from the incurring of material initial project co sts for projects/work pe rformed before these are
recoverable/recovered may damage our financial po sition and prospects and give rise to liquidity or
insolvency risks ’’in this prospectus. During the Track Record Period, we normally incurred net
operating cash outflows during the first half o f our financial year. In view of the liquidity
requirement, especially in our IC T integration projects, we had to adopt a cautious approach in
considering potential ICT integration projects which had a contract sum exceeding RMB20 million
and involved significant initial project costs, and h ad to decline business opportunities in relation to
projects with larger contract sum due to concerns in liquidity management. Meanwhile, in order to
mitigate our liquidity risk which may intensify along with our anticipated business growth, we have
also put in place the internal control measures and procedures to strengthen our liquidity
management and the details of which are set out in ‘‘Internal control and risk management
measures ’’in the Business section.
We expect to finance our working capital requirements and the planned capital expenditures
and investments for the 12 months following the da te of this prospectus with the following sources
of funding:
(i) net cash inflows to be generated from our operating activities;
(ii) the cash and cash equivalents available, w hich were approximately RMB31.5 million as
at 30 June 2023; and
(iii) the net proceeds to be received by our Group from the Share Offer.
Based on the above, our Directors are satisfied, after due and careful enquiry, that in the
absence of unforeseen circumstances our Group will have sufficient working capital for our present
requirements for at least the next 12 months from the date of this prospectus.
FINANCIAL INFORMATION
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For more information on our expected capital ex penditure requirements, please refer to the
sub-section headed ‘‘Capital expenditure ’’in this section below.
Cash flows of our Group
The following table sets out the selected cash flow data from the consolidated statements of
cash flows for the Track Record Period:
FY2020 FY2021 FY2022 6M2022 6M2023
RMB’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
(unaudited)
Operating cash flows before
working capital changes 37,711 32,951 36,447 16,471 20,550
Changes in working capital:
Contract assets and trade
receivables (8,357) (18,693) (2,368) (3,966) (9,012)
Prepayments, deposits and other
receivables 488 2,258 396 (2,414) (7,568)
Amount due from the then
intermediate holding company — (112) (1,049) (18) (20)
Trade and bills payables 2,325 9,939 (11,982) (10,337) (2,585)
Other payables and accruals (13 ,736) 6,636 (486) (2,190) 7,391
Pledged bank deposits 180 60 ———
Net cash generated from/(used
in) operations 18,611 33,039 20,958 (2,454) 8,756
Income tax paid (5,379) (8,020) (3,996) (978) (2,255)
Net cash generated from/(used
in) operating activities 13, 232 25,019 16,962 (3,432) 6,501
Net cash (used in)/generated
from investing activities (1,075) (3,786) (1,198) (857) 77
Net cash (used in)/generated
from financing activities (12,1 30) (22,821) 4,893 23,720 (17,270)
Net increase/(decrease) in cash
and cash balances 27 (1,588) 20,657 19,431 (10,692)
Cash and bank balances at
31 December/30 June 23,1 30 21,542 42,199 40,973 31,507
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Operating cash flows
Our cash inflow from operating activities is principally derived from the receipts of income
from our principal businesses, while our major cash outflow in operating activities is principally
attributable to our employee benefits expenses, subc ontracting charges, material costs, supplies and
other project costs and operating expenses attributable to our principal businesses.
Operating cash inflows before changes in working capital
Our operating cash inflows before changes in working capital was approximately RMB37.7
million, RMB33.0 million, RMB36.4 million, RMB 16.5 million and RMB20.6 million for FY2020,
FY2021, FY2022, 6M2022 and 6M2023, respectively.
For FY2020, our operating cash inflows before changes in working capital was principally
attributable to profit before income tax of approximately RMB34.7 million, and non-cash
depreciation and amortisation charged of appr oximately RMB1.6 million. Our operating cash
inflows before changes in working capital of approximately RMB37.7 million for FY2020 took into
account the non-recurring Listing expenses of appr oximately RMB1.0 million incurred during the
year.
For FY2021, our operating cash inflows before changes in working capital was principally
attributable to profit before income tax of approximately RMB30.1 million, and non-cash
depreciation and amortisation charged of appr oximately RMB2.3 million. Our operating cash
inflows before changes in working capital of approximately RMB33.0 million for FY2021 took into
account the non-recurring Listing expenses of appr oximately RMB7.5 million incurred during the
year.
For FY2022, our operating cash inflows before changes in working capital was principally
attributable to profit before income tax of appr oximately RMB29.3 million, non-cash depreciation
and amortisation charged of approximately RMB3. 1m i l l i o na n dn o n - c a s hp r ovision for impairment
of contract assets and trade receivables of appr oximately RMB3.3 milli on. Our operating cash
inflows before changes in working capital of approximately RMB36.4 million for FY2022 took into
account the non-recurring Listing expenses of app roximately RMB10.1 million incurred during the
period.
For 6M2022, our operating cash inflows before changes in working capital was principally
attributable to profit before income tax of appr oximately RMB13.3 million, non-cash depreciation
and amortisation charged of approximately RMB1. 5m i l l i o na n dn o n - c a s hp r ovision for impairment
of contract assets and trade receivables of appr oximately RMB1.4 milli on. Our operating cash
inflows before changes in working capital of a pproximately RMB16.5 million for 6M2022 took into
account the non-recurring Listing expenses of appr oximately RMB6.6 million incurred during the
period.
FINANCIAL INFORMATION
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--- page 349 ---
For 6M2023, our operating cash inflows before changes in working capital was principally
attributable to profit before income tax of appr oximately RMB17.7 million, non-cash depreciation
and amortisation charged of approximately RMB1. 2m i l l i o na n dn o n - c a s hp r ovision for impairment
of contract assets and trade receivables of appr oximately RMB1.3 milli on. Our operating cash
inflows before changes in working capital of a pproximately RMB20.6 million for 6M2023 took into
account the non-recurring Listing expenses of appr oximately RMB5.9 million incurred during the
period.
Net cash generated from operating activities
For FY2020, our net cash generated from operating activities of approximately RMB13.2
million was principally attributable to our operat ing cash inflows before changes in working capital
of approximately RMB37.7 million, which was pa rtially offset by the decrease in other payables
and accruals of approximately RMB13.7 million which was principally due to the decrease in
contract liabilities of approximately RMB7.5 mi llion and the decrease in accrued trade payables of
approximately RMB3.6 million ; the increase in contract assets and trade receivables of
approximately RMB8.4 million which was princi pally due to increase in gross amount of contract
assets of approximately RMB10.4 million; and inc ome tax paid of approximately RMB5.4 million.
The decrease in contract liabilities was mainly attributable to the projects of Customer C as our
contract liabilities attributable to Customer C decreased by approximately RMB7.7 million, while
the increase in contract assets was principally a ttributable to the increase in contract assets in
relation to the projects with Customer C of approximately RMB5.8 million.
For FY2021, our net cash generated from operating activities of approximately RMB25.0
million was principally attributable to our operat ing cash inflows before changes in working capital
of approximately RMB33.0 million, the increase in trade and bills payables of approximately
RMB9.9 million which was principally attributable to the payables to our subcontractors and the
increase in other payables and accruals of approximately RMB6.6 million principally attributable to
the increase in contract liabilities of approximately RMB5.3 million. This was partially offset by
the increase in contract assets and trade receivab les of approximately RMB18.7 million and income
tax paid of approximately RMB8.0 million. The i ncrease in trade and bills payables was mainly
attributable to the increase in payables to our tw o subcontractors of approximately RMB6.9 million
in aggregate, and the increase in contract assets an d trade receivables was principally attributable to
the increase in contract assets and trade receivables in relation to the projects with three of our
major customers, namely Customer C, Customer D and Customer A of approximately RMB8.7
million, RMB5.9 million and RMB5.9 million, respectively.
For FY2022, our net cash generated from operating activities of approximately RMB17.0
million was principally attributable to our operat ing cash inflows before changes in working capital
of approximately RMB36.4 million and partially o ffset by the decrease in trade and bills payables
of approximately RMB12.0 milli on and increase in contract assets and trade receivables of
approximately RMB2.4 million. The decrease in trade and bills payables was principally
attributable to the settlement of the subcontracting fees payable during FY2022, while the increase
in contract assets and trade receivables was pri ncipally attributable to the increase in trade
receivables from Customer E of ap proximately RMB7.1 million.
FINANCIAL INFORMATION
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--- page 350 ---
For 6M2022, our net cash used in operating activ ities of approximately RMB3.4 million was
principally attributable to the decrease in tra de and bills payable of approximately RMB10.3
million, increase in contract assets and trade recei vables of approximately RMB4.0 million, increase
in prepayments, deposits and other receivables of approximately RMB2.4 million and decrease in
other payables and accruals of approximately RMB2. 2 million, and partially offset by our operating
cash inflows before changes in working capital of approximately RMB16.5 million. The decrease in
trade and bills payable was principally attribut able to the settlement of the subcontracting fees
payable during 6M2022, while the increase in cont ract assets and trade receivables was principally
attributable to the increase of contract assets a ttributable to the proj ects related to Guangzhou
Chengxiang. On the other hand, the increase in p repayments, deposits and other receivables was
principally attributable to the increase in def erred listing expenses of approximately RMB2.3
million, and the decrease in other payables and accruals was principally attributable to the
reductions in both contract liabilities and accrued trade payables.
For 6M2023, our net cash generated from operating activities of approximately RMB6.5
million was principally attributable to our net ope rating cash inflow before working capital changes
of approximately RMB20.6 million and increase in other payables and accruals of approximately
RMB7.4 million principally driven by the increas e in accrued subcontracting charges, materials
costs and other direct project costs of approximat ely RMB6.2 million, and partially offset by the
increase in contract assets and trade receivables of approximately RMB9.0 million as mainly driven
by the increase in trade receivables of approxim ately RMB14.0 million, increase in prepayments,
deposits and other receivables of approximately R M B 7 . 6m i l l i o nm a i n l yd r i v e nb yt h ei n c r e a s ei n
prepayment for projects of approximately RMB 4 . 8m i l l i o na n di n c r e a s ei nd e f e r r e dL i s t i n g
expenses of approximately R MB2.5 million, and decrease in trade and bills payable of
approximately RMB2.6 million mainly driven by the settlement of payables to subcontractors.
For FY2020, FY2021, FY2022, 6M2022 and 6M2023, our operating cash outflow attributable
to our contract assets and trade receivables was a pproximately RMB8.4 mi llion, RMB18.7 million,
RMB2.4 million, RMB4.0 million and RMB9.0 million, respectively, while we did not record
operating cash inflow attributable to our trade a nd bills payables that can cover such cash outflow
during each reporting period. Nevertheless, we s till managed to record net cash generated from
operating activities of approximately RMB13.2 million, RMB25.0 million, RMB17.0 million and
RMB6.5 million for FY2020, FY2021, FY2022 and 6 M2023, respectively, which was principally
attributable to our profit before taxation. Mean while, our operating cashflow also included the
payment of initial project costs of our projects, and we planned to finance part of our initial project
costs for our ICT integration pro jects with the proceeds from Share Offer. For details, please refer
to ‘‘Business strategies — (I) Financing the initial funding needs for our future ICT integration
projects ’’in this prospectus.
Investing cash flows
During the Track Record Period, our investin g cash flows were principally related to our
purchase and disposal of property, plant and equipment, the additi ons of intangible assets mainly
representing self-developed soft ware, and our pledged bank deposits.
FINANCIAL INFORMATION
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--- page 351 ---
During FY2021, our net cash used in investing activities of approximately RMB3.8 million
was principally attributable to the addition of p roperty, plant and equipment of approximately
RMB2.0 million, and the addition of intangible a ssets of approximately RMB1.8 million mainly
representing self-developed software.
We did not record a material amount of net cas hu s e di no rg e n e r a t e df r o mo u ri n v e s t i n g
activities for FY2020, FY2022, 6M2022 and 6M2023.
Financing cash flows
During the Track Record Period, our financin g cash flows were principally related to the
proceeds from our bank borrowings and the repayment thereof, dividend paid, consideration paid in
relation to the Reorganisation, and advances f rom our Shareholders for the purposes of the
Reorganisation and the repayment thereof.
During FY2020, our cash used in financing activities of approximately RMB12.1 million was
principally attributable to the repayment of ban k borrowings of approximately RMB19.4 million
and the repayment to shareholders of approximat ely RMB15.1 million, which was partially offset
by the proceeds from bank borrowings of approximately RMB23.7 million.
During FY2021, our cash used in financing activities of approximately RMB22.8 million was
principally attributable to the dividend paid of approximately RMB20.0 million, which was partially
offset by the proceeds from bank borrowi ngs of approximately RMB6.0 million.
During FY2022, our cash generated from finan cing activities of approximately RMB4.9
million was principally attributable to procee ds from bank borrowings of approximately RMB30.0
million which was partially offset by the divid end paid of approximately RMB14.6 million and
repayment of bank borrowings of approximately RMB7.9 million.
During 6M2022, our cash generated from finan cing activities of approximately RMB23.7
million was principally attributable to procee ds from bank borrowings of approximately RMB25.0
million.
During 6M2023, our cash used in financing acti vities of approximately RMB17.3 million was
principally attributable to the dividend paid of a pproximately RMB14.3 million and repayment of
bank borrowings of approximately RMB10.5 million, and partially offset by the proceeds from bank
borrowings of approximately RMB10.0 million.
Subsequent to the Track Record Period, It is expected that subsequent to the Listing, we will
be partly financed by equity and our bank borrowings. The cost of our equity is represented by
dividend and the cost of our borrowings is repres ented by our interest expenses. As stated the
paragraph ‘‘Dividend ’’ below, we have not designated a fixed dividend payout ratio and the
declaration and payment of future dividends wi ll be subject to the decision of the Board having
regard to various factors.
FINANCIAL INFORMATION
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--- page 352 ---
WORKING CAPITAL
The table below sets out the breakdown of our cu rrent assets and current liabilities as at 31
December 2020, 2021 and 2022, 30 June 2023 and 31 October 2023.
As at 31 December
As at
30 June
2023
As at
31 October
20232020 2021 2022
RMB’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
(unaudited)
Current assets
Contract assets 59,264 72,758 67,895 61,520 56,731
Trade receivables 26,473 31,499 35,397 49,502 48,804
Prepayments, deposits and other
receivables 13,199 10,941 10,545 18,113 29,868
Pledged bank deposits 60 4,130 —— —
Amount due from the intermediate
holding company — 112 1,161 1,181 1,181
Current income tax assets — 2,662 1,051 111 —
Cash and cash equivalents 23,130 21,542 42,199 31,507 15,838
122,126 143,644 158,248 161,934 152,422
Current liabilities
Trade and bills payables 7,259 17,198 5,216 2,631 3,409
Contract liabilities, other payables
and accruals 44,976 49,313 45,280 50,146 39,092
Bank borrowings 1,420 4,420 22,000 23,500 24,000
Lease liabilities 287 398 83 45 46
Amounts due to shareholders 1,261 3,970 1,860 2,588 253
Current income tax liabilities 806 —— — 185
56,009 75,299 74,439 78,910 66,985
Net current assets 66,117 68,345 83,809 83,024 85,437
FINANCIAL INFORMATION
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--- page 353 ---
Our total current assets as at 31 Decem ber 2020, 2021 and 2022, 30 June 2023 and 31
October 2023 amounted to approximately RMB 122.1 million, RMB143.6 million, RMB158.2
million, RMB161.9 million and RMB152.4 million, respectively, which primarily comprise contract
assets, trade receivables, prepayment, deposits an d other receivables, and cash and cash equivalents.
Our total current liabilities as at 31 December 2020, 2021 and 2022, 30 June 2023 and 31 October
2023 amounted to approximately RMB56.0 million, RMB75.3 million, RMB74.4 million, RMB78.9
million and RMB67.0 million, respectively, whic h primarily comprise trade and bills payables,
contract liabilities, other payables and accruals , bank borrowings and amounts due to shareholders.
We recorded an increase in our net current assets from approximately RMB66.1 million as at
31 December 2020 to approximately RMB68.3 million as at 31 December 2021. The increase was
principally attributable to the profit recorded for FY2021 of approximately RMB25.5 million, which
was partially offset by the dividend paid of approx imately RMB20.0 million. The increase mainly
comprised increase in contract assets of appr oximately RMB13.5 mill ion, increase in trade
receivables of approximately RMB5.0 mill i o na n di n c r e a s ei np l e d g eb a n kd e p o s i t so f
approximately RMB4.1 million, and partially o ffset by the increase in trade and bills payable of
approximately RMB9.9 million, in crease in contract liabilities, other payables and accruals of
approximately RMB4.3 million and increase in c urrent bank borrowings of approximately RMB3.0
million.
We recorded an increase in our net current assets from approximately RMB68.3 million as at
31 December 2021 to approximately RMB83.8 million as at 31 December 2022. The increase was
principally attributable to the profit recorded fo r FY2022 of approximately RMB24.3 million and
partially offset by the dividend declared and paid o f approximately RMB14.6 million. The increase
mainly comprised increase in tra de receivables of approximately R MB3.9 million, increase in cash
and cash equivalents of approximately RMB20.7 m illion, decrease in trade and bills payables of
approximately RMB12.0 million and decrease in contract li abilities, other payables and accruals of
approximately RMB4.0 million, and partially offs et by decrease in contract assets of approximately
RMB4.9 million, the crease in pledged bank dep osits of approximately RMB4.1 million, and
increase in current bank borrowings of approximately RMB17.6 million.
We recorded a slight decrease in our net current assets from approxim ately RMB83.8 million
as at 31 December 2022 to approximately RMB83. 0 million as at 30 June 2023. The decrease was
principally attributable to the declaration o f dividend of approximately RMB14.3 million and
RMB2.0 million of the non-current bank borrowing became current bank borrowings during
6M2023, and partially offset by the profit record ed for 6M2023 of approximately RMB14.7 million
which had taken into account the Listing expens es of approximately RMB5.9 million. The decrease
mainly comprised decrease in contract assets of approximately RMB6.4 million, decrease in cash
and cash equivalents of approximately RMB10.7 mil lion and increase in contract liabilities, other
payables and accruals of approximately RMB4.9 mi llion, and partially offset by the increase in
trade receivables of approximately RMB14.1 milli on, increase in prepaymen t and deposits and other
receivables of approximately RMB7.6 million.
FINANCIAL INFORMATION
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--- page 354 ---
Our unaudited net current assets position sli ghtly enhanced by approximately RMB2.4 million
for the four months ended 31 October 2023, from approximately RMB83.0 million as at 30 June
2023 to approximately RMB85.4 m illion as at 31 October 2023.
Please refer to ‘‘Discussion of selected statements of financial position items ’’below for the
discussions of our major current asse ts and current liabilities items.
DISCUSSION OF SELECTED STATEME NTS OF FINANCIAL POSITION ITEMS
Contract assets and trade receivables
Contract assets represent our rights to conside ration for work completed but unbilled for its
business. During Track Record Period, the major ity of contract assets are transferred to trade
receivables when the rights to consideration beco me unconditional which generally take less than 1
year. The balances of contract assets fluctuat ed from year-to-year during the Track Record Period
as we provided varying amounts of services that were unbilled before the year-ends.
The following table sets out the breakdown of our contract assets and trade receivables as at
the dates indicated:
As at 31 December
As at
30 June
20232020 2021 2022
RMB’000 RMB ’000 RMB ’000 RMB ’000
Contract assets 60,567 74,266 70,388 65,449
Less: provision for impairment of contract
assets (1,303) (1,508) (2,493) (3,929)
59,264 72,758 67,895 61,520
Trade receivables 26,947 31,941 38,187 52,138
Less: provision for impairment of trade
receivables (474) (442) (2,790) (2,636)
26,473 31,499 35,397 49,502
Contract assets and trade receivabl es 85,737 104,257 103,292 111,022
FINANCIAL INFORMATION
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--- page 355 ---
Our contract assets and trade receivables incr eased from approximately RMB85.7 million as at
31 December 2020, to approxim ately RMB104.3 million as at 31 December 2021, decreased to
approximately RMB103.3 million as at 31 Decem ber 2022, and increased to approximately
RMB111.0 million as at 30 June 2023. The increase during FY2021 was mainly driven by the
increase in contract assets, while the increase during 6M2023 was mainly driven by the increase in
trade receivables. The increase in contract asset s for FY2021 was principally attributable to the net
increase in contract assets for projects of Cus tomer C and Customer D of approximately RMB15.6
million in aggregate, which was consistent with the increase in revenue derived from these two
customers from approximately RMB40.4 million i n FY2020 to approximately RMB51.9 million in
FY2021. The decrease in contract assets for FY2022 was mainly attributable to the projects of
Customer C of approximately RMB12.2 million and partially offset by the increase in contract
assets related to the projects of China Comservices and the customer of our TT Foshan Network
Enhancement Project #1 of approximately RMB5. 3 million in aggregate. The decrease in contract
assets during 6M2023 was principally attributable to the net decrease in contract asset for projects
related to the customers of our TT Foshan Network Enhancement Project #1, HS Wireless
Supervision Project and DL Jieyang Network E nhancement Project of approximately RMB7.1
million in aggregate.
On the other hand, the increase in trade receivabl es for FY2021 was principally attributable to
the increase in trade receivables from Custome r A of approximately RMB4.3 million and the
increase in trade receivables from the customer of our NF Guangdong Mobile Maintenance Project
of approximately RMB3.5 million. The increase i n trade receivables for FY2022 was principally
attributable to the increase in trade receivables from Customer E of approximately RMB7.1 million.
The increase in trade receivables during 6M2023 was principally attributable to the net increase in
trade receivables for projects related to the customers of our DL Jieyang Network Enhancement
Project, LQ Public Integrated Services Project and GG Guangxi Comprehensive Maintenance
Project of approximately RMB9.7 million in aggregate.
FINANCIAL INFORMATION
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--- page 356 ---
The table below sets out an aging analysis of our trade receivables, based on invoice date, and
our trade receivables turnover days as at the dates indicated:
As at 31 December
As at
30 June
2023
Subsequent
settlement of
outstanding
amount as at 30
June 2023 up to
the Latest
Practicable Date2020 2021 2022
RMB’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
Within 180 days 23,596 24,638 33,416 40,843 25,549
Between 181 days and 365
days 3,171 5,498 375 9,183 6,003
Between 1 and 2 years 39 1,669 3,160 1,177 477
Over 2 years 141 136 1,236 935 135
Total 26,947 31,941 38,187 52,138 32,164
FY2020 FY2021 FY2022 6M2023
Trade receivable and contract
asset turnover days (Note 1) 153.0 170.5 167.2 170.4
Comprising:
Trade receivables turnover
days (Note 2) 51.5 52.0 53.9 67.5
Contract asset turnover days
(Note 3) 101.5 118.5 113.3 102.9
Notes:
1. We calculate trade receivables and contract assets tu rnover days by dividing average trade receivables and
contract assets by revenue and multiplied by 365 or 181 days (as applicable). Average trade receivables and
contract assets is calculated by dividing by two the sum of trade receivables and contract assets at the
beginning of the year/period and trade receivables and contract assets at the end of the year/period.
2. We calculate trade receivables turnover days by dividin g average trade receivables by revenue and multiplied
by 365 or 181 days (as applicable). Average trade recei vables is calculated by dividing by two the sum of
trade receivables at the beginning of the year/period and trade receivables at the end of the year/period.
3. We calculate contract assets turnover days by dividing a verage trade contract assets by revenue and multiplied
by 365 or 181 days (as applicable). Average contract assets is calculated by dividing by two the sum of
contract assets at the beginning of the year/period and contract assets at the end of the year/period.
FINANCIAL INFORMATION
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--- page 357 ---
During the Track Record Period, we experien ced a relatively stable trade receivable and
contract asset turnover days ranged from approximately 153.0 days to 170.5 days. The increase in
trade receivable and contract asset turnover days from approximately 153.0 days during FY2020 to
approximately 170.5 days during FY2021 was mai nly attributable to an increase in contract assets
from approximately RMB59.3 million as at 31 De cember 2020 to approximately RMB72.8 million
as at 31 December 2021, while the increase in trade receivable and contract asset turnover days
from approximately 167.2 days during FY2022 to approximately 170.4 days during 6M2023 was
mainly attributable to an increase in trade recei vables from approximately RMB35.4 million as at
31 December 2022 to approximately RMB49.5 mi llion as at 30 June 2023, partially offset by a
decrease in contract assets from approximate ly RMB67.9 million as at 31 December 2022 to
approximately RMB61.5 million as at 30 June 2023.
Our trade receivable turnover days during F Y2020 to FY2022 was relatively stable and
amounted to approximately 51.5 days, 52.0 days and 53.9 days for FY2020, FY2021 and FY2022,
respectively. Our trade receivable turnover days increased during 6M2023 principally due to an
increase in our trade receivable from approxima tely RMB35.4 million as at 31 December 2022 to
approximately RMB49.5 million as at 30 June 2023.
During the Track Record Period, we recorded a relatively stable contract asset turnover days
(representing the average time lag between time of our revenue recognition and time of billing)
which ranged from approximately 101.5 days to 118.5 days. The increase in contract asset turnover
days from approximately 101.5 days during FY2020 to approximately 118.5 days during FY2021
was mainly attributable to an increase in contract assets from approximately RMB59.3 million as at
31 December 2020 to approximately RMB72.8 mi llion as at 31 December 2021, while the decrease
in contract asset turnover days from approximately 113.3 days during FY2022 to approximately
102.9 days during 6M2023 was mainly attributable to a decrease in contract assets from
approximately RMB67.9 million as at 31 Decembe r 2022 to approximately RMB61.5 million as at
30 June 2023.
Although our revenue is principally recognized with reference to value of goods and services
t r a n s f e r r e dt ot h ec u s t o m e r st od a t ea ss e to u ti np r o g r e s sr e p o r t sw h i c ha r ec o n f i r m e db yo u r
customers (save for the case of certain projects wit h contingent payment clauses, for which Net-of-
VC Revenue would be recognised), we may still experience a relatively long time lag between the
time of revenue recognition and the time of invoice billing for projects with payment terms
whereby the settlement of our invoice is continge nt on the settlement of payment by the ultimate
customers. Moreover, although the progress repo rts are confirmed by our customers, the projects
are normally subject to final examination or ass essment by the customer upon completion of the
projects.
For the avoidance of doubt, variable considerations of our projects, if any, will not be
recognised as revenue until the uncertainty associ ated therewith has been resolved, which is after
the relevant amounts are confirmed, billed and s ettled. As a result, the recognition of variable
consideration as revenue will not result in an increase in our contract assets.
FINANCIAL INFORMATION
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--- page 358 ---
The table below sets out an aging analysis of our contract assets based on recognition date as
at the dates indicated:
As at 31 December
As at
30 June
2023
Subsequent
billing of
outstanding
amount as at 30
June 2023 up to
the Latest
Practicable Date2020 2021 2022
RMB’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
Within 180 days 40,191 49,178 40,138 39,298 19,187
Between 181 days and 365
days 7,638 18,915 14,533 5,372 2,144
Between 1 year and 2 years 8,317 5,704 14,927 13,270 5,470
Over 2 years 4,421 469 790 7,509 4,624
60,567 74,266 70,388 65,449 31,425
As at 31 December 2020, 2021 and 2022 and 30 June 2023, approximately 79.0%, 91.7%,
77.7% and 68.3% of our contract assets were aged within one year. The increase in contract assets
aged over 1 year during FY2022 was principally attr ibutable to the increase in contract assets aged
o v e r1y e a ri nr e l a t i o nt oC XH a r b i nI c eR i n kP roject and YD Doumen Integrated Services Project
of approximately RMB7.6 million in aggregate. Each of these two projects contained a contingent
payment clause pursuant to which the settlement o f our fee is conditional on the settlement of fee
by the relevant end customer while Net-of-VC Reven ue of these projects had been recognised in the
financial period that our services were performed. As such, the timing of relevant billing is subject
to the timing of settlement of fees by the releva nt end customer despite our work in relation to
these two projects having been substantially completed. The overall increase in contract assets aged
over one year (including over two years) as at 30 June 2023 was mainly attributable to ZTF
Hospital Automation Alteration Service Project of approximately RMB4.8 million.
During 6M2023, billings in respect of the YD Doumen Integrated Services Project in the
amount of approximately RMB2.1 million had b een issued and subsequent to the Track Record
Period and up to the Latest Practicable Date, billings in respect of CX Harbin Ice Rink Project and
ZTF Hospital Automation Alteration Service Project which amounted to approximately RMB4.3
million and RMB2.1 million, respectively, had been issued. To the best of estimate of our Directors
in light of the latest update of these projects, it is currently expected that the remaining billing of
the CX Harbin Ice Rink Project and ZTF Hospital Automation Alteration Service Project will be
issued by the first quarter of 2024. Nevertheless, t he total outstanding contract assets of CX Harbin
Ice Rink Project had reduced by approximately RMB5.4 million during FY2022.
FINANCIAL INFORMATION
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--- page 359 ---
During the Track Record Period, none of our cont ract assets and trade receivables had become
unrecoverable and been written off. As at 30 June 2023, all of our trade receivables aged between
181 days and 365 days were attributable to Group 1 customers, of which approximately 65.4% had
been subsequently settled. Meanwhile, based on p ast experience, only an insignificant portion of
our trade receivables aged within 181 days to 365 days will eventually become aged over 2 years.
As at 30 June 2023, approximately RMB2.2 millio n of our trade receivables was aged over 1 year,
representing a decrease of approximately 52.0% as compared to 31 December 2022, and such
outstanding balance was lower than the provision for impairment made as at 30 June 2023. On the
other hand, as at 30 June 2023, approximately 83. 1% of our contract assets aged between 181 days
and 365 days were attributable to Group 1 cust omers, of which approximately 32.5% had been
subsequently billed up to the Latest Practicable Date. Meanwhile, the largest contract assets aged
between 181 days and 365 days for Group 2 custo mers represented approximately 74.6% of the
aggregate contract assets aged between 181 da ys and 365 days for Group 2 customers, and such
outstanding balance represented approximately 17.1% of the revenue recognised for the project in
FY2022. Based on past experience, and save for the projects mentioned above, the portion of our
trade receivables aged within 181 days to 365 days which will eventually become aged over 2 years
is not expected to be significant as compared to our amount of total contract assets. As at 30 June
2023, approximately RMB20.8 million of our contra ct assets was aged over 1 year, amongst which
approximately RMB19.5 million was attribut able to our customers whi ch we had maintained a
business relationship with and derived reve nue from during 6M2023, and the remaining balance
was lower than the balance of provision for imp airment of contract assets as at 30 June 2023.
Meanwhile, approximately 88.0% of our outst anding contract assets as at 30 June 2023 was
attributable to Group 1 customers (being state-owned and/or listed companies and their
subsidiaries). Taking into account of the aforesaid, the Directors consider that the amount of
provision made as at 30 June 2023 was sufficient, and had no material concerns from the
perspective of recoverability.
As at the Latest Practicable Date, approxima tely RMB31.4 million or 48.0% of our contract
assets as at 30 June 2023 had been billed (of w hich approximately RMB10.1 million were
attributable to contract assets aged over one year), and approximately RMB32.2 million or 61.7% of
our outstanding trade receivables as at 30 June 2023 had been settled (of which approximately
RMB0.6 million were attributable to trade receivables aged over one year).
FINANCIAL INFORMATION
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--- page 360 ---
Prepayments, deposits and other receivables
Other than the prepayments for project materi al costs or Listing expenses, we did not record
material amount of prepayments , deposits and other receivables as at 31 December 2020, 2021 and
2022 and 30 June 2023. The following table sets out the breakdown of our prepayments, deposits
and other receivables as at the dates indicated:
As at 31 December
As at
30 June
20232020 2021 2022
RMB’000 RMB ’000 RMB ’000 RMB ’000
Prepayments for project material
costs and subcontracting costs 11,148 5,647 744 5,517
Other prepayments 440 700 623 619
Rental and other deposits 66 201 174 302
Deposits for tendering 647 1,140 2,148 2,039
Other receivables 267 323 379 635
Deferred Listing expenses 631 2,930 6,477 9,001
Total 13,199 10,941 10,545 18,113
The decrease in our prepayments, deposits and other receivables during FY2021 was
principally attributable to the utilisation of p repayments for project material costs, which was
partially offset by the increase in deferred Listi ng expenses of approximately RMB2.3 million. The
slight decrease in our prepayments, deposits and other receivables during FY2022 was principally
attributable to the decrease in prepayment for p roject material costs of approximately RMB4.9
million and partially offset by increase in defe rred Listing expenses of approximately RMB3.5
million. The increase in our prepayment, dep osits and other receiva bles during 6M2023 was
principally attributable to the increase in prepa yment for subcontracting costs of approximately
RMB4.2 million and the increase in deferred Lis ting expenses of approximately RMB2.5 million.
As at 31 December 2020, our prepayments for project material costs were related to the initial
project costs paid in relation to o ur ICT integration service projects. Taking into account that ICT
integration services is the business line that requires the most initial project costs, we planned to
finance such initial project costs with part of our proceeds from the Share Offer. For details, please
refer to our ‘‘Business — Business strategies ’’in this prospectus.
As at the Latest Practicable Date, approximatel y 11.6%, or approximately RMB2.1 million, of
the outstanding prepayment, deposits and othe r receivables as at 30 June 2023 were subsequently
utilised or settled. Given our deferred Listing e xpenses accounted for a significant portion of our
prepayments, deposits and other receivables as at 30 June 2023, and part of our prepayments for
project materials costs and subcontracting costs an dd e p o s i t sf o rt e n d e r i n gh a dy e tt ob eu t i l i s e do r
released, as the case may be, the subsequent ut ilisation/settlement rate was not high.
FINANCIAL INFORMATION
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Trade and bills payables
During the Track Record Period, our trade and bills payables principally represented the
amount payable in relation to our material suppli ers and our subcontractors. The increase in trade
payables from approximately RMB7.3 million a s at 31 December 2020 to approximately RMB17.2
million as at 31 December 2021 was principally attributable to the increase in trade payables in
relation to subcontracting charges which was cons istent with the overall increase in subcontracting
charges. The increase in trade and bills payabl es during FY2021 was mainly attributable to the
increase in payables to our two subcontractors of approximately RMB6.9 million in aggregate. The
decrease in trade and bills payables during FY2022 wa s principally attributable to the settlement of
trade payable to three subcontractors of approxi mately RMB9.0 million in aggregate. The decrease
in trade and bills payable during 6M2023 was principally attributable to the settlement of trade
payable in relation to subcontracting fees
The table below sets out an aging analysis of our trade and bills payables based on invoice
date as at the dates indicated:
As at 31 December
As at
30 June
20232020 2021 2022
RMB’000 RMB ’000 RMB ’000 RMB ’000
Within 180 days 4,061 13,462 2,668 990
Between 181 days and 365 days 2,307 2,450 505 126
Over 365 days 891 1,285 2,043 1,515
7,259 17,198 5,216 2,631
As at 31 December 2020, 2021 and 2022 and 30 June 2023, approximately 87.7%, 92.5%,
60.8% and 42.4% of our trade and bills payables were aged within one year. The decrease in such
ratio during FY2022 was principally attributable to the increase in trade and bills payables aged
over 1 year payable to two subcontractors of appr oximately RMB1.0 million in aggregate. The
increase in such ratio during 6M2023 was principally attributable to the reduction of payables to
our subcontractors aged within one year.
Given our trade and bills payables principally represented the amount payable in relation to
our material suppliers and our subcontractors, ou r trade payables turnover days was calculated by
dividing average trade and bills payables by the agg regate of subcontracting charges and materials,
supplies and other project costs, and multiplied by 365 or 181 days. The average trade and bills
payables is calculated by dividing by two the sum of trade and bills payables at the beginning of
the year/period and trade and bills payables at t he end of the year/period. Our trade payables
turnover days was approximately 22.0 days, 38.6 days, 25.6 days and 9.1 days for FY2020,
FY2021, FY2022 and 6M2023, respectively. The increase in trade payables turnover days for
FY2021 was mainly attributable to the increase in trade and bills payables to our subcontractors as
mentioned above and was consistent with the incr ease in our subcontracting charges during the
Track Record Period. The decrease in FY2022 and 6M2023 was principally attributable to the
reduction in trade and bills p ayables as described above.
FINANCIAL INFORMATION
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As at the Latest Practicable Date, approximatel y 38.7%, or approximately RMB1.0 million, of
the outstanding trade and bills payables as at 30 June 2023 were subsequently settled.
Contract liabilities, oth er payables and accruals
During the Track Record Period, our contr act liabilities, other payables and accruals
principally represented accrued subcontracting c harges, materials costs and other direct project
costs, accrued employee benefits expenses, other t ax payables mainly related to value-added tax,
contract liabilities in relation to our projects, and accrued Listing expenses. The following table sets
out the breakdown of our contract liabilities, othe r payables and accruals as at the dates indicated:
As at 31 December
As at
30 June
20232020 2021 2022
RMB’000 RMB ’000 RMB ’000 RMB ’000
Accrued employee benefits expenses 7,368 2,832 2,026 1,411
VAT or other tax payables 3,162 4,311 1,877 2,369
Other payables and accruals 881 568 846 989
Accrued subcontracting charges, materials
costs and other direct project costs 32,038 31,232 32,873 39,111
Accrued Listing expenses 337 3,871 5,355 4,648
Contract liabilities 1 ,190 6,499 2,303 1,618
Total 44,976 49,313 45,280 50,146
Our contract liabilities, other payables and accruals increased from approximately RMB45.0
million as at 31 December 2020 to approximately RMB49.3 million as at 31 December 2021. The
increase was principally attributable to the increas e in contract liabilities of approximately RMB5.3
million and the increase in accrued Listing expe nse of approximately RMB3.5 million, which was
partially offset by the decrease in accrued empl oyee benefits expenses of approximately RMB4.5
million. Our contract liabilities, other paya bles and accruals decreased from approximately
RMB49.3 million as at 31 December 2021 to appr oximately RMB45.3 million as at 31 December
2022. The decrease was principally attributable to the decrease in contract liabilities of
approximately RMB4.2 million. Ou r contract liabilities, other payables and accruals increased from
approximately RMB45.3 million as at 31 Decembe r 2022 to approximately RMB50.1 million as at
30 June 2023. The increase was principally attrib utable to the increase in accrued subcontracting
charges, materials costs and other direct project of approximately RMB6.2 million.
As at the Latest Practicable Date, approximat ely 82.0%, or approximately RMB41.9 million,
of the outstanding contract liabilities, ot her payables and accruals as at 30 June 2023 were
subsequently settled or billed or recognised as revenue.
FINANCIAL INFORMATION
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Bank borrowings
Information related to our bank borrowings is further set out in the paragraphs headed
‘‘Indebtedness ’’in this section below.
Amounts due to shareholders
The amounts due to shareholders increased to approximately RMB4.0 million as at 31
December 2021 as our shareholders settled certai n Listing expenses on our behalf during FY2021.
The amount reduced to approximately RMB1.9 million as at 31 December 2022 principally due to
repayment thereof during FY2022, and increased to approximately RMB2.6 million as at 30 June
2023 as our shareholders settled certain List ing expenses on our behalf during 6M2023. The
amounts due were non-trade in nature, unsecure d, interest free and repayable on demand, and are
expected to be settled before the Listing. For further details of our related party transactions, please
r e f e rt on o t e2 6t ot h eA c c o u n t a n t’s Report set out in Appendix I to this prospectus.
Net assets position
We recorded increase in net assets from appro ximately RMB65.5 million as at 31 December
2020 to approximately RMB71. 1 million as at 31 December 2021, which was principally
attributable to the profit recorded for FY2021 of approximately RMB25.5 million, partially offset
by the dividend paid of approximately RMB20. 0 million. We recorded a further increase in net
assets to approximately RMB80.7 million as at 31 December 2022, which was principally
attributable to our profit recorded for FY2022 of approximately RMB24.3 million, partially offset
by the dividend declared and paid of approxim ately RMB14.6 million. We recorded a slight
increase in our net assets to approximately R MB81.1 million as at 30 June 2023, which was
principally attributable to the profit recorded for 6M2023 of approximately RMB14.7 million,
partially offset by the declaration of dividend o f approximately RMB14.3 million during 6M2023.
Capital structure
Based on the unaudited consolidated manage ment account of the Company which contained
our unaudited statement of financial positi on as at 31 October 2023, we had net assets of
approximately RMB84.6 million, comprising non- current assets of approximately RMB3.2 million
(mainly comprising intangible assets of appr oximately RMB0.5 million and property, plant and
equipment of approximately RMB1.5 million) , net current assets of approximately RMB85.4
million (mainly comprising cont ract assets of approximately RMB56.7 million, trade receivables of
approximately RMB48.8 million, cash and cash equ ivalents of approximately RMB15.8 million,
prepayments, deposits and other receivables of approximately RMB29.9 million, which was
partially offset by bank borrowings of approximately RMB24.0 million, contract liabilities, other
payables and accruals of approximately RMB 39.1 million, and trade and bills payable of
approximately RMB3.4 million) and non-current liabilities of approximately RMB4.1 million.
FINANCIAL INFORMATION
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--- page 364 ---
INDEBTEDNESS
Set forth below is the breakdown of our borrowings or other material liabilities outstanding as
at 31 December 2020, 2021 and 2022, 30 June 2023 and 31 October 2023 (being the latest
practicable date for the preparation of this i ndebtedness statement in this prospectus):
As at 31 December
As at
30 June
2023
As at
31 October
20232020 2021 2022
RMB’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
(unaudited)
Borrowings 6,280 7,860 30,000 29,500 28,000
Amounts due to shareholders 1,261 3,970 1,860 2,588 253
Lease liabilities 583 435 83 166 143
8,124 12,265 31,943 32,254 28,396
Borrowings
As at 31 December 2020, 2021 and 2022 and 30 June 2023, and 31 October 2023, our
borrowings represented our bank borrowings. Th e following table sets out a breakdown of our
borrowings by scheduled repayment with reference to the Accountant ’s Report set out in Appendix
I to this prospectus and unaudited management account of the Group (as the case may be):
As at 31 December
As at
30 June
2023
As at
31 October
20232020 2021 2022
RMB’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
(unaudited)
Bank borrowings
Within 1 year or on demand 1,420 4,420 22,000 23,500 24,000
Between 1 and 2 years 1,420 3,440 4,000 4,500 4,000
Between 2 and 5 years 3,440 — 4,000 1,500 —
Total 6,280 7,860 30,000 29,500 28,000
In view of the potential increase in working capital requirement of our projects, we have
materially increased our bank borrowings level during FY2022, which was consistent with the fact
that the initial project costs of our revenue-contri buting ICT integration services projects in FY2022
already amounted to approximately RMB30.5 million.
FINANCIAL INFORMATION
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--- page 365 ---
Our outstanding bank borrowings as at 31 Decem ber 2022 and 30 June 2023 carried interest
rates based on the loan prime rate as announced by the National Interbank Funding Center plus zero
base points to 40 base points. Our outstandi ng bank borrowings as at 31 December 2020 and 31
December 2021 carried floating interest rates based on the loan prime rate as announced by the
National Interbank Funding Center plus 20 base points to 80 base points.
All our borrowings as at 31 December 2020, 2021 and 2022, 30 June 2023 and 31 October
2023 were denominated in Renminbi. The weig hted average effective interest rate of our
borrowings as at 31 December 2020, 2021 and 2022, 30 June 2023 and 31 October 2023 was
approximately 4.2%, 4.3%, 3.9%, 3.9% and 3.7%, respectively.
As at 30 June 2023, our unutilised bank facility amounted to approximately RMB5.5 million
which we may further draw down depending on our business needs.
Taking into account our business nature and given that we did not own any fixed or other
material assets (such as real estate property) whic h may serve as collateral for securing additional
debt financing, our Directors currently do not have a ny material external debt financing plan for the
Group.
We had no seasonality of borrowing requiremen t during the Track Record Period. In respect of
our outstanding borrowings as at 30 June 2023, all of which are unsecured, are subject to various
financial and other covenants including, without limitation (i) the maintenance of debt/loan-to-
assets ratio below certain stipulated percentage; ( ii) to comply with periodic credit assessment and
reporting requirements as well as to notify the lend er in respect of prescribed material or adverse
events; (iii) to seek prior consent prior to any materi al corporate reorganisation or restructuring; (iv)
restriction on distribution of dividend; and ( v) restrictions on purpose of use of drawn-down
amounts. The Group intends to comply with all relev ant covenants concerning our bank borrowings,
and based on the financial position of the Group as at 30 June 2023, our Directors are of the view
that the risk of breach of financial covenants to be remote. Our Directors further confirm that our
Group did not experience any unusual difficulty in obtaining bank loans and other borrowings,
default in payment of bank loans and other borrowings or breach of covenants during the Track
Record Period and up to the Latest Practicable Date, and (subject to unforeseen circumstances
beyond our control), we expect to be able to com ply existing covenants in connection with our
bank loan upon and after Listing.
Save as disclosed above and apart from intra-group liabilities, as at 31 October 2023, we did
not have any other borrowings, mortgages, cha rges, debentures or debt securities, issued or
outstanding, or authorised or otherwise created bu t unissued, or other similar indebtedness, finance
lease commitment, liabilities under acceptances, a cceptance credits, hire purchase commitments,
material contingent liabilities or guarantees. Our Group has unutilised banking facilities of
approximately RMB7 million as at 31 October 2023. Our Directors confirmed that there have been
no material changes in the indebtedness and cont ingent liabilities of our Group since 31 October
2023 and up to the Latest Practicable Date.
For further details of our borrowings, please also refer to note 23 to the Accountant ’sR e p o r t
set out in Appendix I to this prospectus.
FINANCIAL INFORMATION
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--- page 366 ---
Funding and treasury policies
We negotiate with banks to obtain banking facili ties according to our development plans and
needs. For repayment arrangeme nts, our accounting department will keep track of the status to
ensure that the bank borrowings can be repaid on time. We will generally deposit the surplus cash
into the bank as general working capital. As at the Latest Practicable Date, we did not have any
significant funding and treasury policy in respect of investment of our cash surplus.
CAPITAL EXPENDITURES
Our capital expenditure during our Track Record Period primarily related to expenditures on
our property, plant and equipment, and our intangi ble assets. Our capital ex penditures amounted to
approximately RMB1.1 million, RMB3.9 mil lion, RMB1.3 million and RMB0.1 million for
FY2020, FY2021, FY2022 and 6M2023, respectively.
We anticipate that our future capital expenditu res shall still be principally related to our
property, plant and equipment, and our intangib le assets, as we expand our business. Our projected
capital expenditures for the two years ending 31 December 2024 are currently expected to be
approximately RMB1.0 million, which are current ly expected to be partially financed by inflows
from operating activities, our cash and cash equiva lents and partially financed by the proceeds from
the Share Offer.
Our planned capital expenditures are projections only and are based on our current
expectations and assumptions regarding our busin ess, the economy and other future conditions. We
may make necessary adjustments depending on the e xisting market conditions and status of the
various expansion plans.
As at 31 December 2020, 2021 and 2022 and 30 June 2023, we did not have any material
capital commitments.
LEASE COMMITMENTS
We lease our office premises with lease terms ranging from 2 years to 6 years. The following
table sets out our future minimum lease payments pursuant to the relevant lease agreements as at 31
December 2020, 2021 and 2022 and 30 June 2023:
As at 31 December
As at
30 June
20232020 2021 2022
RMB’000 RMB ’000 RMB ’000 RMB ’000
Within one year 329 321 139 50
Later than one year and not more than five
years 321 — 101 76
Total 650 321 240 126
FINANCIAL INFORMATION
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--- page 367 ---
The above amounts have been recognised as our leas e liabilities as at the respective reporting
date pursuant to the adoption of HKFRS 16.
CONTINGENT LIABILITIES
As at the Latest Practicable Date, we were not involved in any legal proceedings pending or,
to our knowledge, threatened against our Group which could have a material adverse effect on our
business or operations. The Directors confirm that as at the Latest Practicable Date, we did not have
any material contingent liabilities nor any dispu te or unresolved tax issues with the relevant tax
authorities.
KEY FINANCIAL RATIOS
The following table shows certain key financial ratios as at the dates or for the periods
indicated:
As at or for the year ended 31 December
As at or for
the six months
ended 30 June
20232020 2021 2022
Current ratio 1 2.2 1.9 2.1 2.1
Quick ratio 2 2.2 1.9 2.1 2.1
Gearing ratio
— Non-ordinary payables 3 1.9% 5.6% 2.3% 3.2%
Interest coverage ratio 4 7,098.4% 9,208.2% 3,749.4% 4,651.8%
Return on assets 5 23.4% 17.0% 14.9% 8.8%
Return on equity 6 45.3% 35.9% 30.0% 18.1%
Notes:
1. Current ratio is calculated as the total current assets divided by the total current liabilities as at the respective
dates.
2. Quick ratio is calculated as the current assets excluding inventories divided by the total current liabilities as
the respective dates.
3. Gearing ratio — non-ordinary payables is calculated as the pa yables incurred not in the ordinary course of
business divided by total equity as at the respective date and multiplied by 100%.
4. Interest coverage ratio is calculated based on the profit before interest and tax divided by net finance costs of
the respective years and multiplied by 100%.
5. Return on assets is calculated as the net profit divided by the total assets as at the respective date and
multiplied by 100%.
6. Return on equity is calculated as the net profit attributable to our equity holders divided by the equity
attributable to our equity holders as at the respective date and multiplied by 100%.
FINANCIAL INFORMATION
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--- page 368 ---
Current ratio and quick ratio
During the Track Record Period, we did not maintain any inventory, and therefore, our current
ratios equaled to our quick ratios, which amounted to approximately 2.2 times, 1.9 times, 2.1 times
and 2.1 times as at 31 December 2020, 2021 and 2022 and 30 June 2023, respectively. The
reduction in current ratios and quick ratios during FY2021 was mainly attributable to the
declaration and payment of dividend of approxim ately RMB20.0 million during FY2021, which was
partially offset by our profit recorded during FY2021, and in the meantime, we experienced growth
in both of our current assets and liabilities. We expe rienced improvement in current ratio and quick
ratio during FY2022 as we recorded growth in current assets while reduction in current liabilities.
Such improvement was in line with the profit recorded by us during FY2022 and the fact that we
have reduced our trade and bills payables by settlin g the relevant outstanding amounts as mentioned
above. While we did not experience material fluctuation in current ratio and quick ratio during
6M2023 as the impact of declaration of dividend of approximately RMB14.3 million during the
period was offset by the net profit of approxima tely RMB14.7 million recorded during 6M2023.
Gearing ratio
Our gearing ratio — non-ordinary payable was calculated based on the payables incurred not
in the ordinary course of business, which mainly i ncluded the amounts due to our shareholders. Our
gearing ratio — non-ordinary payable was approximately 1.9%, 5.6%, 2.3% and 3.2% as at 31
December 2020, 2021 and 2022 and 30 June 2023, respectively.
Interest coverage ratio
During the Track Record Period, we did not rely heavily on bank borrowings to finance our
operations and our net finance costs was approxi mately RMB0.5 million, RMB0.3 million, RMB0.8
million and RMB0.4 million for FY2020, FY2021 and FY2022 and 6M2023, respectively, and we
maintained high interest coverage ratios of approximately 7,098.4%, 9,208.2%, 3,749.4% and
4,651.8% for FY2020, FY2021, FY2022 and 6M2023 respectively.
Return on assets
We recorded a relatively stable return on assets during the Track Record Period which
amounted to approximately 23.4%, 17.0%, 14.9% and 8.8% for FY2020, FY2021, FY2022 and
6M2023, respectively. Our return on assets for FY2021 was reduced to approximately 17.0% and
such reduction was principally attributable to the recording of Listing expenses of approximately
RMB7.5 million during the year, which represente d approximately 5.0% of our total assets as at 31
December 2021. Our return on assets for FY2022 was reduced to approximately 14.9% and such
reduction was principally attributable to the fact th at we recorded decrease in net profit as discussed
above as compared to growth in our total assets during FY2022. Our return on assets for 6M2023
w a sf u r t h e rr e d u c e dt oa p p r o x i m a t e l y8 . 8 % ,a n ds u c hr e d u c t i o nw a sp r i n c i p a l l ya t t r i b u t a b l et ot h e
fact that the financial period was just six months , we recorded Listing expenses of approximately
RMB5.9 million and PRC dividend withholding tax o f approximately RMB1.7 million, representing
FINANCIAL INFORMATION
– 358 –


--- page 369 ---
approximately 4.6% of our total assets in aggregate as at 30 June 2023, and we experienced
continuous growth in total assets during the Track Record Period. The annualised return on assets
for 6M2023 was approximately 18.4%.
Return on equity
For FY2021, our return on equity reduced to a pproximately 35.9% and such reduction as
compared to FY2020 was principally attributable to the recording of Listing expenses of
approximately RMB7.5 million during the year, w hich represented approximately 10.6% of our
equity as at 31 December 2021. For FY2022, our retu rn on equity further reduced to approximately
30.0% and such reduction was principally attrib utable to the fact that we recorded decrease in net
profit as discussed above as compared to growth in our total equity during FY2022. Our equity
recorded a growth of approximately 13.6% during FY2022 as we had a relatively small equity base
as a private company during the Track Record Period. For 6M2023, our return on equity further
reduced to approximately 18.1%, and such reduction w as principally attributable to the fact that the
financial period was just six months, we recorded Listing expenses of approximately RMB5.9
million and PRC dividend withholding tax of a pproximately RMB1.7 million, representing
approximately 9.4% of our total equity in aggregate as at 30 June 2023. The annualised return on
equity for 6M2023 was approximately 39.4%.
FINANCIAL RISK AND CAPITAL MANAGEMENT
Our Group is exposed to interest rate risk, credit risk and liquidity risk in the normal course of
business. For further details of our financial ri sk management, please refer to the section headed
‘‘Business — Internal control and risk management measures ’’and note 3 of the Accountant ’s
Report as set out in Appendix I to this prospectus . We manage our capital to ensure that entities in
our Group will be able to continue as a going concern while maximising the return to shareholders
through the optimisation of the balance of debt and equity. Our overall strategy remained
unchanged during the Track Record Period.
Given that the majority of our income and expens es of our business operations (except for the
Listing expenses) are mainly settled in RMB, we considered that our exposure to exchange rate risk
is not significant and we did not use any financial instrument for hedging purpose during the Track
Record Period.
UNAUDITED PRO FORMA ADJUSTED CONSO LIDATED NET TANGIBLE ASSETS
The unaudited pro forma adjusted consolidate d net tangible assets, which was prepared to
illustrate the effect of the Share Offer on the audi ted consolidated net tangible assets of our Group
attributable to equity holders of our Company as at 30 June 2023 as if the Share Offer had taken
place on 30 June 2023, was approximately HK$0. 36 per Share to HK$0.42 per Share (equivalent to
approximately RMB0.33 per Share and RMB0.39 per Share), respectively, based on the indicative
Offer Price Range of HK$1.0 per Offer Share to HK$1.3 per Offer Share. Please refer to Appendix
II to this prospectus for the bases and assumption s in calculating the unaudited pro forma adjusted
consolidated net tangible assets figure.
FINANCIAL INFORMATION
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--- page 370 ---
LISTING EXPENSES
Our Directors estimate that the total amount of expenses in relation to the Listing will be
approximately HK$62.1 million (equivalent to appr oximately RMB57.3 million), mainly comprising
professional parties ’ fees and underwriting commission. Based on an Offer Price of HK$1.15 per
Offer Share (being the mid-point of the indicat ive Offer Price range of HK$1.0 per Offer Share to
HK$1.3 per Offer Share), the gross proceeds from t he Share Offer are expected to be approximately
RMB124.1 million. The estimated expenses in relation to the Listing represent approximately
43.2% of the gross proceeds from the Share Offer. Out of the total Listing expenses amounted to
RMB57.3 million (or equivalent to approxim ately HK$62.1 million in Hong Kong dollars),
approximately RMB19.1 million i s directly attributable to the issue of the Listing and is expected to
be accounted for as a deduction from equity upon L isting. The remaining amount of approximately
RMB38.2 million, shall be charged to profit or loss and other comprehensive income, and
approximately RMB1.0 million, RMB1.0 milli on, RMB7.5 million, RMB10.1 million and RMB5.9
million have been charged prior to the Track Record Period, during FY2020, FY2021, and FY2022
and 6M2023, respectively, while approximatel yR M B 8 . 1m i l l i o ni se x p e c t e dt ob ei n c u r r e di nt h e
remaining of FY2023 and approximately RMB4.6 million is expected to be incurred in FY2024.
Expenses in relation to the Listing are non-recurring in nature. Our Group ’s financial performance
and results of operations for FY2023 and FY2024 will be adversely affected by the estimated
expenses in relation to the Listing.
Out of the estimated total Listing expense s of approximately HK$62.1 million, (i)
approximately HK$7.2 million is attributabl e to underwriting-related expenses; and (ii)
approximately HK$54.9 million is attributable to n on-underwriting-related expenses which include
(a) estimated fees in the amount of approximately HK$40.0 million to legal advisers and reporting
accountant; and (b) other fees and expens es of approximately HK$14.9 million.
DIVIDEND
We had declared and paid dividends of approx imately RMB20.0 million during FY2021 and
approximately RMB14.6 million during FY2022, an d declared dividend of approximately RMB14.3
million during 6M2023, while we did not declare dividends for FY2020. However, the declaration
and payment of future dividends will be subject to the decision of the Board having regard to
various factors, including but not limited to our oper ations and financial perfo rmance, profitability,
business development, prospects, capital requi rements and economic outlook. The declaration and
payment of future dividend will also be subject to any applicable laws. The historical dividend
payments may not be indicative of future divid end trends. We do not have any predetermined
dividend payout ratio.
DISTRIBUTABLE RESERVES
As at 30 June 2023, the reserve available for dist ribution to shareholders of the Company was
approximately RMB0.7 million.
OFF-BALANCE SHEET ARRANGEMENTS
During the Track Record Period and up to the Latest Practicable Date, we had no material off-
balance sheet arrangements.
FINANCIAL INFORMATION
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--- page 371 ---
RELATED PARTY TRANSACTIONS
Our related party transactions during the Tra ck Record Period are summarised in note 26 to
the Accountant ’s Report as set out in Appendix I to this prospectus. Our Directors are of the view
that these related party transac tions were conducted on an arm ’s length basis and these transactions
would not distort our track record results nor make the historical results not reflective of our future
performance.
RULES 13.13 TO 13.19 OF THE LISTING RULES
Our Directors confirmed that, as at the Latest Practicable Date, they were not aware of any
circumstances which, had we been required to co mply with Rules 13.13 to 13.19 of the Listing
Rules, would have given rise to a disclosure req uirement under Rules 13.13 to 13.19 of the Listing
Rules.
FINANCIAL AND TRADING PROSPECTS OF THE GROUP
Our Directors consider that the results of our Group during the Track Record Period are
indicative of our future performance. Taking into account the expected continuous growth of the
telecommunication and related services industr ies in the PRC as mentioned in the CIC Report, the
projects we secured, the proceeds from the Share Offer and our listing status, our Directors expect
that our ability to secure additiona l projects will be strengthen, our revenue with continue to grow
with the market and our ICT integration service will continue to be one of the major drivers of our
business growth. On the other hand, as a result of the expected business expansion and increase in
average salaries as mentioned in the CIC Report, the Directors also expect that we will experience
increase in our project related costs. Further take into account the development trend of the
telecommunication and related service industries as mentioned in the CIC Report, the Directors are
optimistic on the overall growth and developm ent of the Group subsequent to the Listing.
Further, please refer to the section headed ‘‘Risk factors — Factors affecting our Group ’s
results of operations and financial condition ’’in this prospectus for the factors that may affect our
financial and trading prospects, the sections headed ‘‘Business — Business strategies ’’and the
‘‘Future plans and use of proceeds ’’for our business development strategies and implementation
plans respectively.
NO MATERIAL ADVERSE CHANGE
Our Directors confirm that, save for the expenses in connection with the Listing, there has
been no material adverse change in our financial or trading position or prospects since 30 June
2023 and up to the date of this prospectus, and there had been no events since 30 June 2023 and up
to the date of this prospectus which would materially affect the information shown in our
consolidated financial stateme nts included in the Accountant ’s Report set out in Appendix I to this
prospectus.
FINANCIAL INFORMATION
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REASONS FOR THE LISTING
Our Directors believe that our Group has a genuine funding need to support our expansion
plans through the Listing and the Listing will further benefit our Group for the following reasons:
. Our Directors believe that there is an optimistic potential for us to expand our market
share in the industries in which we operate in the PRC. In particular, according to the
CIC Report, the market size of the wireless telecommunication network enhancement
services industry, telecommunication network infrastructure maintenance and engineering
service industry, ICT integration service in dustry and telecommunica tion network-related
software industry in the PRC is expected to grow at CAGRs of approximately 4.9%,
8.3%, 8.5% and 9.5% from 2022 to 2027, respectively. Further, our Directors believe
that there is generally a strong demand f or relevant services in light of rapid 5G
development in the PRC, which do not appear to be particularly susceptible to social,
economic and public health factors. For instance, despite the COVID-19 pandemic, our
Group ’s revenue for FY2021 and FY2022 as compared to FY2020 and FY2021 increased
by approximately RMB7.8 million and RMB23 .2 million, respectiv ely, representing an
increase of approximately 4.0% and 11.4%, res pectively. Therefore, by implementing our
expansion plans, our Directors believe that we will be able to leverage the market growth
and deepen our market penetration.
. Our Directors believe that the net proceed s from the Share Offer will enable us to
implement our business strategies with a v iew to enhancing our competitiveness and
achieve business expansion. For more benefit s of and details in the plans we intend to
implement, please refer to the paragraphs headed ‘‘Implementation plan ’’in this section.
. Our Directors consider that it is necessary t o maintain a sufficient level of working
capital as our Group had generally relied on cash inflows from customers to meet
payment obligations to our suppliers and subcontractors as well as to meet the expenses
required in our daily operations during the Track Record Period. Our Group in the past
generally relied upon our internal resources and/or bank borrowings for our business
expansion, which would constrain our expansion to a limited scale. Moreover, if our
Group continues to utilise our internal res ources only, our Directors believe that our
Group may not be able to capitalise upon the growth opportunities in the PRC
telecommunication market and th ere is no guarantee that our Group ’s internal resources
can continue to provide sufficient capital, or that our Group will be able to obtain
sufficient bank borrowings on favourable term s, prior to the full implementation of our
Group ’s proposed and future business strategies.
. Assuming our Group utilises debt financing i nstead of the net proceeds from the Listing
of approximately HK$81.6 million (equiva lent to approximately RMB75.2 million), our
Group ’s total borrowing-to-asset ratio (calcula ted by dividing total borrowings by total
asset) will increase from approximately 17.8% as at 30 June 2023 to approximately
63.1%. Interest payments incurred in excessi ve debt financing for our business operation
and expansion plans would adversely affect our financial performance. Our Directors
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believe equity financing entails less risks to our Group as Shareholders will look to the
long-term benefits from investing in our Group instead of the periodic repayment of debt
and interest associated with debt financing. Without the Listing, our Group would remain
a private company and as such there is no guarantee that banks or other financial
institutions would grant loans or other facilities to us to enable our Group to implement
our business strategies without the imposit ion of stringent financing requirements.
Further, debt financing generally entail s interest obligations which are subject to
fluctuating lending rates from time to time, which may be affected by external macro and
micro economic factors. Our Group may als o be required to pledge cash deposits,
investment properties and certain property, plant and equipment to banks, together with
the provision of personal guarantees by our Controlling Shareholders as security for the
banking facilities obtained by our Group, w hich may cause difficulty to us (as a high-
tech enterprise with relatively less fixed a ssets) in obtaining banking borrowings in the
PRC. Our Directors are of the view that fund -raising through an initial public offering
will reduce our financing costs and increase our ability to improve our financial leverage.
. In addition, our Directors believe that being a company listed in Hong Kong will give us
a long-term advantage as it would expand our shareholder and capital base by making
our Shares available and accessible to interna tional and mainland Chinese investors on
the Stock Exchange. Our Directors also belie ve that there is a strong investor support for
listed companies on the Stock Exchange in both primary and secondary fund raising. As
such, the Listing in Hong Kong can allow us to have a good channel for potential fund
raising in the future.
. As we generally obtain our business through open tenders and private quotations,
reputation and company profile is one of the factors in our customers ’ consideration of
our tenders or quotations. Our Directors believe that having a listing status can generate
a better corporate profile for us, which can cr eate greater assurance to our existing and
potential customers and can potentially l ead to higher prospects of success in securing
more business opportunities from custome r s .A sac o m p a n yl i s t e di nH o n gK o n g ,w e
may also have more bargaining power towards our customers, suppliers and
subcontractors, which may help our Group obtain better terms in conducting business
with them. Our Directors believe that our cus tomers, suppliers and subcontractors would,
in general, prefer doing business with a publi cly listed company compared with a private
company given a publicly listed company ’s corporate and financial transparency
accountability and credibility which gen erally reduces their counterparty risk.
. Our Directors believe that being listed in the Hong Kong stock market will enable us to
attract more talent to join our Group and gain access to a larger pool of talent, which
will improve our service quality. In addition, th e listing status will also facilitate our in-
house talent management, through staff reten tion and development, whereby our existing
staff may be motivated to further develop their career with us in view of the perceived
status associated with empl oyment with a company listed in Hong Kong. Furthermore,
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the listing status will facilitate us to adopt various rewarding systems such as the Share
Option Scheme or other employee incentive schemes to, subject to our discretion, reward
employees with outstanding performance (i ncluding experienced management and
technical personnel), which can facilitate bo th the attracting and retaining of talent to
enhance our ability to offer quality serv ices and achieve sustainable growth.
. We believe that our operational efficiency, f inancial transparency, risk management and
corporate governance will be improved through compliance with rigorous disclosure and
corporate governance standards applicable to a company listed on the Stock Exchange.
For instance, the appointment of independent non-executive Directors will ensure
transparency in management and fairness i n business decisions and operations, the
independent non-executive Directors will contribute to the enhancement of corporate
value by providing advice and oversight ba sed on their extensive administrative
experience and specialised knowledge; and th e formation of audit committee will review
and monitor the effectiveness of our financ ial controls, internal controls and risk
management measures.
BUSINESS STRATEGIES
Our business objectives include:
(i) Strengthening our financial capabilities in order to be in position to undertake more and
larger ICT integration projects;
(ii) Improving our service capabilities, qual ity and offering by conducting research and
development;
(iii) Expanding the pool of target users of our te lecommunication network-related software;
and
(iv) Strengthening our capability in exploring a nd undertaking new businesses opportunities.
Please refer to the paragraphs headed ‘‘Business — Business strategies ’’in this prospectus for
further details. Our Directors consider that t he net proceeds from the Share Offer would facilitate
the implementation of our business strategies and our future plans.
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IMPLEMENTATION PLAN
With a view to achieving our business strat egies as set out in the paragraphs headed ‘‘Business
— business strategies ’’in this prospectus, our Directors hav e devised an implementation plan, the
summary of which and the corresponding bu siness strategies are set out below:
Implementation plan Corresponding business strategies
(I) Financing the initial funding needs of
our future ICT integration projects
Strengthening our financial capabilities in
order to be in position to undertake more
and larger ICT integration projects
(II) Pursuing new research and development
undertakings:
(a) Undertaking 5G industry
application research and
development projects
Improving our service capabilities, quality
and offering by conducting research and
development
(b) Developing a
telecommunication network
enhancement services
software based on end-user
data
Improving our service capabilities, quality
and offering by conducting research and
development
(c) Developing an easy-to-use
wireless telecommunication
network testing software
Expanding the pool of target users of our
telecommunication network-related software
(III) Expanding our manpower in project
management to cater for the
anticipated expansion plans and
business growth
Strengthening our cap ability in exploring
and undertaking new business opportunities
(IV) Financing our sales and marketing
funding needs for expansion of
manpower and marketing activities
Strengthening our cap ability in exploring
and undertaking new business opportunities
(I) Financing the initial funding needs for our future ICT integration projects
Owing to the nature of our ICT integration servic es, we are typically required during the early
stage of an ICT integration project to procure a ra nge of hardware, software and other equipment
(including servers, storage devices, cables and opti cal fibers, operating system software and security
software) which will form the fun ctioning framework of an ICT system, the specifications of which
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are generally provided by our customers. In add ition, we may also need to engage third-party
subcontractors to provide ancillary services (suc h as cabling, light-current power work, and other
construction and installation work) required for the project. These costs for procuring such
hardware, software, equipment and payments to subcontractors are generally included in our
contract price, but we generally receive payment of the contract price from customers only at a later
stage of the project, which is in line with industry practice. As a result, for liquidity management
purpose, we need to reserve or secure significant operating funds for payment of initial project
costs to mitigate the impact of any liquidity mi smatch arising from significant net cash outflow
during the early stages of our ICT integration pro jects, where our cash outflow for our payables are
not yet recovered by payment of our receivables for a prolonged period of time, until the
accumulated progress payments received from our customers can materially cover the aggregate
cost we have incurred. For more details about our ICT integration services, please refer to the
paragraph headed ‘‘Business — Our services — (II) Integrator — ICT integration services ’’in this
prospectus.
The table below sets out the breakdown of our initial project costs (being all the accumulated
cash outflow for the provision of ICT integration s ervices before receipt of the first payment of our
fees or contract price from the customer in each ICT integration project) incurred for ICT
integration projects during the Track Record Period:
FY2020 FY2021 FY2022 6M2023
RMB ’000 RMB ’000 RMB ’000 RMB ’000
(approximately) (approximately) (approximately) (approximately)
ICT integration services 24,668 27,200 30,802 22,365
Total initial project costs during the Track Record Period (approximately): 105,035
Note: For the purpose of the information involving initial project costs, the timing (i.e. the particular year/period in
the Track Record Period) of incurrence of the initial proj ect costs for a project is deemed to coincide with the
timing of revenue recognition of that project.
During the Track Record Period, initial project costs, which would be recognised as part of
the major operating costs in connection with the provision of our ICT integration services,
accounted for approximately 64.7%, 70.1%, 71.5% and 81.8%, of the total operating costs for
providing ICT integration services for the respec tive periods. Meanwhile, during the Track Record
Period, (i) the average percentage of initial project costs (excluding staff cost) to awarded contract
value for our ICT integration projects which requ ired initial projects costs was approximately
58.9%, 55.7%, 70.6% and 64.0% respectively; (ii) the average amount of working capital required
as initial project costs per project for our ICT integration projects which required initial project
costs was approximately RMB6.2 million, RMB2.5 million, RMB2.4 million and RMB1.3 million,
respectively. Subsequent to the Track Record Pe riod and up to the Latest Practicable Date, our
initial project costs remained at a similarly high l evel when compared with the initial project costs
incurred during the Track Record Period.
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According to the CIC Report, while the average percentage of initial project costs to awarded
contract value for ICT integration projects m ay vary greatly from company to company and from
project to project depending on, among other things, the size and nature of, and hardware and
software required for, ICT integration projects undertaken by an ICT integration service provider,
such average percentage of our Group during the Track Record Period was not anomalous or
unreasonable compared with other industry player s in the ICT integration service industry in the
PRC, and the fluctuations in su ch average percentage of our Group during the Track Record Period
was not uncommon in the industry due to the varianc es among different ICT integration projects as
explained above.
For our ICT integration projects which require d initial project costs and (i) commenced during
the Track Record Period or (ii) commenced before the Track Record Period and was on-going and/
or completed during the Track Record Period: (a ) we had received first payment of our contract
price from our customers for only approximately 8 1.3% of these projects and the average time gap
between the first payment of initial project cost s incurred by us and the receipt of the first payment
was approximately 163.6 days; and (b) we had achieved breakeven (when receipt of payments from
customers that could cover our initial project costs incurred) for approximately 80.8% of these
projects during the Track Record Period and the average time gap between the first payment of
initial project costs by us and the achieving of breakeven was approximately 188.4 days.
On the above basis, our ICT integration projects on average generally started generating cash
inflow within approximately four to five months af ter the first payment of initial projects costs by
us. As a result, we generally experienced time lag s between making payments for the initial project
costs and receiving payments from our customers. Further, we generally issue invoices to our
customers typically after passi ng periodic acceptance assessmen ts conducted by customers. The
credit terms we grant to our customers for our ICT i ntegration services ge nerally range from 15 to
60 days from the invoice date. However, there is no assurance that our customers will make
payment on time and in full. For each of FY2020, FY2021, FY2022 and 6M2023, the number of
our trade receivables and contract assets turnove r days was approximately 153.0 days, 170.5 days,
167.2 days and 170.4 days, respectively, details of which are discussed in the paragraphs headed
‘‘Financial information — Discussion of selected statemen ts of financial position items — Contract
assets and trade receivables ’’in this prospectus. On the other h and, as part of the major operating
costs in connection with the provision of our IC T integration services , which includes the
prepayments for project material costs, the initia l project costs usually need to be settled at the
early stage of an ICT project. If we fail to properly manage our exposure from such cash flow
mismatch between our payment of initial project s costs to our suppliers and subcontractors and
receipt of payments from our customers, or if our customers fail to make payment on time and/or in
full, our cash flows and financial position could b e materially and adversely affected. As a result,
for liquidity management purpose, we need to reserve or secure significant operating funds as initial
project costs to mitigate the impact of any cas hflow mismatch and we had to adopt a cautious
approach in considering potential ICT integratio n projects which had a large contract sum, details
of which are discussed in the paragraphs headed ‘‘Organic growth of our Group and presence of
demand from customers — Presence of demand for ICT integr ation services on a larger scale ’’in
this section below.
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During the Track Record Period, we recorded st able growth in our ICT integration services
business, which generated revenue of approxi mately RMB38.5 million, RMB42.5 million,
RMB54.6 million and RMB35.6 million respect ively, representing a C AGR of approximately
19.1% from FY2020 to FY2022 and an approximately 2.3% growth from 6M2022 to 6M2023. As
such, to enable the continued growth and expa nsion of this business line and to capture the
opportunities brought about by favourable governm ent policies as described above, we will require
additional funds for payment of initial project co sts in order to kick-start and advance new projects,
and a lack of such funds may affect our ability to take on new undertakings and in turn limit our
growth potential.
Since the end of the Track Record Period and up to the Latest Practicable Date, we had
already secured 16 new ICT integration project s with an aggregate expected contract sum of
approximately RMB40.7 million, and we estimate t hat the aggregate initial project costs to be
incurred for these new projects will amount to a pproximately RMB17.9 million. Furthermore,
taking into account the continuous growth in ICT ma rket and the enhancement of our experience in
ICT integration services, it is estimated that we will submit an increas ed number of tenders and
private quotations for new ICT integration projects of different scale to capture the market
opportunities. In the event that we perform thes e new projects concurrently or within similar
timelines, we will be required to pay substantia l initial project costs before receipt of payments
from our customers and thus, our cash flow and liquidity condition would be affected if we do not
have sufficient working capital. In view of the for egoing, based on the historical initial project
costs we incurred as set out in the table above, we expect to apply approximately HK$22.9 million
(equivalent to approximately R MB21.1 million), representing approximately 28.0% of the net
proceeds from the Share Offer, for settling part of t he initial project costs expected to be incurred
for future ICT integration projects, a breakdown of which is as follows:
FY2024 FY2025 FY2026 FY2027 Total
RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
(approximately) (approximately) (approxima tely) (approximately) (approximately)
Initial project costs
for ICT integration
services 5,268 7,024 7,024 1,756 21,072
Owing to the generally shorter project cycle of our Group ’s ICT integration projects, we have
yet to identify any specific ICT integration projects for the three years from April 2024 to March
2027 towards which we may utilise the allocat ed net proceeds. Our Directors have therefore
adopted a prudent basis in determining the amount of the above allocated proceeds as compared
with the historical initial project costs we incurre d as set out above. Our Directors believe that such
basis is reasonable and can avoid excessive allocation of proceeds from the Share Offer.
Nevertheless, for illustration purposes only, se t out in the table below are the expected service
scope, project period, contract value and requ ired initial project costs of the potential ICT
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integration projects of the Group for the three years from April 2024 to March 2027 towards which
we may utilise the allocated net p roceeds, which are estimated base d on the ICT integration projects
undertaken by the Group duri ng the Track Record Period:
Potential ICT
integration projects
FY2024
(from April
2024) FY2025 FY2026
FY2027
( u pt oM a r c h
2027) Total
RMB ’000
(approximately)
RMB ’000
(approximately)
RMB ’000
(approximately)
RMB ’000
(approximately)
RMB ’000
(approximately)
Expected service
scope (Note 1)
ICT integration projects can take many forms. The expected service scope of our potential ICT
integration projects may include the integratio n of building and facility management system, data
server facilities, electronic ma nagement platform and others, which may involve equipment
installation and commissioning, system integratio n testing, training and online operation, software
and hardware environment configuration and other related services.
Expected project
period (Note 2)
Project period of our potential ICT integratio np r o j e c t si se x p e c t e dt ob el e s st h a no n ey e a r .
Expected total contract
value (Note 3)
39,120 53,260 54,384 13,883 160,647
Expected total initial
project costs
required
(Note 4)
24,150 32,879 33,573 8,570 99,172
Notes:
1. Based on the service scope of historical ICT integra tion projects undertaken by the Group during the Track
Record Period.
2. Based on the typical project cycle of our Group ’s ICT integration projects (from tender or private quotation to
completion) which generally lasted for less than approximately one year during the Track Record Period.
3. Based on aggregate total contract amount awarded t o us for ICT integration services in FY2022, projected
based on the CAGR of approximately 2.11% for such c ontract amount from FY2020 to FY2022, and adjusted
proportionally for FY2024 and FY2027.
4. Based on the average percentage of initial project costs out of the aggregate contract amount of our ICT
integration projects which required initial project costs awarded for the period from FY2020 to FY2022.
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(II) Pursuing new research an d development undertakings
The telecommunication network su pport service industry and ICT integration service industry
are rapidly evolving industries which are c onstantly experiencing new advancements and
challenges. Our Directors believe that such and ot her advancements in the industry are expected to
bring about new demand for upgraded services and software. Further, in order to be able to address
customers ’ fast changing needs, it is imperative for u s to engage in new research and development
undertakings based on the latest industry trends, namely the following:
(a) Undertaking 5G industry applicatio n research and development projects
5G, as the latest broadband cellular network technology, supports higher quality and
higher rate broadband wireless communicatio n than 4G and uses wider bandwidth resources.
According to the CIC Report, MIIT offi cially issued 5G commercial licences to
telecommunication operators in June 2019, ma rking the PRC telecommunication network
service industry ’s official step into the 5G era, and operators have since then gradually ceased
the large-scale construction of 4G networks and shifted their focus to the construction of 5G
networks. With the continuous commercial dev elopment of 5G networks, MIIT aims to reach
3.6 million 5G base stations by 2025, according to the CIC Report.
According to the International Telecommunication Union, the United Nations specialised
agency for information and communication technologies, the major usage scenarios and
applications of 5G can be categorised into the following:
Usage scenarios Explanation and examples
1 Ultra-reliable and low latency
communications ( ‘‘uRLLC ’’)
uRLLC has stringent requirements for, among
others, low latency (in formation transmission
delay) which is fundamental in applications such
as wireless control of industrial manufacturing
processes, remote medical procedures and
transportation and traffic safety.
2 Massive machine type
communications ( ‘‘mMTC ’’)
mMTC refers mainly to applications that require
the connection of numerous devices for non-
delay-sensitive data transmission, such as smart
city and smart home devices and environmental
detection systems.
3 Enhanced Mobile Broadband
(‘‘eMBB ’’)
eMMB enables improved performance and a more
seamless user experience in accessing multi-
media content, services and data. It covers a
variety of applications, including wide-area
coverage (i.e. for vast areas which require
seamless coverage and mobility) and hotspot (i.e.
for areas with high user density which require
high traffic capacity but with a low mobility
requirement).
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Owing to the nature of uRLLC and mMTC, 5G will be a significant foundation when
applied to ICT integration services in IoT netwo rks. In particular, uRLLC can enable the real-
time transmission of data between devices to achie ve a close-to-instantaneous response by the
system, which is crucial for applications in , for example, manufacturing, medical and
transportation and traffic fields (such as th e use of automated factory machines, surgical
robots and autonomous vehicles, respectively) t hat require minimum del ay and high precision.
One of the major challenges of the uRLLC applications of 5G is the need to minimise
transmission latency. This can be achieved by ed ge computing, i.e. moving the data processing
closer to the functional terminal devices of an IoT (such as sensors and controllers).
Traditionally, data in an IoT system is transm itted to and from and processed by physically
distant data centres or by cloud computing, which may require longer transmission time and is
thus subject to latency. In contrast, under edge co mputing, processing of delay-sensitive data
is conducted near or at the source of the data, i.e. the IoT devices, and hence data can be
collected from terminal IoT devices, processed l ocally at a physically nearby data storage and
processing server (i.e. a ‘‘gateway ’’device) and then transmitted back to that or other IoT
devices in a swifter manner, whereas data which is not delay-sensitive can be stored and
processed by distant data centres or cloud com puting. The differences between a traditional
data centre model and edge computing are illustrated by the following diagram:
Computation takes
place here
Computation takes
place here
Central Computing Edge Computing
Central data centre Central data centre
Terminal devices Terminal devices
Longer
response
time Shorter
response
time
Edge gateway device
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In this regard, we plan to undertake certain 5G industry application research and
development projects ( ‘‘5G R&D Projects ’’) to develop and eventually commercialise
different industry applications based on uRLLC and edge computing of 5G. Set out below are
the major research directions of our 5G R&D Project:
Project directions Description
1 5G multi-industry integrated
solutions
We plan to develop specific integrated solutions
(including customised hardware and software
layout and plans) that extend the use of 5G and
edge computing to other industry applications,
such as smart factory man agement, agriculture
and fisheries system, wildfire prevention system
and smart city management.
For instance, smart factory management is one of
the 5G usage scenarios that require low latency
communications. In order to lower the risk of
industrial accidents, emer gency shut-off devices,
for example, need to react to hazard detectors
instantaneously without delay. This can be
facilitated by designing an ICT integration
solution utilising 5G edge computing.
2 Supporting developments For each ne w industry application, we plan to
develop a set of 5G edge computing hardware
and software, including edge computing gateways
and ancillary customi sed software, edge
computing cloud platforms, and signal conversion
equipment (e.g. converting 5G signal into WiFi
signal), which are specif ically designed and/or
programmed to fit the relevant industry
application settings and scenarios. In particular:
Gateway devices
As mentioned above, in an edge computing
setting, data from terminal devices can be sent
to, stored and processed in a nearby device, i.e. a
gateway, to accelerate the processing of data and
response time.
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Project directions Description
We plan to develop, for each new 5G industry
application, gateway devices and ancillary
software compatible with the relevant industry
application setti ngs which function near terminal
devices to process and store data therefrom
locally and connect the devices and the wireless
network, thus minimising data latency.
Cloud Platforms
Although an edge computing system deploys
edge gateways to achieve low-latency data
transmission, it does not dispense with a cloud
data centre, which serves as an essential control
centre of the edge system performing overall
remote management and monitoring of edge
devices and processing more scalable data.
We plan to develop, for each new 5G industry
application, cloud platfo rms specifically for edge
computing which serve to conduct systematic
centralised management and coordination of a
large number of edge computing devices. Such
platforms are expected to achieve faster service
response in an edge computing system. In
addition, such new cust omised cloud platform
may also be adopted in the existing 5G ICT
solutions of our Group to improve their
performance.
3 Ancillary software In addition to the above, as 5G and edge
computing can be applied to numerous industries
applications and scenario s, the specifications and/
or functions of ancillary software may differ for
different applications. Depending on the field in
which our customers operate, we plan to develop
customised ancillary software which is
compatible with the applications in the relevant
field. Such new software may also be adopted in
the existing 5G ICT solutions of our Group to
improve their performance.
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As mentioned above, the uRLLC application of 5G is fundamental to IoT systems that
require an instantaneous response, which can be utilised in a wide range of usages. Our
Directors therefore believe that the resear ch results of the 5G R&D Projects in the above
research directions can be applied to and extend the reach of our ICT integration services to
other areas, such as smart facilities management and environmental monitoring and detection,
thus expanding our business scope and revenue streams. Although potential ICT integration
projects based on the research results of the 5G R&D Projects may differ from our past and
existing ICT integration projects in terms of ap plications, settings and equipment, we believe
our current business model in relation to ICT integration services (which in essence involves
system design, equipment and material procurem ent, installation and implementation, and
system commissioning of a wireless communi cation network) will apply to potential new
projects which involve the uRLLC and 5G edge computing applications. For instance, for a
potential smart factory ICT integration proj ect, the same operational flow will apply, which
consists of (i) design of overall layout of a factory monitoring and detection system; (ii)
procurement or preparation of the 5G edge computing and other hardware and software; (iii)
installation of the said hardware and software ; (iv) testing and compatibility check, etc.
Accordingly, we do not foresee any material di fficulty in applying the research results of the
5G R&D Projects in our Group ’s ICT integration services.
Apart from future ICT integration project utilising the research results of the 5G R&D
Projects, we may also provide customised s oftware development services to potential
customers in relation to 5G industry applications.
We plan to apply approximately HK$12.2 milli on (equivalent to appr oximately RMB11.2
million), representing approx imately 14.9% of the net proceeds from the Share Offer, for
undertaking the 5G R&D Projects, including r emuneration of research and other personnel,
costs of equipment and software, and other co rporate expenses. If the cost of the 5G R&D
Projects exceeds the allocated proceeds, we expect to settle the excess by our internal
resources and/or bank borrowings. Set out below is the breakdown of the cost of implementing
the above strategy, with the amount to be incurred over the specified periods:
Expenses to
be incurred for: FY2024 FY2025 FY2026 FY2027 Total
in RMB ’000 in RMB ’000 in RMB ’000 in RMB ’000 in RMB ’000
(approximately) (approximately) (approxima tely) (approximately) (approximately)
Remuneration of
research and other
personnel 1,785 2,875 3,040 760 8,460
Costs of equipment
and software 180 220 210 200 810
Other corporate
expenses 390 670 720 180 1,960
Total 2,355 3,765 3,970 1,140 11,230
FUTURE PLANS AND USE OF PROCEEDS
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Despite the initial investment required for the research and development of the 5G R&D
Projects, our Directors believe that it will assist our Group in extending the reach of our ICT
integration services and software to 5G appli cations and thereby increase our market share.
With the capability to take on ICT integration projects and offer software which involve the
u s eo f5 Ga p p l i c a t i o n s ,w eb e l i e v eag r e a t e rpool of potential customers and variety of
potential projects will open up to our Group. To the best estimate of our Directors in light of
the current market conditions, after the resea rch and development in relation to the 5G R&D
Projects are completed the payback period (i.e . when the total future net cash flow generated
from operating activities can fully cover the total initial investment amount) for the 5G R&D
Projects would be not more than approximately two and a half years and that breakeven (i.e.
when revenue generated from research results c overs the then relevant operating costs and
expenses) could be achieved within a period of not more than one month, upon
commencement of undertaking IC T integration projects and relevant software development
projects based on the development results of the 5G R&D Projects, which is expected to
commence in 2027 if our implementation pl an takes place as we have planned. Such
estimations have taken into consideration a numb er of factors including, among others: (i) the
initial investment required for the research and development of the 5G R&D Projects; (ii)
estimated economic benefit arising from ICT int egration projects expected to be secured in the
future which involve substantially the use of the development results of the 5G R&D Projects
and from the relevant software development pro jects; and (iii) estima ted operating costs in
relation to the new business brought about by the 5G R&D Projects. The estimations are
however subject to change due to uncertainties in general economic and market conditions,
market demands, costs of labour and supplies, a nd other factors beyond our control. Based on
our cost and benefit analysis, we believe the benefits resulting from the 5G R&D Projects will
in the long run outweigh the estimated costs required for its research and development.
The table below sets out the breakdown of the number of the research and other
personnel required as stated in the table above, and the total expenses to be incurred for the
same based on their respective monthly salary and other benefits:
FY2024 FY2025 FY2026 FY2027
Personnel required Monthly salary
From April
2024 to
December
2024
From January
2025 to
March
2025
From April
2025 to
December
2025
From January
2026 to
March
2026
From April
2026 to
December
2026
From January
2027 to
March
2027
RMB
(Approximately)
Project leader (Note 1) 1 7 , 0 0 0111111
Technical director (Note 2) 1 7 , 0 0 0111111
System architect (Note 3) 1 7 , 0 0 0111111
Product manager (Note 4) 1 7 , 0 0 0444444
Hardware engineer (Note 5) 1 7 , 0 0 0111111
Software engineer (Note 6) 1 0 , 0 0 0112222
System engineer (Note 7) 10,000 —— 1111
Equipment engineer (Note 8) 10,000 —— 1111
Industry analyst (Note 9) 1 0 , 0 0 0112222
Testing personnel (Note 10) 7 , 5 0 0111111
Other supporting personnel (Note 11) 6 , 7 0 0557777
Total remuneration to be paid
(Approximately) (RMB ’000) 1,635 545 2,130 710 2,130 710
O t h e re m p l o y e eb e n e f i t s
(Approximately) (RMB ’000) 150 50 150 50 150 50
Total expenses to be incurred
(Approximately) (RMB ’000) 1,785 595 2,280 760 2,280 760
FUTURE PLANS AND USE OF PROCEEDS
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--- page 386 ---
Notes:
1. The project leader is mainly responsible for setting the research and development direction and plan,
supervising and managing the research and other pe rsonnel, monitoring development progress, and in
general overseeing the developm ent of new products and services throughout from initial design to final
assessment.
2. The technical director is mainly responsible for the overall design of new products and services and
providing technical advice and guidance to the research personnel.
3. A system architect is mainly responsible for designing the overall framework of a software system
based on particular functional requirements, and g uiding the development of the system. We intend to
hire one system architect who will be responsible for all three of our proposed research and
development undertakings, namely the 5G R&D Proj ects, the Enhancement Platform and the Easy-to-
use Testing Software. The proceeds from the Share Offer earmarked for remuneration of the system
architect will be shared among the three undertakings.
4. A product manager is mainly responsible for inve stigating, organising and reporting customer
requirements for a particular type of products or services, analy sing whether the functions of an
intended product or service can meet the requireme nts and demand of target customers or users, and
collecting opinions from target customers in respect of a developing product or service.
5. A hardware engineer is mainly responsible for the design, development, assembling, installation and
testing of hardware involved in a research and dev elopment project, and coordinating with software
engineers and other personnel to ensure compatibility within the solutions.
6. A software engineer is mainly responsible for the design, coding and installation of software involved
in a research and development project, and preparing user manual for software developed.
7. A system engineer is mainly responsible for assis ting in building the overall framework of a software
system and resolving issues arising in the course of system development or operation.
8. An equipment engineer is mainly responsible for te sting the functions, performance and reliability of
equipment involved in a research and development project, analysing and reporting the testing results,
and following up on resolving issues discovered during the tests.
9. An industry analyst is mainly responsible for an alysing the industry application of new products and
services in development and designing sales strategy.
10. Testing personnel are mainly responsible for planning and executing the testing of the individual
functions and overall operation of software d eveloped, and reporting the testing results.
11. Other supporting personnel include various supp orting and ancillary personnel who are generally
responsible for providing administrative, techni cal and ancillary support to other personnel, etc.
FUTURE PLANS AND USE OF PROCEEDS
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The table below sets out the breakdown of the expenses to be incurred for purchasing
equipment and software:
Equipment and software
to be purchased Description and use
Unit
required
Average
unit costs
Total expenses
to be incurred
in RMB ’000
(approximately)
in RMB ’000
(approximately)
Computer and development
equipment
Computer and other
equipment for
development, such as
laptops and mobile
phones
16 10 160
Development software Subscription of development
software
—— 200
Cloud server Subscription of cloud data
storage and data sharing
services
—— 450
Total 810
(b) Developing a telecommunication network enha ncement services software based on end-
user data
Our wireless telecommunicat ion network enhancement ser vice has been one of our major
business lines which generated the most re venue for us during the Track Record Period,
accounting for approximately 47.9%, 49.2%, 45.1% and 37.3%, respectively, of our total
revenue during the corresponding periods. Gi ven the continuous deve lopments in relevant
telecommunication network standards and leve ls of complication, our Directors consider that
in order to maintain our competitiveness in p roviding wireless tel ecommunication network
enhancement services, it is imperative that we s hould continue to improve our service standard
and provide enhancement solutions that better address the needs of the end-users. In view of
this, we plan to develop a teleco mmunication network enhancement services software based on
desensitised end-user data (the ‘‘Enhancement Platform ’’) which utilises more comprehensive
user perception and behaviour data in perfor ming telecommunication n etwork enhancement.
Currently in the industry, when telecommunication operators engage service providers
like our Company to perform telecommunication network analysis and enhancement, the
mainstream enhancement approach is to coll ect and analyse data and parameters in the
wireless telecommunication network envir onment which may indicate the performance of a
telecommunication network, such as network cove rage and signal strength. These parameters
can assess the overall quality of the wireless te lecommunication network connection, but may
not accurately identify the source or locat ion of a telecommunication network issue
encountered by users outside of the wireless environment (i.e. other components that form a
wireless telecommunication network, such as the core network, access network and bearer
network, an illustration of which is set out in the paragraphs headed ‘‘Business — Our
FUTURE PLANS AND USE OF PROCEEDS
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--- page 388 ---
services ’’in this prospectus). High performance of a local wireless telecommunication network
environment and good base station coverag e as measured by parameters may not always
guarantee satisfactory end-user perception, since there are other factors that affect user
experience, such as the setting s and condition of end-users ’ own terminal devices (e.g. mobile
phones), or issues taking place at the server end of a website or an application.
In view of the above, our Directors believe th at in order to better address user perception
and experience in telecommunication network en hancement, it is imperative to develop the
Enhancement Platform which makes use of end- user(s) own data (with sensitive personal
information removed). The advantage of using end-user data in analysis and enhancement is
that it provides more directed analysis for asse ssing user experience and enables more accurate
trouble-shooting, since user data can reveal th e telecommunication net work quality and issues
directly experienced by individual end-users, and not just the performance of the objective
telecommunication network environment within t he wireless environment in general. Set out
below is the expected data acqui sition and analysis flow in connection with the Enhancement
Platform:
Stages Description
1 Source data acquisition To pre-process (such as organising data format)
desensitised source data (Note) obtained from third-party
data providers
2 Categorisation of data To categorise d ata into different groups according to
the usage of the data (e.g. grouping video streaming
data into one category, and voice call data into
another)
3 Analysis of data To perform statistical analysis on the data and present
analysed data
Note: The data to be obtained from third-party data providers (such as big data companies) will be
desensitised (i.e. with private and personal infor mation filtered and removed) by the providers.
According to our PRC Legal Advisers, such desensitised data does not constitute personal data or
important data contemplated under the Pe rsonal Information Protection Law* ( 個人信息保護法)a n d
t h eD a t aS e c u r i t yL a w *(數據安全法) of the PRC respectively and we are therefore not subject to the
obligations under such laws by reason of using the desensitised data.
FUTURE PLANS AND USE OF PROCEEDS
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--- page 389 ---
With the end-user data collected and analysed according to the aforementioned flow, the
Enhancement Platform is expected to be capable of serving, among others, the following
major functions:
Functions Description
1 Coverage analysis Through analys ing end-user data, automatically
identify the areas with coverage issues and perform
one-stop analysis with info rmation about base station
distribution, building density, etc., to uncover issues
such as weak coverage, cross-area coverage and
overlapping coverage.
2 Speed analysis Directly identify low-speed areas and provide status
tracking, and perform analysis which compares the
base station KPIs with the actual rates of user
terminals, which can be displayed geographically on a
map.
3 Perception analysis Through analysin g end-user data, perform analysis of
indicators which reflect actual user perception, such as
webpage access rate, upload and download speed,
voice service, instant messa ging, video streaming and
gaming quality.
4 Specific location
evaluation
Evaluate the telecommunicat ion network quality of key
testing locations, such as commercial areas, office
areas, residential areas, hospitals, administrative
organisations and transport ation hubs, which may have
different telecommunication network requirements and
focuses and thus require di fferent testing parameters.
5 Complaint evaluation Organise the user complaint data from
telecommunication operators and display the
distribution geographically on a map, and perform
testing and analysis of the major complaint areas.
FUTURE PLANS AND USE OF PROCEEDS
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--- page 390 ---
Functions Description
6 User behaviour analysis Based mainl y on mass data acquired from end-users,
analyse the business model and user behaviour in the
wireless telecommunication network or particular
telecommunication network areas (such as commercial
areas, residential areas sch ool districts) from various
perspectives including dat a usage, user concentration
and duration for which users are online. The analysis
could provide a reference basis for the formulation of
the telecommunication net work resource allocation
strategies and telecommunication network
enhancement measures.
The Enhancement Platform is expected to be applied to provide a new service under our
business line of wireless telecommunication n etwork enhancement services to offer a different
perspective of enhancement and increase custom er satisfaction. In particular, it is expected to
serve as an extension of our wireless teleco mmunication network enhancement service by
offering a different perspective, i.e. one tha t is based on end-user perception and behaviour
data as explained above, in telecommunication n etwork enhancement. In practice, in the stage
of collecting and analysing telecommunication network data, in addition to collection of data
and parameters through our existing softwar e, customers may also engage us to deploy the
Enhancement Platform to obtain more compreh ensive data and achieve more user-centred
solutions and market and user analysis. For the detailed operational flow in providing wireless
telecommunication network enhancement ser vices, please refer to the paragraphs headed
‘‘Business — Our services — (I) Telecommunication Network Support Services — (a)
Wireless telecommunication n etwork enhancement services ’’. As such, we believe that the
Enhancement Platform can be integrated into our Group ’s existing business and complement
our wireless telecommunication netwo rk enhancement service offerings.
We plan to apply approximately HK$5.3 milli on (equivalent to approximately RMB4.9
million), representing approximately 6.5% o f the net proceeds from the Share Offer, for
developing the Enhancement Platform, includ ing remuneration of development and other
personnel, costs of developmen t resources (such as source d ata for testing the software ’s
functionality) and equipment (such as computers) , and other corporate expenses. If the cost for
FUTURE PLANS AND USE OF PROCEEDS
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--- page 391 ---
developing the Enhancement Platform exceeds t he allocated proceeds, we expect to settle the
excess by our internal resources and/or bank borrowings. Set out below is the breakdown of
the cost of implementing the above strategy, w ith the amount to be incurred over the specified
periods:
Expenses to be incurred for: FY2024 FY2025 FY2026 FY2027 Total
in RMB ’000 in RMB ’000 in RMB ’000 in RMB ’000 in RMB ’000
(approximately) (approximately) (approxima tely) (approximately) (approximately)
Remuneration of
development and other
personnel 863 1,180 942 215 3,200
Costs of development
resources and equipment 150 230 460 360 1,200
Other corporate expenses 112 173 173 42 500
Total 1,125 1,583 1,575 617 4,900
Despite the initial investment require d for the research and development of the
Enhancement Platform, our Directors believe that it will improve the quality of
telecommunication network enhancement by tar geting user perception and experience, and
hence boost our business of providing wireles s telecommunication network enhancement
services. To the best estimate of our Directors in light of the current market conditions, after
the Enhancement Platform is developed, the payback period (i.e. when the total future net cash
flow generated from operating activities covers the total initial investment amount) for the
Enhancement Platform would be not more than ap proximately one year, and breakeven (i.e.
when revenue generated from research resul ts covers the relevant operating costs and
expenses) could be achieved within a period of not more than approximately two months,
upon commencement of undertaking wireless telecommunication n etwork enhancement
projects involving the use of the Enhancement Platform, which is expected to commence in
2027 if our implementation plan takes place as w e have planned. Such estimations have taken
into consideration a number of factors including, among others: (i) the initial investment
required for the research and development of the Enhancement Platform; (ii) estimated
economic benefit arising from projects secu red in the future for performing wireless
telecommunication network enhancement servi ces using the Enhancement Platform; and (iii)
estimated operating costs in relation to the projects secured in the future for performing
wireless telecommunication net work enhancement services usin g the Enhancement Platform;
The estimations are however subject to change due to uncertainties in general economic and
market conditions, market demands, costs of labour and supplies, and other factors beyond our
control. Based on our cost and benefit analys is, we believe the benefits resulting from the
Enhancement Platform will in the long run out weigh the estimated costs required for its
research and development.
FUTURE PLANS AND USE OF PROCEEDS
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The table below sets out the breakdown of the number of the development and other
personnel required as stated in the table above, and the total expenses to be incurred for the
same based on their respective monthly salary:
FY2024 FY2025 FY2026 FY2027
Personnel required Monthly salary
From April
2024 to
December
2024
From January
2025 to
March
2025
From April
2025 to
December
2025
From January
2026 to
March
2026
From April
2026 to
December
2026
From January
2027 to
March
2027
RMB
(Approximately)
System architect (Note 1) 1 7 , 0 0 0111111
Product manager (Note 2) 1 7 , 0 0 0111111
Software engineer (Note 3) 1 0 , 0 0 0334422
Testing personnel (Note 4) 7 , 5 0 0111122
Other supporting personnel (Note 5) 6 , 7 0 0554433
Total expenses to be incurred
(Approximately) (RMB ’000) 863 287 893 297 645 215
Notes:
1. A system architect is mainly responsible for designing the overall framework of a software system based on
particular functional requirements, and guiding the development of the system. We intend to hire one system
architect who will be responsible for all three of our proposed research and development undertakings, namely
the 5G R&D Projects, the Enhancement Platform and the E asy-to-use Testing Softw are. The proceeds from the
Share Offer earmarked for remuneration of the system architect will be shared among the three undertakings.
2. A product manager is mainly responsible for investigating, organising and reporting customer requirements for
a particular type of products or services, analysing whether the functions of an intended product or service can
meet the requirements and demand of target customers or users, and collecting opinions from target customers
in respect of a developing product or service.
3. A software engineer is mainly responsible for the design, coding and installation of software involved in a
research and development project, and preparing user manual for software developed.
4. Testing personnel are mainly responsible for planning and executing the testing of the individual functions and
overall operation of software developed, and reporting the testing results.
5. Other supporting personnel include various supporting and ancillary pers onnel who are generally responsible
for providing administrative, technical and ancillary support to o ther personnel, etc.
FUTURE PLANS AND USE OF PROCEEDS
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--- page 393 ---
The table below sets out the breakdown of the expenses to be incurred for purchasing
development resources and equipment:
Equipment and resources to be
purchased Description and use
Unit
required
Average unit
costs
Total expenses
to be incurred
in RMB ’000
(Approximately)
in RMB ’000
(Approximately)
Computer and development
equipment
Computer and other
equipment for
development, such as
laptops and mobile
phones
10 10 100
Development software and data Subscription of development
software and purchase of
testing and end-user data
—— 950
Cloud server Subscription of cloud data
storage and data sharing
services
—— 150
Total 1,200
(c) Developing an easy-to-use wireless teleco mmunication network testing software
During the Track Record Period, we offered f or sale certain software developed by us,
such as Wangyou Renwoxing* ( 網優任我行)a n dt h eS m a r tB e e *( 小蜜蜂) testing software,
details of which are set out in the paragraphs headed ‘‘Business — Our software ’’in this
prospectus. The target users of these software are mainly personnel with technical knowledge
in telecommunication n etwork enhancement. In order to expand the target market for our
products and the pool of users who may purchase our software, we plan to develop wireless
telecommunication network testing software (the ‘‘Easy-to-use Testing Software ’’)w h i c hw i l l
be positioned as an easy-to-use software and target ordinary non-technical users.
To the understanding and knowledge of our Di rectors, the telecommunication network
testing software in the market generally require users to have (i) specific technical knowledge,
due to the fact that the current telecommunicat ion technological environment is complicated
by, among other things, the coexistence of multiple standards (2G/3G/4G/5G) and the
fragmentation of testing scenarios and (ii) speci fic terminal devices which are compatible with
the telecommunication network testing software for running these. These have given rise to
the following problems:
(1) the target users of the telecommunicatio n network testing software are limited to
corporations which have personnel wit h the technical knowledge in the field to
operate the software, while ordinary non-t echnical personnel may have significant
difficulty in this regard;
FUTURE PLANS AND USE OF PROCEEDS
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--- page 394 ---
(2) within a corporation, only technica l personnel may have the expertise to use
telecommunication network testing software, but a large number of non-technical
personnel (such as marketing and customer service personnel) may also require
network testing in order to understand the t elecommunication network conditions of
their customers;
(3) as a result of (2) above, a substantial workload is imposed on technical personnel,
such as compiling testing reports. Thi s may adversely affect the operational
efficiency of a corporate customer; and
(4) as traditional telecommunication netwo rk software usually requires the use of
specific terminal devices which are gene rally not accessible to most non-technical
personnel and are available in corporations usually in limited quantities, the use of
such software may not be readil y available to ordinary users.
Consistent with the trend of the developm ent of 5G and IoT as described above, the
demand for telecommunication network testing is expected to rise in th e areas of, for instance,
smart cities, smart homes, smart transportation a nd traffic systems. In these telecommunication
network environments, there may not always be sufficient or any technical personnel to
perform telecommunication network testing. Ther efore, our Directors believe that there will be
demand for testing software which is user-fri endly and can be operated by ordinary users
without necessitating technical expertise.
It is against this background that we plan to develop the Easy-to-use Testing Software.
The expected functions of the software include, among others: (i) automatic data acquisition
and testing of signal strength, coverage, transmi ssion rate; (ii) drive test (testing along major
roads of an area) and call quality test (testi ng at different fixed spots of an area); (iii)
displaying of basic information, operation condition, performance and alert of a connected
telecommunication network and base station locat ion and distribution; and (iv) reporting of
FUTURE PLANS AND USE OF PROCEEDS
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telecommunication network issues. Set out be low is a summary of the expected differences
between the Easy-to-use Testing Software and tr aditional telecommuni cation network testing
software:
The Easy-to-use Testing Software
Traditional telecommunication
network testing software (including
the software developed by us)
Signal testing (testing of strength
and condition)
✓✓
Signal analysis (analysis of
exchanges between terminal
devices and base stations for
more accurate and detailed
analysis of telecommunication
issues that take place over the
wireless telecommunication
network)
✕✓
Drive test and call quality test ✓✓
Data sharing Available as an in-app
function, more efficient
Generally requiring manual
saving and distribution, less
efficient
Testing report Automatically generated Typically require user to
compile
Target user Telecommunication network
enhancement, maintenance,
marketing, engineering
testing, IoT installation,
management, planning
personnel
Telecommunication network
enhancement personnel
Technical requirement Lower: through simplification
of interface, technical terms
and jargons, representation of
testing results, etc.
Higher
Price Lower Higher
Compatibility with terminal devices Compatible with end-user ’s
own terminal devices (e.g.
mobile phones)
Usually require a specific
terminal device and not
readily compatible with other
devices
FUTURE PLANS AND USE OF PROCEEDS
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--- page 396 ---
Our new software is intended to be available for both individual users who have the need
for telecommunication network testing and t echnical and non-technical personnel of
corporations. The basic functions of the software are intended to be offered for free in order
to induce popularisation and build confidence among users and, on payment of a monthly
subscription fee by users, more advanced functi on will also be available for use. Furthermore,
the Easy-to-use Testing Software may also be applied in our wireless telecommunication
network enhancement services as a convenient an d handy alternative testing tool (for instance,
testing report can be automatically generated ) which may enhance the working efficiency in
carrying our wireless telecommunicat ion network enhancement services.
We plan to apply approximately HK$3.5 milli on (equivalent to approximately RMB3.2
million), representing approximately 4.3% o f the net proceeds from the Share Offer, for
developing the Easy-to-use Testing Software, including remuneration of development and
other personnel, costs of development res ources (such as cloud server and development
software) and equipment (such as computers) and other corporate expenses. If the cost for
developing the new software exceeds the allocat ed proceeds, we expect to settle the excess by
our internal resources and/or bank borrowings. Set out below is the breakdown of the cost of
implementing the above strategy, with the amo unt to be incurred over the specified periods:
Expenses expected
to be incurred for: FY2024 FY2025 FY2026 FY2027 Total
in RMB ’000 in RMB ’000 in RMB ’000 in RMB ’000 in RMB ’000
(approximately) (approximately) (approxima tely) (approximately) (approximately)
Remuneration of
development and
other personnel 495 720 762 193 2,170
Costs of development
resources and
equipment 260 200 250 — 710
Other corporate
expenses 83 110 125 32 350
Total 838 1,030 1,137 225 3,230
Despite the initial investment required for th e research and development of the Easy-to-
use Testing Software, our Directors believe that it will enable us to develop our software sales
business by offering a new product that accommodates not only our traditional target users,
namely telecommunication network enhancemen t personnel, but also other technical and non-
technical personnel in other fields and industri es. To the best estimate of our Directors in light
of the current market conditions, after the Ea sy-to-use Testing Software is developed and
officially launched on the market, the payback period (i.e. when the total future net cash flow
generated from operating activities covers the t otal investment amount) for the Easy-to-use
FUTURE PLANS AND USE OF PROCEEDS
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--- page 397 ---
Testing Software would be not more than approximately one year, and breakeven (i.e. when
revenue generated from research results cover s the relevant operating costs and expenses)
could be achieved within a period of not mo re than approximately two months, upon
commencement of sales of the Eas y-to-use Testing Software, which is expected to commence
in 2027 if our implementation plan takes place as we have planned. Such estimations have
taken into consideration a number of factors incl uding, among others: (i) the initial investment
required for the research and development of th e Easy-to-use Testing Software; (ii) estimated
economic benefit arising from the monthly subscription of the Easy-to-use Testing Software
by users; and (iii) estimated operating costs i n relation to the sales and maintenance of the
Easy-to-use Testing Softwa re. The estimations are however subject to change due to
uncertainties in general economic and market con ditions, market demands, costs of labour and
supplies, and other factors beyond our contro l. Based on our cost and benefit analysis, we
believe the benefits resulting from the Easy -to-use Testing Software will in the long run
outweigh the estimated costs require d for its research and development.
The table below sets out the breakdown of the number of the development and other
personnel required as stated in the table above, and the total expenses to be incurred for the
same based on their respective monthly salary:
FY2024 FY2025 FY2026 FY2027
Personnel required Monthly salary
From April
2024 to
December
2024
From January
2025 to
March
2025
From April
2025 to
December
2025
From January
2026 to
March
2026
From April
2026 to
December
2026
From January
2027 to
March
2027
RMB
(Approximately)
System architect (Note 1) 1 7 , 0 0 0111111
Product manager (Note 2) 1 7 , 0 0 0111111
Software engineer (Note 3) 1 0 , 0 0 0222222
Testing personnel (Note 4) 7 , 5 0 0111111
Other supporting personnel (Note 5) 6 , 7 0 0112233
Total expenses to be incurred
(Approximately) (RMB ’000) 495 165 555 185 577 193
Notes:
1. A system architect is mainly responsible for designing the overall framework of a software system based on
particular functional requirements, and guiding the development of the system. We intend to hire one system
architect who will be responsible for all three of our proposed research and development undertakings, namely
the 5G R&D Projects, the Enhancement Platform and the E asy-to-use Testing Softw are. The proceeds from the
Share Offer earmarked for remuneration of the system architect will be shared among the three undertakings.
2. A product manager is mainly responsible for investigating, organising and reporting customer requirements for
a particular type of products or services, analysing whether the functions of an intended product or service can
meet the requirements and demand of target customers or users, and collecting opinions from target customers
in respect of a developing product or service.
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3. A software engineer is mainly responsible for the design, coding and installation of software involved in a
research and development project, and preparing user manual for software developed.
4. Testing personnel are mainly responsible for planning and executing the testing of the individual functions and
overall operation of software developed, and reporting the testing results.
5. Other supporting personnel include various supporting and ancillary pers onnel who are generally responsible
for providing administrative, technical and ancillary support to o ther personnel, etc.
The table below sets out the breakdown of the expenses to be incurred for purchasing
development resources and equipment:
Equipment and resources to be
purchased Description and use
Unit
required
Average unit
costs
Total expenses
to be incurred
in RMB ’000
(Approximately)
in RMB ’000
(Approximately)
Computer and development
equipment
Computer and other
equipment for
development, such as
laptops and mobile
phones
61 06 0
Development software Subscription of development
software
—— 50
Cloud server Subscription of cloud data
storage and data sharing
services
—— 600
Total 710
In summary, the estimated total investmen t costs for pursuing our new research and
development undertakings are approximately: (i) HK$12.2 million (equivalent to approximately
RMB11.2 million), representing approximately 1 4.9% of the net proceeds from the Share Offer for
undertaking 5G industry application research a nd development projects; (ii) HK$5.3 million
(equivalent to approximately RMB4.9 million) , representing approximately 6.5% of the net
proceeds from the Share Offer for developing a tel ecommunication network enhancement services
software based on end-user data; and (iii) HK$3.5 million (equivalent to approximately RMB3.2
million), representing approximately 4.3% of th e net proceeds from the Share Offer for developing
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an easy-to-use wireless telecommunication networ k testing software. The table below sets out the
detailed implementation schedule of our new research and development undertakings:
Research and development
activities FY2024 FY2025 FY2026 FY2027 Total
RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
(Approximately) (Approximately) (Approxima tely) (Approximately) (Approximately)
Undertaking 5G industry
application research and
development projects 2,355 3,765 3,970 1,140 11,230
Developing a
telecommunication
network enhancement
services software based
on end-user data 1,125 1,583 1,575 617 4,900
Developing an easy-to-use
wireless
telecommunication
network testing software 838 1,030 1,137 225 3,230
Total 4,318 6,378 6,682 1,982 19,360
As illustrated in the table above, the total amount of the proceeds from the Share Offer to be
invested in pursuing our new research and devel opment undertakings, being approximately
RMB19.4 million, will be applied progressively over the period from FY2024 to FY2027. Our
Directors believe that the said amount is not out of line with or disproportionate to our historical
research and development expenses, which amoun ted to approximately RMB49.1 million in total
during the Track Record Period (being a period of 3.5 years).
(III) Expanding our manpower in project manage ment to cater for the anticipated expansion
plans and business growth
During the Track Record Period, we deployed our project managers to oversee the execution
and implementation of our projects. Our proj ect managers are mainly responsible for the
formulation of project solutions, implementati on plans and contingency plans, project cost and
personnel planning, and supervision of the imple mentation of solutions and services by technical
personnel and subcontractors. In essence, therefore, a project manager serves as the person-in-
charge, inspector and coordinator of a project who we believe are of great importance to our
business operations. For more details about the resp onsibilities of our personnel and our business
operational flow, please refer to the paragraphs headed ‘‘Business — Our business operational
flow ’’in this prospectus.
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The table below sets out the movement in the number of project managers employed by our
Group during the Track Record Period:
FY2020 FY2021 FY2022 6M2023
Beginning of the year/period 43 43 28 27
Newly employed/promoted or
t r a n s f e r r e dt op o s i t i o no fp r o j e c t
m a n a g e r 9341
(Resigned/terminated/promoted or
transferred to other position) (9) (18) (Note) (5) 0
End of year/period 43 28 27 28
Note: During the Track Record Period, our project managers mainly comprised: (i) the core team of project
managers who were more senior in our Group, had more stable employment relationship with us and served a
supervisory role among other project managers; and (ii) the ad hoc team of project managers who may be
hired (or deployed through transferral from other positi ons) for particular projects, especially those which
took place in a province or city where we did not have mate rial and regular operations, in which case hiring
a project manager based in that province or city w ould be more cost-effective. In view of the above
background, the decrease of 18 project managers duri ng FY2021 was mainly attributable to the completion of
work of a large number of projects during the same year . After those projects were completed, we may invite
the ad hoc project managers to take up projects in other provinces or cities or mutually agree to cease their
employment with us if they chose to stay in their then locations. Our Directors expect that when new
projects commence (in particular considering the busin ess opportunities arising after implementation of the
expansion plans as detailed in this section), the numb er of project managers will be restored to, or even
exceed, the previous level.
As at the Latest Practicable Date, we had 26 project managers.
During the Track Record Period, mainly depen ding on the geographical location of a project,
our business may be taken charge of by eight different branch business departments in Hebei,
Shandong, Hunan, Guangdong, Guangxi, Xining, Guiyang and Sichuan, respectively. Along with
the implementation of our busines s strategies and the general industry growth, we expect to capture
more business opportunities which will necessit ate the expansion of manpower. As such, we plan to
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hire additional project managers in each of our branch business departments in the PRC to
supervise our future new projects under different business lines. The tables below set forth our
hiring plan of the project managers:
Main responsibilities Preferred exp erience and qualifications
. to formulate solutions based on project requirements and
objectives;
. to formulate project implementation plans including logistics
arrangements and contingency plans;
. to perform overall planning of project budget and cost and
deployment of personnel;
. to oversee delivery and implementation of solutions and
services rendered by technical personnel and
subcontractors; and
. to maintain communication with our customers.
. approximately 6 years of experience or above in the fields of
telecommunication network support services and/or ICT
integration services;
. relevant academic background, such as a bachelor ’s degree in
computer science or engineering;
. qualification of telecommunication engineer,
telecommunication network enhancement engineer or
similar qualifications issued by a reputable authority,
organization or industry leader.
Place of deployment of new project managers
(branch department)
Number of new
project managers
to be deployed
Expected
total annual
remuneration
(Note)
Expected total
remuneration for
three years
in RMB ’000 in RMB ’000
(approximately) (approximately)
Hebei 2 362 1,086
Shandong 2 362 1,086
Hunan 2 362 1,086
Guangdong 8 1,446 4,338
Guangxi 3 542 1,626
Xining 2 362 1,086
Guiyang 2 362 1,086
Sichuan 2 362 1,086
Total 23 4,160 12,480
Note: The annual remuneration of a project manager is calcula ted by reference to an expected monthly salary of
approximately RMB14,000 and an a nnual bonus equivalent to one month ’s salary.
Our Directors believe that the hiring of a total of 23 additional project managers is justified
and in the interest of our Group having considered the following factors:
(i) The general industry growth in the PRC and the implementation of the expansion plans
as detailed in this section is expected to en able our Group to secure more projects which
would in turn necessitate the deploymen t of additional project managers;
(ii) However, our existing manpower is unlikely to satisfy the need for more project
management personnel resulting from the po tential increase in the number of projects.
Our projects generally require the deployment of project managers to take charge of and
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oversee the execution and implementation o f solutions. During the Track Record Period,
based on the number of our on-going project and number of project managers, each of
our project managers were in charge of, on average, approximately 3, 5, 7 and 5 projects
respectively. As elaborated above, our project managers serve as the person-in-charge,
inspector and coordinator of our projects and are therefore required to devote substantial
time and attention in order to closely supervise the progress of the projects on a day-to-
day basis and handle and resolve any issues in relation thereto throughout. Our Directors
believe that the capacity of our project managers are therefore fully occupied and do not
have spare capacity in taking up additional projects while ensuring the quality of our
services; and
(iii) From an internal control perspective, our Directors believe that it is conducive to our
Group to alleviate the workload of our project managers and reduce the number of
projects simultaneously undertaken by each of them, for the reasons that (a) our project
managers can allocate more time to the performance of their duties in each stage and
aspect of a project, which can lower the chan ces of mistakes and oversight due to time
constraints and workload pressure; (b) in the event of unexpected resignation or
prolonged absence from work of any project m anagers, the remaining project managers
will have more spare capacity to take the pla ce in leading the projects of the departing
managers, thus minimising the disruption to project progress and quality; (c)
appropriately lightening the workload and pressure of our project managers is consistent
with our policy to promote employee well-bei ng and may also benefit talent management
and retention.
Payment of remuneration of the above project managers to be hired, determined based on the
market salary level, seniority of the position and l evel of education, qualif ication, knowledge, skill
and experience required, will be funded by the p roceeds of the Share Offer which will cover up to
approximately 36 months of their employment. After the proceeds of the Share Offer allocated to
such purpose have been used up, payment of the remuneration of the said project managers will be
funded by our internal resources. In addition, oth er related expenses such as social insurance and
housing provident fund contributions will also be funded by our internal resources. As at the Latest
Practicable Date, no recruitment exercise had been initiated yet. We plan to commence such
exercise gradually upon Listing.
We expect to apply approximately HK$12.0 mi llion (equivalent to approximately RMB11.1
million), representing approximately 14.7% of the net proceeds from the Share Offer for expanding
our manpower in project management. If the cost for expanding our manpower in project
management exceeds the allocated proceeds, we exp ect to settle the excess by our internal resources
and/or bank borrowings.
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(IV) Financing our sales and marketing funding needs for expansion of manpower and
marketing activities
Our four regional business departments are resp ectively responsible for our operations in the
Central, Northern, Western and South Western regions of the PRC. Our regional managers and
regional business departments explore potential business opportunities by attending to query and
request of our existing and potential customers, approaching potential new customers to promote
our services and software, identifying potent ial projects open for tender, and maintaining
communication and relationships with customer s. For more information, please refer to the
paragraphs headed ‘‘Business — Sales and marketing ’’in this prospectus. Our Directors consider
that after implementing our expansion plans as de scribed above in this section, we will be able to
offer new solutions (such as 5G edge computing sol utions) and software (such as the Easy-to-use
Testing Software) to customers in the future. To f acilitate the promotion of such new solutions and
software and our existing service and software o fferings, we will need to invest more resources in
expanding our sales and marketing operations.
In view of the above, we plan to strengthen our sales and marketing operations by adopting
the following plans.
(1) Hiring more sales and marketing personnel for different regional business departments.
We plan to hire five additional sales and ma rketing personnel, including two in the
Central region ’s business department (which manages the operations of our headquarters
in Guangdong) and one in each of the Northern, Western and South Western regions ’
business departments. Details of the our hiring plan are set out in the table below:
Main responsibilities Preferred experience and qualifications
. to attend to query or request from
existing or potential new customers in
relation to potential business
opportunities;
. to identify and communicate with
potential new customers and arrange in
order to promote our services and
software; and
. to identify new business opportunities
from available open tenders posted
online or otherwise advertised.
. approximately six years of experience
or above in the fields of sales and
marketing and telecommunication or
information technology; and
. relevant academic background, such as
in telecommunication or information
technology.
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P l a c eo fd e p l o y m e n to fn e ws a l e sa n d
marketing personnel (regional business
department)
Number of new
sales and
marketing
personnel to be
deployed
Expected total
annual
remuneration (Note)
Expected total
remuneration for
three years
in RMB ’000 in RMB ’000
(approximately) (approximately)
Central region 2 240 720
Northern region 1 120 360
Western region 1 120 360
South Western region 1 120 360
Total 5 600 1,800
Note : The annual remuneration of a sales and marketing personnel is calculated by reference to an expected
monthly salary of approximately RMB10,000.
Payment of remuneration of the above sales and marketing personnel to be hired,
determined based on the market salary level, seniority of the position and level of
education, qualification, knowledge, skil l and experience required, will be funded by the
proceeds of the Share Offer which will cover up to approximately 36 months of their
employment. After the proceeds of the Share Offer allocated to such purpose have been
used up, payment of the remuneration of the s aid sales and marketing personnel will be
funded by our internal resources. In additi on, other related expenses such as social
insurance and housing provident fund cont ributions will also be funded by our internal
resources. As at the Latest Practicable Date, n o recruitment exercise had been initiated
yet. We plan to commence such exercise gradually upon Listing.
(2) Funding our sales and marketing activities . We also plan to use the proceeds of the
Share Offer to fund the sales and marketing activities to be conducted by our regional
business departments and sales and marketing personnel, including preparing promotional
materials in relation to our existing and new services and software, paying visit to
existing and potential customers to introduce our services and software and explore
business opportunities, participating in te lecommunication, ICT and related events such
as conferences, exhibitions or symposia, and/ or travelling and other relevant expenses,
etc.
We expect to apply approximately HK$3.3 million (equivalent to approximately RMB3.0
million), representing approximately 4.0% of the net proceeds from the Share Offer for financing
our sales and marketing funding needs for expa nsion of manpower and marketing activities.
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MARKET DEMAND AND STRATEGIES TO CAPTURE SUCH DEMAND
Factors indicating sufficient market and customer demand for our Group ’s services and
products
Our Directors believe that our Group ’s proposed expansion based on the implementation plans
as detailed in the paragraphs headed ‘‘Implementation plan ’’in this section will be supported by
sufficient market and customer demand, hav ing considered the following factors:
Industry advancements and favourable policies a re expected to boost market growth and demand
(i) The forecast growth in the ICT integr ation service industry in the PRC. A c c o r d i n gt ot h e
CIC Report, due to the development of 5G and IoT, demand for ICT integration services has
been boosted in the past few years. Meanwhile, the PRC government has published favourable
policies which are expected to continually pro mote the growth of the ICT integration service
industry, such as the Development Plan for th e Digital Economy of the 14th Five-Year Plan*
(‘‘十四五’’數字經濟發展規劃) issued by the State Council in 2022. As downstream industries
are expected to continue to carry out digitali sation transformation, the demand for ICT
integration services is expected to further incre ase in the future, as a result of which the total
revenue of the ICT integration service industry in the PRC is expected to grow to
approximately RMB254.0 billion in 2027, with a CAGR of 8.5% from 2022 to 2027,
according to the CIC Report.
(ii) The forecast growth in the telecommunication network support service industry in the PRC .
(a) According to the CIC Report, pursuant to the 13th Five-Year Plan, the PRC is expected
to accelerate the construction of the telecomm unication network industry and encourage
the commercial use of 5G internet. To meet the end-users ’ needs for high-quality and
personalised services, telecommunication operators are expected to continue to increase
their telecommunication network coverage, i mprove telecommunicat ion network service
quality, and maintain stable and continuous s pendings on wireless telecommunication
network enhancement services in the future; a s a result, the market size of the wireless
telecommunication network enhancement service industry in the PRC is expected to
increase from approximately RMB12.2 billi on in 2022 to approximately RMB15.5 billion
in 2027, representing a CAGR of approximately 4.9%, according to the CIC Report.
(b) According to the CIC Report, as the end of 2022, the number of 5G stations in the PRC
reached 2.3 million units, and with the cont inuous commercial development of 5G, the
Ministry of Industry and Information Technology of the PRC (MIIT) aims to set up 3.6
million units of 5G base stations by 2025. According to the CIC Report, the market size
of the telecommunication netwo rk infrastructure maintenan ce service industry in the PRC
is expected to reach approximately RMB1 12.8 billion in 2027, representing a CAGR of
approximately 6.8% from 2022 to 2027.
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(c) According to the CIC Report, along with the c onstruction of 5G base stations and other
related facilities as mentioned above, the m arket size of the telecommunication network
infrastructure engineering service industry is expected to reach approximately RMB485.9
billion in 2027, representing a CAGR of approximately 8.6% from 2022 to 2027.
(iii) The forecast growth in the software product s and development service industry in the
PRC. According to the CIC Report, the total revenue of the telecommunication network
software products and development service industry in the PRC is expected to grow to
approximately RMB1,620.3 million in 2027, with a CAGR of 9.5% from 2022 to 2027, due to
the development of 5G which brought new dema nd for telecommunication network software.
Furthermore, in 2020, the MIIT published the ‘‘Notice on Promoting the Accelerated
Development of 5G* ’’(關於推動5G加快發展的通知), which attached great importance to the
research and application of telecommunication n etwork software, according to the CIC Report.
(iv) Other future trends of the telecommunicati on network services and ICT industries in the
PRC. There are other industry trends and devel opments according to the CIC Report which
our Directors believe may heighten the market demand for the services and products of our
Group, including: (a) the continuous evolut ion of telecommunication technology which
initiates the upgrade of telecommunication network and hence triggers new demands for ICT
integration services; (b) the increasing compl exity of telecommunication network service
technology attributable to the continuous upgrading of telecommunication network
infrastructure, which prompts growing custo mer needs for third-part y telecommunication
network service providers; (c) the development towards a healthy and fair market attributable
to the standardised tendering and biddi ng management measures formulated by
telecommunication operators in selecting servi ce providers; (d) the trend that customers from
vertical industries and government sector increasingly require ICT integration service
providers that have extensive industry knowledge and can provide customised services; and
(e) favorable government policies in general.
Organic growth of our Group and pr esence of demand from customers
(v) The growth of our business during the Track Record Period . There had generally been
growing demand for our services and product s during the Track Record Period. Our Group ’s
revenue for FY2021 and FY2022 as compared to FY2020 and FY2021 increased by
approximately RMB7.8 million and RMB23.2 million, respectively, representing an increase
of approximately 4.0% and 11.4%, respectiv ely. Our revenue increased by approximately
RMB10.6 million from 6M2022 to 6M2023, repres enting an increase of approximately 10.3%.
(vi) Presence of demand for ICT integration services on a larger scale . In the course of our day-
to-day exercise of identifying potential busi ness opportunities, we have noticed the presence
of ICT integration projects available for tende r which have a larger scale than the projects we
undertook during the Track Record Period. As these projects typically require more substantial
initial input of capital and resources, we may no t have sufficient financial capacity to engage
in such projects while maintaining a healthy lev el of available working capital. In particular,
during the Track Record Period, we had to adopt a cautious approach in considering potential
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ICT integration projects which had a large contr act sum and involved significant initial project
costs, and had to decline business opportunit ies in relation to at least approximately seven
projects with larger contract sum due to concerns in liquidity management. By way of
illustration, set out below are the details of some examples of such missed business
opportunities:
ICT integration project description
Approximate
contract sum of
project
Expected initial
project costs
required to be
incurred
Estimated amount
of profits that
could have been
generated from the
project
RMB
(approximately)
RMB
(approximately)
RMB
(approximately)
(i) Setting up a cloud healthcare
information platform for a
medical institution
15.9 million 11.0 million 1.8 million
(ii) Setting up a sustainable
development goals integrated
service platform for a research
institute
18.0 million 12.0 million 2.1 million
(iii) Setting up a data centre for a
hospital
11.7 million 10.0 million 1.3 million
(iv) Setting up an inf ormation platform,
a video and audio fingerprinting
s y s t e m ,e t c .f o rar e s e a r c h
institute
34.9 million 20.0 million 4.0 million
(v) Upgrading a cloud healthcare
information platform for a
medical institution
43.5 million 22.0 million 5.0 million
(vi) Setting up an integrated system of a
research and education centre for
a medical institution
18.3 million 11.0 million 2.1 million
(vii) Setting up an integrated
management system for multi-
functional lamp poles
12.4 million 10.0 million 1.4 million
Our Directors therefore believe that with the net proceeds from the Share Offer, the pool of
potential ICT integration projects in the market which we are capable of undertaking in terms
of financial capacity can be expanded.
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(vii) Indication of interest f rom existing customers . By way of assessing the customer demand for
our intended developments, we have distributed a questionnaire to the relevant contact persons
of our customers (including our five largest c ustomers in each year/period during the Track
Record Period) to solicit their views on our proposed services and products. The questionnaire
included introduction of the commercial u se of the 5G R&D Projects, the Enhancement
Platform and the Easy-to-use Testing Software. Out of 57 respondents, 37, 33 and 38 had
indicated that they are interested in the 5G R& D Projects, the Enhancement Platform and the
Easy-to-use Testing Software, r espectively, and would recommend the relevant customers to
consider procuring such services or products.
Strategies to capture the growing market demand for our Group ’s services and products and
compete with other market players
Our Directors believe that the aforementioned industry growth and customers ’ indicated
demand present attractive market opportunities and potential for our Group to expand our market
share in the industries in which we operate in th e PRC. In order to capture and capitalise on such
opportunities, we intend to adopt the following strategies:
(i) Enhance interaction with customers and gauge their interest and requirements .I n
conducting research and development for our proposed initiatives, namely the 5G R&D
Projects, the Enhancement Platform and th e Easy-to-use Testing Software, we will
endeavour to ensure that the design of certain features of such proposed services and
products (such as software user interface) align with the preference of our target
customers and the end-users. In order to und erstand the specific requirements of the
target customers and end-users, we will continue to solicit the opinions of our existing
and/or potential customers through vario us means such as face-to-face or telephone
interviews and distribution of questionnair es. Our Directors believe that this can enable
us to more accurately address and respond to the market demand.
(ii) Form a team of talents with market knowledge and awareness. A part of the proceeds
from the Share Offer allocated to pursuing ne w research and development undertakings,
i.e. the 5G R&D Projects, the Enhancement P latform and the Easy-to-use Testing
Software, will be used for forming a team of research and other personnel comprising,
among others, system architects, hardware engineers, software engineers, system
engineers, etc., who will work together in ad ministering the aforesaid undertakings and
building our proprietary technologies. I n selecting research and development team
members, we will strategically give priorit y to candidates who have worked for industry-
leading corporations with cutting-edge techno logies to enhance our research capabilities
and those possessed with relevant market knowledge and thorough understanding of the
industry trend and competitive landscape. Our Directors believe that those candidates
who can apply their experience and understanding in our new research and development
undertakings will facilitate the developmen t of services and products which can compete
with those of the market incumbents.
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(iii) Engage in continuous market research and modifications . Before and during the course
of carrying out our new research and develop ment undertakings, our management and
our research personnel will, from time to tim e, conduct market research in relation to
competing services and products in the market which are similar to our proposed
undertakings (if any), with a view to understanding their strengths and weaknesses and
applying the findings to improve our own developments. Our Directors believe that
ongoing market research would enable us to keep abreast of the latest market
innovations, trends and competing products, which would facilitate and building our
proprietary technologies the continuous modifications and upgrade of our services and
products and maintain our competitiveness.
(iv) Set up a team to conduct promotional activities . As detailed in the paragraphs headed
‘‘Implementation plan ’’in this section, we propose to apply part of the proceeds from the
Share Offer for funding our sales and marketing activities. In order to enhance the
effectiveness of the promotional efforts, we intend to designate a team of marketing
personnel to specifically take charge of t he execution of the marketing activities in
relation to the 5G R&D Projects, the Enhancem ent Platform and the Easy-to-use Testing
Software and coordinate with our techni cal personnel to approach existing and new
customers, such as visiting different cus tomers and presenting the new services and
products.
USE OF PROCEEDS
We estimate the aggregate net proceeds from t he Share Offer (after deducting underwriting
fees and estimated expenses in connection wit h the Share Offer and assuming and Offer Price of
HK$1.15 per Share, being the mid-point of the indicative range of the Offer Price of HK$1.00 to
HK$1.30 per Share, and assuming the Over-a llotment Option is not exercised) will be
approximately HK$81.6 million (equivalent to a pproximately RMB74.8 million). Our Directors
currently intend to apply the net procee ds from the Share Offer as follows:
1. approximately 28.0%, or HK$22.9 million (equivalent to approximately RMB21.1
million), will be used for financing the initial funding needs for our future ICT
integration projects.
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2. approximately 25.7%, or HK$21.0 million (equivalent to approximately RMB19.4
million), will be used for pursuing new research and development undertakings
including:
i. Undertaking 5G industry application research and development projects :
approximately HK$12.2 million (equivale nt to approximately RMB11.2 million)
which include: (i) approximately HK$9.2 million (equivalent to approximately
RMB8.5 million), being remuneration of research and other personnel; (ii)
approximately HK$0.9 million (equival ent to approximately RMB0.8 million),
being costs of equipment and software; a nd (iii) approximately HK$2.1 million
(equivalent to approximately RMB2.0 mil lion), being other corporate expenses;
ii. Developing a telecommunication network e nhancement services software based on
end-user data : approximately HK$5.3 million (equi valent to approximately RMB4.9
million) which include: (i) approximately HK$3.5 million (equivalent to
approximately RMB3.2 million), being remuneration of development and other
personnel; (ii) approximately HK$1.3 milli on (equivalent to approximately RMB1.2
million), being costs of developmen t resources and equipment; and (iii)
approximately HK$0.5 million (equival ent to approximately RMB0.5 million),
being other corporate expenses; and
iii. Developing an easy-to-use wireless telec ommunication networ k testing software :
approximately HK$3.5 million (equivalent to approximately RMB3.2 million) which
include: (i) approximately HK$2.4 milli on (equivalent to approximately RMB2.2
million), being remuneration of developm ent and other personnel; (ii) approximately
HK$0.8 million (equivalent to approxima tely RMB0.7 million), being costs of
development resources and equipment; a nd (iii) approximately HK$0.4 million
(equivalent to approximately RMB0.4 mil lion), being other corporate expenses;
3. approximately 14.7%, or HK$12.0 million (equivalent to approximately RMB11.1
million), will be used for expanding our manpower in project management to cater for
the anticipated expansion plans and business growth;
4. approximately 4.0%, or HK$3.3 million (equi valent to approximately RMB3.0 million),
will be used for financing our sales and marketing funding needs for expansion of
manpower and marketing activities;
FUTURE PLANS AND USE OF PROCEEDS
– 400 –


--- page 411 ---
5. approximately 17.6%, or HK$14.3 million (equivalent to approximately RMB13.2
million), will be used for repaying part of our bank borrowings, the salient terms of
which are set out below:
Borrower Lender
Loan
amount
Outstanding
balance as at
the Latest
Practicable Date Drawdown date Maturity date
Interest rate
(per annum) Use of loan amount
RMB million RMB million
(approximately)
WellCell Technology Agricultural Bank of China 10.0 4.0
6.0
12 April 2023
3 April 2023
2 April 2024 China 1-Year
Loan Prime
Rate
Payment of material costs
and subcontracting
charges
WellCell Technology Bank of China 5.0 3.5 20 January 2022 19 January 2025 China 1-Year
Loan Prime
Rate +0.4%
Daily business operation,
payment of wages and
salaries and technical
service
6. approximately 10.0%, or HK$8.1 million (equivalent to approximately RMB7.0 million),
will be used for our general working capital purposes.
The net proceeds from the issue of the Share Offer will be utilised by 2027 and approximately
10.0% will be used as working capital and funding for other general corporate purposes according
to our current business plans. If the Offer Price is fixed at the high-end of the indicative range of
the Offer Price, being HK$1.30 per Share, the net proceeds we receive from the Share Offer will
increase by approximately HK$17.8 million. We in tend to apply the additional net proceeds for the
above purposes on a pro-rata basis. If the Offer Price is set at the low-end of the indicative range of
the Offer Price, being HK$1.00 per Share, the net proceeds we receive from the Share Offer will
decrease by approximately HK$17.8 million and we will reduce the amount allocated to financing
the initial funding needs for our future projects, repaying part of our bank borrowings and/or our
general working capital purpose.
If the Over-allotment Option is exercised in fu ll, we estimate that the additional net proceeds
from the offering of these additional Shares to b e received by us, will be approximately (i)
HK$24.4 million, assuming the Offer Price is fixed at the high-end of the indicative range of the
Offer Price, being HK$1.30 per Share; (ii) HK$21.6 m illion, assuming the Offer Price is fixed at
the mid-point of the indicative range of the Offer Price, being HK$1.15 per Share; and (iii)
HK$18.8 million, assuming the Offer Price is fixed at the low-end of the indicative range of the
Offer Price, being HK$1.00 per Share. Any additi onal proceeds received by us from the exercise of
the Over-allotment Option will also be allocated to the above businesses and projects on a pro-rata
basis.
FUTURE PLANS AND USE OF PROCEEDS
– 401 –


--- page 412 ---
The possible use of our proceeds outlined above may change in light of our evolving business
needs and conditions, management requirements t ogether with prevailing market circumstances. In
the event of any material modification to the use o f proceeds as described above, we will issue an
announcement and make disclosure in our annual report for the relevant year as required by the
Stock Exchange.
According to the current estimates, our Directo rs consider that the net proceeds from the issue
of the Offer Shares under the Share Offer and our Group ’s internal resources will be sufficient to
finance our Group ’s business plans up to 2027.
To the extent that the net proceeds are not immediately applied to the above purposes and to
the extent permitted by applicable laws and re gulations, we will deposit the unused net proceeds
into short-term demand deposits with authorised financial institutions (under the SFO or other
applicable PRC laws and regulations, as the case may be) and/or licensed banks in Hong Kong and/
or the PRC only.
FUTURE PLANS AND USE OF PROCEEDS
– 402 –


--- page 413 ---
UNDERWRITERS
Public Offer Underwriters
Eddid Securities and Futures Limited
Halcyon Securities Limited
China Everbright Securities (HK) Limited
Beta International Securities Limited
CMBC Securities Company Limited
China PA Securities (Hong Kong) Company Limited
Quam Securities Limited
Maxa Capital Limited
SBI China Capital Financial Services Limited
SPDB International Capital Limited
Innovax Securities Limited
Cinda International Capital Limited
Patrons Securities Limited
ZMF Asset Management Limited
Goldlink Securities Limited
UNDERWRITING ARRANGEMENTS AND EXPENSES
The Public Offer Underwriting Agreement
The Public Offer Underwriting Agreement was en tered into on 27 December 2023. Pursuant to
the Public Offer Underwriting Agreement, our C ompany has agreed to offer initially 12,500,000
Public Offer Shares (subject to reallocation) fo r subscription by members of the public in Hong
Kong on the terms and subject to the conditions of this prospectus at the Offer Price.
Subject to:
. the Listing Committee of Stock Exchange granting the listing of, and permission to deal
in, the Shares in issue or to be issued pursuant to the Share Offer or otherwise as
mentioned in this prospectus and such listing and permission not subsequently being
revoked; and
. certain other conditions set out in the Public Offer Underwriting Agreement being
satisfied or waived on or before the dates and times as specified therein or such other
dates as the Sole Overall Coordinator (for itself and on behalf of the Public Offer
Underwriters) may agree (but in any event on or before the last day on which each of the
conditions is required to be fulfilled),
the Public Offer Underwriters have agreed to subscr ibe or procure subscribers applications, on the
terms and conditions of this prospectus and the Public Offer Underwriting Agreement, for the
Public Offer Shares now being offered and wh ich are not taken up under the Public Offer.
UNDERWRITING
– 403 –


--- page 414 ---
The Public Offer Underwriting Agreement i s conditional on and subject to the Placing
Underwriting Agreement having been executed , becoming unconditional and not having been
terminated in accordance with its terms.
Grounds for termination
The Sole Overall Coordinator (for itself and on behalf of the Public Offer Underwriters) has
the right, in its sole and absolute discretion, by notice in writing to our Company, to terminate the
obligations of the Public Offer Underwriters und er the Public Offer Underwriting Agreement if it
sees fit upon the occurrence of any of the following events at or prior to 8:00 a.m. (Hong Kong
time) on the Listing Date:
(a) there has come to the notice of the Sole Overall Coordinator:
(i) that any statement contained in this prospectus, or any notices, letters,
announcements, advertisements, communi cations or other documents issued or used
by or on behalf of our Company in connectio n with the Public Offer (including any
supplement or amendment the reto) (collectively, the ‘‘Relevant Documents ’’), was,
when it was issued, or has become, untrue, incorrect, misleading or deceptive in
any material respect or that any forecast, expression of opinion, intention or
expectation expressed in any of the Rel evant Documents issued or used by or on
behalf of our Company in connection with the Public Offer (including any
supplement or amendment thereto), was, when it was made, not fairly and honestly
made and made on reasonable ground, or where appropriate, 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 bef ore the respective dates of the publication
of the Relevant Documents, constitut e a material misstatement in any of the
Relevant Documents issued or used by or on behalf of our Company in connection
with the Public Offer (including any supplement or amendment thereto) or
constitute a material omission therefrom, as considered by the Sole Overall
Coordinator (for itself and on behalf of the Public Offer Underwriters) in its sole
and reasonable opinion to be material to the Share Offer; or
(iii) any breach of any of the obligations im posed or to be imposed upon any party to
the Public Offer Underwriting Agreement or the Placing Underwriting Agreement
(in each case, other than on the part of any of the Underwriters); or
(iv) any breach, considered by the Sole Overall Coordinator (for itself and on behalf of
the Public Offer Underwriters) in its sole and reasonable opinion to be material in
the context of the Share Offer, of any of the representations, warranties and
undertakings given by any of our Company, the Executive Directors and the
Controlling Shareholders (the ‘‘Warrantors ’’) contained under the Public Offer
UNDERWRITING
– 404 –


--- page 415 ---
Underwriting Agreement or under the Placi ng Underwriting Agreement or any event
rendering any such representations and wa rranties to be untrue, incorrect, inaccurate
or misleading in any material respect; or
(v) any change or development or event invol ving a prospective change in the assets,
liabilities, general affairs, managem ent, business, prospects, shareholders ’ equity,
profits, losses, results of operations, position or condition (financial, trading or
otherwise) of any member of our Group, or of customer confidence or performance
of any member of our Group; or
(vi) any material breach of, or any event or circumstance rendering untrue, incorrect,
inaccurate or misleading in any respect, any representations, warranties, agreements
and undertakings given by any of the Warrantors; or
(vii) any matter or event arising or has been discovered rendering any of the
representations, warranties and undertak ings given by any of the Warrantors are (or
would when repeated be), untrue, incorrect , incomplete in any material respect, or
misleading or having been breached; or
(viii) the approval by the Listing Committee of the listing of, and permission to deal in,
the Shares is refused, not granted, or is qua lified, 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
(ix) the acceptance of the CSRC of the CSRC F ilings and the publication of the filing
results in respect of the CSRC Filings on its website is rejected or not granted, on
or before the date of the Listing, or if granted or accepted, the acceptance is
subsequently withdrawn, can celled, qualified, revoked, invalidated or withheld; or
(x) the withdrawal of any of the Relevant Documents or the Share Offer; or
(xi) any person (other than the Public Offer Underwriters) has withdrawn or sought to
withdraw its consent to being named in any of the or to the issue of any of the
Public Offer Documents (as defined in th e Public Offer Underwriting Agreement);
or
(xii) other than with the approval of the Sole Overall Coordinator, the issue or
requirement to issue by our Company of any supplement or amendment to this
prospectus (or to any other documents us ed in connection with the contemplated
subscription and sale of the Offer Shares) pursuant to the Companies Ordinance and
the Companies (Winding Up and Miscellaneous Provisions) Ordinance; or
UNDERWRITING
– 405 –


--- page 416 ---
(xiii) any potential or actual action, suit, p roceeding, litigation, dispute or claim by any
third party which would affect the operation , financial condition or reputation of
any member of our Group in any material respect, or any investigation against any
member of our Group or an order or sus pension of business by any public,
regulatory, taxing, administrative or gov ernmental, agency or authority, any self-
regulatory organisation or any securities exchange authority (including, without
limitation, the Stock Exchange and the S FC and the CSRC), other authority and any
court at the national, provincial, municipal or local level of any Relevant
Jurisdiction as defined below (the ‘‘Government Authority ’’); or
(xiv) that a petition or an order is present ed for the winding-up or liquidation of any
member of our Group or any member of our Group makes any composition or
arrangement with its creditors or enters into a scheme of arrangement or any
resolution is passed for the winding-up of any member of our Group or a
provisional liquidator, receiver or manager is appointed to take over all or part of
the assets or undertaking of any member of our Group or anything analogous
thereto occurs in respect of any member of our Group; or
(xv) any prohibition on our Company by a Government Authority for whatever reasons
from offering, allotting, issuing or sellin g of the Offer Shares pursuant to the terms
of the Share Offer; or
(xvi) any Government Authority in any rele vant jurisdiction where any member of our
Group is incorporated or operates or the Shares are to be listed, or the Group ’s
business is carried out,or the Group ’sa s s e t si sh e l d ,i n c l u d i ng (without limitation),
the Cayman Islands, BVI, the PRC and Hong Kong (the ‘‘Relevant Jurisdiction ’’)
has commenced any investigation or othe r action, or announced an intention to
investigate or take other action, against a ny of the Directors and senior management
member of our Group as set out in the paragraphs headed ‘‘Directors and senior
management ’’in this prospectus; or
(xvii) a portion of the orders in the bookbuilding process, which is considered by the Sole
Overall Coordinator (for itself and on beh alf of the Public Offer Underwriters) in its
absolute opinion to be material at the time the Placing Underwriting Agreement is
entered into, have been withdrawn, term inated or cancelled and the Sole Overall
Coordinator, in its sole and absolute discretion, concludes that it is therefore
inadvisable or inexpedient or impracticable to proceed with the Share Offer; or
(xviii) any material loss or damage has been sustained by any member of our Group
(howsoever caused and whether or not the subject of any insurance or claim against
any person); or
UNDERWRITING
– 406 –


--- page 417 ---
(b) there shall develop, occur, exist or come into effect:
(i) any local, national, regional, internationa l event or circumstance, or series of events
or circumstances, in the nature of force majeure (whether or not covered by
insurance or responsibility has been claime d) including, without limitation, acts of
government or orders of any courts, strik es, calamity, crisis, lock-outs, fire,
earthquakes, explosion, flooding, civil commotion, acts of war, outbreak or
escalation of hostilities (whether or not war is declared), acts of God, acts of
terrorism, declaration of a local, national, regional or international emergency, riot,
public disorder, civil commotions, economi c sanctions, social or political crises,
outbreaks of diseases, pandemics or epidem ics (including, without limitation,
Severe Acute Respiratory Syndrome, avian influenza A (H5N1), Swine Flu (H1N1),
Middle East Respiratory Syndrome, COVI D-19 or such related or mutated forms)
and any related or mutated forms of infec tious diseases (or the escalation and/or
intensification of any outbreak, epidemi c and/or pandemic of the foregoing),
accidents or interruptions (including, wit hout limitation, interruption or delay in
transportation) in or affecting, or have sim ilar effect on, any Relevant Jurisdiction;
or
(ii) any change or development involving a prospective change, or any event or
circumstance or series of events or circum stances resulting in or likely to result in
any change or development involving a prospective change, in any local, regional,
national, international, financial, economi c, political, military, industrial, fiscal,
legal regulatory, currency, credit or m arket conditions (including, without
limitation, conditions in the stock and bond markets, money and foreign exchange
markets, the interbank markets and credit markets) or any monetary or trading
settlement system, or
(iii) any change in the system under which the value of the Hong Kong currency is
linked to that of the currency of the United States or any material fluctuation in the
exchange rate of the Hong Kong dollar against any foreign currencies or any
interruption in the securities settlement or clearing service or procedures,
respectively) in or affecting any Relevant Jurisdiction; or
(iv) any moratorium, suspension or restriction on trading in securities generally
(including, without limitation, any impos ition of or requirement for any minimum
or maximum price limit or price range) on the Stock Exchange due to exceptional
financial circumstances or otherwise; or
(v) any moratorium on commercial banking act ivities, or any disruption in commercial
banking activities, foreign exchange trading or securities settlement or clearance
services or procedures or matters, in or affecting any Relevant Jurisdiction; or
UNDERWRITING
– 407 –


--- page 418 ---
(vi) any new law, rule, statute, ordinance, regulation, guideline, opinion, notice,
circular, order, judgment, decree or ruling of any Governmental Authority
(‘‘Law’’), 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 exist ing Laws by any court or other competent
authority, in each case, in or affecting any Relevant Jurisdiction; or
(vii) any imposition of economic sanctions, in whatever form, directly or indirectly, by
or for any Relevant Jurisdiction; or
(viii) a change or development involving a pro spective change in or affecting taxation or
exchange control (or the implementation of any exchange control), currency
exchange rates or foreign investment Laws (including, without limitation, any
change in the system under which the value of the Hong Kong currency is linked to
that of the currency of the United States or a material fluctuation in the exchange
rate of the Hong Kong dollars against any foreign currency) in or affecting any
Relevant Jurisdiction or affecting an investment in the Shares; or
(ix) any change or development involving a prospective change, or a materialisation of,
any of the risks set out in the paragraphs headed ‘‘Risk factors ’’in this prospectus;
or
(x) any litigation or claim of any third party b eing threatened or instigated against any
member of our Group or any of the Warrantors; or
(xi) any Director and senior management members of our Company as set out in the
paragraphs headed ‘‘Directors, senior management and employees ’’ in this
prospectus being charged or indicted or detained with or due to an indictable
offence or prohibited by operation of Law or otherwise disqualified from taking part
in the management of a company or t he commencement by any Government
Authority of any investigation or other action against any Director or senior
management member of our Company in his/her capacity as such or an
announcement by any Government Authority that it intends to investigate or take
any such actions; or
(xii) the chairman of the Board and chief ex ecutive officer of our Company vacating his
or her office; or
(xiii) the commencement by any Government Authority against a Director in his or her
capacity as such or an announcement by any governmental, regulatory or political
body or organisation that it intends to take any such action; or
UNDERWRITING
– 408 –


--- page 419 ---
(xiv) a contravention by any member of our Group or any Director of the Listing Rules,
the Companies Ordinance, the Compa nies (Winding Up and Miscellaneous
Provisions) Ordinance, the Companies Act or any other applicable Laws; or
(xv) a prohibition on our Company for whate ver reason from allotting, issuing or selling
the Offer Shares pursuant to t he terms of the Share Offer; or
(xvi) non-compliance of this prospectus, the CSRC Filings and the other Relevant
Documents or any aspect of the Share O ffer with the Listing Rules, the CSRC
Rules or any other applicable Laws; or
(xvii) the issue or requirement to issue by our C ompany of a supplement or amendment to
this prospectus and/or any other documents in connection with the Share Offer
pursuant to the Companies (Winding Up and Miscellaneous Provisions) Ordinance,
the Listing Rules, the CSRC Rules or any requirement or request of the Stock
Exchange, the SFC and/or the CSRC; or
(xviii) a valid demand by any creditor for repayment or payment of any indebtedness of
any member of our Group or in respect of which any member of our Group is liable
prior to its stated maturity,
which, in each case individually or in aggregate in the sole and absolute opinion of the Sole Overall
Coordinator (for itself and on beha lf of the Public Offer Underwriters):
(a) has or is or will or may or could be expected to have a material adverse effect on the
assets, liabilities, business, gene ral affairs, management, shareholders ’ equity, profits,
losses, results of operation, financial, trad ing or other condition or position or prospects
or risks of our Company or any member of our Group or on any present or prospective
shareholder of our Company in his , her or its capacity as such; 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 the Public Offer Underwriting Agreement or the Share Offer to be performed or
implemented or proceeded with as envisaged or to market the Share Offer or shall
otherwise result in a material interruption to or delay thereof; or
(d) has or will or may have the effect of making any part of the Public Offer Underwriting
Agreement (including underwriting) incapa ble of performance in accordance with its
terms or which prevents the processing of applications and/or payments pursuant to the
Share Offer or pursuant to the underwriting thereof in any material respect.
UNDERWRITING
– 409 –


--- page 420 ---
The Placing Underwriting Agreement
In connection with the Placing, it is expected that our Company will enter into the Placing
Underwriting Agreement with, among others, the Sole Overall Coordinator, the Joint Global
Coordinators, the Joint Bookrunners, the Joint L ead Managers and the Placing Underwriters on or
around the Price Determination Date, 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, the P lacing Underwriters would, subject to certain
conditions, agree to subscribe or procure subscr ibers to subscribe for t he Placing Shares being
offered pursuant to the Placing.
Following the completion of the Share Offer, the Underwriters and their respective affiliated
companies may hold a certain portion of the Shares as a result of fulfilling their obligations under
the Underwriting Agreements.
Save for their interests and obligations under t he Underwriting Agreem ents, the sponsorship
fee payable to the Joint Sponsors in connection with the Listing, and the fee payable to Halcyon
Capital Limited for acting as our compliance advi ser, none of the Joint Sponsors, the Sole Overall
Coordinator, the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers and the
Underwriters or their respective directors or empl oyees, is interested, beneficially or otherwise, in
any shares in any member of our Group or has any right (whether enforceable or not) or option to
subscribe for or to nominate persons to subscribe for any shares in any member of the Group.
No director or employee of the Joint Sponsors, the Sole Overall Coordinator, the Joint Global
Coordinators, the Joint Bookrunners, the Joint Lead Managers or the Underwriters has a
directorship in our Company or any member of our Group. It is expected that the Placing
Underwriting Agreement may be terminated on si milar grounds as the Public Offer Underwriting
Agreement. Potential investors should note tha t if the Placing Underwriting Agreement is not
entered into or is terminated, the Share Offer will not proceed. The Public Offer Underwriting
Agreement is conditional on and subject to the Placing Underwriting Agreement having been
executed, becoming unconditional and not having be en terminated in accordance with its terms. It is
expected that pursuant to the Placing Underwriti ng Agreement, our Company and will make similar
undertakings as those given pursuant to the Public Offer Underwriting Agreement.
UNDERWRITING
– 410 –


--- page 421 ---
UNDERTAKINGS
Undertakings to the Stock Exchan ge pursuant to the Listing Rules
Undertakings by our Company
Pursuant to Rule 10.08 of the Listing Rules, our Company has undertaken to the Stock
Exchange that save as pursuant to the Share Offer ( including the issue and allotment of Shares
pursuant to the exercise of the Over-allotment Option) or pursuant to the exercise of options under
the Share Option Scheme, no furthe r Shares or securities convertible into equity securities of the
Company (whether or not of a class already listed) may be issued by our Company or form the
subject of any agreement to such an issue within six months from the Listing Date (whether or not
such issue of Shares or securities will be comple ted within six months from the Listing Date),
except under the circumstances prescrib ed by Rule 10.08 of the Listing Rules.
Undertakings by our Controlling Shareholders
Pursuant to Rule 10.07(1) of the Listing Rule s, each of our Controlling Shareholders has
undertaken to our Company and the Stock Exchange that, except pursuant to the Share Offer, he/it
will not, and will procure that the registered holder(s) of the Shares will not:
(a) in the period commencing on the date of this prospectus and ending on the date which is
six months from the Listing Date, dispose of, nor enter into any agreement to dispose of
or otherwise create any options, rights, interests or encumbrances in respect of, any of
our Shares or securities of our Company in respect of which he/she/it is shown in this
prospectus to be the beneficial owner (the ‘‘Relevant Shares ’’); or
(b) in the period of a further six months commencing on the date on which the period
referred to in paragraph (a) above expires, di spose of, nor enter into any agreement to
dispose of, or otherwise create any options, r ights, interests or encumbrances in respect
of, any of the Relevant Shares if, immediately following such disposal or upon the
exercise or enforcement of such options, ri ghts, interests or enc umbrances, he/she/it
would then cease to be a controlling shareholder (as defined in the Listing Rules) of our
Company.
Pursuant to Note 3 to Rule 10.07(2) of the List ing Rules, each of our Controlling Shareholders
has further undertaken to our Company and the Stoc k Exchange that, within the period commencing
on the date of this prospectus and ending on the date which is 12 months from the Listing Date, he/
she/it will:
(a) when he/it pledges or charges any Shares or securities of our Company beneficially
owned by him/it in favour of an authorised institution pursuant to Note (2) to Rule
10.07(2) of the Listing Rules, immediately inform our Company in writing of such
pledge or charge together with the number of Shares or securities of our Company so
pledged or charged; and
UNDERWRITING
– 411 –


--- page 422 ---
(b) when he/it receives indications, either verba l or written, from the pledgee or chargee that
any of our pledged or charged Shares or secu rities of our Company will be disposed of,
immediately inform our Company i n writing of such indications.
Our Company will also inform the Stock Exch ange as soon as we have been informed of the
matters mentioned in the paragraphs (a) and (b) above by any of our Controlling Shareholders and
subject to the then requirements of the Listing Rules disclose such matters by way of an
announcement which is published in accordance with Rule 2.07C of the Listing Rules as soon as
possible.
Undertakings pursuant to the Publ ic Offer Underwriting Agreement
Undertaking by our Company
Pursuant to the Public Offer Underwriting Agree ment, except for the Capitalisation Issue and
the offer of the Offer Shares pursuant to the Share Offer (including pursuant to the exercise of the
Over-allotment Option), our Company has undertaken to each of the Joint Sponsors, the Sole
Overall Coordinator, the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers
and the Public Offer Underwriters that 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, and will procure each other
member of our Group not to, without the prior written consent of the Joint Sponsors and the Sole
Overall Coordinator (for itself and on behalf of the Public Offer Underwriters) and unless in
compliance with the requirements of the Listing Rules:
(a) allot, issue, sell, accept subscription for, offer to allot, issue or sell, contract or agree to
allot, issue or sell, mortgage, charge, pledge , hypothecate, lend, grant or sell any option,
warrant, contract or right to subscribe for or purchase, grant or purchase any option,
warrant, contract or right to allot, issue or s ell, or otherwise transfer or dispose of or
create a pledge, charge, lien, mortgage, option, restriction, right of first refusal, security
interest, claim, pre-emption ri ghts, equity interest, third part y rights or interests or rights
of the same nature as that of the foregoing or other encumbrances or security interest of
any kind or another type of preferential arra ngement (including without limitation,
retention arrangement) having similar effect ( ‘‘Encumbrance ’’) over, or agree to transfer
or dispose of or create an Encumbrance over, e ither directly or indirectly, conditionally
or unconditionally, any Shares or other secu rities of our Company or any shares or other
securities of such other member of our Group, as applicable, or any interest in any of the
foregoing (including, without limitation, an y securities convertible into or exchangeable
or exercisable for or that represent the ri ght to receive, or any other warrants or other
rights to purchase, any Shares or any shares of such other member of our Group, as
applicable), or deposit any Shares or other securities of our Company or any shares or
other securities of such other member of our Group, as applicable, with a depositary in
connection with the issue of depositary r eceipts; or repurchase any Shares or other
securities of our Company or any shares or other securities of such other member of our
Group, as applicable; or
UNDERWRITING
– 412 –


--- page 423 ---
(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 shares or other securities of such other member of our Group, as
applicable, or any interest in any of the fo regoing (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 purc hase, any Shares or other securities of our
Company or any shares or other securities of such other member of our Group, as
applicable); or
(c) enter into any transaction, act, event, omi ssion or circumstance existing of whatever
nature ( ‘‘Transaction ’’) with the same economic effect as any Transaction specified in
(a) or (b) above; or
(d) offer to or agree to or announce any intenti on to effect any Transaction specified in (a),
(b) or (c) above,
in each case, whether any of the Transactions specified in (a), (b) or (c) above is to be settled by
delivery of Shares or other securities of our Company or shares or other securities of such other
member of our Group, as applicable, or in cash or otherwise (whether or not the issue of such
Shares or other shares or securities will be com pleted within the First Six-Month Period).
Our Company has also undertaken that we will not, and will procure each other member of
our Group not to, enter into any of the Transactions specified in (a), (b) or (c) above or offer to or
agree to or announce any intention to effect any suc h Transaction, such that any of the Controlling
Shareholders would cease to be a controlling share holder (as defined in the Listing Rules) of our
Company during the period of six months immediate ly following the expiry of the First Six-Month
Period (the ‘‘Second Six-Month Period ’’).
In the event that, during 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 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. Each of the
Controlling Shareholders undertakes to each of the Sole Overall Coordinator, and the Public Offer
Underwriters to use its best endeavors to procure our Company to comply with the above
undertakings.
UNDERWRITING
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Undertaking by our Controlling Shareholders
Under the Public Offer Underwriting Agreement, each of the Controlling Shareholders hereby
jointly and severally undertakes to each of our C ompany, the Joint Sponsors, the Sole Overall
Coordinator, the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers and the
Public Offer Underwriters that, except in complia nce with the requirements under Rule 10.07(3) of
the Listing Rules, without the prior written c onsent of the Joint Sponsors and the Sole Overall
Coordinator (for itself and on beha lf of the Public Offer Underwriters):
(a) at any time during the First Six-Month Period, it/he/she shall not, and shall procure that
the relevant registered holder(s), any nomin ee or trustee holding on trust for it/him/her
and the companies controlled by it/he/she (together, the ‘‘Controlled Entities ’’)s h a l l
not,
(i) sell, offer to sell, contract or agree to s ell, mortgage, charge, pledge, hypothecate,
lend, grant or sell any option, warrant, contract or right to sell, or otherwise transfer
or dispose of or create an Encumbrance over, or agree to transfer or dispose of or
create an Encumbrance over, either dire ctly or indirectly , conditionally or
unconditionally, any Shares or other securities of our Company or any interest
therein (including, without limitation, any securities convertible into or
exchangeable or exercisable for or that represent the right to receive, or any
warrants or other rights to purchase, any S hares) beneficially owned by it/him/her
directly or indirectly through its /his/her Controlled Entities (the ‘‘Relevant
Securities ’’), or deposit any Relevant Securitie s with a depositary in connection
with the issue of depositary receipts; or
(ii) enter into any swap or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ow nership of the Relevant Securities; or
(iii) enter into or effect any Transactio n with the same economic effect as any of the
Transactions referred to in sub-paragraphs (a) or (b) of the undertakings by our
Company above; or
(iv) offer to or agree to or announce any intention to enter into or effect any of the
Transactions referred to in sub-paragraphs (a), (b) or (c) of the undertakings by our
Company above, which any of the foregoing Transactions referred to in sub-
paragraphs (a), (b), (c) or (d) of the undertakings by our Company 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/he/she shall not, and shall procure
that the Controlled Entities shall not, enter into any of the Transactions referred to in
sub-paragraphs (a), (b) or (c) of the undertakings by our Company above or offer to or
agree to or announce any intention to enter i nto any such Transaction if, immediately
UNDERWRITING
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following any sale, transfer or disposal or upon the exercise or enforcement of any
option, right, interest or Encumbrance pursuant to such Transaction, it/he/she would
cease to be a ‘‘controlling shareholder ’’(as defined in the Listing Rules) of our Company
or would together with the other Controlling Shareholders cease to be ‘‘controlling
shareholders ’’(as defined in the Listing Rules) of our Company;
(c) in the event that it/he/she enters into any of the Transactions specified in sub-paragraphs
(a), (b) or (c) of the undertakings by our Company above or offer to or agrees to or
announce any intention to effect any such Transaction within the Second Six-Month
Period, it/he/she shall take al l reasonable steps to ensure that it/he/she will not create a
disorderly or false market for any Share s or other securities of our Company; and
(d) it/he/she shall, and shall procure that t he relevant registered holder(s) and other
Controlled Entities shall, comply with all t he restrictions and requirements under the
Listing Rules on the sale, transfer or disposal by it/he/she or by the registered holder(s)
and/or other Controlled Entities of any Shares or other securities of our Company.
Each of the Controlling Shareholders has fu rther undertaken to each of our Company, the
Stock Exchange, the Joint Sponsors and the Sole Overall Coordinator (for itself and on behalf of
the Public Offer Underwriters) that, within the period from the date by reference to which
disclosure of its/his/her shareholding in our Co m p a n yi sm a d ei nt h i sp r o s p e c t u sa n de n d i n go nt h e
date which is 12 months from the Listing Date, it/he/she will:
(a) when it/he/she pledges or charges any securi ties or interests in the Relevant Securities in
favour of an authorised institution (as defined in the Banking Ordinance (Chapter 155 of
the Laws of Hong Kong)) pursuant to Note 2 to Rule 10.07(2) of the 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/he/she receives indications, eithe r 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 us and the Joint Sponsors in
writing of such indications.
Our Company shall inform the Stock Exchange in writing as soon as our Company has been
informed of any of the matters referred to above (if any) by the Controlling Shareholders and
disclose such matters by way of an announcement to be published in accordance with the Listing
R u l e sa ss o o na sp o s s i b l e .
UNDERWRITING
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COMMISSION AND EXPENSES
Syndicate members involved in the Share Offe r (including all Underwriters) will receive an
underwriting commission of 3% of the aggregate Offer Price of the Offer Shares (including any
Offer Shares to be issued pursuant to the exercise of the Over-allotment Option) ( ‘‘Fixed Fees ’’). In
addition, we may, at our discretion, pay to the syndicate members an additional incentive fee of up
to 2% of the aggregate Offer Price of the Offer Sh ares (regardless of whether the over-allotment
option is exercised in full or not, and on the bas is that the discretionary fees are fully paid)
(‘‘Discretionary Fees ’’).
Assuming the Discretionary Fees are paid i n full, the ratio of the Fixed Fees and the
Discretionary Fees is therefore approximately 60 :40. Assuming the Over-allotment Option is not
exercised and based on an Offer Price of HK$1.15 (being the mid-point of the stated range of the
Offer Price between HK$1.0 and HK$1.3), the aggr egate commissions and estimated expenses,
together with the Stock Exchange listing fee, SFC tr ansaction levy, AFRC transaction levy, Stock
Exchange trading fee, legal and other professional fees, printing and other fees and expenses
relating to the Share Offer, are estimated to am ount in aggregate to HK$62.1 million in total and
are payable by us.
The commissions and fees are determined after arm ’s length negotiations between our
Company and the Public Offer Underwriters and/or ot her parties by reference to the current market
conditions.
INDEMNITY
Our Company and the Controll ing Shareholders have undertaken to indemnify each of the
Joint Sponsors, the Sole Overall Coordinator, the Joi nt Global Coordinators, the Joint Bookrunners,
the Joint Lead Managers and the Underwriters fo r certain losses which it may suffer, including
losses arising from its performance of its obligations under the Underwriting Agreements and any
breach by our Company pursuant to the terms of the Underwriting Agreements.
JOINT SPONSORS AND UNDERWRITERS ’ INTEREST IN OUR COMPANY
Following the completion of the Share Offer, the Underwriters and their respective affiliated
companies may hold a certain portion of the Shares as a result of fulfilling their obligations under
the Underwriting Agreements.
Save for their interests and obligations under t he Underwriting Agreem ents, the sponsorship
fee payable to the Joint Sponsors in connection with the Listing, and the fee payable to Halcyon
Capital Limited for acting as our compliance advi ser, none of the Joint Sponsors, the Sole Overall
Coordinator, the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers and the
Underwriters or their respective directors or empl oyees, is interested, beneficially or otherwise, in
any shares in any member of our Group or has any right (whether enforceable or not) or option to
subscribe for or to nominate persons to subscribe for any shares in any member of the Group nor
any interest in the Share Offer.
UNDERWRITING
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No director or employee of the Joint Sponsors, the Sole Overall Coordinator, the Joint Global
Coordinators, the Joint Bookrunners, the Joint Lead Managers or the Underwriters has a
directorship in our Company or any member of our Group.
COMPLIANCE ADVISER ’S AGREEMENT
Our Company has appointed Halcyon Capital Lim ited as our compliance adviser pursuant to
Rule 3A.19 of the Listing Rules for the period commencing on the Listing Date and ending on the
date on which our Company complies with Rule 13.46 of the Listing Rules in respect of our
financial results for the first financial year commencing after the Listing Date, or until the
agreement is terminated, whichever is earlier.
MINIMUM PUBLIC FLOAT
The Director will ensure that there will be a minimum 25% of the total issued Shares held in
public hands in accordance with Rule 8.08 of the Listing Rules after completion of the Share Offer.
SPONSORS ’ INDEPENDENCE
The Joint Sponsors satisfy the independence criteria applicable to sponsors set out in Rule
3A.07 of the Listing Rules.
STAMP TAXES
Buyers of Offer Shares sold by the Underwrite r sm a yb er e q u i r e dt op a ys t a m pt a x e sa n do t h e r
charges in accordance with the laws and practice of the country of purchase in addition to the Offer
Price.
UNDERWRITING
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THE SHARE OFFER
This prospectus is published in connection with the Share Offer. Eddid Capital Limited and
Halcyon Capital Limited are the Joint Sponsors, E ddid Securities and Futures Limited is the Sole
Overall Coordinator, Eddid Securities and Future s Limited, Halcyon Securities Limited, China
Everbright Securities (HK) Limited, Beta Inte rnational Securities Limited, CMBC Securities
Company Limited, China PA Securities (Hong K ong) Company Limited and Quam Securities
Limited are the Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers of the Share
Offer.
The Share Offer comprises:
(i) the Public Offer of 12,500,000 Public Offe r Shares (subject to reallocation as mentioned
below) representing 10% of the Offer Share s, which will be offered to members of the
public in Hong Kong as further described under the paragraph headed ‘‘The Public
Offer ’’below; and
(ii) the Placing of an aggregate of 112,500,000 Placing Shares which will be conditionally
placed with professional, institutional and ot her investors (subject to reallocation as
mentioned below and the Over-allotment Op tion), representing 90% of the Offer Shares,
as further described under the paragraph headed ‘‘The Placing ’’below.
Investors may apply for Offer Shares under the Public Offer or, if qualified to do so, apply for
or indicate an interest for Offer Shares under th e Placing, but may only receive shares under the
Public Offer or the Placing.
The Public Offer is open to members of the publ ic in Hong Kong as well as to institutional,
professional and other investors in Hong Kong. The Placing will involve selective marketing of the
Offer Shares to institutional, professional and othe r investors. The Placing Underwriters will solicit
from prospective investors indi cations of interest in acquiring the Offer Shares in the Placing.
The Offer Shares will represent 25% of the enl arged issued share capital of our Company
immediately after completion of the Share Offer and the Capitalisation Issue (without taking into
account of Shares which may be allotted and issue db yt h eC o m p a n yu p o nt h ee x e r c i s eo ft h eO v e r -
allotment Option and/or options that may be gra nted under the Share Option Scheme). The number
of Offer Shares to be offered under the Public Offe r and the Placing respectively may be subject to
reallocation as described in the paragraph headed ‘‘Reallocation of the Offer Shares between the
Placing and the Public Offer ’’below.
References in this prospectus to applicatio ns, application monies or the procedure for
application relate solely to the Public Offer.
STRUCTURE AND CONDITIONS OF THE SHARE OFFER
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THE PUBLIC OFFER
Number of Offer Shares initially offered
Our Company is initially offering 12,500,000 Pu blic Offer Shares for subscription (subject to
reallocation) at the Offer Price by members of the public in Hong Kong under the Public Offer,
representing 10% of the total number of Offer Shares offered under the Share Offer. The Public
Offer Shares initially offered under the Public O ffer, subject to any reallocation of Offer Shares
between the Placing and the Public Offer, will represent 2.5% of our Company ’s enlarged issued
share capital after completion of the Capitalisa tion Issue and Share Offer (without taking into
account of Shares which may be allotted and issue db yt h eC o m p a n yu p o nt h ee x e r c i s eo ft h eO v e r -
allotment Option and options that may be granted under the Share Option Scheme). The Public
offer is fully underwritten by the Public Offer Underwriters (subject to satisfaction or waiver of the
other conditions provided in the Public Offer Underwriting Agreement).
T h eP u b l i cO f f e ri so p e nt oa l lm e m b e r so ft h ep u b l i ci nH o n gK o n ga sw e l la st o
institutional, professional and other investors. Pr ofessional and institutional investors generally
include brokers, dealers, companies (including f und managers) whose ordin ary business involves
dealing in shares and other securities and corpora te entities which regularly invest in shares and
other securities.
Completion of the Public Offer is subject to the conditions as set out in the paragraph headed
‘‘Conditions of the Share Offer ’’below in this section.
Allocation
Allocation of the Public Offer Shares to investo rs under the Public Offer will be based solely
on the level of valid applications received under th e Public Offer. The basis of allocation may vary,
depending on the number of Public Offer Shares v alidly applied for by applicants. When there is
oversubscription under the Public Offer, all ocation of the Public Offer Shares may, where
appropriate, consist of balloting, which coul d mean that some applicants may be allotted more
Public Offer Shares than others who have applie df o rt h es a m en u m b e ro fP u b l i cO f f e rS h a r e s ,a n d
those applicants who are not successful in the ballot may not receive any Public Offer Shares.
The total number of Public Offer Shares available under the Public Offer (after taking into
account any reallocation as referred to below) is t o be divided equally (to the nearest board lot) into
two pools for allocation purposes: pool A and pool B with any odd board lots being allocated to
Pool A. The Public Offer Shares in pool A will be al located on an equitable basis to applicants who
have applied for the Public Offer Shares with an a ggregate subscription price of HK$5 million
(excluding the brokerage, the Stock Exchange trading fee, AFRC transaction levy and the SFC
transaction levy payable thereon) or less. The P ublic Offer Shares in pool B will be allocated on an
equitable basis to applicants who have appli ed for Public Offer Shares with an aggregate
subscription price of more than HK$5 million (exc luding the brokerage, the Stock Exchange trading
fee, AFRC transaction levy and the SFC transactio n levy payable thereon) and up to the total value
in pool B.
STRUCTURE AND CONDITIONS OF THE SHARE OFFER
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--- page 430 ---
Investors should be aware that the allocation ratios for applications in the two pools, as well
as the allocation ratios for applications in the s ame pool, are likely to be different. Where one of
the pools is undersubscribed, the surplus Public Offer Shares will be transferred to satisfy demand
in the other pool and be allocated accordingly.
Applicants can only receive an allocation of Public Offer Shares from either pool A or pool B
and not from both pools. Multiple or suspected multiple applications under the Public Offer and
any application for more than 6,248,000 Public Offer Shares will be rejected.
Applications
The Sole Overall Coordinator (for itself and on behalf of the Underwriters) may require any
investor who has been offered Offer Shares under the Placing, and who has made an application
under the Public Offer, to provide sufficient inf ormation to the Sole Overall Coordinator so as to
allow them to identify the relevant applications under the Public Offer and to ensure that they are
excluded from any application of O ffer Shares under the Public Offer.
Each applicant under the Public Offer will also be required to give an undertaking and
confirmation in the application submitted by hi m or her that he or she and any person(s) for whose
benefit he or she is making the application have not applied for or taken up, or indicated an interest
for, and will not apply for or take up, or indicate an interest for, any Placing Shares under the
Placing. Such applicant ’s application is liable to be reject ed if the said undertaking and/or
confirmation is breached and/or untrue (as the case may be) or if he or she has been or will be
placed or allocated Placing Shares under the Placi ng. Multiple applicatio ns or suspected multiple
applications and any application made for more th an 6,248,000 Public Offer Shares will be rejected.
The listing of the Offer Shares on the Stock Exchange is sponsored by the Joint Sponsors.
Applicants under the Public Offer are required to pay, on application, the maximum Offer Price of
HK$1.3 per Offer Share plus 1% brokerage, 0.0027% SFC transaction levy, 0.00565% Stock
Exchange trading fee and 0.00015% AFRC transaction levy payable on each Offer Share. If the
Offer Price, as finally determined in the manner described in the paragraph headed ‘‘Pricing and
allocation ’’of this section below, is less than the maximum Offer Price of HK$1.3 per Offer Share,
appropriate refund payments (including the brokerage, SFC transaction levy, the Stock Exchange
trading fee and 0.00015% AFRC transaction levy a ttributable to the surplus application monies)
will be made to wholly or partially successful applic ants, without interest. For details, please refer
to the section headed ‘‘How to apply for Public Offer Shares ’’of this prospectus.
THE PLACING
Number of Placing Shares initially offered
The number of the Offer Shares to be initially o ffered for subscription at the Offer Price under
the Placing will be 112,500,000 Placing Shares (s ubject to reallocation and the Over- allotment
Option as described below), representing 90% of t he total number of Offer Shares initially offered
under the Share Offer.
STRUCTURE AND CONDITIONS OF THE SHARE OFFER
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--- page 431 ---
The Placing is expected to be fully underwritten by the Placing Underwriters on a several
basis upon and subject to the terms and conditi ons of the Placing Underwriting Agreement
(including the satisfaction or waiver of the c onditions provided in thereunder). Subject to the
reallocation of the Offer Shares between the Pl acing and the Public Offer, the number of Offer
Shares initially offered under the Placi ng will represent 22.5% of our Company ’s enlarged issued
share capital immediately after th e completion of the Capitalisati on Issue and Share Offer (without
taking into account any Shares which may be allotted and issued by the Company pursuant to the
exercise of the Over-allotment Option and any options which may be granted under the Share
Option Scheme).
The Placing is expected to be subject to the co nditions as stated in the paragraph headed
‘‘Conditions of the Share Offer ’’below.
Allocation
Pursuant to the Placing, it is expected that the Placing Shares will be conditionally placed on
behalf of our Company by the Placing Underwrite rs or through selling agents appointed by them.
The Placing Shares will be selectively placed to select ed professional, institu tional and other private
investors. Professional and institutional investor s generally include brokers, dealers, companies
(including fund managers) whose ordinary busines s involves dealing in shares and other securities
and corporate entities which regularly invest in sh ares 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 Placing Shares will be effected in accordance with the ‘‘book-building ’’process
based on a number of factors, including the level and timing of demand, the total size of the
relevant investor ’s invested assets or equity assets in re levant sector and whether or not it is
expected that the relevant investor is likely to buy further Offer Shares, and/or hold or sell its Offer
Shares, after the Listing. Such all ocation is intended to result in a di stribution of the Placing Shares
on a basis which would lead to the establishment of a solid professional and institutional
shareholder base to the benefit of our Company a nd our Shareholders as a whole. Investors to
whom Placing Shares are offered will be required to undertake not to apply for Shares under the
Public Offer.
APPLICATIONS
Our Company, our Directors, the Joint Sponsors and Sole Overall Coordinator (for itself and
on behalf of the Underwriters) are required to take reasonable steps to identify and reject
applications under the Public Offer from investo rs who receive Shares under the Placing, and to
identify and reject indications of interest in the P lacing from investors who receive Shares under the
Public Offer.
STRUCTURE AND CONDITIONS OF THE SHARE OFFER
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REALLOCATION OF THE OFFER SHARE S BETWEEN THE PLACING AND THE
PUBLIC OFFER
The allocation of the Offer Shares between the Placing and the Public Offer is subject to
reallocation on the following basis:
(I) where the Placing Shares are fully subscribed or oversubscribed:
(a) if the Public Offer Shares are undersubscribed, the Sole Overall Coordinator (for
itself and on behalf of the Underwriters) have the authority (but shall not be under
any obligations) to reallocate all or any u nsubscribed Public Offer Shares to the
Placing, in such proportions as the Sole Overall Coordinator (for itself and on
behalf of the Underwriters) deem appropriate;
(b) if the Public Offer Shares are not unders ubscribed but the number of Offer Shares
validly applied for under the Public Offer represents less than 15 times the number
of the Offer Shares initially available for subscription under the Public Offer, the
Sole Overall Coordinator may at its sol e discretion reallocate up to 12,500,000
Offer Shares to the Public Offer from the Placing, so that the total number of the
Offer Shares available under the Public Of fer will be increased to 25,000,000 Offer
Shares, representing 20% of the number of t he Offer Shares initially available under
the Share Offer (before any exercis e of the Over-allotment Option);
(c) if the number of Offer Shares validly a pplied for under the Public Offer represents
15 times or more but less than 50 times the number of Offer Shares initially
available for subscription under the Publi c Offer, then 25,000,000 Offer Shares will
be reallocated to the Public Offer from the Placing, so that the total number of
Offer Shares available for subscription under the Public Offer will be increased to
37,500,000 Offer Shares, representing 30% of the number of the Offer Shares
initially available for subscription under the Share Offer (before any exercise of the
Over-allotment Option);
(d) if the number of Offer Shares validly applied for under the Public Offer represents
50 times or more but less than 100 times the number of Offer Shares initially
available for subscription under the Publi c Offer, then 37,500,000 Offer Shares will
be reallocated to the Public Offer from the Placing, so that the total number of
Offer Shares available for subscription under the Public Offer will be increased to
50,000,000 Offer Shares, representing 40% of the number of the Offer Shares
initially available for subscription under the Share Offer (before any exercise of the
Over-allotment Option); and
(e) if the number of Offer Shares validly a pplied for under the Public Offer represents
100 times or more the number of Offer Shares initially available for subscription
under the Public Offer, then 50,000,000 Offer Shares will be reallocated to the
Public Offer from the Placing, so that the total number of Offer Shares available for
STRUCTURE AND CONDITIONS OF THE SHARE OFFER
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subscription under the Public Offer wil l be increased to 62,500,000 Offer Shares,
representing 50% of the number of the O ffer Shares initially available for
subscription under the Share Offer (before any exercise of the Over-allotment
Option).
(II) Where the Placing Shares are undersubscribed:
(a) if the Public Offer Shares are undersubs cribed, the Share Offer will not proceed
unless the Underwriters would subscribe or procure subscribers for their respective
applicable proportions of the Offer Shares being offered which are not taken up
under the Share Offer on the terms and conditions of this prospectus and the
Underwriting Agreements; and
(b) if the Public Offer Shares are fully subsc ribed or oversubscribed irrespective of the
number of times the number of Offer Shares initially available for subscription
under the Public Offer, then up to 12,500,000 Offer Shares may be reallocated to
the Public Offer from the Placing (as the Sole Overall Coordinator deem
appropriate), so that the total number of the Offer Shares available under the Public
Offer will be increased to 25,000,000 Offer S hares, representing 20% of the number
of the Offer Shares initially available for subscription under the Share Offer (before
any exercise of the Over-allotment Option).
In the event of a reallocation of Offer Shares from the Placing to the Public Offer in
circumstances under paragraph (I)(b), (I)(c), (I)(d ), (I)(e) and (II)(b) above, the additional Offer
Shares reallocated to the Public Offer from the Pl acing will be allocated equally between pool A
and pool B and the number of Offer Shares allocated to the Placing will be correspondingly
reduced, in such number as the Sole Overall Coordinator (for itself and on behalf of the
Underwriters) deems appropriate.
In the event of reallocation of Offer Shares between the Public Offer and the Placing in the
circumstances where (i) the Placing Shares are ful ly subscribed or oversubscribed and the Public
Offer Shares are fully subscribed or oversubscri bed by less than 15 times under paragraph (I)(b)
above; or (ii) the Placing Shares are undersubs cribed and the Public Offer Shares are fully
subscribed or oversubscribed under paragraph (II)(b ) above, the final Offer Price shall be fixed at
the low-end of the indicative Offer Price range (i.e. HK$1.00 per Offer Share) stated in this
prospectus in accordance with Guidance Letter HKEX-GL-91-18 issued by the Stock Exchange.
In addition, the Sole Overall Coordinator (for itself and on behalf of the Underwriters) may in
its sole and absolute discretion reallocate Off er Shares from the Placing to the Public Offer to
satisfy valid applications under the Public Offe r. In accordance with Guidance Letter HKEX-GL91-
18 issued by the Stock Exchange, if such reallocat ion is done other than pursuant to Practice Note
18 of the Listing Rules, the maximum total number of Offer Shares that may be reallocated to the
Public Offer following such reallocation shall be not more than double the initial allocation to the
Public Offer (i.e. 25,0 00,000 Offer Shares).
STRUCTURE AND CONDITIONS OF THE SHARE OFFER
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The Offer Shares to be offered in the Public Offer and the Placing may, in certain
circumstances, be reallocated as between these o fferings at the discreti on of the Sole Overall
Coordinator. If the Public Offer Shares are not fully subscribed, the Sole Overall Coordinator may
have the discretion to reallocate to the Placing al l or any unsubscribed Public Offer Shares in such
numbers as they deem appropriate only if the Public Offer is not fully subscribed and the Placing is
fully subscribed.
OVER-ALLOTMENT OPTION
Our Company is expected to grant to the Placi ng Underwriters the Over-allotment Option,
exercisable at the sole discretion of the Sole Ove rall Coordinator (for itself and as the agent on
behalf of the Placing Underwriters) at any time during the period from the Listing Date until 30
days after the last day for lodging applications un der the Public Offer to cover over-allocations in
the Placing and/or the obligation of the Stabilisin g Manager to return securities borrowed under the
Stock Borrowing Agreement. Pursuant to the Over-allotment Option, our Company may be required
to allot and issue up to 18,750,000 additional new Shares, representing 15% of the number of Offer
Shares initially available under the Share Offer, at the Offer Price.
If the Over-allotment Option is exercised in f ull, the additional 18,750,000 Shares will
represent approximately 3.61% of our Company ’s enlarged share capital immediately after
completion of the Share Offer, the Capitalisati on Issue and the exercise in full of the Over-
allotment Option (but without taking into acc ount any Shares which may be issued upon the
exercise of any options that may be granted under the Share Option Scheme).
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 Over-allotment Option has
been exercised. In the event that the Over-allotment Option has not been exercised by the Sole
Overall Coordinator on behalf of the Placing Underwriters, our Company will confirm in such
announcement that the Over-allotment Option has l apsed and cannot be exercised at any future date.
STABILISATION
Stabilisation is a practice used by underwriters in some markets to facilitate the distribution of
securities. To stabilise, the underwriters may bid fo r, or purchase, the newly issued securities in the
secondary market, during a specified period of time , to retard and, if possible, prevent a decline in
the initial offer prices of the securities. In Hong Kong and certain other jurisdictions, activity aimed
at reducing the market price is prohibited, and the price at which stabilisation is effected is not
permitted to exceed the offer price.
In connection with the Share Offer, Eddid Secu rities and Futures Limited, as Stabilising
Manager or its authorised agents, may, but are not obliged to, over-allocate Shares and/or effect any
other transactions with a view to stabilising or su pporting the market price of our Shares at a level
higher than which might otherwise prevail in the open market, for a limited period. Such stabilising
activity may include stock borrowing, making mar ket purchases of Shares in the secondary market
or selling Shares to liquidate a position held as a re sult of those purchases, a sw e l la se x e r c i s i n gt h e
STRUCTURE AND CONDITIONS OF THE SHARE OFFER
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--- page 435 ---
Over-allotment Option. Any such stabilising activity will be effected in compliance with all
applicable laws, rules and regulatory requireme nts in Hong Kong on stabilisation including the
Securities and Futures (Price Stab ilising) Rules made under the SFO.
In Hong Kong, stabilising activities must be ca rried out in accordance with the Securities and
Futures (Price Stabilising) Rules (Cap 571W). Stabilising actions permitted pursuant to the
Securities and Futures (Price Stabilising) Rules include:
(a) over-allocation for the purpose of preventing or minimizing any reduction in the market
price;
(b) selling or agreeing to sell the Shares so as to establish a short position in them for the
purpose of preventing or minimizing any reduction in the market price of the Shares;
(c) subscribing, or agreeing to subscribe, for the Shares pursuant to the Over-allotment
Option in order to close out any position established under (a) or (b) above;
(d) purchasing, or agreeing to purchase, the Shares for the sole purpose of preventing or
minimizing any reduction in the market price of the Shares;
(e) selling or agreeing to sell any of the Shar es to liquidate a long position held as a result
of those purchase; and
(f) offering or attempting to do anything described in (b), (c), (d) and (e) above.
However, there is no obligation on the Stabilis ing Manager or its authorised agents to conduct
any such stabilising activity, which if commenc ed, will be done at the absolute discretion of the
Stabilising Manager or its autho rised agents acting for it and i n what the Stabilising Manager
reasonably regards as the best interest of our Company; and may be discontinued at any time. The
number of Shares that may be over-allocated wi ll not exceed the number of Shares that may be
issued under the Over-allotment Option, namely 18,750,000 Shares, which is 15% of the number of
Shares initially available under the Share Offer.
Specifically, prospective applicants for and investors in the Offer Shares should note that as a
result of effecting transactions to stabilise o r maintain the market price of our Shares, the
Stabilising Manager or its authorised agents may m aintain a long position in our Shares. The size of
the long position, and the period for which the Sta bilising Manager or its authorised agents will
maintain the long position is at the discretion of the Stabilising Manager or its authorised agents
and is uncertain. In the event that the Stabilisin g Manager or its authorised agents liquidate this
long position by making sales in the open market, this may lead to a decline in the market price of
our Shares.
Stabilising activity by the St abilising Manager or its authorised agents acting for it is not
permitted to support the price of our Shares for long er than the stabilising period, which begins on
the day on which trading of our Shares commences on the Stock Exchange and ends on the 30th
STRUCTURE AND CONDITIONS OF THE SHARE OFFER
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--- page 436 ---
day after the last day for lodging applications under the Public Offer. The stabilising period is
expected to end on Thursday, 8 February 2024. As a result, demand for the Shares, and their
market price, may fall after the end of the stabilising period.
These activities by the Stabilising Manager ma y stabilize, maintain or otherwise affect the
market price of the Shares. As a result, the price of the Shares may be higher than the price that
otherwise may exist in the open market.
Any stabilising activity taken by the Stabili sing Manager or its authorised agents may not
necessarily result in the market p rice of our Shares staying at or a bove the Offer Price either during
or after the stabilising period. Bids for or mar ket purchases of our Shares by the Stabilising
Manager or its authorised agents may be made at a price at or below the Offer Price and therefore
at or below the price paid for our Shares by investors.
Our Company will ensure and procure that a public announcement in compliance with the
Securities and Futures (Price Stab ilising) Rules will be made within seven days of the expiration of
the stabilising period.
In order to facilitate the settlement of over-a llocations, the Stabilising Manager or its
authorised agents may, among other means, purc hase Shares in the secondary market, enter into
stock borrowing arrangements with holders of Shares, exercise the Over-allotment Option, engage a
combination of these means or otherwise as ma y be permitted under applicable laws. Any such
secondary market purchases will be made in co mpliance with all applicable laws, rules and
regulations.
STOCK BORROWING AGREEMENT
The Stabilising Manager will enter into the Sto ck Borrowing Agreement with WellCell Group,
whereby, the Stabilising Manage r, as stabilising manager or its authorised agents may borrow up to
18,750,000 Shares from WellCell Group equivalent to the maximum number of additional Shares to
offered upon full exercise of the Over-allotme nt Option, under the Stock Borrowing Agreement.
The Stock Borrowing Agreement will not be subject to the restrictions of Rule 10.07(1)(a) of the
Listing Rules provided that the requirements set forth in Rule 10.07(3) of the Listing Rules are to
be complied with as follows:
. such stock borrowing arrangement is fully described in this prospectus and must be for
the sole purpose of covering any short pos ition prior to the exercise of the Over-
allotment Option;
. the maximum number of Shares to be borrowe d from WellCell Group by the Stabilising
Manager (or any person acting for it) is the maximum number of Shares that may be sold
upon full exercise of the Over-allotment Option;
STRUCTURE AND CONDITIONS OF THE SHARE OFFER
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--- page 437 ---
. the same number of Shares so borrowed must be returned to WellCell Group or its
nominee(s) within three business days follo wing the earlier of (a) the last day on which
the Over-allotment Option may be exercised, and (b) the day on which the Over-
allotment Option is exercised in full;
. the stock borrowing arrangement will be e ffected in compliance with all applicable
listing rules, laws and other regulatory requirements; and
. no payment will be made to WellCell Group by the Stabilising Manager (or any person
acting for it) in relation to such stock borrowing arrangement.
PRICING AND ALLOCATION
Pursuant to the Price Determination Agreement, pricing for the Offer Shares for the purpose of
the Share Offer will be fixed on the Price Determination Date, which is expected to be on or before
12:00 noon on Wednesday, 10 January 2024, by agreement between the Sole Overall Coordinator
(for itself and on behalf of the Underwriters) and our Company and the number of Offer Shares to
be allocated under the Share Offer will be determined shortly thereafter.
The Offer Price will be not more than HK$1.30 per Offer Share and is expected to be not less
than HK$1.00 per Offer Share unless otherwise anno unced, as further explained below. Applicants
for Offer Shares under the Public Offer must pay, on application, the maximum Offer Price of
HK$1.30 for each Public Offer Share (plus the brokerage of 1%, Stock Exchange trading fee of
0.00565%, SFC transaction levy of 0.0027% and AFRC transaction levy of 0.00015% payable on
each Offer Share), amounting to a total of HK$5,252.44 per board lot of 4,000 Offer Shares. If the
Offer Price is less than HK$1.30 per Public Offer S hare, appropriate refund payments (including
the brokerage, Stock Exchange trading fee and SFC transaction levy attributable to the surplus
applicable monies, without any interest) will be m ade to wholly or partially successful applicants.
Prospective investors should be aware that the Offer Price to be determined on the Price
Determination Date may be, but is not expected to be, lower than the indicative Offer Price range
stated in this prospectus.
If, for any reason, our Company and the Sole Overall Coordinator (for itself and on behalf of
the Underwriters) are unable to reach agreemen t on the Offer Price at or before 12:00 noon on
Wednesday, 10 January 2024, the Share Offer will not proceed and will lapse.
For details, please refer to the section headed ‘‘How to apply for Public Offer Shares ’’of this
prospectus.
STRUCTURE AND CONDITIONS OF THE SHARE OFFER
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--- page 438 ---
ANNOUNCEMENT OF THE FINAL OFFER PRI CE AND THE BASIS OF ALLOCATIONS
Announcement of the final Offer Price, the level of indication of interests in the Placing, the
level of applications in the Public Offer, the basis of allocation of the Public Offer Shares and the
results of allocations of the Public Offer is expected to be published on Thursday, 11 January 2024
on the website of the Stock Exchange at www.hkexnews.hk and our Company ’s website at
www.wellcell.com.cn .
UNDERWRITING
The Public Offer is fully underwritten by the Pub lic Offer Underwriters under the terms of the
Public Offer Underwriting Agreement, whic h is conditional on and subject to the Placing
Underwriting Agreement having been executed and becoming unconditional and not having been
terminated in accordance with its terms.
Our company expects to enter into the Placing Un derwriting Agreement relating to the Placing
on or around the Price Determination Date. These u nderwriting arrangements and the Underwriting
Agreements are summarised in the section headed ‘‘Underwriting ’’of this prospectus.
CONDITIONS OF THE SHARE OFFER
Acceptance of all applications for the Offe r Shares is conditional upon, among others, the
satisfaction of all of the following conditions:
(a) the Listing Committee granting the approval of the Listing of, and permission to deal in,
the Shares in issue and to be issued pursuant to the Capitalisation Issue and the Share
Offer (including the additional Shares wh ich may be allotted and issued upon the
exercise of the Over-allotment Option an d upon the exercise of any options which may
be granted under the Share Option Scheme) and such approval not subsequently being
withdrawn revoked prior to the Listing Date;
(b) the execution and delivery of the Placing Un derwriting Agreement on or about the Price
Determination Date;
(c) 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; and
(d) the Offer Price having been agreed between the Sole Overall Coordinator (for itself and
on behalf of the Underwriters) and our Company pursuant to the Price Determination
Agreement, in each case on or before the date s and times specified in the Underwriting
Agreements (unless and to the extent such conditions are validly waived on or before
such dates and times) and, in any event, not later than the date which is 30 days after the
date of this prospectus.
STRUCTURE AND CONDITIONS OF THE SHARE OFFER
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--- page 439 ---
If, for any reason, the Offer Price is not agreed b etween us and the Sole Overall Coordinator
(for itself and on behalf of the Underwriters), on or before 12:00 noon on Wednesday, 10 January
2024, the Share Offer will not proceed and will lapse.
The consummation of each of the Public Offer a nd the Placing is conditional upon, among
other things, the other offering becoming unconditional and not having been terminated in
accordance with its terms.
If the above conditions are not fulfilled or waived on or before the dates and times specified,
the Share Offer will lapse and the Stock Exchange wi ll be notified immediately. Notice of the lapse
of the Share Offer will be published by our company on the Stock Exchange ’s website at
www.hkexnews.hk and our Company ’s website at www.wellcell.com.cn on the next Business Day
following such lapse. In the event of such lapse , all application monies will be returned to the
applicants, without interest on the terms set out in the paragraph headed ‘‘12. Refund of application
monies ’’under the section headed ‘‘How to apply for Public Offer Shares ’’in this prospectus. In
the meantime, all application monies will be hel d in separate bank account(s) with the receiving
bank or other bank(s) in Hong Kong licensed under the Banking Ordinance.
Share certificates for the Offer Shares are expected to be issued on Thursday, 11 January 2024
but will only become valid evidence of title at 8:00 a.m. (Hong Kong time) on Friday, 12 January
2024 provided that: (a) the Share Offer has become unconditional in all respects; and (b) the right
of termination as described in ‘‘Underwriting — Underwriting arrangements — T h eP u b l i cO f f e r
Underwriting Agreement — Grounds for termination ’’of this prospectus has not been exercised.
Investors who trade Shares prior to the receipt of sh ares certificates or prior to the share certificates
bearing valid evidence of title do so entirely at their own risk.
SHARES WILL BE ELIGIBLE FOR ADMISSION INTO CCASS
Application has been made to the Stock Exchange for listing of and permission to deal in the
Shares in issue and to be issued as mentioned in thi s prospectus. If the Stock Exchange grants the
listing of and permission to deal in the Shares in issue and to be issued as mentioned in this
prospectus on the Stock Exchange and our Company complies with the stock admission
requirements of HKSCC, our Shares will be accepted a s eligible securities by HKSCC for deposits,
clearance and settlement in CCASS with effect from the Listing Date or, unde r contingent situation,
any other date as determined by HKSCC. Settlemen t of transactions between HKEX Participants is
required to take place in CCASS on the second settlement day after any trading day.
All necessary arrangements have been made enab ling the Shares to be admitted into CCASS.
All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational
Procedures in effect from time to time. Investors should seek the advice of their stockbroker or
other professional adviser for details of the set tlement arrangement as such arrangements may affect
their rights and interests.
STRUCTURE AND CONDITIONS OF THE SHARE OFFER
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--- page 440 ---
COMMENCEMENT OF DEALING AND SETTLEMENT
Assuming that the Share Offer becomes unconditional at or before 8:00 a.m. (Hong Kong
time) on Friday, 12 January 2024, it is expected th at dealing in the Shares on the Stock Exchange
will commence at 9:00 a.m. on Friday, 12 January 2024.
The Shares will be traded in board lots of 4,000 Shares each and the stock code of the Shares
is 02477.
STRUCTURE AND CONDITIONS OF THE SHARE OFFER
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--- page 441 ---
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.wellcell.com.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 eWhite Form service only ).
Unless permitted by the Listing Rules or a w aiver 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 Sharehold er or close associates; or
. are a Director or any of his/her close associates.
2. Application Channels
The Public Offer period will begin at 9:00am on Thursday, 28 December 2023 and
end at 12:00noon on Tuesday, 9 January 2024 (Hong Kong time).
HOW TO APPLY FOR PUBLIC OFFER SHARES
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To apply for Public Offer Shares, you may use one of the following application channels:
Application
Channel Platform Target Investors Application Time
eWhite Form
service
www.ewhiteform.com.hk
Enquiries:
+852 2504 6968
Investors who would like to
receive a physical Share
certificate. Public Offer
Shares successfully applied
for will be allotted and
issued in your own name.
From 9:00 am on Thursday,
28 December 2023 to 11:30
a.m. on Tuesday, 9 January
2024, Hong Kong time.
The latest time for
completing full payment of
application monies will be
12:00 noon on Tuesday, 9
January 2024, Hong Kong
time.
HKSCC EIPO
channel
Your broker or custodian
who is a HKSCC Participant
will submit an EIPO
application on your behalf
through HKSCC ’sF I N I
system in accordance with
your instruction
Investors who would
not like
to receive a physical Share
certificate. Public Offer
Shares successfully applied
for will be allotted and
issued in the name of
HKSCC Nominees,
deposited directly into
C C A S Sa n dc r e d i t e dt oy o u r
designated HKSCC
Participant ’s stock account.
Contact your broker or
custodian for the earliest and
latest time for giving such
instructions, as this may vary
by broker or custodian.
The eWhite Form service and the HKSCC EIPO channel are facilities subject to
capacity limitations and potential service inte rruptions and you are advised not to wait until
the last day of the application period to apply for Public Offer Shares.
For those applying through the eWhite Form service, once you complete payment in
respect of any application instructions given by you or for your benefit through the eWhite
Form s e r v i c et om a k ea na p p l i c a t i o nf o rP u b l i cOffer 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 t o have declared that only one set of electronic
application instructions has been given for your benefit. If you are an agent for another
person, you shall be deemed to have declared that you have only given one set of electronic
application instructions for the benefit of the person for whom you are an agent and that you
are duly authorized to give those instructions as an agent.
For the avoidance of doubt, giving an application instruction under the eWhite Form
service more than once and obtaining different payment reference numbers without effecting
full payment in respect of a particular refer ence number will not constitute an actual
application.
HOW TO APPLY FOR PUBLIC OFFER SHARES
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--- page 443 ---
If you apply through the eWhite Form service, you are deemed to have authorized the
eWhite Form service provider to apply on the terms and conditions in this prospectus, as
supplemented and amended by the terms and conditions of the eWhite Form service.
By instructing your broker or custodian to apply for the Public Offer Shares on your
behalf through the HKSCC EIPO Channel, you (a nd, if you are joint applicants, each of you
jointly and severally) are deemed to have in structed and authorized HKSCC to cause HKSCC
Nominees (acting as nominee for the relevant HKSCC Participants) to apply for Public Offer
Shares on your behalf and to do on your behalf all the things stated in this prospectus and any
supplement to it.
For those applying through HKSCC EIPO channel, an actual application will be deemed
to have been made for any application instr uctions 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 b een withdrawn or otherwise invalidated before
the closing time of the Hong Kong Public Offer.
HKSCC Nominees will only be acting as a nominee for you and neither HKSCC nor
HKSCC Nominees shall be liable to you or any other person in respect of any actions taken
by HKSCC or HKSCC Nominees on your behalf to apply for Public Offer Shares or for any
breach of the terms and conditions of this prospectus.
3. Information Required to Apply
You must provide the following information with your application:
For Individual Applicants For Corporate Applicants
. Full name(s) 2 a ss h o w no ny o u r
identity document
. Identity document ’s issuing country or
jurisdiction
. Identity document type, with order of
priority:
i. HKID card; or
ii. National identification
document; or
iii. Passport; and
. Identity document number
. Full name(s) 2 a ss h o w no ny o u r
identity document
. Identity document ’s issuing country or
jurisdiction
. Identity document type, with order of
priority:
i. LEI registration document; or
ii. Certificate of incorporation; or
iii. Business regist ration certificate;
or
iv. Other equivalent document; and
. Identity document number
HOW TO APPLY FOR PUBLIC OFFER SHARES
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--- page 444 ---
Notes:
1. If you are applying through the eWhite Form service, you are required to provide a valid e-mail
address, a contact telephone number and a Hong Kong Address. You are also required to declare that
the identity information provided by you follows th e requirements as described in Note 2 below. In
particular, where you cannot provide a HKID num ber, you must confirm that you do not hold a HKID
card.
2. The applicant ’s full name as shown on their identity document must be used. If an applicant ’s identity
document contains both an English and Chinese name, both English and Chinese names must be used.
Otherwise, either English or Chinese names will be accepted. The order of priority of the applicant ’s
identity document type must be strictly followed and where an individual applicant has a valid HKID
card, the HKID number must be used when making an application to subscribe for shares in a public
offer. Similarly for corporate applicants, a LEI number must be used if an entity has a LEI certificate.
3. If the applicant is a trustee, the client identification data ( ‘‘CID’’) of the trustee, as set out above, will
be required. If the applicant is an investment fund (i.e. a collective investment scheme, or CIS), the
CID of the asset management compa ny or the individual fund, as appropriate, which has opened a
trading account with the broker will be required, as above.
4. The maximum number of joint account holders on FINI is capped at 4
1 in accordance with market
practice.
5. If you are applying as a nominee, you must pr ovide: (i) the full name (as shown on the identity
document), the identity document ’s issuing country or jurisdiction, th e identity document type; and (ii),
the identity document number, for each of the benefic ial owners or, in the case(s) of joint beneficial
owners, for each joint beneficial owner. If you do no t 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 specifi ed amount in a distribution of either profits or
capital).
For those applying through HKSCC EIPO channel, and making an application under a
power of attorney, we and the Sole Overall Coordinator, as our agent, have discretion to
consider whether to accept it on any conditi ons we think fit, including evidence of the
attorney ’s authority.
Failing to provide any required information ma y result in your application being rejected.
1. Subject to change, if the Company ’s Articles of Incorporation and applicable company law prescribe a lower cap.
HOW TO APPLY FOR PUBLIC OFFER SHARES
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--- page 445 ---
4. Permitted Number of Public Offer Shares for Application
Board lot size :4 , 0 0 0
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$1.30 per Share.
If you are applying through the HKSCC EIPO
channel, you are required to pre-fund your
application based on the amount specified by your
broker or custodian, as determined based on the
applicable laws and regulations in Hong Kong.
By instructing your broker or custodian to apply for
the Public Offer Shares on your behalf through the
HKSCC EIPO Channel, you (and, if you are joint
applicants, each of you jointly and severally) are
deemed to have instructed and authorized HKSCC to
cause HKSCC Nominees (acting as nominee for the
relevant HKSCC Participants) to arrange payment of
the final Offer Price, brokerage, SFC transaction levy,
the Stock Exchange trading fee and the AFRC
transaction levy by debiting the relevant nominee
bank account at the Designated Bank for your broker
or custodian.
If you are applying through the eWhite Form service,
you may refer to the table below for the amount
payable for the number of Shares you have selected.
You must pay the respective maximum amount
payable on application in full upon application for
Public Offer Shares.
HOW TO APPLY FOR PUBLIC OFFER SHARES
– 435 –


--- page 446 ---
No. of Public
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of Public
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of Public
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of Public
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
HK$ HK$ HK$ HK$
4,000 5,252.44
8,000 10,504.89
12,000 15,757.32
16,000 21,009.77
20,000 26,262.21
24,000 31,514.65
28,000 36,767.09
32,000 42,019.53
36,000 47,271.97
40,000 52,524.42
60,000 78,786.64
80,000 105,048.85
100,000 131,311.06
120,000 157,573.25
140,000 183,835.46
160,000 210,097.68
180,000 236,359.89
200,000 262,622.10
300,000 393,933.16
400,000 525,244.20
500,000 656,555.26
600,000 787,866.30
700,000 919,177.36
800,000 1,050,488.40
900,000 1,181,799.46
1,000,000 1,313,110.50
1,500,000 1,969,665.76
2,000,000 2,626,221.00
2,500,000 3,282,776.26
3,000,000 3,939,331.50
3,500,000 4,595,886.76
4,000,000 5,252,442.00
4,500,000 5,908,997.26
5,000,000 6,565,552.50
6,000,000 7,878,663.00
6,248,000
(1) 8,204,314.40
(1) Maximum number of Public Offer Shares you may apply for.
(2) This is 50% of the Public Offer Shares initially offered, and the amount payable is inclusive of brokerage, SFC transaction levy, the
Stock Exchange trading fee and AFRC transaction levy. If your application is successful, brokerage will be paid to the Exchange
Participants (as defined in the Listing Rules) or to the eWhit e Form Services Provider (for applications made through the eWhite
Form service) while the SFC transaction levy, the Stock Exchange trading fee and the AFRC transaction levy will be paid to the
SFC, the Stock Exchange and the AFRC, respectively.
5. Multiple Applications Prohibited
You or your joint applicant(s) shall not make more than one application for your own
benefit, except where you are a nominee and provide the information of the underlying
investor in your application as req uired under the paragraph headed ‘‘— A. Applications for
Public Offer Shares — 3. Information Required to Apply ’’in this section. If you are suspected
of submitting or cause to submit more than one application, all of your applications will be
rejected.
Multiple applications made either through (i) the eWhite Form service, (ii) HKSCC
EIPO channel, or (iii) both channels concurrently are prohibited and will be rejected. If you
have made an application through the eWhite Form service or HKSCC EIPO channel, you or
the person(s) for whose benefit you have made the application shall not apply for any Offer
Shares.
6. Terms and Conditions of An Application
By applying for Public Offer Shares through the eWhite Form service or HKSCC EIPO
channel, you (or as the case may be, HKSCC Nominees will do the following things on your
behalf):
(i) undertake to execute all relevant documen ts and instruct and authorise us and/or the
Sole Overall Coordinator, as our agents , to execute any documents for you and to
do on your behalf all things necessary to reg ister any Public Offer Shares allocated
to you in your name or in the name of HKSCC Nominees as required by the
HOW TO APPLY FOR PUBLIC OFFER SHARES
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--- page 447 ---
Articles of Association, and (if you are applying through the HKSCC EIPO
channel) to deposit the allotted Public Offer Shares directly into CCASS for the
credit of your designated HKSCC Participant ’s stock account on your behalf;
(ii) confirm that you have read and understand the terms and conditions and application
procedures set out in this prospectus and the designated website of the eWhite
Form service (or as the case may be, the agreement you entered into with your
broker or custodian), and agree to be bound by them;
(iii) (if you are applying through the HKSCC EIPO channel) agree to the arrangements,
undertakings and warranties under the parti cipant agreement between your broker or
custodian and HKSCC and observe the General Rules of HKSCC and the HKSCC
Operational Procedures for giving applicat ion instructions to apply for Public Offer
Shares;
(iv) confirm that you are aware of the restric tions on offers and sales of shares set out in
this prospectus and they do not apply to you, or the person(s) for whose benefit you
have made the application;
(v) confirm that you have read this prospectus and any supplement to it and have relied
only on the information and representations contained therein in making your
application (or as the case may be, causi ng your application to be made) and will
not rely on any other informat ion or representations;
(vi) agree that the Relevant Persons 2, the Hong Kong Branch Share Registrar and
HKSCC will not be liable for any information and representations not in this
prospectus and any supplement to it;
(vii) agree to disclose the details of your application and your personal data and any
other personal data which may be required about you and the person(s) for whose
benefit you have made the application to us, the Relevant Persons, the Hong Kong
Branch Share Registrar, HKSCC, HKSCC Nominees, the Stock Exchange, the SFC
and any other statutory regulatory or gover nmental bodies or otherwise as required
by laws, rules or regulations, for the purposes under the paragraph headed ‘‘— G.
Personal Data — 3. Purposes and 4. Transfer of personal data ’’in this section;
(viii) agree (without prejudice to any other rights which you may have once your
application (or as the case may be, HKSCC Nominees ’ application) has been
accepted) that you will not rescind it because of an innocent misrepresentation;
2. As defined in this prospectus, Relevant Persons would inc lude the Joint Sponsor, the Joint Representatives, the Sole
Overall Coordinators, the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the
Underwriters, any of their or the Company ’s respective directors, officers, employees, partners, agents, advisers and
any other parties involved in the Share Offering.
HOW TO APPLY FOR PUBLIC OFFER SHARES
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(ix) agree that subject to Section 44A(6) of the Companies (Winding Up and
Miscellaneous Provisions) Ordinance , any application made by you or HKSCC
Nominees on your behalf cannot be revoked once it is accepted, which will be
evidenced by the notification of the resu lt of the ballot by the Hong Kong Branch
Share Registrar by way of publication of the results at the time and in the manner
as specified in the paragraph headed ‘‘- B. Publication of Results ’’in this section;
(x) confirm that you are aware of the situations specified in the paragraph headed ‘‘—
C. Circumstances In Which You Will Not Be Allocated Public Offer Shares ’’in this
section;
(xi) agree that your application or HKSCC Nominees ’ application, any acceptance of it
and the resulting contract will be govern ed by and construed in accordance with the
laws of Hong Kong;
(xii) agree to comply with the Companies Ordinance, the Companies (Winding Up and
Miscellaneous Provisions) Ordinance, the Articles of Association and laws of any
place outside Hong Kong that apply to your application and that neither we nor the
Relevant Persons will breach any law inside and/or outside Hong Kong as a result
of the acceptance of your offer to purchase, or any action arising from your rights
and obligations under the terms and condi tions contained in this prospectus;
(xiii) confirm that (a) your application or HKSCC Nominees ’ application on your behalf
is not financed directly or indirectly by the Company, any of the directors, chief
executives, substantial Shareholder(s) or e xisting shareholder(s) of the Company or
any of its subsidiaries or any of their respective close associates; and (b) you are
not accustomed or will not be accustomed to ta king instructions from the Company,
any of the directors, chief executives, substantial shareholder(s) or existing
shareholder(s) of the Company or any of its s ubsidiaries or any of their respective
close associates in relation to the acquisiti on, 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 Sole Overall Coordinator will rely on
your declarations and representations in deciding whether or not to allocate any
Public Offer Shares to you and that you may be prosecuted for making a false
declaration;
(xvi) agree to accept Public Offer Shares app lied for or any lesser number allocated to
you under the application;
(xvii) declare and represent that this is the only application made and the only application
intended by you to be made to benefit you or the person for whose benefit you are
applying;
HOW TO APPLY FOR PUBLIC OFFER SHARES
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(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 indirect ly or through the application channel of
the Hong Kong Branch Share Registrar or by any one as your agent or by any other
person; and
(xix) (if you are making the application as an agent for the benefit of another person)
warrant that (1) no other application has been or will be made by you as agent for
or for the benefit of that person or by that person or by any other person as agent
for that person by giving electronic application instructions to HKSCC and (2) you
have due authority to give electronic appli cation instructions on behalf of that other
person as its agent.
B. PUBLICATION OF RESULTS
Results of Allocation
You can check whether you are successfully allocated any Public Offer Shares through:
Platform Date/Time
Applying through eWhite Form service or HKSCC EIPO channel:
Website The designated results of allocation
at www.ewhiteform.com.hk/
results with a ‘‘search by ID
Number ’’function.
The full list of (i) wholly or
partially successful applicants
using the eWhite Form service
and HKSCC EIPO channel, and (ii)
the number of Hong Kong Offer
Shares conditionally allotted to
them, among other things, will be
displayed at
https://www.ewhiteform.com.hk/
eAnnouncement/ .
24 hours, from 11:00 p.m. on
Thursday, 11 January 2024 to
12:00 midnight on Thursday, 18
January 2024 (Hong Kong time)
The Stock Exchange ’s website at
www.hkexnews.hk and our
website at www.wellcell.com.cn
which will provide links to the
above mentioned websites of the
Hong Kong Branch Share
Registrar.
No later than 11:00 p.m. on
Thursday, 11 January 2024
(Hong Kong time).
HOW TO APPLY FOR PUBLIC OFFER SHARES
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Platform Date/Time
Telephone +852 2153 1688 — the allocation
results telephone enquiry line
provided by the Hong Kong
Branch Share Registrar
between 9:00 a.m. and 6:00 p.m.,
from Friday, 12 January 2024 to
Thursday, 18 January 2024
(Hong Kong time) on a business
day
For those applying through HKSCC EIPO channel, you may also check with your broker
or custodian from 6:00 p.m. on Wednesday, 10 January 2024 (Hong Kong time)
HKSCC Participants can log into FINI and review the allotment result from 6:00 p.m. on
Wednesday, 10 January 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 Share Offer, the level of applications in the Hong Kong 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.wellcell.com.cn by no later than 11:00 p.m. on
Thursday, 11 January 2024 (Hong Kong time).
C. CIRCUMSTANCES IN WHICH YOU WILL NOT BE ALLOCATED PUBLIC OFFER
SHARES
You should note the following situations in which Public Offer Shares will not be allocated to
you or the person(s) for whose benefit you are applying for:
1. If your application is revoked:
Your application or the application made by HKSCC Nominees on your behalf may be
revoked pursuant to Section 44A(6) of the Companies (Winding Up and Miscellaneous
Provisions) Ordinance.
2. If we or our agents exercise our discretion to reject your application:
We, the Sole Overall Coordinator, the H ong Kong Branch Share Registrar and their
respective agents and nominees have full discre tion to reject or accept any application, or to
accept only part of any applicati on, without giving any reasons.
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3. If the allocation of Public Offer Shares is void:
The allocation of Public Offer Shares will be void if the Stock Exchange does not grant
permission to list the Shares either:
. within three weeks from the closing date of the application lists; or
. within a longer period of up to six weeks if the Stock Exchange notifies us of that
longer period within three weeks of the cl osing date of the application lists.
4. If:
. you make multiple applications or suspected multiple applications. You may refer to
the paragraph headed ‘‘— A. Applications for Public Offer Shares — 5. Multiple
Applications Prohibited ’’in this section on what constitutes multiple applications;
. your application instruction is incomplete;
. 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 Sole Overall Coordinator believe that by accepting your application, it or
we would violate applicable securities or other laws, rules or regulations.
5. If there is money settlement failure for allotted Shares:
Based on the arrangements between HKS CC Participants and HKSCC, HKSCC
Participants will be required to hold sufficient application funds on deposit with their
Designated Bank before balloting. After ballo ting of Public Offer Shares, the Receiving Bank
will collect the portion of these funds required to settle each HKSCC Participant ’s actual Hong
Kong 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 rectif y or procure to rectify the failure.
However, if it is determined that such settlement obligation cannot be met, the affected
Public Offer Shares will be reallocated to the Share Offer. Public Offer Shares applied for by
you through the broker or custodian may be affect ed 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 HKS CC Participant. None of us, the Relevant Persons, the Hong
Kong Branch Share Registrar and HKSCC is or will be liable if Public Offer Shares are not
allocated to you due to the money settlement failure.
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D. DESPATCH OF SHARE CERTIFICATES AND REFUND OF APPLICATION MONIES
You will receive one Share certificate for all P ublic Offer Shares allotted to you under the
Hong Kong Public Offer (except pursuant to applications made through the HKSCC EIPO channel
where the Share certificates will be deposited into CCASS as described below).
No temporary document of title will be issued in respect of the Shares. No receipt will be
issued for sums paid on application.
Share certificates will only become valid at 8:00 a.m. on Friday, 12 January 2024 (Hong
Kong time), provided that the Share Offer has beco me unconditional and the right of termination
described in the section headed ‘‘Underwriting ’’has not been exercised. Investors who trade Shares
prior to the receipt of Share certificates or the S hare certificates becoming valid do so entirely at
their own risk.
The right is reserved to retain any Share certi ficate(s) and (if applicable) any surplus
application monies pending clearance of application monies.
The following sets out the relevant procedures and time:
eWhite Form service HKSCC EIPO channel
Despatch of Share certificate 3
For application of
Public Offer Shares
Your Share certificate(s) will be sent to
the address specified in your application
instructions by ordinary post at your own
risk
Date: Thursday, 11 January 2024
4
Share certificate(s) will be issued in the
name of HKSCC Nominees, deposited
into CCASS and credited to your
designated HKSCC Participant ’ss t o c k
account
No action by you is required
3. Except in the event of a tropical cyclone warning signa l number 8 or above, a black rainstorm warning and/or an
‘‘extreme conditions ’’announcement issued after a super typhoon in force in Hong Kong in the morning on the
Thursday, 11 January 2024 rendering it impossible for the r elevant share certificates to be dispatched to HKSCC in a
timely manner, the Company shall procure the Share Regi strar to arrange for delivery of the supporting documents
and share certificates in accordance with the contingency arrangements as agreed between them. You may refer to
‘‘ — E. Severe Weather Arrangements ’’in this section.
4. As agreed with the Company and communicated to the s ubscribers in the relevant subscription channel.
HOW TO APPLY FOR PUBLIC OFFER SHARES
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eWhite Form service HKSCC EIPO channel
Refund mechanism for surplus application monies paid by you
Date Friday, 12 January 2024 Subject to the arrangement between you
and your broker or custodian
Responsible party Hong Kong Branch Share Registrar Your broker or custodian
Application monies paid
through single bank
account
e-Refund payment instructions to your
designated bank account
Your broker or custodian will arrange
refund to your designated bank account
subject to the arrangement between you
and it
Application monies paid
through multiple
bank accounts
Refund cheque(s) will be despatched to
the address as specified in your
application instructions by ordinary post
at your own risk
E. SEVERE WEATHER ARRANGEMENTS
The Opening and Closing of the Application Lists
The application lists will not open or close on Tuesday, 9 January 2024 if, there is:
. a tropical cyclone warnin g 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 ’’),
HOW TO APPLY FOR PUBLIC OFFER SHARES
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--- page 454 ---
in force in Hong Kong at any time between 9:00 a.m. and 12:00 noon on Tuesday, 9 January
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 tha t a postponement of the opening/closing of the
application lists may result in a delay in the listing date. Should there be any changes to the
dates mentioned in the section headed ‘‘Expected Timetable ’’ in this prospectus, an
announcement will be made and published on the Stock Exchange ’s website at
www.hkexnews.hk and our website at www.wellcell.com.cn of the revised timetable.
If a Severe Weather Signal is hoisted on Thursday, 11 January 2024, the Hong Kong
Branch Share Registrar will make appropriate arrangements for the delivery of the share
certificates to the CCASS Depository ’s service counter so that they would be available for
trading on Friday, 12 January 2024.
If a Severe Weather Signal is hoisted on Thursday, 11 January 2024:
. for physical share certificates of Offer Shares issued under your own name,
despatch will be made by ordinary post when the post office re-opens after the
Severe Weather Signal is lowered or cancelled (e.g. in the afternoon of Thursday,
11 January 2024 or on Friday, 12 January 2024).
Prospective investors should be aware tha t if they choose to receive physical share
certificates issued in their own name, t here may be a delay in receiving the share
certificates.
F. ADMISSION OF THE SHARES INTO CCASS
If the Stock Exchange grants the listing of, and permission to deal in, the Shares on the Stock
Exchange and we comply with the stock admission requirements of HKSCC, the Shares will be
accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with
effect from the date of commencement of dealings in the Shares or any other date HKSCC chooses.
Settlement of transactions between Exchange Participants is required to take place in CCASS on the
second settlement day after any trading day.
All activities under CCASS are subject to the General Rules of HKSCC and HKSCC
Operational Procedures in effect from time to time.
HOW TO APPLY FOR PUBLIC OFFER SHARES
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--- page 455 ---
All necessary arrangements have been made enab ling the Shares to be admitted into CCASS.
You should seek the advice of your broker or other professional advisor for details of the
settlement arrangement as such arrangem ents may affect your rights and interests.
G. PERSONAL DATA
The following Personal Information Collect ion Statement applies to any personal data
collected and held by the Compan y, the Hong Kong Branch Share Registrar, the receiving bank and
the Relevant Persons about you in the same way as it applies to personal data about applicants
other than HKSCC Nominees. This personal data may include client identifier(s) and your
identification information. By giving applicat ion instructions to HKSCC, you acknowledge that you
have read, understood and agree to all of the te rms of the Personal Information Collection
Statement below.
1. Personal Information Collection Statement
This Personal Information Collection Stateme nt informs the applicant for, and holder of,
Public Offer Shares, of the policies and practices of the Company and the Hong Kong Branch
Share Registrar in relation to personal data and the Personal Data (Privacy) Ordinance
(Chapter 486 of the Laws of Hong Kong).
2. Reasons for the collection of your personal data
It is necessary for applicants and registered holders of Public Offer Shares to ensure that
personal data supplied to the Company or its agents and the Hong Kong Branch Share
Registrar is accurate and up-to-date when appl ying for Public Offer Shares or transferring
Public Offer Shares into or out of their names or in procuring the services of the Hong Kong
Branch Share Registrar.
Failure to supply the requested data or su pplying inaccurate data may result in your
application for Public Offer Shares being rejected, or in the delay or the inability of the
Company or the Hong Kong Branch Share Registr ar to effect transfers or otherwise render
their services. It may also prevent or delay reg istration or transfers of Public Offer Shares
which you have successfully applied for and/or the despatch of Share certificate(s) to which
you are entitled.
It is important that applicants for and holders of Public Offer Shares inform the Company
and the Hong Kong Branch Share Registrar imme diately of any inaccuracies in the personal
data supplied.
HOW TO APPLY FOR PUBLIC OFFER SHARES
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--- page 456 ---
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 cheq ue and eRefund payment instruction(s),
where applicable, verification of compl iance 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 re gulations in Hong Kong and elsewhere;
. registering new issues or transfers into or out of the names of the holders of the
Shares including, where applicable, HKSCC Nominees;
. maintaining or updating the register of members of the Company;
. verifying identities of applicants for and holders of the Shares and identifying any
duplicate applications for the Shares;
. facilitating Public Offer Shares balloting;
. establishing benefit entitlements of holde rs of the Shares, such as dividends, rights
issues, bonus issues, etc.;
. distributing communications from t he Company and its subsidiaries;
. compiling statistical information and profiles of the holder of the Shares;
. disclosing relevant information to facilitate claims on entitlements; and
. any other incidental or asso ciated purposes relating to the above and/or to enable
the Company and the Hong Kong Branch Share Registrar to discharge their
obligations to applicants and holders of the Shares and/or regulators and/or any
other purposes to which applicants and holders of the Shares may from time to time
agree.
4. Transfer of personal data
Personal data held by the Company and the Hong Kong Branch Share Registrar relating
to the applicants for and holders of Public Offer Shares will be kept confidential but the
Company and the Hong Kong Branch Share Registrar may, to the extent necessary for
achieving any of the above purposes, disclose, obtain or transfer (whether within or outside
Hong Kong) the personal data to, from or with any of the following:
. the Company ’s appointed agents such as financial advisers, receiving bank and
overseas principal share registrar;
HOW TO APPLY FOR PUBLIC OFFER SHARES
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--- page 457 ---
. HKSCC or HKSCC Nominees, who will use the personal data and may transfer the
personal data to the Hong Kong Branch Share Registrar for the purposes of
providing its services or facilities or performing its functions in accordance with its
rules or procedures and operating FINI an d CCASS (including where applicants for
the Public Offer Shares request a deposit into CCASS);
. any agents, contractors or t hird-party service provide rs who offer administrative,
telecommunications, computer, payment or other services to the Company or the
Hong Kong Branch Share Registrar in conn ection with their respective business
operation;
. the Stock Exchange, the SFC and any other statutory regulatory or governmental
bodies or otherwise as required by laws, rules or regulations, including for the
purpose of the Stock Exchange ’s administration of the Listing Rules and the SFC ’s
performance of its statutory functions; and
. any persons or institutions with which t he holders of Public Offer Shares have or
propose to have dealings, such as their ba nkers, solicitors, accountants or brokers
etc.
5. Retention of personal data
The Company and the Hong Kong Branch Share R egistrar will keep the personal data of
the applicants and holders of Public Offer Shares for as long as necessary to fulfil the
purposes for which the personal data were colle cted. Personal data which is no longer required
will be destroyed or dealt with in accordance with the Personal Data (Privacy) Ordinance
(Chapter 486 of the Laws of Hong Kong).
6. Access to and correction of personal data
Applicants for and holders of Public Offer Shares have the right to ascertain whether the
Company or the Hong Kong Branch Share Registr ar hold their personal data, to obtain a copy
of that data, and to correct any data that is inaccurate. The Company and the Hong Kong
Branch Share Registrar have the right to charge a reasonable fee for the processing of such
requests. All requests for access to data or co rrection of data should be addressed to the
Company and the Hong Kong Branch Share Registr ar, at their registered address disclosed in
the section headed ‘‘Corporate information ’’in this prospectus or as notified from time to
time, for the attention of the company secretar y, or the Hong Kong Branch Share Registrar for
the attention of the privacy compliance officer.
HOW TO APPLY FOR PUBLIC OFFER SHARES
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--- page 458 ---
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 i s 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 WELLCELL HOLDINGS CO., LIMITED,
HALCYON CAPITAL LIMITED AND EDDID CAPITAL LIMITED
Introduction
We report on the historical financial information of WellCell Holdings Co., Limited (the
‘‘Company ’’) and its subsidiaries (together, the ‘‘Group ’’) set out on pages I-4 to I-65, which
comprises the consolidat ed statements of financial position as at 31 December 2020, 2021 and 2022
and 30 June 2023, the Company ’s statement of financial position as at 31 December 2021 and 2022
and 30 June 2023, and the consolidated statements of comprehensive income, the consolidated
statements of changes in equity and the consolidat ed statements of cash flows for each of the years
ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2023 (the ‘‘Track
Record Period ’’) and material accounting policy information and other explanatory information
(together, the ‘‘Historical Financial Information ’’). The Historical Financial Information set out on
pages I-4 to I-65 forms an integral part of this report, which has been prepared for inclusion in the
prospectus of the Company dated 28 December 2023 (the ‘‘Prospectus ’’)i nc o n n e c t i o nw i t ht h e
initial listing of shares of the Company on the Main Board of The Stock Exchange of Hong Kong
Limited.
Directors ’ responsibility for the Historical Financial Information
The directors of the Company are responsible for the preparation of Historical Financial
Information that gives a true and fair view in accordance with the basis of presentation and
preparation set out in Notes 1.3 and 2.1 to the Historical Financial Information, and for such
internal control as the directors determine is ne cessary to enable the preparation of Historical
Financial Information that is free from material misstatement, whether due to fraud or error.
Reporting accountant ’s responsibility
Our responsibility is to express an opinion on the Historical Financial Information and to
report our opinion to you. We conducted our wo rk 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
APPENDIX I ACCOUNTANT ’SR E P O R T
– I-1 –


--- page 459 ---
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 Informati on. The procedures selected depend on the reporting
accountant ’s judgement, including the ass essment 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 int ernal control relevant to the entity ’s preparation of Historical
Financial Information that gives a true and fair v iew in accordance with the basis of presentation
and preparation set out in Notes 1.3 and 2.1 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 use d and the reasonableness of accounting estimates
made by the directors, as well as evaluating the over all 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 pos ition of the Company as at 31 December 2021 and
2022 and 30 June 2023 and the consolidated fina n c i a lp o s i t i o no ft h eG r o u pa sa t3 1D e c e m b e r
2020, 2021 and 2022 and 30 June 2023 and of its consolidated financial performance and its
consolidated cash flows for the Track Record Peri od in accordance with the basis of presentation
and preparation set out in Notes 1.3 and 2.1 to the Historical Financial Information.
Review of stub period comparative financial information
We have reviewed the stub period comparative financial information of the Group which
comprises the consolidated statement of compreh ensive income, the consolidated statement of
changes in equity and the consolidated statemen t of cash flows for the six months ended 30 June
2022 and other explanatory information (the ‘‘Stub Period Comparative F inancial Information ’’).
The directors of the Company are responsible fo r the presentation and preparation of the Stub
Period Comparative Financial Information in a ccordance with the basis of presentation and
preparation set out in Notes 1.3 and 2.1 to the Histor ical Financial Informati on. Our responsibility
is to express a conclusion on the Stub Period Com parative 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 Perfo rmed by the Independent Auditor of the Entity
issued by the HKICPA. A review consists of making i nquiries, primarily of persons responsible for
financial and accounting matters, and applying anal ytical 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
APPENDIX I ACCOUNTANT ’SR E P O R T
– I-2 –


--- page 460 ---
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 Inform ation, for the purposes of the accountant ’s report, is not
prepared, in all material respects, in accordance wi th the basis of presentation and preparation set
out in Notes 1.3 and 2.1 to the Historical Financial Information.
Report on matters under the Rules Governing the Listing of Securities on The Stock Exchange
of Hong Kong Limited (the ‘‘Listing Rules ’’) and the Companies (Winding Up and
Miscellaneous Provisions) Ordinance
Adjustments
In preparing the Historical Financial Informati on, no adjustments to the Underlying Financial
Statements as defined on page I-4 have been made.
Dividends
We refer to Note 27 to the Historical Financial I nformation which contains information about
the dividends paid by WellCell Holdings Co., Li mited in respect of the Track Record Period.
No statutory financial st atements for the Company
No statutory financial statements have been prepared for the Company since its date of
incorporation.
PricewaterhouseCoopers
Certified Public Accountants
Hong Kong
28 December 2023
APPENDIX I ACCOUNTANT ’SR E P O R T
– I-3 –


--- page 461 ---
I HISTORICAL FINANCIAL INFORMATION OF THE GROUP
Preparation of Historical Financial Information
Set out below is the Historical Financial Inf ormation which forms an integral part of this
accountant ’s report.
The financial statements of the Group fo rt h eT r a c kR e c o r dP e r i o d ,o nw h i c ht h e
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.
APPENDIX I ACCOUNTANT ’SR E P O R T
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Consolidated Statements of Comprehensive Income
Year ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
Note RMB’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
(unaudited)
Revenue 5 195,570 203,336 226,513 103,237 113,838
Other income 7 3,053 3,092 3,434 1,799 1,224
Other (losses)/gains, net 8 (57) (122) (21) (45) 238
Employee benefit expenses 9 (55,664) (46,425) (20,041) (9,992) (9,108)
Subcontracting charges (69,194) (86,593) (121,592) (50,085) (63,199)
Materials, supplies and other
project costs (31,854) (29,168) (38,220) (20,232) (14,650)
Depreciation and amortisation 6(a) (1,648) (2,275) (3,066) (1,545) (1,219)
Net impairment losses of contract
assets and trade receivables 3.2(b) (804) (173) (3,333) (1,379) (1,282)
Other operating expenses 6(b) (3,180) (3,649) (3,496) (1,619) (1,848)
Listing expenses 6(c) (1,014) (7,544) (10,108) (6,590) (5,945)
Operating profit 35,208 30,479 30,070 13,549 18,049
Finance income 10 73 47 94 49 147
Finance costs 10 (569) (378) (896) (326) (535)
Finance costs, net 10 (496) (331) (802) (277) (388)
Profit before income tax 34,712 30,148 29,268 13,272 17,661
Income tax expense 11 (5,052) (4,624) (5,009) (3,901) (3,003)
Profit for the year/period
attributable to the equity
holders of the Company 29,660 25,524 24,259 9,371 14,658
Total comprehensive income for
the year/period attributable
to the equity holders of the
Company 29,660 25,524 24,259 9,371 14,658
Earnings per share attributable to
equity holders of the Company
Basic and diluted 12 74 64 61 23 37
Note: The earnings per share presented above has not taken i nto account the proposed capitalisation issue, noted in
Note 30(b), pursuant to the resolutions of the sha reholders passed on 15 December 2023, because the
proposed capitalisation issue has not become ef fective as at the date of this Accountant ’s Report.
APPENDIX I ACCOUNTANT ’SR E P O R T
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Consolidated Statements of Financial Position
As at 31 December
As at
30 June
20232020 2021 2022
Note RMB’000 RMB ’000 RMB ’000 RMB ’000
ASSETS
Non-current assets
Property, plant and equipment 13 2,579 3,187 2,533 2,104
Intangible assets 14 1,709 2,836 1,607 1,076
Deferred tax assets 20 267 195 793 985
4,555 6,218 4,933 4,165
Current assets
Contract assets 18 59,264 72,758 67,895 61,520
Trade receivables 18 26,473 31,499 35,397 49,502
Prepayments, deposits and other
receivables 16 13,199 10,941 10,545 18,113
Pledged bank deposits 17 60 4,130 ——
Amount due from the intermediate
holding company 26 — 112 1,161 1,181
Current income tax recoverable — 2,662 1,051 111
Cash and cash equivalents 17 23,130 21,542 42,199 31,507
122,126 143,644 158,248 161,934
Total assets 126,681 149,862 163,181 166,099
EQUITY
Equity attributable to equity
holders of the Company
Share capital ———— *
Combined capital 22,000 22,000 22,000 —
Reserves 43,516 49,086 58,742 81,068
Total equity 65,516 71,086 80,742 81,068
LIABILITIES
Non-current liabilities
Bank borrowings 23 4,860 3,440 8,000 6,000
Lease liabilities 19 296 37 — 121
5,156 3,477 8,000 6,121
Current liabilities
Trade and bills payables 21 7,259 17,198 5,216 2,631
Contract liabilities, other payables
and accruals 22 44,976 49,313 45,280 50,146
Bank borrowings 23 1,420 4,420 22,000 23,500
Lease liabilities 19 287 398 83 45
Amounts due to shareholders 26 1,261 3,970 1,860 2,588
Current income tax liabilities 806 ———
56,009 75,299 74,439 78,910
Total liabilities 61,165 78,776 82,439 85,031
Total equity and liabilities 126,681 149,862 163,181 166,099
* The balance was less than RMB1,000.
APPENDIX I ACCOUNTANT ’SR E P O R T
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Statements of Financial Position of the Company
As at
31 December
2021
As at
31 December
2022
As at
30 June
2023
Note RMB’000 RMB ’000 RMB ’000
ASSETS
Non-current asset
Investment in subsidiary 30(e) —— 24
Current assets
Other receivables 30(f) —— 2
Amount due from the intermediate holding
company 30(a) — * 859 859
Total assets — * 859 885
EQUITY
Equity attributable to equity holder of
the Company
Share capital 30(b) — * — * — *
Capital reserve 30(d) —— 24
(Accumulated losses)/retained earnings 30(d) (40) 723 710
Total (deficit)/equity (40) 723 734
LIABILITIES
Current liabilities
Other payables and accruals — 56 —
Amount due to a subsidiary 30(c) 40 80 151
Total liabilities 40 136 151
Total equity and liabilities — * 859 885
* The balance was less than RMB1,000.
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Consolidated Statements of Changes in Equity
Attributable to equity holders of the Company
Share
capital
Combined
capital
Capital
reserve
Statutory
reserve
Retained
earnings
Total
equity
RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
(Note a) (Note b)
Balance at 1 January 2020 — 22,000 (26,608) 6,711 33,753 35,856
Comprehensive income
Profit for the year ———— 29,660 29,660
Total comprehensive income ———— 29,660 29,660
Transaction with equity holders
Appropriation (Note b) ——— 3,343 (3,343) —
Total transaction with equity
holders ——— 3,343 (3,343) —
Balance at 31 December 2020 — 22,000 (26,608) 10,054 60,070 65,516
Balance at 1 January 2021 — 22,000 (26,608) 10,054 60,070 65,516
Comprehensive income
Profit for the year ———— 25,524 25,524
Total comprehensive income ———— 25,524 25,524
Transactions with equity holders
Appropriation (Note b) ——— 2,729 (2,729) —
Dividend paid (Note 27) ———— (19,954) (19,954)
Total transactions with equity
holders ——— 2,729 (22,683) (19,954)
Balance at 31 December 2021 — 22,000 (26,608) 12,783 62,911 71,086
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Attributable to equity holders of the Company
Share
capital
Combined
capital
Capital
reserve
Statutory
reserve
Retained
earnings
Total
equity
RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
(Note a) (Note b)
Balance at 1 January 2022 — 22,000 (26,608) 12,783 62,911 71,086
Comprehensive income
Profit for the year ———— 24,259 24,259
Total comprehensive income ———— 24,259 24,259
Transactions with equity holders
Appropriation (Note b) ——— 2,927 (2,927) —
Dividend paid (Note 27) ———— (14,603) (14,603)
Total transactions with equity
holders ——— 2,927 (17,530) (14,603)
Balance at 31 December 2022 — 22,000 (26,608) 15,710 69,640 80,742
Balance at 1 January 2022 — 22,000 (26,608) 12,783 62,911 71,086
Comprehensive income
Profit for the period ———— 9,371 9,371
Total comprehensive income ———— 9,371 9,371
Transaction with equity holders
Appropriation (Note b) ——— 1,342 (1,342) —
Total transaction with equity
holders ——— 1,342 (1,342) —
B a l a n c ea t3 0J u n e2 0 2 2
(unaudited) — 22,000 (26,608) 14,125 70,940 80,457
APPENDIX I ACCOUNTANT ’SR E P O R T
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Attributable to equity holders of the Company
Share
capital
Combined
capital
Capital
reserve
Statutory
reserve
Retained
earnings
Total
equity
RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
(Note a) (Note b)
Balance at 1 January 2023 — 22,000 (26,608) 15,710 69,640 80,742
Comprehensive income
Profit for the period ———— 14,658 14,658
Total comprehensive income ———— 14,658 14,658
Transactions with equity holders
Reclassification of combined capital
to share capital and capital
reserves upon the completion of
the Reorganisation (Note 1.2(i)) — * (22,000) 22,000 ——— *
Appropriation (Note b) ——— 1,516 (1,516) —
Dividend paid (Note 27) ———— (14,332) (14,332)
Total transactions with equity
holders — * (22,000) 22,000 1,516 (15,848) (14,332)
B a l a n c ea t3 0J u n e2 0 2 3 — * — (4,608) 17,226 68,450 81,068
* The balances were rounded to the nearest thousand.
Notes:
(a) The Company was incorporated on 14 September 202 1 and the Reorganisation was completed on 27 April
2023. For the purpose of the Historical Financial Infor mation, the combined capital as at 31 December 2020,
2021 and 2022 represented the aggregate amounts of s hare capital of the companies then comprising the
Group after elimination of the inter-company investment costs.
(b) The People ’s Republic of China (the ‘‘PRC’’) laws and regulations require companies registered in the PRC to
provide for certain statutory reserves, which are to be appropriated from the profit after income tax (after
offsetting accumulated losses from prior years) as reporte d in their respective statutory financial statements,
before profit distributions to equity holders. All stat utory reserves are created for specific purposes. A PRC
company is required to appropriate an amount of not le ss than 10% of statutory profits after income tax to
statutory surplus reserves, prior to distribution of its post-tax profits of the current year. A company may
discontinue the contribution when the aggregate sum of the statutory surplus reserve is more than 50% of its
registered capital. The statutory surplus reserves shall only be used to make up losses of the company, to
expand the company ’s operations, or to increase the capital of the company. In addition, a company may make
further contribution to the discretional surplus reserv e using its post-tax profits in accordance with resolutions
of the board of directors.
APPENDIX I ACCOUNTANT ’SR E P O R T
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Consolidated Statements of Cash Flows
Year ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
Note RMB’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
(unaudited)
Cash flows from operating
activities
Cash generated from/(used in)
operations 24(a) 18,611 33,039 20,958 (2,454) 8,756
Income tax paid (5,379) (8,020) (3,996) (978) (2,255)
Net cash generated from/(used in)
operating activities 13,232 25,019 16,962 (3,432) 6,501
Cash flows from investing
activities
Purchase of property, plant and
equipment (470) (2,023) (1,238) (906) (70)
Proceeds from disposal of
property, plant and equipment 24(b) — 19 —— —
Additions of intangible assets (678) (1,829) (54) ——
Interest received 73 47 94 49 147
Net cash (used in)/generated from
investing activities (1,075) (3,786) (1,198) (857) 77
Cash flows from financing
activities
Proceeds from bank borrowings 24(c) 23,720 6,001 30,000 25,000 10,000
Repayments of bank borrowings 24(c) (19,440) (4,421) (7,860) (3,710) (10,500)
Interest paid 24(c) (569) (378) (896) (326) (535)
Dividend paid 27 — (19,954) (14,603) — (14,332)
Change in pledged deposits for
bills payables — (4,130) 4,130 4,130 —
Advances from shareholders 24(c) 98 2,787 1,656 1,088 728
Repayments to shareholders 24(c) (15,077) (78) (3,766) ——
Payment of principal element of
lease liabilities 19(c) (231) (349) (221) (155) (106)
Payment of listing expenses (631) (2,299) (3,547) (2,307) (2,525)
Net cash (used in)/generated from
financing activities (12,130) (22,821) 4,893 23,720 (17,270)
Net increase/(decrease) in cash
and cash equivalents 27 (1,588) 20,657 19,431 (10,692)
Cash and cash equivalents at
beginning of the year/period 23,103 23,130 21,542 21,542 42,199
Cash and cash equivalents at end
of the year/period 17 23,130 21,542 42,199 40,973 31,507
APPENDIX I ACCOUNTANT ’SR E P O R T
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II. NOTES TO THE HISTORICAL FINANCIAL INFORMATION
1 GENERAL INFORMATION, REORGANISATION AND BASIS OF PRESENTATION
1.1 General information
WellCell Holdings Co., Limited (the ‘‘Company ’’) was incorporated in the Cayman Islands on 14 September
2021 as an exempted company with limited liability under the Companies Law (Cap. 22, Law 3 of 1961 as
consolidated and revised) of the Cayman Islands. The addres s of its registered office is 71 Fort Street, P.O. Box 500,
George Town, Grand Cayman, KY1-1106, Cayman Islands.
The Company is an investment holding company, an d its subsidiaries now comprising the Group are
principally engaged in providing telecommunication net work support services, information and communication
technology integration services and telecommunication network-related software development services to our
customers (the ‘‘Listing Business ’’). The ultimate holding company of the Company is Shine Dynasty Limited
(‘‘Shine Dynasty ’’), a company incorporated in the British Virgin Islands (the ‘‘BVI’’). The ultimate controlling
shareholder is Mr. Jia Zhengyi ( ‘‘Mr. Jia ’’) who has been controlling the group companies.
1.2 Reorganisation
Immediately prior to the reorganisation (the ‘‘Reorganisation ’’) as described below and during the Track
Record Period, the Listing Business was carried out by Guangdong WellCell Technology Company Limited*
(‘‘WellCell Technology ’’)( 廣東經緯天地科技有限公司) and Guangdong WellCell Intelligent Technology Company
Limited* ( ‘‘WellCell Intelligent ’’)( 廣東經緯天地智能科技有限公司) (collectively the ‘‘Operating Companies ’’)
which were controlled by Mr. Jia throughout the Track Record Period.
In preparation for the initial public offering ( ‘‘IPO’’) and listing (the ‘‘Listing ’’)o ft h eC o m p a n y’ss h a r e so n
the Main Board of The Stock Exchange of Hong Kong Limited, the Group underw ent a reorganisation ( ‘‘the
Reorganisation ’’) which principally involved the following steps:
(a) On 5 July 2018, Shine Dynasty, a company incorporated in the BVI with limited liability and was
authorised to issue a maximum number of 50,000 shares of 1 United States dollar ( ‘‘USD’’) each. Upon
incorporation, 1 share of USD1 was allotted and issued at par and credited as fully paid to Mr. Jia.
(b) On 8 February 2019, WellCell Group Co., Limited ( ‘‘WellCell Group ’’)( 經緯天地集團有限公司)w a s
incorporated in the BVI and was authorised to issu e a maximum of 50,000 shares of par value of USD1
each. Upon incorporation, 103 shares, 75 shares, 10 shares, 8 shares and 4 shares were allotted and
issued to Shine Dynasty wholly owned by Mr. Jia, Cheer Partners Limited ( ‘‘Cheer Partners ’’) wholly
held by Mr. Lin Qihao ( ‘‘Mr. Lin ’’), Mr. Fung Man Hon ( ‘‘Mr. Fung ’’), Dazzling Power Limited
(‘‘Dazzling Power ’’) wholly held by Mr. Cong Bin ( ‘‘Mr. Cong ’’) and Diamond Skyline Limited
(‘‘Diamond Skyline ’’) wholly held by Ms. Chen Shen Mao ( ‘‘Ms. Chen ’’), respectively. Subsequently
on 1 September 2021, Mr. Fung transferred his entire equity interest in WellCell Group to Golden
Concord Holding Limited ( ‘‘Golden Concord ’’) wholly held by Mr. Fung.
(c) On 19 February 2019, WellCell Hong Kong Limited ( ‘‘WellCell HK ’’)( 經緯天地香港有限公司)w a s
incorporated in Hong Kong with limited liability with 1 share of 1 Hong Kong dollar ( ‘‘HK$’’) allotted
and issued to WellCell Group.
(d) On 1 March 2019, WellCell HK acquired 51.5%, 37.5%, 5%, 4% and 2% equity interest in WellCell
Technology from Mr. Jia, Mr. Lin, Mr. Fung, Mr. Cong and Ms. Chen, respectively, at a total
consideration of RMB28,600,000.
(e) On 3 July 2019, WellCell Intelligent was incorporated in the PRC with limited liability by WellCell
HK with a registered capital of RMB10,000,000. After its incorporation, WellCell Intelligent became a
wholly-owned subsidiary of WellCell HK.
APPENDIX I ACCOUNTANT ’SR E P O R T
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--- page 470 ---
(f) On 11 August 2021, WellCell International Co., Limited ( ‘‘WellCell International ’’) was incorporated in
the BVI and was authorised to issue a maximum of 50,000 shares of par value of USD1 each. Upon
incorporation, 1 share was allotted and issued as fully paid to WellCell Group at par.
(g) On 27 August 2021, WellCell International acquired the entire equity interest of WellCell HK from
WellCell Group. In consideration of acquisition, We llCell International issued and allotted 1 share to
WellCell Group.
(h) On 14 September 2021, the Company was incorporated in the Cayman Islands with initial authorised
share capital of 38,000,000 shares of HK$0.01 each. Upon incorporation, 1 share of the Company of
HK$0.01 was issued and allotted to the initial subscribing shareholder. On the same day, the subscriber
share was transferred to WellCell Group and the Company further issued and allotted 199 shares as
fully paid to WellCell Group.
(i) On 27 April 2023, the Company acquired 100% equ ity interest in WellCell International at a
consideration of the issue and allotment of 200 shares to WellCell Group.
Upon completion of the Reorganisation on 27 April 2023, the Company became the holding company of the
companies comprising the Group.
Upon completion of the Reorganisation and as at the dat e of this report, the Company had direct or indirect
interests in the following subsidiaries:
Name of subsidiary
Place, date of incorporation/
establishment and
kind of legal entity
Principal activities and
place of operation
Issued and paid
up capital/
registered capital
Effective interest
held by the Group As at
the date
of this
report
Name of statutory
auditors
As at
31 December
As at
30 June
Year ended
31 December
2020 2021 2022 2023 2020 2021 2022
Direct Interests:
WellCell International Co.,
Limited
The BVI:
11 August 2021,
limited liability company
Investment holding in BVI USD1 N/A 100% 100% 100% 100% N/A (i) (i)
Indirect Interests:
WellCell Hong Kong Limited Hong Kong:
19 February 2019,
limited liability company
Investment holding in
Hong Kong
HK$1 100% 100% 100% 100% 100% (ii) (ii) (ii)
Guangdong WellCell Technology
Company Limited*
(廣東經緯天地
科技有限公司)
#
The PRC:
20 March 2003,
limited liability company
Provision of maintenance
and engineering services
for telecommunication
network and
infrastructure
RMB22,000,000 100% 100% 100% 100% 100% (iii) (iii) (iii)
Guangdong WellCell Intelligent
Technology Company
Limited*
(廣東經緯天地智能
科技有限公司)
#
The PRC:
3 July 2019,
limited liability company
Sales of telecommunication
network related software
in the PRC
RMB515,298 100% 100% 100% 100% 100% (iii) (iii) (iii)
(i) No audited statutory financial statements have been issued for the subsidiaries as they are not required
to issue audited financial statements under the statutory requirements of their places of incorporation.
(ii) The statutory auditor for the years ended 31 December 2020, 2021 and 2022 was
PricewaterhouseCoopers, Certified Public Accountants.
(iii) The statutory auditor for the years ended 31 December 2020, 2021 and 2022 was Zhuhai Deyuan
Certified Public Accountants* ( 珠海德源會計師事務所).
All companies now comprising the Group have adopted 31 December as their financial year end date.
APPENDIX I ACCOUNTANT ’SR E P O R T
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* The English translation is for identification purpose only. These companies do not have official English
name.
# Registered as wholly foreign owned enterprises under PRC law.
1.3 Basis of presentation
Immediately prior to and after the Reorganisati on, the Listing Business had been and continues to be
conducted through the Operating Companies. Pursuant to the Reorganisation, the Listing Business is held by the
Company. The Company has not been involved in any business prior to the Reorganisation and does not meet the
definition of a business. The Reorganisation is merely a recapitalisation of the Listing Business with no change in
management of such business and the ultimate controlling shareholder remains the same. Accordingly, the Group
resulting from the Reorganisation is regarded as a continua tion of the Listing Business, with the assets and liabilities
of the Group recognised and measured at the carrying amo unts of the Listing Business for all periods presented.
2 SUMMARY OF MATERIAL ACCOUNTING POLICIES
The principal accounting policies applied in the preparat ion of the Historical Financial Information are set out
below. These policies have been consistently applied to all the years/periods presented, unless otherwise stated.
2.1 Basis of preparation
The Historical Financial Information of the Group has been prepared in accordance with Hong Kong Financial
Reporting Standards ( ‘‘HKFRS ’’) issued by the Hong Kong Institute of Certified Public Accountants ( ‘‘HKICPA ’’).
The Historical Financial Information has been pr epared under the historical cost convention.
The preparation of the Historical Financial Information in conformity with HKFRS requires the use of certain
critical accounting estimates. It also requires the dir ectors of the Group to exercise judgement in the process of
applying the Group ’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas
where assumptions and estimates are significant to the Historical Financial Information, are disclosed in Note 4.
The relevant accounting policies have been consistent ly applied to this Historical Financial Information
throughout the Track Record Period.
New standard and amendments to existing standards not yet adopted
Effective for
accounting periods
beginning on
or after
HKAS 1 (Amendments) Classification of Liab ilities as Current or Non-current 1 January 2024
HKAS 1 (Amendments) Non-current Li abilities with Covenants 1 January 2024
HKFRS 16 (Amendments) Lease Liability in a Sale and Leaseback 1 January 2024
Hong Kong Interpretation 5
(Revised)
Presentation of Financial Statements — Classification by
the Borrower of a Term Loan that Contains a Repayment
on Demand Clause
1 January 2024
HKAS 7 and HKFRS 7
(Amendments)
Supplier Finance Arrangement s (Amendments) 1 January 2024
HKAS 21 (Amendments) Lack of Exchangeability 1 January 2025
HKFRS 10 and HKAS 28
(Amendments)
Sale or Contribution of Assets Between an Investor and its
Associate or Joint Venture
To be determined
APPENDIX I ACCOUNTANT ’SR E P O R T
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The Group will adopt the above new standard and amendments to existing standards as and when they
become effective. Management has performed preliminary a ssessment and does not anticipate any significant impact
on the Group ’s financial position and results of operations upon adopting these standards and amendments to
existing HKFRS.
2.2 Principles of consolidation
2.2.1 Subsidiaries
A subsidiary is an entity (including a structured entity) over which the Group has control. The Group
controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with
the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are
consolidated from the date on which control is tra nsferred to the Group. They are deconsolidated from the
date that control ceases.
(a) Business combination
Except for the Reorganisation, the Group applies the acquisition method to account for business
combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the
assets transferred, the liabilities incurred and the equity interests issued by the Group. The
consideration transferred includes the fair value of any asset or liability resulting from a contingent
consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed
in a business combination are measured initially at their fair values at the acquisition date. The Group
recognises any non-controlling interest in the acquire e on an acquisition-by-acquisition basis, either at
fair value or at the non-controlling interest ’s proportionate share of the recognised amounts of
acquiree ’s identifiable net assets.
Acquisition-related costs are expensed as incurred.
If the business combination is achieved in stages, the acquisition date carrying value of the
acquirer ’s previously held equity interest in the acquiree is re-measured to fair value at the acquisition
date; any gains or losses arising from such re -measurement are recognised in profit or loss.
Any contingent consideration to be transferred by the Group is recognised at fair value at the
acquisition date. Subsequent changes to the fair valu e of the contingent consideration that is deemed to
be an asset or liability is recognised in accordance with HKFRS 9 in profit or loss. Contingent
consideration that is classified as equity is not re measured, and its subsequent settlement is accounted
for within equity.
The excess of the consideration transferred, t he amounts of any non-controlling interest in the
acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair
value of the identifiable net assets acquired is recorded as goodwill. If the total of consideration
transferred, non-controlling interest recognised and previously held interest measured is less than the
fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is
recognised directly in the profit or loss.
Inter-company transactions, balances and unrealised gains on transactions between group
companies are eliminated. Unrealised losses are also eliminated. Accounting policies of subsidiaries
now comprising the Group have been changed where n ecessary to ensure consistency with the policies
adopted by the Group.
APPENDIX I ACCOUNTANT ’SR E P O R T
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--- page 473 ---
(b) Changes in ownership interests in subsidiaries without change of control
Transactions with non-controlling interests that do not result in a loss of control are accounted
for as equity transactions — that is, as transactions with the owners of the subsidiary in their capacity
as owners. The difference between fair value of any c onsideration paid and the relevant share acquired
of the carrying amounts of net assets of the subsidiary is recorded in equity. Gains or losses on disposal
to non-controlling interests are also recorded in equity.
(c) Disposal of subsidiaries
When the Group ceases to have control, any retained interest in the entity is re-measured to its
fair value at the date when control is lost, with the change in carrying amounts recognised in profit or
loss. The fair value is the initial carrying amounts for the purposes of subsequently accounting for the
retained interest as an associate or a financial asse t. In addition, any amounts previously recognised in
other comprehensive income in respect of that entity are accounted for as if the Group had directly
disposed of the related assets or liabilities. This may mean that amounts previously recognised in other
comprehensive income are reclassified to profit or loss.
2.3 Segment reporting
Operating segment is reported in a manner consistent with the internal reporting provided to the chief
operating decision-maker ( ‘‘CODM ’’). The CODM, who is responsible for allocating resources and assessing
performance of the operating segment, has been identif ied as the directors who make strategic decisions.
2.4 Foreign currency translation
2.4.1 Functional and presentation currency
Items included in the financial statements of each of the Group ’s entities are measured using the
currency of the primary economic environment in which the entity operates (the ‘‘functional currency ’’). The
Historical Financial Information is p resented in RMB, which is the Company ’s functional and the Group ’s
presentation currency.
2.4.2 Transactions and balances
Foreign currency transactions are translated int o the functional currency using the exchange rate
prevailing at the dates of the transaction. Foreign e xchange gains and losses resulting from the settlement of
such transactions and from the translation at year-e nd exchange rates of monetary assets and liabilities
denominated in foreign currencies are generally recognised in profit or loss.
Non-monetary items that are measured at fair value in a foreign currency are translated using the
exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities
carried at fair value are reported as part of the fair value gain or loss. For example, translation differences on
non-monetary assets and liabilities such as equities held at fair value through profit or loss are recognised in
profit or loss as part of the fair value gain or loss and t ranslation differences on non-monetary assets such as
equities held at fair value through other comprehensive income are recognised in other comprehensive income.
2.4.3 Group companies
The results and financial positions of all the gr oup entities (none of which has the currency of a
hyperinflationary economy) that have a functional cur rency different from the presentation currency are
translated into the presentation currency as follows:
. assets and liabilities for each statement of financial position presented are translated at the
closing rate at the date of that statement of financial position;
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. income and expenses for each statement of compr ehensive income are translated at average
exchange rates (unless this average is not a reas onable approximation of the cumulative effect of
the rates prevailing on the transaction dates, in which case income and expenses are translated at
the rate on the dates of the transactions); and
. all resulting exchange differences are r ecognised in other comprehensive income.
On consolidation, exchange differences arising fro m the translation of any net investment in foreign
operations are taken to other comprehensive income. When a foreign operation is sold or any borrowings
forming part of the net investment are repaid, the associated exchange differences are reclassified to profit or
loss, as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as
assets and liabilities of the foreign entity and translated at the closing rate.
2.5 Property, plant and equipment
Property, plant and equipment are stated at historical cost less accumulated depreciation. Historical cost
includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the assets ’ carrying amounts or recognised as a separate asset, as
appropriate, only when it is probable t hat future economic benefits associated with the asset will flow to the Group
and the cost of the item can be measured reliably. The car rying amounts of the replaced part is derecognised. All
other repairs and maintenance are charged to profit or lo ss during the reporting period in which they are incurred.
Depreciation of property, plant and equipment is calcu lated using the straight-line method to allocate their
costs, net of their residual value, over their estimated useful lives, as follows:
Furniture, fixtures and office equipment 3 to 5 years
Plant and machinery 3 to 5 years
Motor vehicles 3 to 5 years
Leasehold improvements Shorter of estim ated useful lives or remaining lease terms
The assets ’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each
reporting period.
An asset ’s carrying amount is written down immediate ly to its recoverable amounts if the asset ’s carrying
amount is greater than its estimated recoverable amounts.
Gain or loss on disposal are determined by compari ng proceeds with carrying amounts and are recognised in
profit or loss.
2.6 Intangible assets
2.6.1 Acquired software for own use
Acquired software licenses are capitalised on the bas is of the costs incurred to acquire and bring to use
the specific software. They have a finite useful life and are carried at cost less accumulated amortisation and
impairment losses.
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2.6.2 Self-developed software
Development costs that are directly attributable to the design and testing of identifiable and unique
software controlled by the Group are recognised as int angible assets where the following criteria are met:
. it is technically feasible to complete the software so that it will be available for use,
. management intends to complete the software and use or sell it,
. there is an ability to use or sell the software,
. it can be demonstrated how the software will ge nerate probable future economic benefits,
. adequate technical, financial and other resources to complete the development and to use or sell
the software are available, and
. the expenditure attributable to the software dur ing its development can be reliably measured.
Directly attributable costs that are capitalised as part of the software include employee costs and an
appropriate portion of relevant overheads.
Capitalised development costs are recorded as intangible assets and amortised from the point at which
the asset is ready for use.
Costs associated with maintaining self-developed software programmes are recognised as an expense as
incurred.
2.6.3 Research and development
Research expenditure and development expenditure th at do not meet the criteria in Note 2.6.2 above are
recognised as an expense as incurred. Development c osts previously recognised as an expense are not
recognised as an asset in a subsequent period.
2.6.4 Amortisation methods and periods
The Group amortises intangible assets with a limited u seful life using the straight-line method over the
following periods:
System software 5 years
Self-developed software 3 years
2.7 Impairment of non-financial assets
Assets are tested for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment lo ss 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 i mpairment, assets are grouped at the lowest levels for
which there are separately identifiable cash flows (cash-ge nerating units). Non-financial assets other than goodwill
that suffered an impairment are reviewed for possible rev ersal of the impairment at the end of each reporting period.
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2.8 Financial assets
2.8.1 Classification
The Group classifies its financial assets as assets 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.
The Group reclassifies debt investments when a nd only when its business model for managing those
assets changes.
2.8.2 Recognition and measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a
financial asset not at fair value through profit or loss, tr ansaction costs that are directly attributable to the
acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or
loss are expensed in profit or loss.
Financial assets with embedded derivatives are consid ered in their entirety when determining whether
their cash flows are solely payment of principal and interest.
Debt instruments
Subsequent measurement of debt instruments depends on the Group ’s business model for
managing the asset and the cash flow characteristics of the asset. The Group classifies its debt
instruments to be measured at amortised costs.
Assets that are held for collection of contractual cash flows where those cash flows represent
solely payments of principal and interest are meas ured at amortised cost. Interest income from these
financial assets is included in finance income using the effective interest rate method. A gain or loss on
a debt investment that is subsequently measured at amortised cost and is not part of a hedging
relationship is recognised in profit or loss when the asset is derecognised or impaired.
2.8.3 Derecognition
Financial assets are derecognised when the rights to receive cash flows from the investments have
expired or have been transferred and the Group has transfe rred substantially all risks and reward of ownership.
2.9 Offsetting financial instruments
Financial assets and liabilities are offset and the net amounts reported in the consolidated statement of
financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention
to settle on a net basis or realise the asset and settle the liability simultaneously.
2.10 Impairment of financial assets
The Group has the following types of financial asse ts measured at amortised cost subject to HKFRS 9 ’s
expected credit loss model:
. Contract assets and trade receivables;
. Other receivables;
. Cash and cash equivalents and pledged bank deposits
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The Group assesses on a forward-looki ng basis the expected credit loss associated with its assets carried at
amortised cost. The impairment methodology applied depe nds on whether there has been a significant increase in
credit risk.
In assessing whether the credit risk of a financial asset has increased significantly since initial recognition, the
Group considers that a default event occurs when the borro wer is unlikely to pay its credit obligations to the Group
in full, without recourse to actions such as realising security. The Group considers information that is reasonable and
supportable, including historical experience an d forward-looking information that is available.
For contract assets and trade receivables, the Group applies the simplified approach permitted by HKFRS 9,
which requires expected lifetime losses to be recognised from initial recognition of the contract assets and trade
receivables. The provision matrix is determined based on historical default rates over the expected life of the
contract assets and trade receivables with similar credi t risk characteristics and is adjusted for forward-looking
estimates. At every reporting date, the historical defau lt rates are updated and changes in the forward-looking
estimates are analysed.
For other receivables, the Group measures the impairment as either 12-month expected credit losses or
lifetime expected credit losses, depending on whether there has been a significant increase in credit risk since initial
recognition. If a significant increase in credit risk of the other receivables has occurred since initial recognition, then
impairment is measured as lifetime expected credit losse s. To manage risk arising from cash and cash equivalents
and pledged bank deposits, the Group only transacts with reputable financial institutions. There has been no recent
history of default in relation to these financial institutions.
2.11 Trade and other receivables
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course
of business. If collection of trade and other receivables is expected in one year or less (or in the normal operating
cycle of the business if longer), they are classified as curren t assets. If not, they are presented as non-current assets.
Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost
using the effective interest method , less allowance for impairment.
2.12 Cash and cash equivalents
For the purpose of presentation in the consolidated statement of cash flows, cash and cash equivalents include
cash on hand and deposits held at call with banks with original maturities of three months or less.
2.13 Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of tax, from the proceeds.
2.14 Trade, bills and other payables
Trade and bills payables are obligations to pay for goods or services that have been acquired in the ordinary
course of business from suppliers. Trade, bills and other payables are classified as current liabilities if payment is
due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as
non-current liabilities.
Trade, bills and other payables are recognised initially at fair value and subsequently measured at amortised
cost using the effective interest method.
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2.15 Borrowings
Borrowings are recognised initially at fair value, ne t of transaction costs incurred. Borrowings are
subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the
redemption value is recognised in interest expense over the period of the borrowings using the effective interest
method.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement
of the liability for at least twelve months after the end of the reporting period.
2.16 Borrowing costs
General and specific borrowing costs that are directly attributable to the acquisition, construction or
production of a qualifying asset are capitalised during the pe riod of time that is required to complete and prepare the
asset for its intended use or sale. Qualifying assets are ass ets that necessarily take a substantial period of time to get
ready for their intended use or sale.
Investment income earned on the temporary investment o f specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs eligible for capitalisation.
Other borrowing costs are expensed in the period in which they are incurred.
2.17 Provisions
Provisions are recognised when the Group has a present l egal or constructive obligation as a result of past
events; it is probable that an outflow of resources will be required to settle the obligation; and the amounts can be
reliably estimated. Provisions are not re cognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement
is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of
an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of the expenditures expected to be required to settle the
obligation using a pre-tax rate that reflects current ma rket assessments of the time value of money and the risks
specific to the obligation. The increase in the provisi on due to passage of time is recognised as finance costs.
2.18 Current and deferred income tax
The income tax expense or credit for the period is the tax payable on the current period ’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.
2.18.1 Current income tax
The current income tax charge is calculated on the basis of the tax laws enacted or substantively
e n a c t e da tt h ee n do ft h er e p o r t i n gp e r i o di nt h ec o u n t r i e sw h e r et h ec o m p a n y’s subsidiaries operate and
generate taxable income. Manageme nt periodically evaluates positions taken in tax returns with respect to
situations in which applicable tax regulation is subject to interpretation. It establishes provisions where
appropriate on the basis of amounts expected to be paid to the tax authorities.
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2.18.2 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 consolidated financial
information. However, deferred tax liabilities are not r ecognised if they arise from the initial recognition of
goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or
liability in a transaction other than a business combina tion that at the time of the transaction affects neither
accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have
been enacted or substantively enacted by the end of th e 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 proba ble that future taxable amounts will be available to
utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying
amount and tax bases of investments in foreign opera tions where the Group is able to control the timing of
the reversal of the temporary differences and it is p robable that the differences will not reverse in the
foreseeable future.
2.18.3 Offsetting
Deferred tax assets and liabilities are offset when the re 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 liabilities are offset where the entity has a le gally 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.
2.19 Employee benefits
2.19.1 Short-term obligations
Liabilities for wages and salaries, including non-mone tary benefits and accumulating sick leave that are
expected to be settled wholly within twelve 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 th e consolidated statement of financial position.
2.19.2 Other long-term employee benefit obligations
The obligations are presented as current liabilities in t he consolidated statement of financial position if
the entity does not have an unconditional right to defer settlement for at least twelve months after the
reporting period, regardless of when the actual settlement is expected to occur.
2.19.3 Defined contribution plans
The Group pays contributions to state-managed pensi on insurance plans on a mandatory, contractual or
voluntary basis. The Group has no further payment obligations once the contributions have been paid. The
contributions are recognised as employee benefit expe nse when they are due. Prepaid contributions are
recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
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2.19.4 Bonus plans
The Group recognises a liability and an expense for bonuses based on a formula that takes into
consideration the profit attributable to the Group ’s shareholders after certain adjustments. The Group
recognises a provision where contr actually obliged or where there is a past practice that has created a
constructive obligation.
2.20 Revenue recognition
Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services
in the ordinary course of the Group ’s activities.
Revenue is recognised when or as the control of the services or goods is transferred to the purchaser.
Depending on the terms of the contract and the laws that apply to the contract, control of the services or goods may
transfer over time or at a point in time. Control of the services or goods is transferred over time if the Group ’s
performance:
(i) provides all of the benefits received and consumed simultaneously by the customer; or
(ii) creates and enhances an asset that the cu stomer controls as the Group performs; or
(iii) does not create an asset with an alternative use to the Group and the Group has an enforceable right to
payment for performance completed to date.
If control of the services or goods transfers over time, revenue is recognised over the period of the contract by
reference to the progress towards complete satisfactio n of that performance obligation. Otherwise, revenue is
recognised at a point in time when the purchaser obtains control of the asset.
The progress towards complete satisfaction of the perf ormance obligation is measured based on output method
that best depicts the Group ’s performance in satisfying the performa nce obligation. The output method is made
reference to the direct measurements of the value to the cus tomer of goods or services transferred to date, provided
that the value to the customer is established according to the progress report confirmed by customer.
If the consideration in a contract includes a variable amount, the Group estimates the amount of consideration
to which it will be entitled in exchange for transferring the goods or services to the customer. The variable
consideration is estimated at contract inception and constr ained until it is highly probable that a significant revenue
reversal in the amount of cumulative revenue recognised w ill not occur when the associated uncertainty with the
variable consideration is subsequently resolved.
Certain contracts entered into by the Group in the provision of wireless telecommunication network
enhancement services, telecommunication network infras tructure maintenance and engineering services and
information and communication technology integration s ervices include performance penalties and contingent
payment clauses that give rise to variable consideration.
For variable consideration arising from performance penalties, the Group ’s entitlement to the consideration is
contingent on the meeting of specified performance criteria as stated in the customer contract.
For variable consideration arising from contingent payment clauses , the Group is subcontracted by the
customers who are engaged by the ultimate users as contractors of projects, and the Group ’s receipts of payment
from the customers are in turn contractually contingent on the customers receiving the acceptance and payment from
the ultimate users, only after which the customers will settle with the Group.
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The Group uses the expected value method to estimate the amount of variable consideration because this
method best predicts the amount of variable consideration to which the Group will be entitled. Accumulated
historical receipts, background of ultimate project user, duration of project and involvement of numbers of parties in
the project are used to estimate the variable consider ation arising from performance penalties and contingent
payment clauses, using the expected value method, and r evenue is only recognised to the extent that it is highly
probable that a significant reversal will not occur.
Before including any amount of variable consideration i n the transaction price, the Group considers whether
the amount of variable consideration is constrained. The Gr oup determined that estimates of variable consideration
are constrained until it is highly probable that a signifi cant reversal in the amount of cumulative revenue recognised
will not occur when the uncertainty associated with th e variable consideration i s subsequently resolved.
At the end of each reporting period, the Group updates t he estimated transaction price (including updating its
assessment of whether an estimate of variable consideration i s constrained) to represent faithfully the circumstances
present at the end of each reporting period and the cha nge in circumstances during the reporting period.
When either party to a contract has performed, the Group presents the contract in the consolidated statement
of financial position as a contract asset or a contract liability, depending on the relationship between the Group ’s
performance and the customer ’s payment. A contract asset is the Group ’s right to consideration in exchange for
goods that the Group has transferred to a customer. Incremen tal costs incurred to obtain a contract, if recoverable,
are capitalised and presented as assets and subsequently amortised when the related revenue is recognised. The
Group applies the practical expedient and recognises cos ts of obtaining a contract as an expense when incurred
because the amortisation period is normally within one year or less.
If a customer pays consideration or the Group has a righ t to an amount of consideration that is unconditional,
before the Group transfers the promised goods to the custo mer, the Group presents the contract as a contract liability
when the payment is received or a receivable is recorded (whichever is earlier). A contract liability is the Group ’s
obligation to transfer the promised goods to a custome r for which the Group has received consideration or an
amount of consideration is due from the customer.
Revenue is recognised when specific criteria have been met for the Group ’s activities as described below:
2.20.1 Wireless telecommunication network enhancement services
Revenue from provision of wireless telecommunica tion network enhancement services is recognised
over time in accordance with output method for measurin g progress when the related services are rendered.
2.20.2 Telecommunication network infrastructure maintenance and engineering services
Revenue from provision of telecommunication netwo rk infrastructure maintenance and engineering
services is recognised over time in accordance with out put method for measuring progress when the related
services are rendered.
2.20.3 Information and communication technology integration services
Revenue from information and communication technol ogy integration services is recognised over time
in accordance with the output method for measuring p rogress when the related services are rendered.
2.20.4 Software development and related services
Revenue from software development and related services is recognised over time in accordance with the
output method for measuring progress when the related services are rendered.
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2.20.5 Sales of software
Sales of software transferred at a point in tim e are recognised when control of the goods has
transferred, being when the Group has delivered th e products to the customers and the customers have
accepted the products, the customers have full discretion over the products, and there is no unfulfilled
obligation that could affect the customers ’ acceptance of the products.
2.21 Interest income
Interest income is recognised on a time-propor tion basis using the effective interest method.
2.22 Equipment rental income
Equipment rental income receivable is recognised in profit or loss in equal instalments over the periods
covered by the lease term, except where an alternative basis is more representative of the pattern of benefits to be
derived from the use of the leased asset.
2.23 Leases
The Group leases various properties and machineries. Re ntal contracts are typically made for fixed periods of
three months to six years. Lease terms are negotiated on an individual basis and contain various terms and
conditions. The lease agreements do not impose any covena nts, but leased assets may not be used as security for
borrowing purposes.
Leases are recognised as right-of-use assets (included i n property, plant and equipment) and the corresponding
liabilities at the date of which the resp ective leased asset is available for use by the Group. Each lease payment is
allocated between the liability 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.
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 pa yments), less any lease incentives receivable;
. variable lease payment that are based on an index or a rate;
. 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.
The lease payments are discounted using the interest rate implicit in the lease, if that rate can be determined,
or the entity ’s incremental borrowing rate.
Right-of-use assets are measured at costs comprising the following:
. the amount of the initial measurement of lease liability;
. any lease payments made at or before the commen cement date less any lease incentives received;
. any initial direct costs; and
. restoration costs.
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Right-of-use assets are generally depr eciated over the shorter of the asset ’s useful life and the lease term on a
straight-line basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is
depreciated over the underlying asset ’s useful life.
Payments associated with short-term leases are recognised on a straight-line basis as an expense in profit or
loss. Short-term leases are leases for property, plant and machinery with a lease term of less than 12 months.
2.24 Dividend distribution
Dividend distribution to the shareholders is recognised as a liability in the year/period in which the dividend
is approved by the Company ’s shareholders or directors, where appropriate.
2.25 Government grants
Grants from the government are recognised at their fair v alue where there is a reasonable assurance that the
grant will be received and the Group will comply with all attached conditions.
Government grants relating to expenses are deferre d and recognised in the consolidated statement of
comprehensive income over the period necessary to match t hem with the costs that they are intended to compensate.
2.26 Contingent liabilities
A contingent liability is a possible obligation that arises from past events and whose existence will only be
confirmed by the occurrence or non-occurrence of one or mo re uncertain future events not wholly within the control
of the Group. It can also be a present obligation arising from past events that is not recognised because it is not
probable that outflow of economic resources will be requ ired or the amounts of obligation cannot be measured
reliably.
A contingent liability is not recognised but is disclose d in the financial statements. When a change in the
probability of an outflow occurs so that outflow is probable, it will then be recognised as a provision.
3 FINANCIAL RISK MANAGEMENT
The Group ’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 Group ’s overall risk management policies and practices focuses on the
unpredictability of financial markets and seeks to minimise potential adverse effects on the Group ’s financial performance.
3.1 Market risk
3.1.1 Foreign exchange risk
The Group operates mainly in the PRC with most of the transactions settled in RMB. Management
considers that the Group is not exposed to any signi ficant foreign exchange risk for the years ended 31
December 2020, 2021 and 2022 and the six months ended 30 June 2023 as there are no significant financial
assets or liabilities of the Group denominated in the curre ncies other than the respective functional currencies
of the Group ’s entities.
During the Track Record Period, the Group has not en tered into any derivative instruments to hedge its
foreign exchange exposures.
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3.1.2 Interest rate risk
The Group ’s interest rate risk is mainly attributable to its cash at banks, pledged bank deposits and
bank borrowings with floating interest rates. Details of the Group ’s cash at banks, pledged bank deposits and
bank borrowings have been disclosed in Notes 17 and 23 t o the Historical Financial Information respectively.
Other than cash at banks, pledged bank deposits and bank borrowings, the Group does not have
significant interest-bearing assets or liabilities.
As at 31 December 2020, 2021 and 2022 and 30 June 2023, if interest rates on cash at bank, pledged
bank deposits and bank borrowings had been 100 basis point s higher/lower with all variables held constant,
profit before income tax for the year/period then end ed would have been approximately RMB169,000 higher/
lower, approximately RMB137,000 higher/lower, appr oximately RMB122,000 higher/lower and approximately
RMB20,000 higher/lower, respectively, mainly as a resul t of higher/lower of interest income on cash at banks
and pledged bank deposits netted with higher/lower interest expenses on the bank borrowings.
3.2 Credit risk
The credit risk of the Group mainly arises from cash an d cash equivalents, pledged bank deposits, contract
assets and trade receivables, deposits and other receivables. The carrying amounts of each financial asset represent
the Group ’s maximum exposure to credit risk in relation to financial assets.
(a) Risk management
The Group has policies in place to ensure that credit terms are made to customers with an appropriate
credit history and the Group performs peri odic credit evaluations of its customers.
The Group ’s cash and cash equivalents and pledged bank deposits were deposited with high quality
financial institutions. Therefore, the Group does not expect any loss from non-performance by these
counterparties.
For the years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2023, 60%,
61%, 51% and 47% of the Group ’s revenue was derived from its top five customers respectively. As at 31
December 2020, 2021 and 2022 and 30 June 2023, 36%, 47%, 40% and 39% of the total contract assets and
trade receivables were due from the Group ’s top five customers respectively.
(b) Impairment of assets
The Group has the following types of financial asse ts measured at amortised cost subject to HKFRS 9 ’s
expected credit loss model:
. Cash and cash equivalents and pledged bank deposits;
. Other receivables and amount due from the immediate holding company;
. Contract assets and trade receivables
Cash and cash equivalents and pledged bank deposits
While cash and cash equivalents and pledged bank deposits are also subject to the impairment
requirements of HKFRS 9, the identified impairment loss was immaterial as they were placed in
reputable institutions with sound credit ratings.
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Other receivables and amount due from the immediate holding company
For other receivables, the impairment loss is measured based on the 12-month expected credit
loss. The 12-month expected credit loss is the portion o f lifetime expected credit loss that results from
default events on a financial instrument that are possible within 12 months after the reporting date.
However, when there is a significant increase in credit risk since initial recognition, the allowance will
be based on the lifetime expected credit loss. As at 31 December 2020, 2021 and 2022 and 30 June
2023, the Group has assessed that the expected credit losses for these deposits and other receivables
were immaterial under 12-month expected losses met hod as the management considered the credit risk
of other receivables as low as counterparties have the capacity to meet their contractual cash flow
obligations in the near term. Therefore, no loss allo wance provision for these balances was recognised.
For amount due from the immediate holding comp any, the Group has assessed the expected credit
losses of the balance and the identified impairment loss was immaterial.
Contract assets and trade receivables
The Group applies the HKFRS 9 simplified appr oach to measure expected credit losses which
uses a lifetime expected loss allowance for all contract assets and trade receivables.
To measure the expected credit losses, contract assets and trade receivables have been grouped
into two categories by the Group ’s management based on credit risk characteristics. Contract assets and
trade receivables from state-owned and/or listed com panies and their subsidiaries are grouped as one
category ( ‘‘Group 1 ’’), and the remaining contract assets and trade receivables from other customers,
being private companies that are neither state-ow ned nor listed, are classified as another category
(‘‘Group 2 ’’).
The expected loss rates are based on the corres ponding historical credit losses experienced,
industry credit loss rate and payment profiles of sales, in respect of these two groups of customers.
These historical loss rates are then adjusted to refl ect current and forward-looking information on
macroeconomic factors affecting the ability of th e customers to settle the receivables. The Group has
identified the gross domestic product of the PRC and the consumer price index of the PRC in which the
Group primarily sells its services to be the most relev ant factors, and accordingly adjusts the historical
loss rates based on expected changes in these factors.
Financial assets are written off when there is no reasonable expectation of recovery, such as a
debtor failing to engage in a repayment plan with the Group. The Group categories a receivable for
write off when a debtor fails to make contractual payments. Where receivables have been written off,
the Group continues to engage in enforcement activ ity to attempt to recover the receivable due. Where
recoveries are made, they are recognised in profit or loss.
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On these bases, the loss allowances for contract assets and trade receivables as at 31 December
2020, 2021 and 2022 and 30 June 2023 were determined as follows:
Expected
loss rate
Gross
carrying
amount
Loss
allowance
Net
carrying
amount
RMB ’000 RMB ’000 RMB ’000
31 December 2020
Group 1
Collective basis
. Contract assets 1. 8% 46,330 819 45,511
. Trade receivables
— Within 180 days 0.4% 12,848 48 12,800
— Between 181 days and 365 days 0.4% 1,633 6 1,627
— Between 1 year and 2 years 5.1% 39 2 37
— Over 2 years 100% 141 141 —
Group 2
Collective basis
. Contract assets 3. 4% 14,237 484 13,753
. Trade receivables
— Within 180 days 2.3% 10,748 242 10,506
— Between 181 days and 365 days 2.3% 1,538 35 1,503
31 December 2021
Group 1
Collective basis
. Contract assets 1. 9% 70,028 1,304 68,724
. Trade receivables
— Within 180 days 0.4% 22,381 89 22,292
— Between 181 days and 365 days 0.4% 4,835 19 4,816
— Between 1 year and 2 years 5.5% 1,669 92 1,577
— Over 2 years 100% 136 136 —
Group 2
Collective basis
. Contract assets 4. 8% 4,238 204 4,034
. Trade receivables
— Within 180 days 3.6% 2,257 82 2,175
— Between 181 days and 365 days 3.6% 663 24 639
31 December 2022
Group 1
Collective basis
. Contract assets 3. 1% 60,683 1,861 58,822
. Trade receivables
— Within 180 days 1.5% 30,962 456 30,506
— Between 181 days and 365 days 1.5% 375 6 369
— Between 1 year and 2 years 19.4% 2,181 424 1,757
— Over 2 years 100% 1,236 1,236 —
Group 2
Collective basis
. Contract assets 6. 5% 9,705 632 9,073
. Trade receivables
— Within 180 days 6.8% 2,454 167 2,287
— Between 1 year and 2 years 51.2% 979 501 478
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Expected
loss rate
Gross
carrying
amount
Loss
allowance
Net
carrying
amount
RMB ’000 RMB ’000 RMB ’000
30 June 2023
Group 1
Collective basis
. Contract assets 6. 0% 57,617 3,443 54,174
. Trade receivables
— Within 180 days 1.6% 32,703 511 32,192
— Between 181 days and 365 days 1.6% 9,183 143 9,040
— Between 1 year and 2 years 19.8% 398 79 319
— Over 2 years 100% 935 935 —
Group 2
Collective basis
. Contract assets 6. 2% 7,832 486 7,346
. Trade receivables
— Within 180 days 6.9% 8,140 560 7,580
— Between 1 year and 2 years 52.3% 779 408 371
Impairment losses on contract assets and trade recei vables are presented as net impairment losses
within operating profit. Subsequent recoveries of amoun ts previously written off are credited against the
same line item.
Movements of the provision for impairment of contract assets and trade receivables were as
follows:
Year ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
RMB’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
(unaudited)
At beginning of the year/
period 973 1,777 1,950 1,950 5,283
Provision for impairment
of contract assets and
trade receivables 804 173 3,333 1,379 1,282
At end of the year/period 1,777 1,950 5,283 3,329 6,565
3.3 Liquidity risk
The Group ’s policy is to regularly monitor current and exp ected liquidity requirements to ensure that it
maintains sufficient reserves of cash to meet its liquidity requirements in the shorter and longer term.
The Group maintains liquidity by a number of sources in cluding orderly realisation of receivables that the
Group considers appropriate. Long-term financing includin g long-term borrowings are also considered by the Group
in its capital structuring. The Group aims to maintain flex ibility in funding by keeping sufficient bank balances,
committed credit lines available and interest-bearing bo rrowings which enable the Group to continue its business for
the foreseeable future.
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As at 31 December 2020, 2021 and 2022 and 30 June 2023, the Group ’s total undrawn banking facilities
amounted to approximately RMB2,900,000, RMB2,140,00 0, RMB5,000,000 and RMB5,000,000 respectively, and
the Group ’s total drawn banking facilities amounted to approximately RMB6,280,000, RMB7,860,000,
RMB30,000,000 and RMB29,500,000 respectively.
The table below analyses the non-derivative financi al liabilities of the Group into relevant maturity groupings
based on the remaining period at the end of the re porting period to the contractual maturity date.
The amounts disclosed in the table were the contractual undiscounted cash flows and the earliest date the
Group can be required to pay. Balances within twelve months equal their carrying balances as impact from
discounting is not significant.
Repayable
on demand
Less than
1y e a r
Between
1a n d
5 years Total
RMB’000 RMB ’000 RMB ’000 RMB ’000
At 31 December 2020
Trade and bills payables — 7,259 — 7,259
Other payables and accruals — 33,256 — 33,256
Amounts due to shareholders 1,261 —— 1,261
Bank borrowings — 1,655 5,083 6,738
Lease liabilities — 314 305 619
1,261 42,484 5,388 49,133
At 31 December 2021
Trade and bills payables — 17,198 — 17,198
Other payables and accruals — 35,671 — 35,671
Amounts due to shareholders 3,970 —— 3,970
Bank borrowings — 4,646 3,570 8,216
Lease liabilities — 412 37 449
3,970 57,927 3,607 65,504
At 31 December 2022
Trade and bills payables — 5,216 — 5,216
Other payables and accruals — 39,074 — 39,074
Amounts due to shareholders 1,860 —— 1,860
Bank borrowings — 22,609 8,286 30,895
Lease liabilities — 84 — 84
1,860 66,983 8,286 77,129
At 30 June 2023
Trade and bills payables — 2,631 — 2,631
Other payables and accruals — 44,748 — 44,748
Amounts due to shareholders 2,588 —— 2,588
Bank borrowings 10,371 14,173 6,148 30,692
Lease liabilities — 50 126 176
12,959 61,602 6,274 80,835
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3.4 Capital management
The Group ’s objectives when managing capital are to safeguard the Group ’s ability to continue as a going
concern in order to provide returns for shareholders and b enefits 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 Group may adjust the amount of dividend paid to
shareholders, return capital to shareholders or sell assets to reduce debt.
The Group monitors capital on the basis of the total d ebt to total capital ratio. Total debt and total capital
represent total bank borrowings and total equity, respec tively, as shown in the consolidated statement of financial
position. The total debt to total capital ratios at 31 December 2020, 2021 and 2022 and 30 June 2023 were as
follows:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB ’000 RMB ’000 RMB ’000
Total bank borrowings 6,280 7,860 30,000 29,500
Total equity 65,516 71,086 80,742 81,068
Total debt to total capital ratio 9.6% 11.1% 37.2% 36.4%
The increase in total debt to total capital ratio from 9.6% as at 31 December 2020 to 11.1% as at 31
December 2021 was mainly due to the additional drawdow n of bank borrowings during the year ended 31 December
2021.
The increase in total debt to total capital ratio from 11.1% as at 31 December 2021 to 37.2% as at 31
December 2022 was mainly due to the additional drawdow n of bank borrowings during the year ended 31 December
2022.
The decrease in total debt to total capital ratio from 37.2% as at 31 December 2022 to 36.4% as at 30 June
2023 was mainly due to the repayment of bank borrowing s and increase in equity during the six months ended 30
June 2023.
3.5 Fair value estimation
As at 31 December 2020, 2021 and 2022 and 30 June 2023, the Group did not have any financial assets or
financial liabilities which were measured at fair value.
The carrying amounts of the Group ’s financial assets and financial liab ilities, approximated their fair values
due to their short maturities.
4 CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS
Estimates and judgements are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning th e future. The resulting accounting estimates will, by
definition, seldom equal the related actual results. The estim ates and assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of assets and l iabilities within the next financial year are addressed below.
APPENDIX I ACCOUNTANT ’SR E P O R T
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4.1 Estimation of variable consideration
Certain contracts entered into by the Group in the provision of wireless telecommunication network
enhancement services, telecommunication network infras tructure maintenance and engineering services and
information and communication technology integration s ervices include performance penalties and contingent
payment clauses that give rise to variable consideration.
For variable consideration arising from performance penalties, the Group ’s entitlement to the consideration is
contingent on the meeting of specified performance criteri a as stated in the customer c ontract. The Group considers
experience in similar types of customer contract in estimating the amount of variable consideration.
For variable consideration arising from contingent payment clauses , the Group is subcontracted by the
customers who are engaged by the ultimate users as contractors of projects, and therefore the Group ’s receipts of
payment from the customers are in turn contractually c ontingent on the customers receiving the acceptance and
payment from the ultimate users, only after which the cu stomers will then settle with the Group. In estimating the
outcome of acceptance and payment by the ultimate project users, the Group considers, among other things, the
financial strength of the ultimate project users and the level of technical complexities of the projects.
Based on the above, the management of the Group es timated the variable consideration arising from
contingent payment clauses to be ranging from 10% to 20% of t he total consideration of the projects. The respective
revenue would not be recognised at contract inception until th e uncertainty associated with the variable consideration
is subsequently resolved. Variable consideration arisi ng from performance penalties is not significant during the
reporting period.
4.2 Impairment of receivables and contract assets
The Group makes provision for impairment of receiva bles and contract assets based on assumptions about risk
of default and expected loss rates. The Group uses judge ment in making these assumptions and selecting the inputs
to the impairment calculation, based on the Group ’s historical default rates, existing market conditions as well as
forward-looking estimates at the end of each reporting perio d. The identification of impairment of receivables and
contract assets requires the use of judgment and estimates . Where the expectations are different from the original
estimates, such differences will im pact the carrying amounts of receivables and contract assets and loss for
impairment of receivables and contract assets recognised in the periods in which such estimates have been changed.
4.3 Income taxes
The Group is subject to income taxes mainly in Hong Kong and the PRC. Significant judgement is required in
determining provision for income taxes. There are t ransactions and calculations for which the ultimate tax
determination is uncertain during the ordinary course of business. Where the final tax outcome of these matters is
different from the amounts that were initially recorded, suc h differences will impact the income tax and deferred
income tax provisions in the periods in which such determination are made.
Deferred tax assets relating to certain temporary dif ferences are recognised as management considers it is
probable that future taxable profit will be available aga inst which the temporary differences can be utilised. Where
the expectation is different from the original estimate, su ch differences will impact the recognition of deferred tax
assets and tax expense in the period s in which such estimate is changed.
5 REVENUE AND SEGMENT INFORMATION
The Company is an investment holding company and its subs idiaries now comprising the Group principally engage
in providing telecommunications network support services, infor mation and communication technology integration services
and telecommunications network-related software development services to customers.
APPENDIX I ACCOUNTANT ’SR E P O R T
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The CODM has been identified as the directors o f the Company. The directors review the Group ’s internal reporting
in order to assess performance and allocate resources. The dir ectors have determined the operating segment based on these
reports.
The directors consider the Group ’s operation from a business perspectiv e and determine that the Group has one
reportable operating segment being provision of services an d products for telecommunication network and infrastructure.
(a) Revenue
Year ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
RMB’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
(unaudited)
Timing of revenue recognition
Over time
— Wireless telecommunication network
enhancement services 93,673 100,085 102,136 39,413 42,404
— Telecommunication network
infrastructure maintenance and
engineering services 39,654 41,787 44,516 21,244 18,709
— Information and communication
technology integration servi ces 38,515 42,505 54,592 34,756 35,550
— Software development and related
service 12,206 9,287 21,745 5,629 12,667
184,048 193,664 222,989 101,042 109,330
At a point in time
— Sales of software 11,522 9,672 3,524 2,195 4,508
195,570 203,336 226,513 103,237 113,838
(b) Revenue from major customers who have individua lly contributed 10% or more of the total revenue of the
Group, including sales to a group of entities which are known to be under common control with that
customer, is set out below:
Year ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
RMB’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
(unaudited)
Customer A 41,502 48,768 53,917 19,890 25,710
Customer B 38,679 39,376 N/A* N/A* N/A*
Customer C 23,163 N/A* N/A* N/A* N/A*
* The corresponding customers did not contribut e over 10% of the total revenue of the Group for the
respective year/period.
APPENDIX I ACCOUNTANT ’SR E P O R T
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(c) Segment revenue by customers ’ geographical location
The Group is domiciled in the PRC. All revenue is deri ved from external customers in the PRC for the years
ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2022 and 2023.
(d) Details of contract liabilities
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB ’000 RMB ’000 RMB ’000
Contract liabilities (Note 22) 1,190 6,499 2,303 1,618
Notes:
(i) Contract liabilities represent advanced payments r eceived from the customers for services that have yet
been transferred to the customers. The contract liab ilities fluctuated during the Track Record Period due
to fluctuation in sales with advanced payments.
(ii) During the years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2023, all
brought-forward contract liabilities of approxim ately RMB8,646,000, RMB1,190,000, RMB6,499,000
and RMB2,303,000 at the beginning of the financial year/period were fully recognised as revenue.
(e) Unsatisfied performance obligations
The transaction price allocated to the remaining performan ce obligations (unsatisfied or partially unsatisfied)
as at 31 December 2020, 2021 and 2022 and 30 June 2023 and the expected timing of recognising revenue is as
follows:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB ’000 RMB ’000 RMB ’000
Within one year 53,378 32,962 86,068 70,344
More than one year but less than
two years 10,883 12,587 6,873 8,729
64,261 45,549 92,941 79,073
The above information only includes contracts for serv ices that had an original expected duration of more
than one year.
For contracts of services that had an original expected dur ation of one year or less, their relevant transaction
price allocated to the remaining performance obligations (u nsatisfied or partially unsatisfied) have been excluded
from the above table pursuant to the practic al expedient in paragraph 121 of HKFRS 15.
The amounts disclosed above do not include va riable consideration which is constrained.
(f) Non-current assets by geographical location
As at 31 December 2020, 2021 and 2022 and 30 June 2023, all of the Group ’s non-current assets were located
in the PRC.
APPENDIX I ACCOUNTANT ’SR E P O R T
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6 PROFIT BEFORE TAXATION
Profit before taxation is stated after charging the following:
(a) Depreciation and amortisation
Year ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
RMB’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
(unaudited)
Depreciation charges
— Property, plant and equipment
(Note 13) 885 1,257 1,555 781 620
— Right-of-use assets (Note 13) 251 316 228 125 68
Total depreciation charges (Note 13) 1,136 1,573 1,783 906 688
Amortisation of intangible assets (Note 14) 512 702 1,283 639 531
1,648 2,275 3,066 1,545 1,219
(b) Other operating expenses
Year ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
RMB’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
(unaudited)
Expenses of short-term leases in respect of
offices and staff quarters 95 — 145 29 2
Auditor ’s remuneration
— Audit services (excluding listing
expenses) 105 111 107 41 42
— Non-audit services 10 10 10 5 5
Office expenses 379 511 343 116 134
Professional fees 498 433 475 355 195
Other taxes and levies 1,007 1,062 1,197 527 865
Entertainment expenses 281 382 267 128 212
Others 805 1,140 952 418 393
3,180 3,649 3,496 1,619 1,848
During the years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2022 and 2023,
the Group incurred expenses for the purpose of resear ch and development of approximately RMB16,345,000,
RMB10,760,000, RMB16,606,000, RMB4,637,000 and RMB5, 397,000 respectively, which comprised employee
benefit expenses, depreciation and amortization and other expenses.
APPENDIX I ACCOUNTANT ’SR E P O R T
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(c) Listing expenses
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
(unaudited)
Listing expenses 1,014 7,544 10,108 6,590 5,945
7 OTHER INCOME
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
(unaudited)
Government subsidies (Note a) 587 873 1,800 1,426 243
Tax credit of input tax additional
deduction and VAT refund 1,484 1,909 1,326 288 846
Equipment rental income (Note b) 963 146 286 64 89
Sundry income 19 164 22 21 46
3,053 3,092 3,434 1,799 1,224
Notes:
(a) During the years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2022 and 2023,
there were no unfulfilled conditions or other contingencies attaching to these grants.
(b) Equipment is leased to customers under operating leases with fixed lease payments.
8 OTHER LOSSES/(GAINS), NET
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
(unaudited)
Loss on disposal of property, plant and
equipment 51 24 ———
Gain on disposal of right-of-use assets
and lease liabilities on early
termination of a lease —— (22) (2) —
Exchange losses/(gains), net 6 98 43 47 (238)
57 122 21 45 (238)
APPENDIX I ACCOUNTANT ’SR E P O R T
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9 EMPLOYEE BENEFIT EXPENSES
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
(unaudited)
Wages and salaries 52,986 41,594 16,382 7,999 7,164
Pension cost — defined contribution
plans (Note a) 1,861 4,241 3,314 1,811 1,603
Other staff welfares 817 590 345 182 341
Total employee benefit expenses
(including directors ’ remunerations) 55,664 46,425 20,041 9,992 9,108
Notes:
(a) Pensions costs — defined contribution plans
The PRC
As stipulated under the relevant rules and regulations in the PRC, the subsidiary operating in the PRC
contributes to state-sponsored retirement plans fo r its employees. For the years ended 31 December 2020,
2021 and 2022 and the six months ended 30 June 2022 and 2023, depending on the provinces of the
employees ’ registered residences and their current region of work, the subsidiary contributed certain
percentages of the basic salaries of its employees and h ad no further obligations for the actual payment of
pensions or postretiremen t benefits beyond the contributions. The state-sponsored retirement plans are
responsible for the entire pension obligations payable to the retired employees.
During the year ended 31 December 2020, the Human Resources and Social Security Bureau of
Guangdong Province has announced that, to provide re lief of the impact of the Coronavirus Disease 2019
(‘‘COVID-19 ’’), all micro, small and medium size enterpris es in Guangdong Province were partially exempted
from employer contributions to pens ion, unemployment and work-related i njury insurance schemes from the
period between February and December 2020.
During the years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2022 and
2023, no forfeited contributions were utilised by the Group to reduce its contributions, and no forfeited
contribution was available as at 31 December 2020, 2021 and 2022 and 30 June 2023 to reduce future
contributions.
Hong Kong
Retirement benefit costs — defined contribution schemes
The Group has arranged for its Hong Kong employe es to join the Mandatory Provident Fund Scheme
(the ‘‘MPF Scheme ’’), a defined contribution scheme managed by an independent trustee. Under the MPF
Scheme, the Group and its employees make monthly c ontributions to the scheme at 5% of the employees ’
earnings as defined under the Mandatory Pr ovident Fund legislation. Both the Group ’s and the employees ’
mandatory contributions are subject to a cap of HK$1,500 per month.
No forfeited contribution is available to reduce the contribution payable in future year.
APPENDIX I ACCOUNTANT ’SR E P O R T
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(b) Five highest paid individuals
The five individuals whose emoluments were the highe st in the Group include 2, 2, 2, 1 and nil directors for
the years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2022 and 2023, whose
emoluments are reflected in the analysis presented in No te 28. The emoluments payable to the remaining 3, 3, 3, 4
and 5 individuals for the years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2022
a n d2 0 2 3a r ea sf o l l o w s :
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
(unaudited)
Wages and salaries 752 1,010 1,590 858 1,124
Pension costs — defined
contribution plans 31 57 75 63 95
783 1,067 1,665 921 1,219
The emoluments fell within the following bands:
Number of individuals
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
(unaudited)
Emolument bands
H K $ 1 t o H K $ 1 , 0 0 0 , 0 0 0 33345
During the Track Record Period, no emoluments wer e paid by the Group to any of the directors or the five
highest paid individuals as an inducement to join or upon joining the Group or as compensation for loss of office.
10 FINANCE COSTS, NET
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
(unaudited)
Finance income
Interest income on cash at banks 73 47 94 49 147
Finance costs
Interest expenses on
— Bank borrowings (526) (346) (887) (319) (530)
— Leases (Note 19(b)) (43) (32) (9) (7) (5)
(569) (378) (896) (326) (535)
Finance costs, net (496) (331) (802) (277) (388)
APPENDIX I ACCOUNTANT ’SR E P O R T
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11 INCOME TAX EXPENSE
Hong Kong profits tax rate is 16.5%. No provision fo r Hong Kong profits tax was provided as the Group did not
have assessable profit in Hong Kong for the years ended 31 December 2020, 2021 and 2022 and the six months ended 30
June 2022 and 2023.
Income tax provision of the Group in respect of operations in the Chinese Mainland has been calculated at the
applicable tax rate on the estimated assessable profits for the ye ar/period, based on the existing legislation, interpretations
and practices in respect thereof.
The general enterprise income tax rate in the PRC i s 25%. During the years ended 31 December 2020, 2021 and
2022 and the six months ended 30 June 2022 and 2023, WellCell Technology, the Group ’s major operating subsidiary in
the PRC, has qualified for high and new technology enterprises s tatus and is therefore subject to a preferential income tax
rate of 15%. In addition to being recognised as high and ne w technology enterprises, WellCell Technology was recognised
as a key software enterprise under rel evant PRC laws and regulations for the years 2021 and 2022 so WellCell Technology
was entitled to a preferential income tax rate of 10% during the years of 2021 and 2022.
During the years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2022 and 2023, a 10%
withholding tax was levied on dividend declared by a company in the PRC to its foreign shareholder.
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
(unaudited)
Current income tax
— PRC CIT 3,622 2,252 3,407 2,005 1,495
— PRC dividend withholding tax 1,600 2,300 2,200 2,200 1,700
Deferred income tax (Note 20) (170) 72 (598) (304) (192)
Income tax expense 5,052 4,624 5,009 3,901 3,003
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
(unaudited)
Profit before income tax 34,712 30,148 29,268 13,272 17,661
Tax calculated at tax rates applicable to
profits of the respective subsidiaries 5,222 2,826 4,504 2,023 2,470
Tax effect of:
Expenses not deductible for tax
purposes 89 413 237 57 228
Super deductions from research and
development expenditure (Note) (1,908) (826) (2,030) (477) (1,395)
Re-measurement of deferred tax —
change in the tax status of the PRC
subsidiary 49 (89) 98 98 —
Withholding tax on dividends 1,600 2,300 2,200 2,200 1,700
Income tax expense 5,052 4,624 5,009 3,901 3,003
APPENDIX I ACCOUNTANT ’SR E P O R T
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Note: According to the relevant laws and regulations promul gated by the State Administration of Taxation of the
PRC, enterprises engaging in research and development activities are entitled to claim 150% to 175% of their
research and development expenses incurred as tax deductible expenses when determining their assessable
profits for that year.
12 EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the pr ofit attributable to equity holders of the Company by the
weighted average number of ordinary shares o utstanding during the Track Record Period.
In determining the weighted average number of ordin ary shares in issue during the Track Record Period, 200
ordinary shares of the Company, being the number of ordinar y shares issued by the Company on 14 September 2021 (date
of incorporation), were deemed to have been issued and all otted by the Company on 1 January 2020 as if the Company has
been incorporated by then, when computing the basic and di luted earnings per share for the years ended 31 December
2020, 2021 and 2022 and the six months ended 30 June 2022 and 2023.
In addition, 200 ordinary shares of the Company, whi ch were issued by the Company on 27 April 2023 for the
R e o r g a n i s a t i o na ss t a t e di nN o t e1 . 2 ( i ) ,w e r ea l s od e e m e dt oh a v eb e e ni s s u e da n da l l o t t e db yt h eC o m p a n yo n1J a n u a r y
2020 as if the Company has been incorporated by then when co mputing the basic and diluted earnings per share for the
years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2022 and 2023.
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
(unaudited)
Profit for the year/period (RMB ’000) 29,660 25,524 24,259 9,371 14,658
Weighted average number of ordinary
shares in issue 400 400 400 400 400
Basic earnings per share (RMB ’000) 74 64 61 23 37
The earnings per share presented above has not taken int o account the proposed capitalisation issue pursuant to the
resolutions of the shareholders passed on 15 December 2023, because the proposed capitalisation issue has not become
effective as at the date of this Accountant ’s Report.
There were no differences between the basic and diluted earnings per share as there were no potential dilutive
ordinary shares outstanding during the Track Record Period.
APPENDIX I ACCOUNTANT ’SR E P O R T
– I-41 –


--- page 499 ---
13 PROPERTY, PLANT AND EQUIPMENT
Right-of-use
assets
Furniture,
fixtures and
office
equipment
Plant and
machinery
Motor
vehicles
Leasehold
improvements Total
RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
At 1 January 2020
Cost 906 3,192 17 1,084 375 5,574
Accumulated depreciation (465) (1,259) (4) (657) (192) (2,577)
Net book amount 441 1,933 13 427 183 2,997
Year ended 31 December 2020
Opening net book amount 441 1,933 13 427 183 2,997
Additions 299 381 — 89 — 769
Depreciation (Note 6(a)) (251) (640) (2) (181) (62) (1,136)
Disposals — (51) —— — (51)
Closing net book amount 489 1,623 11 335 121 2,579
At 31 December 2020
Cost 1,205 3,471 17 1,173 375 6,241
Accumulated depreciation (716) (1,848) (6) (838) (254) (3,662)
Net book amount 489 1,623 11 335 121 2,579
Year ended 31 December 2021
Opening net book amount 489 1,623 11 335 121 2,579
Additions 201 553 365 907 198 2,224
Depreciation (Note 6(a)) (316) (785) (40) (317) (115) (1,573)
Disposals ——— (43) — (43)
Closing net book amount 374 1,391 336 882 204 3,187
APPENDIX I ACCOUNTANT ’SR E P O R T
– I-42 –


--- page 500 ---
Right-of-use
assets
Furniture,
fixtures and
office
equipment
Plant and
machinery
Motor
vehicles
Leasehold
improvements Total
RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
At 31 December 2021
Cost 1,406 4,024 382 1,632 573 8,017
Accumulated depreciation (1,032) (2,633) (46) (750) (369) (4,830)
Net book amount 374 1,391 336 882 204 3,187
Year ended 31 December 2022
Opening net book amount 374 1,391 336 882 204 3,187
Additions 97 886 — 262 83 1,328
Depreciation (Note 6(a)) (228) (1,035) (59) (312) (149) (1,783)
Disposals (199) ——— — (199)
Closing net book amount 44 1,242 277 832 138 2,533
At 31 December 2022
Cost 397 4,909 383 1,894 656 8,239
Accumulated depreciation (353) (3,667) (106) (1,062) (518) (5,706)
Net book amount 44 1,242 277 832 138 2,533
Six months ended 30 June 2022
(unaudited)
Opening net book amount 374 1,391 336 882 204 3,187
Additions — 823 —— 83 906
Depreciation (Note 6(a)) (125) (526) (30) (149) (76) (906)
Disposals (136) ——— — (136)
Closing net book amount 113 1,688 306 733 211 3,051
At 30 June 2022 (unaudited)
Cost 1,206 4,847 382 1,632 656 8,723
Accumulated depreciation (1,093) (3,159) (76) (899) (445) (5,672)
Net book amount 113 1,688 306 733 211 3,051
Six months ended 30 June 2023
Opening net book amount 44 1,242 277 832 138 2,533
Additions 189 35 — 35 — 259
Depreciation (Note 6(a)) (68) (364) (30) (179) (47) (688)
Closing net book amount 165 913 247 688 91 2,104
At 30 June 2023
Cost 585 4,944 383 1,928 656 8,496
Accumulated depreciation (420) (4,031) (136) (1,240) (565) (6,392)
Net book amount 165 913 247 688 91 2,104
APPENDIX I ACCOUNTANT ’SR E P O R T
– I-43 –


--- page 501 ---
14 INTANGIBLE ASSETS
Acquired
software
for own use
Self-developed
software Total
RMB’000 RMB ’000 RMB ’000
At 1 January 2020
Cost 1,387 1,350 2,737
Accumulated amortisation (1,194) — (1,194)
Net book amount 193 1,350 1,543
Year ended 31 December 2020
Opening net book amount 193 1,350 1,543
Additions 177 501 678
Amortisation (Note 6(a)) (101) (411) (512)
Closing net book amount 269 1,440 1,709
At 31 December 2020
Cost 1,564 1,851 3,415
Accumulated amortisation (1,295) (411) (1,706)
Net book amount 269 1,440 1,709
Year ended 31 December 2021
Opening net book amount 269 1,440 1,709
Additions 208 1,621 1,829
Amortisation (Note 6(a)) (85) (617) (702)
Closing net book amount 392 2,444 2,836
At 31 December 2021
Cost 1,772 3,472 5,244
Accumulated amortisation (1,380) (1,028) (2,408)
Net book amount 392 2,444 2,836
APPENDIX I ACCOUNTANT ’SR E P O R T
– I-44 –


--- page 502 ---
Acquired
software
for own use
Self-developed
software Total
RMB’000 RMB ’000 RMB ’000
Year ended 31 December 2022
Opening net book amount 392 2,444 2,836
Additions 54 — 54
Amortisation (Note 6(a)) (126) (1,157) (1,283)
Closing net book amount 320 1,287 1,607
At 31 December 2022
Cost 1,825 3,472 5,297
Accumulated amortisation (1,505) (2,185) (3,690)
Net book amount 320 1,287 1,607
Six months ended 30 June 2022 (unaudited)
Opening net book amount 392 2,444 2,836
Amortisation (Note 6(a)) (60) (579) (639)
Closing net book amount 332 1,865 2,197
At 30 June 2022 (unaudited)
Cost 1,772 3,472 5,244
Accumulated amortisation (1,440) (1,607) (3,047)
Net book amount 332 1,865 2,197
Six months ended 30 June 2023
Opening net book amount 320 1,287 1,607
Amortisation (Note 6(a)) (55) (476) (531)
Closing net book amount 265 811 1,076
At 30 June 2023
Cost 1,825 3,472 5,297
Accumulated amortisation (1,560) (2,661) (4,221)
Net book amount 265 811 1,076
APPENDIX I ACCOUNTANT ’SR E P O R T
– I-45 –


--- page 503 ---
15 FINANCIAL INSTRUMENTS BY CATEGORY
As at 31 December
As at 30
June
2020 2021 2022 2023
RMB’000 RMB ’000 RMB ’000 RMB ’000
Financial assets
Financial assets at amortised cost
Trade receivables (Note 18) 26,473 31,499 35,397 49,502
Deposits and other receivables (Note 16) 980 1,664 2,701 2,976
Amount due from the intermediate holding
company (Note 26(a)) — 112 1,161 1,181
Pledged bank deposits (Note 17) 60 4,130 ——
Cash and cash equivalents (Note 17) 23,130 21,542 42,199 31,507
50,643 58,947 81,458 85,166
Financial liabilities
Financial liabilities at amortised cost
Trade and bills payables (Note 21) 7,259 17,198 5,216 2,631
Other payables and accruals (Note 22) 33,256 35,671 39,074 44,748
Amounts due to shareholders (Note 26(a)) 1,261 3,970 1,860 2,588
Bank borrowings (Note 23) 6,280 7,860 30,000 29,500
Lease liabilities (Note 19) 583 435 83 166
48,639 65,134 76,233 79,633
APPENDIX I ACCOUNTANT ’SR E P O R T
– I-46 –


--- page 504 ---
16 PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB ’000 RMB ’000 RMB ’000
Current portion
Prepayments for project material costs 11,148 5,647 744 5,517
Other prepayments 440 700 623 619
Rental and other deposits (Note i) 66 201 174 302
Deposits for tendering (Note i) 647 1,140 2,148 2,039
Other receivables (Note i) 267 323 379 635
Deferred listing expenses (Note ii) 631 2,930 6,477 9,001
13,199 10,941 10,545 18,113
Notes:
(i) As at 31 December 2020, 2021 and 2022 and 30 June 2023, the carrying amounts of deposits and other
receivables were denominated in RMB and approximated their fair values. These balances were unsecured and
interest free.
(ii) The deferred listing expenses were incurred in connection with the listing of the Company and will be
deducted from equity upon listing.
17 CASH AND CASH EQUIVALENTS AND PLEDGED BANK DEPOSITS
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB ’000 RMB ’000 RMB ’000
Cash at banks 23,130 21,542 42,199 31,507
Cash and cash equivalents 23,130 21,542 42,199 31,507
Pledged bank deposits 60 4,130 ——
23,190 25,672 42,199 31,507
Maximum exposure to credit risk 23,190 25,672 42,199 31,507
As at 31 December 2020, deposits amounting to RMB60,000, respectively, were pledged to banks as required by
certain projects that the Group was tendering. Such pledge d deposits had been released upon the closure of the tendering.
As at 31 December 2021, deposits amounting to RMB4,130,000 were pledged to banks as securities for bills issued
by the banks. Such pledged deposits were subsequently releas ed upon the maturity of the bills in the first quarter of 2022.
APPENDIX I ACCOUNTANT ’SR E P O R T
– I-47 –


--- page 505 ---
The carrying amounts of the Group ’s cash and cash equivalents and pledged bank deposits were denominated in the
following currencies:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB ’000 RMB ’000 RMB ’000
RMB 23,158 25,282 41,889 30,507
HK$ 32 390 310 1,000
23,190 25,672 42,199 31,507
As at 31 December 2020, 2021 and 2022 and 30 June 2023, cash and cash equivalents and pledged bank deposits of
the Group amounting to approximately RMB23,158, 000, RMB25,273,000, RMB41,889,000 and RMB30,507,000,
respectively, were deposited with the banks in the PRC wher e the remittance of funds out of the PRC is subject to the
rules and regulations of foreign exchange control promulgated by the government of the PRC.
18 CONTRACT ASSETS AND TRADE RECEIVABLES
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB ’000 RMB ’000 RMB ’000
Contract assets 60,567 74,266 70,388 65,449
Less: provision for impairment of contract assets
(Note 3.2(b)) (1,303) (1,508) (2,493) (3,929)
59,264 72,758 67,895 61,520
Trade receivables 26,947 31,941 38,187 52,138
Less: provision for impairment of trade
receivables (Note 3.2(b)) (474) (442) (2,790) (2,636)
26,473 31,499 35,397 49,502
85,737 104,257 103,292 111,022
Contract assets represent the Group ’s rights to consideration for work completed but unbilled. The contract assets are
transferred to trade receivables when the rights become unconditional when the project progress is verified, accepted and
agreed to be billed by the customers. Depending on the nature and complexity of the project, the majority of contract
assets generally take less than 1 year to be transferred to trade receivables. The balances of contract assets fluctuated
during the Track Record Period as the Group provided varying amount of services that were unbilled before the end of
each reporting period.
As at 31 December 2020, 2021 and 2022 and 30 June 2023, the carrying amounts of contract assets and trade
receivables approximated their fair values.
Trade receivables are generally due within 15 days to 180 days from the date of billing.
APPENDIX I ACCOUNTANT ’SR E P O R T
– I-48 –


--- page 506 ---
As at 31 December 2020, 2021 and 2022 and 30 June 2023, the aging analysis of trade receivables, based on invoice
date, was as follows:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB ’000 RMB ’000 RMB ’000
Within 180 days 23,596 24,638 33,416 40,843
Between 181 days and 365 days 3,171 5,498 375 9,183
Between 1 year and 2 years 39 1,669 3,160 1,177
Over 2 years 141 136 1,236 935
26,947 31,941 38,187 52,138
As at 31 December 2020, 2021 and 2022 and 30 June 2023, the carrying amounts of the Group ’s trade receivables
were denominated in RMB.
19 LEASES
(a) Amounts recognised in the consolidated statement of financial position
The consolidated statement of financial positio n show the following amounts relating to leases:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB ’000 RMB ’000 RMB ’000
Right-of-use assets*
Properties 489 374 44 165
* The balances were included in Note 13 ‘‘Property, plant and equipment ’’.
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB ’000 RMB ’000 RMB ’000
Lease liabilities
Non-current portion 296 37 — 121
Current portion 287 398 83 45
583 435 83 166
Additions to the right-of-use assets amounted to a pproximately RMB299,000, RMB201,000 and RMB97,000
and RMB189,000, respectively, during the years ended 31 December 2020, 2021 and 2022 and the six months ended
30 June 2023.
As at 31 December 2020, 2021 and 2022 and 30 June 2023, the carrying amounts of the Group ’s lease
liabilities were denominated in RMB.
APPENDIX I ACCOUNTANT ’SR E P O R T
– I-49 –


--- page 507 ---
(b) Amounts recognised in the consolidated statement of comprehensive income
The consolidated statement of com prehensive income show the following amounts relating to leases:
Year ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
RMB’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
(unaudited)
Depreciation charge of right-of-use
assets (Note 13) 251 316 228 125 68
Finance costs on leases (Note 10) 43 32 9 7 5
Expenses of short-term leases in
respect of machineries, offices,
motor vehicles and staff quarters
— Included in Material supplies and
other project cost 4,166 4,918 5,495 2,660 2,667
— Included in other operating
expenses (Note 6(b)) 95 — 145 29 2
4,261 4,918 5,640 2,689 2,669
Gain on disposal of right-of-use assets
and lease liabilities on early
termination of a lease (Note 8) —— 22 2 —
(c) Amounts recognised in the consolidated statement of cash flows
During the years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2022 and 2023,
the total cash outflows for leases were analysed as below:
Year ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
RMB’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
(unaudited)
Cash flows from operating activities
Payments for short-term leases in
respect of machineries, offices,
motor vehicles and staff quarters* 4,261 4,918 5,640 2,689 2,669
Cash flows from financing activities
Payment of interest element of lease
liabilities (Note 10) 43 32 9 7 5
Payment of principal element of lease
liabilities 231 349 221 155 106
4,535 5,299 5,870 2,851 2,780
* Payments for short-term leases were not shown separately but included in the line of ‘‘profit before
income tax ’’in respect of the net cash generated from operations which were presented in Note 24(a)
using the indirect method.
APPENDIX I ACCOUNTANT ’SR E P O R T
– I-50 –


--- page 508 ---
20 DEFERRED INCOME TAX
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
against current tax liabilities and when the deferred taxes assets and liabilities relate to the same tax authority.
The analysis of deferred tax assets is as follows:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB ’000 RMB ’000 RMB ’000
Deferred tax assets 267 195 793 985
The movement in deferred tax assets during the Track Record Period, without taking into consideration the offsetting
of balances within the same tax jurisdiction, is as follows:
Deferred tax assets Loss allowance
RMB’000
At 1 January 2020 97
Effect of change in the applicable tax rate recognised in consolidated statement of
comprehensive income (Note 11) 49
Credited to the consolidated statement of comprehensive income (Note 11) 121
At 31 December 2020 267
Effect of change in the applicable tax rate recognised in consolidated statement of
comprehensive income (Note 11) (89)
Credited to the consolidated statement of comprehensive income (Note 11) 17
At 31 December 2021 195
Effect of change in the applicable tax rate recognised in consolidated statement of
comprehensive income (Note 11) 98
Credited to the consolidated statement of comprehensive income (Note 11) 500
At 31 December 2022 793
Credited to the consolidated statement of comprehensive income (Note 11) 192
At 30 June 2023 985
As at 31 December 2020, 2021 and 2022 and 30 June 2023, the Group had undistributed earnings of approximately
RMB33,382,000, RMB40,781,000, RMB46,532,000 and RMB39, 949,000, respectively, which, if paid out as dividends,
would be subject to tax in the hands of the receipts. An assessable temporary difference exists, but no deferred tax liability
has been recognised as the parent entity is able to control the timing of distributions of dividends from the PRC
subsidiaries such that each year ’s dividend, if any, is expected to be declared and paid out of that year ’s profit, not from
the undistributed retained earnings brought forward.
APPENDIX I ACCOUNTANT ’SR E P O R T
– I-51 –


--- page 509 ---
21 TRADE AND BILLS PAYABLES
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB ’000 RMB ’000 RMB ’000
Trade payables 7,259 13,068 5,216 2,631
Bills payables — 4,130 ——
7,259 17,198 5,216 2,631
As at 31 December 2020, 2021 and 2022 and 30 June 2023, the aging analysis of trade payables, based on invoice
date, was as follows:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB ’000 RMB ’000 RMB ’000
Within 180 days 4,061 9,333 2,668 990
Between 181 days and 365 days 2,307 2,450 505 126
Over 365 days 891 1,285 2,043 1,515
7,259 13,068 5,216 2,631
As at 31 December 2020, 2021 and 2022 and 30 June 2023, the carrying amounts of the Group ’s trade payables
were denominated in RMB and appr oximated their fair values.
APPENDIX I ACCOUNTANT ’SR E P O R T
– I-52 –


--- page 510 ---
22 CONTRACT LIABILITIES, OTHER PAYABLES AND ACCRUALS
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB ’000 RMB ’000 RMB ’000
Accrued employee benefits ex penses 7,368 2,832 2,026 1,411
VAT and other tax payables 3,162 4,311 1,877 2,369
Other payables and accruals 881 568 846 989
Accrued subcontracting charges, materials costs
and other direct project costs 32,038 31,232 32,873 39,111
Accrued listing expenses 337 3,871 5,355 4,648
Contract liabilities (Note 5(d)) 1,190 6,499 2,303 1,618
44,976 49,313 45,280 50,146
As at 31 December 2020, 2021 and 2022 and 30 June 2023, the carrying amounts of other payables and accruals
approximated their fair values.
The carrying amounts of the Group ’s other payables and accruals were denominated in the following currencies:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB ’000 RMB ’000 RMB ’000
RMB 43,262 38,185 41,956 46,953
HK$ 524 4,629 1,021 1,575
43,786 42,814 42,977 48,528
APPENDIX I ACCOUNTANT ’SR E P O R T
– I-53 –


--- page 511 ---
23 BANK BORROWINGS
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB ’000 RMB ’000 RMB ’000
Current portion
Bank borrowings — secured 1,420 4,420 ——
Bank borrowings — unsecured —— 22,000 23,500
1,420 4,420 22,000 23,500
Non-current portion
Bank borrowings — secured 4,860 3,440 ——
Bank borrowings — unsecured —— 8,000 6,000
6,280 7,860 30,000 29,500
At the end of the reporting period, bank borrowings were repayable as follows:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB ’000 RMB ’000 RMB ’000
Within 1 year 1,420 4,420 22,000 23,500
Between 1 and 2 years 1,420 3,440 4,000 4,500
Between 2 and 5 years 3,440 — 4,000 1,500
6,280 7,860 30,000 29,500
As at 31 December 2020, the Group ’s bank borrowings were carried at floating rates ranged from 4.1% to 4.9% per
annum. As at 31 December 2021, the Group ’s bank borrowings were carried at floating rates ranged from 4.1% to 4.7% per
annum. As at 31 December 2022, the Group ’s bank borrowings were carried at floating rates ranged from 3.7% to 4.2%
per annum. As at 30 June 2023, the Group ’s bank borrowings were carried at floating rates ranged from 3.65% to 4.2% per
annum.
As at 31 December 2020, 2021 and 2022 and 30 June 2023, the carrying amounts of the bank borrowings were
denominated in RMB and approximated their fair values.
As at 31 December 2020 and 2021, the bank borrowings were secured by certain trade receivables with carrying
amounts of RMB10,000,000. As at 31 December 2022 and 30 June 2023, the bank borrowings were unsecured.
Certain of the Group ’s bank borrowings as at 31 December 2020, 2021 and 2022 and 30 June 2023 are subject to the
fulfillment of certain covenants which primarily relate to, among others, the maintenance of debt-to-assets ratio below
certain levels. The Group regularly monitors its complianc e with these covenants and none of these covenants had been
breached as at 31 December 2020, 2021 and 2022 and 30 June 2023.
APPENDIX I ACCOUNTANT ’SR E P O R T
– I-54 –


--- page 512 ---
24 NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
(a) Reconciliation of profit before income tax for the Track Record Period to net cash generated from/(used
in) operations
Year ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
RMB’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
(unaudited)
Profit before income tax 34,712 30,148 29,268 13,272 17,661
Adjustments for:
Finance income (Note 10) (73) (47) (94) (49) (147)
Finance costs (Note 10) 569 378 896 326 535
Depreciation and amortisation
(Note 6(a)) 1,648 2,275 3,066 1,545 1,219
Provision for impairment of
contract assets and trade
receivables (Note 3.2(b)) 804 173 3,333 1,379 1,282
Loss on disposal of property, plant
and equipment (Note 8) 51 24 —— —
Gain on disposal of right-of-use
assets and lease liabilities
on early termination of lease
(Note 8) —— (22) (2) —
37,711 32,951 36,447 16,471 20,550
Changes in working capital:
— Contract assets and trade
receivables (8,357) (18,693) (2,368) (3,966) (9,012)
— Prepayments, deposits and other
receivables 488 2,258 396 (2,414) (7,568)
— Amount due from the
intermediate holding company — (112) (1,049) (18) (20)
— Trade and bills payables 2,325 9,939 (11,982) (10,337) (2,585)
— Other payables and accruals (13,736) 6,636 (486) (2,190) 7,391
— Pledged bank deposits 180 60 —— —
Net cash generated from/(used in)
operations 18,611 33,039 20,958 (2,454) 8,756
(b) In the consolidated statement of cash flows, proceeds from disposal of property, plant and equipment
comprise:
Year ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
RMB’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
(unaudited)
Net book amount disposed (Note 13) 51 43 —— —
Loss on disposal of property, plant
and equipment (Note 8) (51) (24) —— —
Proceeds from disposal of property,
plant and equipment — 19 —— —
APPENDIX I ACCOUNTANT ’SR E P O R T
– I-55 –


--- page 513 ---
(c) The reconciliations of liabilities arising from financing activities are as follows:
Bank
borrowings
Lease
liabilities
Dividend
payable
Amounts
due to
shareholders Total
RMB’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
As at 1 January 2020 2,000 515 — 16,240 18,755
Cash flows
— Proceeds from bank borrowings 23,720 —— — 23,720
— Repayments of bank borrowings (19,440) —— — (19,440)
— Payment of principal element of
lease liabilities — (231) —— (231)
— Interest paid (526) (43) —— (569)
— Advances from shareholders ——— 98 98
— Repayments to shareholders ——— (15,077) (15,077)
Other non-cash movements
— Additions of lease liabilities — 299 —— 299
— Interest expenses (Note 10) 526 43 —— 569
As at 31 December 2020 6,280 583 — 1,261 8,124
Bank
borrowings
Lease
liabilities
Dividend
payable
Amounts
due to
shareholders Total
RMB’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
As at 1 January 2021 6,280 583 — 1,261 8,124
Cash flows
— Proceeds from bank borrowings 6,001 —— — 6,001
— Repayments of bank borrowings (4,421) —— — (4,421)
— Payment of principal element of
lease liabilities — (349) —— (349)
— Interest paid (346) (32) —— (378)
— Advances from shareholders ——— 2,787 2,787
— Repayments to shareholders ——— (78) (78)
— Dividend paid (Note 27) —— (19,954) — (19,954)
Other non-cash movements
— Additions of lease liabilities — 201 —— 201
— Interest expenses (Note 10) 346 32 —— 378
— Dividend declared (Note 27) —— 19,954 — 19,954
As at 31 December 2021 7,860 435 — 3,970 12,265
APPENDIX I ACCOUNTANT ’SR E P O R T
– I-56 –


--- page 514 ---
Bank
borrowings
Lease
liabilities
Dividend
payable
Amounts
due to
shareholders Total
RMB’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
As at 1 January 2022 7,860 435 — 3,970 12,265
Cash flows
— Proceeds from bank borrowings 30,000 —— — 30,000
— Repayments of bank borrowings (7,860) —— — (7,860)
— Payment of principal element of
lease liabilities — (221) —— (221)
— Interest paid (887) (9) —— (896)
— Advances from shareholders ——— 1,656 1,656
— Repayments to shareholders ——— (3,766) (3,766)
— Dividend paid (Note 27) —— (14,603) — (14,603)
Other non-cash movements
— Additions of lease liabilities — 97 —— 97
— Interest expenses (Note 10) 887 9 —— 896
— Disposal on early termination of a
lease — (228) —— (228)
— Dividend declared (Note 27) —— 14,603 — 14,603
As at 31 December 2022 30,000 83 — 1,860 31,943
As at 1 January 2022 7,860 435 — 3,970 12,265
Cash flows
— Proceeds from bank borrowings 25,000 —— — 25,000
— Repayments of bank borrowings (3,710) —— — (3,710)
— Payment of principal element of
lease liabilities — (155) —— (155)
— Interest paid (319) (7) —— (326)
— Advances from shareholders ——— 1,088 1,088
Other non-cash movements
— Interest expenses (Note 10) 319 7 —— 326
— Disposal on early termination of a
lease — (138) —— (138)
As at 30 June 2022 (unaudited) 29,150 142 — 5,058 34,350
APPENDIX I ACCOUNTANT ’SR E P O R T
– I-57 –


--- page 515 ---
Bank
borrowings
Lease
liabilities
Dividend
payable
Amounts
due to
shareholders Total
RMB’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
As at 1 January 2023 30,000 83 — 1,860 31,943
Cash flows
— Proceeds from bank borrowings 10,000 —— — 10,000
— Repayments of bank borrowings (10,500) —— — (10,500)
— Payment of principal element of
lease liabilities — (106) —— (106)
— Interest paid (530) (5) —— (535)
— Advances from shareholders ——— 728 728
— Dividend paid (Note 27) —— (14,332) — (14,332)
Other non-cash movements ——— ——
— Additions of lease liabilities — 189 —— 189
— Interest expenses (Note 10) 530 5 —— 535
— Dividend declared (Note 27) —— 14,332 — 14,332
As at 30 June 2023 29,500 166 — 2,588 32,254
25 CAPITAL COMMITMENTS
As at 31 December 2020, 2021 and 2022 and 30 June 2023, the Group did not have any material capital
commitments.
26 RELATED PARTY TRANSACTIONS
Related parties are those parties that have the ability to control, jointly control or exert significant influence over the
other party. Parties are also considered to be related if they a re subject to common control or joint control. Related parties
may be individuals or other entities.
The ultimate holding company and controlling shareholder are disclosed in Note 1.1.
APPENDIX I ACCOUNTANT ’SR E P O R T
– I-58 –


--- page 516 ---
Major related parties that had transactions with the Group during the Track Record Period were as follows:
Related parties Relationship with the Company
Mr. Jia Director and the controlling shareholder
Ms. Zheng Li Spouse of Mr. Jia
Ms. Chen Shareholder
Mr. Cong Director and Shareholder
Mr. Fung Shareholder
Mr. Lin Director and Shareholder
Cheer Partners Limited Controlled by Mr. Lin
Shine Dynasty Limited Controlled by Mr. Jia
Dazzling Power Limited Controlled by Mr. Cong
Diamond Skyline Limited Controlled by Ms. Chen
Golden Concord Limited Controlled by Mr. Fung
WellCell Group Co., Limited The intermediate holding company
In the opinion of the Company ’s directors, the following related party transactions were carried out at terms
mutually agreed between the Group and the respective related parties:
(a) Balances with related parties
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB ’000 RMB ’000 RMB ’000
Non-trade nature
Amount due from the intermediate
holding company:
WellCell Group Co., Limited — 112 1,161 1,181
Amounts due to shareholders:
Mr. Jia 252 252 252 271
M s . C h e n 3 93 93 93 9
Mr. Cong 370 370 370 370
Mr. Fung 588 588 588 588
Mr. Lin 12 2,721 611 1,320
1,261 3,970 1,860 2,588
The balances with related parties were unsecured, interest free and repayable on demand. The carrying
amounts were denominated in RMB and approximated the fair value. The balances will be settled prior to listing.
APPENDIX I ACCOUNTANT ’SR E P O R T
– I-59 –


--- page 517 ---
(b) Transactions with related parties
Save as disclosed in Note 28, the following transac tions were carried out during the Track Record Period:
Guarantees provided by the controlling shareholder and his spouse
During the year ended 31 December 2020, certain bank borrowings were secured by personal
guarantees from the controlling shareholder and his spouse. The personal guarantees were subsequently
discharged in July 2020.
(c) Key management compensation
Compensation paid or payable to key managem ent for employee services is shown below:
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
(unaudited)
Salaries and other short-term
employee benefits 1,098 1,128 1,080 372 416
Pension costs — defined
contribution plans 58 133 287 144 143
1,156 1,261 1,367 516 559
27 DIVIDEND
Dividend during the years ended 31 December 2021 and 2022 represented dividend declared and paid by WellCell
HK to its then equity holders. During the six months ended 30 J une 2023, the Company declared and paid dividends to its
shareholders of approximately RMB14,332,000.
28 BENEFITS AND INTERESTS OF DIRECTORS
(a) Directors ’ emoluments
The remuneration of each director is set out below:
Name of Director Fees Salary
Discretionary
bonus
Allowances
and
benefits
in kind
Employer ’s
contribution
to pension
scheme Total
RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
For the year ended
31 December 2020
Executive directors:
— Jia Zhengyi — 141 100 5 4 250
— Liu Ping — 120 5 4 12 141
— Cong Bin — 122 100 29 14 265
— 383 205 38 30 656
APPENDIX I ACCOUNTANT ’SR E P O R T
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--- page 518 ---
Name of Director Fees Salary
Discretionary
bonus
Allowances
and
benefits
in kind
Employer ’s
contribution
to pension
scheme Total
RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
For the year ended
31 December 2021
Executive directors:
— Jia Zhengyi — 143 100 9 23 275
— Liu Ping — 127 5 9 21 162
— Cong Bin — 124 100 46 30 300
Non-executive director:
— Lin Qihao —— —— ——
— 394 205 64 74 737
For the year ended
31 December 2022
Executive directors:
— Jia Zhengyi — 135 100 15 64 314
— Liu Ping — 129 — 8 35 172
— Cong Bin — 123 100 49 66 338
Non-executive director:
— Lin Qihao —— —— ——
— 387 200 72 165 824
For the six months ended
30 June 2023
Executive directors:
— Jia Zhengyi — 54 — 20 32 106
— Liu Ping — 51 — 17 18 86
— Cong Bin — 47 — 38 33 118
Non-executive director:
— Lin Qihao —— —— ——
— 152 — 75 83 310
For the six months ended
30 June 2022 (unaudited)
Executive directors:
— Jia Zhengyi — 66 — 8 32 106
— Liu Ping — 63 — 61 7 8 6
— Cong Bin — 60 — 26 33 119
Non-executive director:
— Lin Qihao —— —— ——
— 189 — 40 82 311
APPENDIX I ACCOUNTANT ’SR E P O R T
– I-61 –


--- page 519 ---
Mr. Jia, Ms. Liu and Mr. Cong were appointed as execu tive directors of the Company on 14 September 2021.
They were also directors of certain subsidiaries of th e Company and/or employees of the Group during the Track
R e c o r dP e r i o da n dt h eG r o u pp a i de m o l u m e n t st ot h e mi nt h eir capacity as the directors of these subsidiaries and/or
employees of the Group before their appointm ent as executive directors of the Company.
Mr. Lin was appointed as non-executive director of the Company on 14 September 2021. During the Track
Record Period, Mr. Lin received nil director ’s remuneration in the capacity of director.
Dr. Wu Wing Kuen, Dr. Leung Kwong Sak and Mr. Yu Chi Wing were appointed as independent non-
executive directors of the Company on 15 December 2023. During the Track Record Period, the independent non-
executive directors have not yet been appointed and received nil directors ’ remuneration in the capacity of directors.
During the Track Record Period, none of the directors of the Company (i) received or paid any remuneration
in respect of accepting office; (ii) received or paid em oluments in respect of services in connection with the
management of the affairs of the Company or its subsidiari es undertaking; or (iii) waived or has agreed to waive any
emolument.
(b) Directors ’ retirement benefits and termination benefits
During the Track Record Period, no emoluments, retir ement benefits, payments or benefits in respect of
termination of directors ’services were paid or made, directly or indir ectly, to the directors; nor are any payable.
(c) Consideration provided to third parties for making available directors ’services
During the Track Record Period, no consideration was provided to third parties for making available
directors ’services.
(d) Information about loans, quasi-loans and other dealings in favour of directors, controlled bodies
corporate by and connected entities with such directors
As at 31 December 2020, 2021, 2022 and 30 June 2023, there were no loans, quasi-loans and other dealing
arrangements in favour of directors, controlled bodies co rporate by and controlled entities with such directors.
(e) Directors ’ material interests in transactions, arrangements or contracts
Save as disclosed in Note 26 to the Historical Financial I nformation, no significant transactions, arrangements
and contracts in relation to the Group ’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 at the end of the Track Record Period or at
any time during the Track Record Period.
APPENDIX I ACCOUNTANT ’SR E P O R T
– I-62 –


--- page 520 ---
29 ASSETS PLEDGED AS SECURITIES
The carrying amounts of assets pledged as securiti es for the bank borrowings and bills payables:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB ’000 RMB ’000 RMB ’000
Charge at floating rate
Trade receivables (Note 23) 10,000 10,000 ——
Pledged deposits for bills payables (Note 17) — 4,130 ——
Total assets pledged as securities 10,000 14,130 ——
30 NOTES TO THE STATEMENTS OF FINANCIAL POSITION OF THE COMPANY
(a) Amount due from the intermediate holding company
Amount due from the intermediate holding company was unsecured, interest-free and repayable on demand.
The carrying amounts approximated its fair values and was denominated in RMB.
(b) Share capital
The Reorganisation has not been completed as at 31 December 2021 and 2022. For the purpose of this
Historical Financial Information, the combined capital in t he consolidated statement of financial position as at 31
December 2020, 2021 and 2022 represented aggregate amoun ts of share capital of the Company and the subsidiaries
now comprising the Group after elimination of inter-company investments.
Number of
shares
Nominal
value
HK$
Share capital of the Company
Authorised:
Ordinary shares of HK$0.01 38,000,000 380,000
Issued and fully paid:
Issue of ordinary shares on 14 September 2021 (date of incorporation)
(Note 1.2) 200 2
As at 31 December 2021 and 2022 200 2
Issue of ordinary shares on 27 April 2023 200 2
At 30 June 2023 400 4
On 14 September 2021, 200 ordinary shares were i ssued for approximately HK$2 pursuant to the Group ’s
Reorganisation as detailed in Note 1.2. As at 31 December 2021 and 2022, total issued number and nominal value of
ordinary shares of the Company amounted to 200 shares and HK$2 respectively.
APPENDIX I ACCOUNTANT ’SR E P O R T
– I-63 –


--- page 521 ---
On 27 April 2023, the Company acquired 100% equity intere st in WellCell International at a consideration of
the issue and allotment of 200 shares to WellCell Group. As at 30 June 2023, total issued number and nominal value
of ordinary shares of the Company amounted to 400 shares and HK$4 respectively.
Pursuant to the resolutions of the shareholders passe d on 15 December 2023, the authorised share capital of
the Company has been increased to 1,000,000,000 shar es of HKD 0.01 par value each. An aggregate of 374,999,600
ordinary shares will be issued and allotted to the relevant shareholders of the Company on the conditions as set out
in the resolutions.
(c) Amount due to a subsidiary
Amount due to a subsidiary was unsecured, interest free and repayable on demand. The carrying amount
approximated its fair values and was denominated in RMB.
(d) Reserve movements of the Company
Capital
reserve
(Accumulated
losses)/
retained
earnings Total reserve
RMB’000 RMB ’000 RMB ’000
At 14 September 2021 (date of incorporation) ———
Comprehensive income
Loss and total comprehensive loss for the year — (40) (40)
At 31 December 2021 and 1 January 2022 — (40) (40)
Profit and total comprehensive income for the year — 763 763
At 31 December 2022 and 1 January 2023 — 723 723
Issuance of ordinary shares pursuant to the
Reorganisation 24 — 24
Profit and total comprehensive income for the period — 14,319 14,319
Dividend declared — (14,332) (14,332)
At 30 June 2023 24 710 734
(e) Investment in subsidiary
As at 31 December As at 30 June
2021 2022 2023
RMB’000 RMB ’000 RMB ’000
Investment in subsidiary —— 24
The list of subsidiaries of the Company is set out in Note 1.2.
(f) Other receivables
As at 30 June 2023, the carrying amounts of other recei vables were denominated in RMB and approximated
their fair values. These balances were unsecured and interest free.
APPENDIX I ACCOUNTANT ’SR E P O R T
– I-64 –


--- page 522 ---
31 CONTINGENT LIABILITIES
As at 31 December 2020, 2021 and 2022 and 30 June 2023, the Group did not have any material contingent
liabilities.
32 SUBSEQUENT EVENTS
There were no significant events that require additional d isclosure or adjustments occurred after 30 June 2023.
III. SUBSEQUENT FINANCIAL STATEMENTS
No audited financial statements have been prep ared by the Company or any of the subsidiaries
now comprising the Group in respect of any period subsequent to 30 June 2023. No dividend or
distribution has been declared, made or paid b y the Company or any of its subsidiaries now
comprising the Group in respect of any period subsequent to 30 June 2023.
APPENDIX I ACCOUNTANT ’SR E P O R T
– I-65 –


--- page 523 ---
The information set out in this Appendix II does not form part of the Accountant ’sR e p o r tf r o m
PricewaterhouseCoopers, Cert ified Public Accountants, the reporting accountant of the Company,
as set out in Appendix I to this prospectus, and is included herein for illustrative purposes only.
The unaudited pro forma financial information should be read in conjunction with the section
headed ‘‘Financial Information ’’in this prospectus and the Accountant ’s Report set out in Appendix
I in this prospectus.
A. UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET
TANGIBLE ASSETS
The following is the unaudited pro forma stat ement of adjusted consolidated net tangible
assets of the Group attributable to equity holders of the Company (the ‘‘Unaudited Pro Forma
Financial Information ’’) which has been prepared in accordance with Rule 4.29 of the Listing Rules
and on the basis of the notes set out below for the pur pose to illustrate the effect of the Share Offer
on the consolidated net tangible assets of the Group attributable to equity holders of the Company
as at 30 June 2023 as if the Share Offer had taken place on 30 June 2023, assuming the Over-
allotment Option is not exercised.
The Unaudited Pro Forma Financial Informatio n is prepared based on the consolidated net
assets of the Group attributable to equity holde rs of the Company as at 30 June 2023 as set out in
the Accountant ’s Report of the Group, the text of which is set out in Appendix I to this prospectus,
after incorporating the unaudited pro forma adjustments described in the accompanying notes
below.
The Unaudited Pro Forma Financial Informat ion has been prepared by the Directors for
illustrative purposes only, based on the judgem ents and assumptions of the Directors, and because
of its hypothetical nature, it may not give a true pi cture of the consolidated net tangible assets of
the Group attributable to equity holders of the Company had the Share Offer been completed as at
30 June 2023 or at any future dates following the Share Offer.
Audited
consolidated net
tangible assets of
the Group
attributable to
equity holders
of the Company
as at
30 June 2023
Estimated net
proceeds from the
Share Offer
Unaudited pro
forma adjusted
consolidated net
tangible assets
of the Group
attributable to
equity holders
of the Company
as at
30 June 2023
Unaudited pro forma
adjusted consolidated net
tangible assets of the
Group attributable
to equity holders of the
Company per Share
RMB ’000 RMB ’000 RMB ’000 RMB HK$
Note 1 Note 2 Note 3
B a s e do na nO f f e rP r i c eo f
HK$1.00 per Share 79,992 84,429 164,421 0.33 0.36
B a s e do na nO f f e rP r i c eo f
HK$1.30 per Share 79,992 117,274 197,266 0.39 0.42
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-1 –


--- page 524 ---
Notes:
1. The audited consolidated net tangible assets of the Group attributable to equity holders of the Company as at
30 June 2023 is extracted from the Accountant ’s Report set out in Appendix I to this prospectus, which is
based on the audited consolidated net assets of the Group attributable to equity holders of the Company as at
30 June 2023 of approximately RMB81,068,000 with ad justment for the intangible assets as at 30 June 2023
of approximately RMB1,076,000.
2. The estimated net proceeds from the Share Offer are based on 125,000,000 Offer Shares and the indicative
Offer Prices of HK$1.00 per Offer Share and HK$1.30 pe r Offer Share, being the low end and high end of the
indicative Offer Price range, respectively, after deduc tion of the underwriting fees and other related expenses
(excluding listing expenses of approximately RMB 25,606,000 which have been accounted for in the
consolidated statements of comprehensive income of the Group up to 30 June 2023), without taking into
account of any Shares which may be allotted and issued upon the exercise of the Over-allotment Option, or
any Shares which may be issued or repurchased by the C ompany under the general mandates for the issue or
repurchase of Shares.
3. The unaudited pro forma adjusted consolidated net tangi ble assets of the Group attributable to equity holders
of the Company per Share is arrived at after the adjustments referred to in the preceding paragraphs and on
the basis that 500,000,000 Shares were in issue assumi ng the Share Offer had taken place on 30 June 2023,
without taking into account of any Shares which may be allotted and issued upon the exercise of the Over-
allotment Option, or any Shares which may be issued or repurchased by the Company under the general
mandates for the issue or repurchase of Shares.
4. For the purpose of this unaudited pro forma adjusted consolidated net tangible assets, the translations of RMB
amounts into Hong Kong dollars have been made at the rate of RMB0.92198 to HK$1.00. No representation
is made that Renminbi amounts have been, could hav e been or may be converted to Hong Kong dollars, or
vice versa, at that rate.
5. No adjustment has been made to reflect any trading re sults or other transactions of the Group entered into
subsequent to 30 June 2023.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-2 –


--- page 525 ---
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 FO RMA FINANCIAL INFORMATION
To the Directors of WellCell Holdings Co., Limited
We have completed our assurance engagement to report on the compilation of unaudited pro
forma financial information of Wel lCell Holdings Co., Limited (the ‘‘Company ’’)a n di t s
subsidiaries (collectively the ‘‘Group ’’) by the directors of the Company (the ‘‘Directors ’’)f o r
illustrative purposes only. The unaudited pro forma f inancial information consists of the unaudited
pro forma statement of adjusted consolidated net tangible assets of the Group as at 30 June 2023,
and related notes (the ‘‘Unaudited Pro Forma Fin ancial Information ’’) as set out on pages II-1 to II-
2o ft h eC o m p a n y’s prospectus dated 28 December 2023, in connection with the proposed initial
public offering of the shares of the Company (the ‘‘Prospectus ’’). The applicable criteria on the
basis of which the Directors have compiled the Un audited Pro Forma Financial Information are
described on pages II-1 to II-2 of the Prospectus.
The Unaudited Pro Forma Financial Information has been compiled by the Directors to
illustrate the impact of the proposed initial public offering on the Group ’s financial position as at
30 June 2023 as if the proposed initial public offering had taken place at 30 June 2023. As part of
this process, information about the Group ’s financial position has been extracted by the Directors
from the Group ’s financial information for the six months ended 30 June 2023, on which an
accountant ’s report has been published.
Directors ’ Responsibility for the Unaudited P ro Forma Financial Information
The Directors are responsible for compiling the U naudited Pro Forma Financial Information in
accordance with paragraph 4.29 of the Rules Go verning the Listing of Securities on The Stock
Exchange of Hong Kong Limited (the ‘‘Listing Rules ’’) and with reference to Accounting Guideline
7, Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars (‘‘AG 7 ’’)
issued by the Hong Kong Institute of Certified Public Accountants ( ‘‘HKICPA ’’).
Our Independence and Quality Management
We have complied with the independence and other ethical requirements of the Code of Ethics
for Professional Accountants issued by the HKICPA, which is founded on fundamental principles
of integrity, objectivity, profes sional competence and due care, co nfidentiality and professional
behaviour.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-3 –


--- page 526 ---
Our firm applies Hong Kong Standard on Quality Management (HKSQM) 1, Quality
Management for Firms that Perform Audits or R eviews of Financial Statements, or Other
Assurance or Related Services Engagements, issued by the HKICPA, wh ich requires the firm to
design, implement and operate a system of quali ty 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, a s required by paragraph 4.29(7) of the Listing
Rules, on the Unaudited Pro Forma Financial Information and to report our opinion to you. We do
not accept any responsibility for any reports prev iously 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 pe rforms procedures to obtain reasonable assurance about whether
the Directors have compiled the Unaudited Pro Fo rma Financial Information in accordance with
p a r a g r a p h4 . 2 9o ft h eL i s t i n gR u l e sa n dwith reference to AG 7 issued by the HKICPA.
For purposes of this engagement, we are not respon sible for updating or reissuing any reports
or opinions on any historical financial informa tion 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 in formation included in a prospectus is solely to
illustrate the impact of a significant event or trans action on unadjusted financial information of the
entity as if the event had occurred or the transactio n had been undertaken at an earlier date selected
for purposes of the illustration. Accordingly, we do not provide any assurance that the actual
outcome of the proposed initial public offering at 30 June 2023 would have been as presented.
A reasonable assurance engagement to report o n whether the unaudited pro forma financial
information has been properly compiled on the basi s of the applicable criteria involves performing
procedures to assess whether the applicable criteria used by the d irectors in the compilation of the
unaudited pro forma financial info rmation provide a reasonable basi s for presenting the significant
effects directly attributable to the event or transac tion, and to obtain sufficient appropriate evidence
about whether:
. The related pro forma adjust ments give appropriate effect to those criteria; and
. The unaudited pro forma financial information reflects the proper application of those
adjustments to the unadjusted financial information.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-4 –


--- page 527 ---
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 over all presentation of the unaudited pro forma
financial information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Opinion
In our opinion:
(a) the Unaudited Pro Forma Financial Information has been properly compiled by the
Directors on the basis stated;
(b) such basis is consistent with the accounting policies of the Group; and
(c) the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial
Information as disclosed pursuant to par agraph 4.29(1) of the Listing Rules.
PricewaterhouseCoopers
Certified Public Accountants
Hong Kong, 28 December 2023
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-5 –


--- page 528 ---
Set out below is a summary of certain provisions of the Memorandum and Articles of
Association of the Company and of certain aspects of Cayman Islands company law.
The Company was incorporated in the Cayman Is lands as an exempted company with limited
liability on 14 September 2021 under the Companies Act. The Company ’s constitutional documents
consist of its Amended and Restated Memorandum of Association ( Memorandum )a n di t s
Amended and Restated Articles of Association ( Articles ).
1. MEMORANDUM OF ASSOCIATION
(a) The Memorandum provides, inter alia , that the liability of members of the Company is
limited and that the objects for which the Comp any is established are unrestricted (and
therefore include acting as an investment company), and that the Company shall have
and be capable of exercising any and all of the powers at any time or from time to time
exercisable by a natural person or body corpo rate whether as principal, agent, contractor
or otherwise and, since the Company is an e xempted company, that the Company will
not trade in the Cayman Islands with any p erson, firm or corporation except in
furtherance of the business of the Company carried on outside the Cayman Islands.
(b) By special resolution the Company may alter the Memorandum with respect to any
objects, powers or other matters specified in it.
2. ARTICLES OF ASSOCIATION
The Articles were adopted on 15 December 2023 with effect from the Listing Date. A
summary of certain provisions o f the Articles is set out below.
(a) Shares
(i) Classes of shares
The share capital of the Company consists of ordinary shares.
(ii) Variation of rights of existing shares or classes of shares
Subject to the Companies Act, if at any time the share capital of the Company is
divided into different classes of shares, al l or any of the special rights attached to any
class of shares may (unless otherwise provi ded for by the terms of issue of the shares of
that class) be varied, modified or abrogat ed either with the consent in writing of the
holders of not less than three-fourths in nom inal value of the issued shares of that class
or with the sanction of a special resolution p assed at a separate general meeting of the
holders of the shares of that class. The provisions of the Articles relating to general
meetings shall mutatis mutandis apply to every such separate general meeting, but so that
the necessary quorum (other than at an adjourned meeting) shall be not less than two
persons together holding (or, in the case of a member being a corporation, by its duly
APPENDIX III SUMMARY OF THE CONSTITUTION OF THE COMPANY
AND CAYMAN ISLANDS COMPANY LAW
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authorized representative) or representin g by proxy not less than one-third in nominal
value of the issued shares of that class. Ev ery holder of shares of the class shall be
entitled on a poll to one vote for every such share held by him, and any holder of shares
of the class present in person or by proxy may demand a poll.
Any special rights conferred upon the holders of any shares or class of shares shall
not, unless otherwise expressly provided in the rights attaching to the terms of issue of
such shares, be deemed to be varied by the creation or issue of further shares ranking
pari passu therewith.
(iii) Alteration of capital
The Company may, by an ordinary resolution of its members: (a) increase its share
capital by the creation of new shares of such amount as it thinks expedient; (b)
consolidate or divide all or any of its shar e capital into shares of larger or smaller
amount than its existing shares; (c) divide its unissued shares into several classes and
attach to such shares any preferential, deferr ed, qualified or special rights, privileges or
conditions; (d) subdivide its shares or any of them into shares of an amount smaller than
that fixed by the Memorandum; (e) cancel any shares which, at the date of the resolution,
have not been taken or agreed to be taken by any person and diminish the amount of its
share capital by the amount of the shares so cancelled; (f) make provision for the
allotment and issue of shares which do not ca rry any voting rights; and (g) change the
currency of denominatio n of its share capital.
(iv) Transfer of shares
Subject to the Companies Act and the requirements of The Stock Exchange of Hong
Kong Limited (the ‘‘Stock Exchange ’’), all transfers of shares shall be effected by an
instrument of transfer in the usual or common form or in such other form as the Board
may approve and may be under hand or, if the transferor or transferee is a Clearing
House or its nominee(s), under hand or by machine imprinted signature, or by such other
manner of execution as the Board may approve from time to time.
Execution of the instrument of transfer shall be by or on behalf of the transferor
and the transferee, provided that the Board may dispense with the execution of the
instrument of transfer by the transferor or t ransferee or accept mechanically executed
transfers. The transferor shall be deemed to r e m a i nt h eh o l d e ro fas h a r eu n t i lt h en a m e
of the transferee is entered in the registe r of members of the Company in respect of that
share.
The Board may, in its absolut e discretion, at any time and from time to time remove
any share on the principal register to any branch register or any share on any branch
register to the principal register or any other branch register. Unless the Board otherwise
agrees, no shares on the principal register shall be removed to any branch register nor
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shall shares on any branch register be removed to the principal register or any other
branch register. All removals and other docume nts of title shall be lodged for registration
and registered, in the case of shares on any branch register, at the relevant registration
office and, in the case of shares on the principal register, at the place at which the
principal register is located.
The Board may, in its absolute discretion, decline to register a transfer of any share
(not being a fully paid up share) to a person of whom it does not approve or on which
the Company has a lien. It may also decline to register a transfer of any share issued
under any share option scheme upon which a res triction on transfer subsists or a transfer
of any share to more than four joint holders.
The Board may decline to recognise any inst rument of transfer unless a certain fee,
up to such maximum sum as the Stock Exchange may determine to be payable, is paid to
the Company, the instrument of transfer is properly stamped (if applicable), is in respect
of only one class of share and is lodged at the re levant registration office or the place at
which the principal register is located acco mpanied by the relevant share certificate(s)
and such other evidence as the Board may reasonably require is provided to show the
right of the transferor to make the transfer (and if the instrument of transfer is executed
by some other person on his behalf, the authority of that person so to do).
The register of members may, subject to the Listing Rules, be closed at such time
or for such period not exceeding in the whole 30 days in each year as the Board may
determine.
Fully paid shares shall be free from any restriction on transfer (except when
permitted by the Stock Exchange) and shall also be free from all liens.
(v) Power of the Company to purchase its own shares
The Company may purchase its own shares subject to certain restrictions and the
Board may only exercise this power on behalf of the Company subject to any applicable
requirement imposed from time to time by the Ar ticles or any, code, rules or regulations
issued from time to time by the Stock Exchange and/or the Securities and Futures
Commission of Hong Kong.
(vi) Power of any subsidiary of the Company to own shares in the Company
There are no provisions in the Articles relating to the ownership of shares in the
C o m p a n yb yas u b s i d i a r y .
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(vii) Calls on shares and forfeiture of shares
The Board may, from time to time, make such calls as it thinks fit upon the
members in respect of any monies unpaid on the shares held by them respectively
(whether on account of the nominal value of the shares or by way of premium) and not
by the conditions of allotment of such share s made payable at fixed times. A call may be
made payable either in one sum or by instalments. If the sum payable in respect of any
call or instalment is not paid on or before the day appointed for payment thereof, the
person or persons from whom the sum is due shall pay interest on the same at such rate
not exceeding 20% per annum as the Board shall fix from the day appointed for payment
to the time of actual payment, but the Board may waive payment of such interest wholly
or in part. The Board may, if it thinks fit, receive from any member willing to advance
the same, either in money or money ’s worth, all or any part of the money uncalled and
unpaid or instalments payable upon any shares held by him, and in respect of all or any
of the monies so advanced the Company may pay interest at such rate (if any) not
exceeding 20% per annum as the Board may decide.
If a member fails to pay any call or instalment of a call on the day appointed for
payment, the Board may, for so long as any part of the call or instalment remains unpaid,
serve not less than 14 days ’ notice on the member requiring payment of so much of the
call or instalment as is unpaid, together wi th any interest which may have accrued and
which may still accrue up to the date of actua l payment. The notice shall name a further
day (not earlier than the expiration of 14 days from the date of the notice) on or before
which the payment required by the notice is to be made, and shall also name the place
where payment is to be made. The notice shall also state that, in the event of non-
payment at or before the appointed time, the shares in respect of which the call was
made will be liable to be forfeited.
If the requirements of any such notice are not complied with, any share in respect
of which the notice has been given may at any time thereafter, before the payment
required by the notice has been made, be for feited by a resolution of the Board to that
effect. Such forfeiture will include all div idends and bonuses declared in respect of the
forfeited share and not actuall y paid before the forfeiture.
A person whose shares have been forfeit ed shall cease to be a member in respect of
the forfeited shares but shall, neverthel ess, remain liable to pay to the Company all
monies which, at the date of forfeiture, were payable by him to the Company in respect
of the shares together with (if the Board shall in its discretion so require) interest thereon
from the date of forfeiture until paymen t at such rate not exceeding 20% per annum as
the Board may prescribe.
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(b) Directors
(i) Appointment, retirement and removal
At any time or from time to time, the Board shall have the power to appoint any
person as a Director either to fill a casu al vacancy on the Board or as an additional
Director to the existing Board subject to a ny maximum number of Directors, if any, as
may be determined by the members in general meeting. Any Director so appointed to fill
a casual vacancy shall hold office only unt il the first annual general meeting of the
Company after his appointment and be sub ject to re-election at such meeting. Any
Director so appointed as an addition to the existing Board shall hold office only until the
first annual general meeting of the Company a fter his appointment and be eligible for re-
election at such meeting. Any Director so appointed by the Board shall not be taken into
account in determining the Directors or the number of Directors who are to retire by
rotation at an annual general meeting.
At each annual general meeting, one third of the Directors for the time being shall
retire from office by rotation. However, if the number of Directors is not a multiple of
three, then the number nearest to but not less than one third shall be the number of
retiring Directors. The Directors to retire in each year shall be those who have been in
office longest since their last re-electio n or appointment but, as between persons who
became or were last re-elected Directors on t he same day, those to retire shall (unless
they otherwise agree among themselves) be determined by lot.
No person, other than a retiring Director, shall, unless recommended by the Board
for election, be eligible for election to the office of Director at any general meeting,
unless notice in writing of the intention to propose that person for election as a Director
a n dn o t i c ei nw r i t i n gb yt h a tp e r s o no fh i swillingness to be elected has been lodged at
the head office or at the registration office of the Company. The period for lodgment of
such notices shall commence no earlier than the day after despatch of the notice of the
relevant meeting and end no later than seve n days before the date of such meeting and
the minimum length of the period during which such notices may be lodged must be at
least seven days.
A Director is not required to hold any shares in the Company by way of
qualification nor is there any specified upper or lower age limit for Directors either for
accession to or retirement from the Board.
A Director may be removed by an ordinary resolution of the Company before the
expiration of his term of office (but without prejudice to any claim which such Director
may have for damages for any breach of any contract between him and the Company)
and the Company may by ordinary resoluti on appoint another in his place. Any Director
so appointed shall be subject to the ‘‘retirement by rotation ’’provisions. The number of
Directors shall not be less than two.
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The office of a Director shall be vacated if he:
(aa) resigns;
(bb) dies;
(cc) is declared to be of unsound mind and the Board resolves that his office be
vacated;
(dd) becomes bankrupt or has a receiving order made against him or suspends
payment or compounds with his creditors generally;
(ee) is prohibited from being or ceases to be a director by operation of law;
(ff) without special leave, is absent from m eetings of the Board for six consecutive
months, and the Board resolves that his office is vacated;
(gg) has been required by the stock excha nge of the Relevant Territory (as defined
in the Articles) to cease to be a Director; or
(hh) is removed from office by the requisite majority of the Directors or otherwise
pursuant to the Articles.
From time to time the Board may appoint one or more of its body to be managing
director, joint managing director or deputy managing director or to hold any other
employment or executive office with the C ompany for such period and upon such terms
as the Board may determine, and the Board may revoke or terminate any of such
appointments. The Board may also delegate a ny of its powers to committees consisting
of such Director(s) or other person(s) as the Board thinks fit, and from time to time it
may also revoke such delegation or revoke t he appointment of and discharge any such
committees either wholly or in part, and ei ther as to persons or purposes, but every
committee so formed shall, in the exercise o f the powers so delegated, conform to any
regulations that may from time to time be imposed upon it by the Board.
(ii) Power to allot and issue shares and warrants
Subject to the provisions of the Companies Act, the Memorandum and Articles and
without prejudice to any special rights conferred on the holders of any shares or class of
shares, any share may be issued with or ha ve attached to it such rights, or such
restrictions, whether with regard to dividend, voting, return of capital or otherwise, as the
Company may by ordinary resolution determine (or, in the absence of any such
determination or so far as the same may not make specific provision, as the Board may
determine). Any share may be issued on terms that, upon the happening of a specified
event or upon a given date and either at the option of the Company or the holder of the
share, it is liable to be redeemed.
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The Board may issue warrants to subscribe for any class of shares or other
securities of the Company on such term s as it may from time to time determine.
Where warrants are issued to bearer, no cer tificate in respect of such warrants shall
be issued to replace one that has been lost unless the Board is satisfied beyond
reasonable doubt that the original certificate has been destroyed and the Company has
received an indemnity in such form as the Boa rd thinks fit with regard to the issue of
any such replacement certificate.
Subject to the provisions of the Companies Act, the Articles and, where applicable,
the rules of any stock exchange of the Relevant Territory (as defined in the Articles) and
without prejudice to any special rights or restrictions for the time being attached to any
shares or any class of shares, all unissued sh ares in the Company shall be at the disposal
of the Board, which may offer, allot, grant options over or otherwise dispose of them to
such persons, at such times, for such consideration and on such terms and conditions as
it in its absolute discretion thinks fit, but so that no shares shall be issued at a discount.
Neither the Company nor the Board shall be obliged, when making or granting any
allotment of, offer of, option over or disposal of shares, to make, or make available, any
such allotment, offer, option or shares to me mbers or others whose registered addresses
are in any particular territory or territori es where, in the absence of a registration
statement or other special fo rmalities, this is or may, in the opinion of the Board, be
unlawful or impracticable. However, no member affected as a result of the foregoing
shall be, or be deemed to be, a separate class of members for any purpose whatsoever.
(iii) Power to dispose of the assets of the Company or any of its subsidiaries
While there are no specific provisions in th e Articles relating to the disposal of the
assets of the Company or any of its subsidiaries, the Board may exercise all powers and
do all acts and things which may be exercised or done or approved by the Company and
which are not required by the Articles or the Companies Act to be exercised or done by
the Company in general meeting, but if such power or act is regulated by the Company
in general meeting, such regulation shall not invalidate any prior act of the Board which
would have been valid if such regulation had not been made.
(iv) Borrowing powers
The Board may exercise all the powers of the Company to raise or borrow money,
to mortgage or charge all or any part of the undertaking, property and uncalled capital of
the Company and, subject to the Companies Act, to issue debentures, debenture stock,
bonds and other securities of the Company, whe ther outright or as collateral security for
any debt, liability or obligation of the Company or of any third party.
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(v) Remuneration
The Directors shall be entitled to receive, as ordinary remuneration for their
services, such sums as shall from time to time be determined by the Board or the
Company in general meeting, as the case may be, such sum (unless otherwise directed by
the resolution by which it is determined) t o be divided among the Directors in such
proportions and in such manner as they may agree or, failing agreement, either equally
or, in the case of any Director holding office for only a portion of the period in respect
of which the remuneration is payable, pro rata. The Directors shall also be entitled to be
repaid all expenses reasonably incurred b yt h e mi na t t e n d i n ga n yB o a r dm e e t i n g s ,
committee meetings or general meetings or oth erwise in connection with the discharge of
their duties as Directors. Such remuneration shall be in addition to any other
remuneration to which a Director who holds any salaried employment or office in the
Company may be entitled by reason of such employment or office.
Any Director who, at the request of the C ompany, performs services which in the
opinion of the Board goes beyond the ordinary duties of a Director may be paid such
special or extra remuneration as the Board may determine, in addition to or in
substitution for any ordinary remuneration as a Director. An executive Director appointed
to be a managing director, joint managing di rector, deputy managing director or other
executive officer shall receive such remunera tion and such other benefits and allowances
as the Board may from time to time decide. Such remuneration shall be in addition to his
ordinary remuneration as a Director.
The Board may establish, either on its own or jointly in concurrence or agreement
with subsidiaries of the Company or compan ies with which the Company is associated in
business, or may make contributions out of the Company ’s monies to, any schemes or
funds for providing pensions, sickness or co mpassionate allowances, life assurance or
other benefits for employees (which expression as used in this and the following
paragraph shall include any Director or former Director who may hold or have held any
executive office or any office of profit with the Company or any of its subsidiaries) and
former employees of the Company and their d ependents or any class or classes of such
persons.
The Board may also pay, enter into agreements to pay or make grants of revocable
or irrevocable, whether or not subject to an y terms or conditions, pensions or other
benefits to employees and former employees and their dependents, or to any of such
persons, including pensions or benefits additional to those, if any, to which such
employees or former employees or their dep endents are or may become entitled under
any such scheme or fund as mentioned above. Such pension or benefit may, if deemed
desirable by the Board, be granted to an employee either before and in anticipation of, or
upon or at any time after, his actual retirement.
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(vi) Compensation or payments for loss of office
Payments to any present Director or past Director of any sum by way of
compensation for loss of office or as cons ideration for or in connection with his
retirement from office (not being a payment to which the Director is contractually or
statutorily entitled) must be approved by the Company in general meeting.
(vii) Loans and provision of security for loans to Directors
The Company shall not directly or indirectly make a loan to a Director or a director
of any holding company of the Company or any of their respective close associates, enter
into any guarantee or provide any security in connection with a loan made by any person
to a Director or a director of any holding company of the Company or any of their
respective close associates, or, if any one or more of the Directors hold(s) (jointly or
severally or directly or indirectly) a contro lling interest in another company, make a loan
to that other company or enter into any guarantee or provide any security in connection
with a loan made by any person to that other company.
(viii) Financial assistance to purchase Shares
Subject to the Companies Act, or any other law or so far as not prohibited by any
law and subject to any rights conferred o n the holders of any class of Shares, the
Company shall have the power to give, directly or indirectly, by means of a loan, a
guarantee, an indemnity, the provision of se curity or otherwise howsoever, financial
assistance for the purpose of or in connecti on with a purchase or other acquisition made
or to be made by any person of any Shares or warrants or other securities in the
Company or any company which is a h olding company of the Company.
(ix) Disclosure of interest in contracts with the Company or any of its subsidiaries
With the exception of the office of auditor of the Company, a Director may hold
any other office or place of profit with the Company in conjunction with his office of
Director for such period and upon such terms as the Board may determine, and may be
paid such extra remuneration for that other office or place of profit, in whatever form, in
addition to any remuneration provided for by or pursuant to any other Articles. A
Director may be or become a director, officer or member of any other company in which
the Company may be interested, and shall not be liable to account to the Company or the
members for any remuneration or other bene fit received by him as a director, officer or
member of such other company. The Board may also cause the voting power conferred
by the shares in any other company held or owned by the Company to be exercised in
such manner in all respects as it thinks fit , including the exercise in favour of any
resolution appointing the Directors or any of them to be directors or officers of such
other company.
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No Director or intended Director shall be dis qualified by his office from contracting
with the Company, nor shall any such contract or any other contract or arrangement in
which any Director is in any way interested be liable to be avoided, nor shall any
Director so contracting or being so interested be liable to account to the Company for
any profit realised by any such contract or arrangement by reason only of such Director
holding that office or the fiduciary relationship established by it. A Director who is, in
any way, materially interested in a contra ct or arrangement or proposed contract or
arrangement with the Company shall declar e the nature of his interest at the earliest
meeting of the Board at which he may practically do so.
There is no power to freeze or otherwise impair any of the rights attaching to any
share by reason that the person or persons who are interested directly or indirectly in that
share have failed to disclose their interests to the Company.
A Director shall not vote or be counted in the quorum on any resolution of the
Board in respect of any contract or arrangement or proposal in which he or any of his
close associate(s) has/have a material inte rest, and if he shall do so his vote shall not be
counted nor shall he be counted in the quorum for that resolution, but this prohibition
shall not apply to any of the following matters:
(aa) the giving of any security or indemnity to the Director or his close associate(s)
in respect of money lent or obligations incurred or undertaken by him or any
of them at the request of or for the benefit of the Company or any of its
subsidiaries;
(bb) the giving of any security or indemn i t yt oat h i r dp a r t yi nr e s p e c to fad e b to r
obligation of the Company or any of its subsidiaries for which the Director or
his close associate(s) has/have himself/ themselves assumed responsibility in
whole or in part whether alone or jointly under a guarantee or indemnity or by
the giving of security;
(cc) any proposal concerning an offer of shares, debentures or other securities of or
by the Company or any other company which the Company may promote or
be interested in for subscription or purchase, where the Director or his close
associate(s) is/are or is/are to be intere sted as a participant in the underwriting
or sub-underwriting of the offer;
(dd) any proposal or arrangement concer ning the benefit of employees of the
Company or any of its subsidiaries, in cluding the adoption, modification or
operation of either: (i) any employees ’ share scheme or any share incentive or
share option scheme under which the Director or his close associate(s) may
benefit; or (ii) a pension fund or retire ment, death or disability benefit scheme
which relates to Directors, their clo se associates and employees of the
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Company or any of its subsidiaries and does not provide in respect of any
Director or his close associate(s) any privilege or advantage not generally
accorded to the class of persons to which such scheme or fund relates; and
(ee) any contract or arrangement in which th e Director or his close associate(s) is/
are interested in the same manner as other holders of shares, debentures or
other securities of the Company by virt ue only of his/their interest in those
shares, debentures or other securities.
(x) Proceedings of the Board
The Board may meet anywhere in the world for the despatch of business and may
adjourn and otherwise regulate its meetings as it thinks fit. Questions arising at any
meeting shall be determined by a majority o f votes. In the case of an equality of votes,
the chairman of the meeting shall have a second or casting vote.
(c) Alterations to the constitutional documents and the Company ’sn a m e
To the extent that the same is permissible under Cayman Islands law and subject to the
Articles, the Memorandum and Articles of the Company may only be altered or amended, and
the name of the Company may only be changed, with the sanction of a special resolution of
the Company.
(d) Meetings of member
(i) Special and ordinary resolutions
A special resolution of the Company must be passed by a majority of not less than
three-fourths of the votes cast by such members as, being entitled so to do, vote in
person or by proxy or, in the case of members which are corporations, by their duly
authorised representatives or, where proxi es are allowed, by proxy at a general meeting
of which notice specifying the intention to propose the resolution as a special resolution
has been duly given.
Under the Companies Act, a copy of any special resolution must be forwarded to
the Registrar of Companies in the Cayman Islands within 15 days of being passed.
An ‘‘ordinary resolution ’’, by contrast, is a resolution passed by a simple majority
of the votes of such members of the Company as, being entitled to do so, vote in person
or, in the case of members which are corporations, by their duly authorised
representatives or, where proxies are all owed, by proxy at a general meeting of which
notice has been duly given.
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A resolution in writing signed by or on behalf of all members shall be treated as an
ordinary resolution duly passed at a general meeting of the Company duly convened and
held, and where relevant as a special resolution so passed.
(ii) Voting rights and right to demand a poll
Subject to any special rights, restricti ons or privileges as to voting for the time
being attached to any class or classes of shares at any general meeting: (a) on a poll
every member present in person or by proxy or, in the case of a member being a
corporation, by its duly authorised representative shall have one vote for every share
which is fully paid or credited as fully paid registered in his name in the register of
members of the Company but so that no amount paid up or credited as paid up on a
share in advance of calls or instalments is treated for this purpose as paid up on the
share; and (b) on a show of hands every member who is present in person (or, in the case
of a member being a corporation, by its duly authorised representative) or by proxy shall
have one vote. Where more than one proxy is appointed by a member which is a
Clearing House (as defined in the Articles) o r its nominee(s), each such proxy shall have
one vote on a show of hands. On a poll, a member entitled to more than one vote need
not use all his votes or cast all the votes he does use in the same way.
At any general meeting a resolution put t o the vote of the meeting is to be decided
by poll save that the chairman of the meeting may, pursuant to the Listing Rules, allow a
resolution to be voted on by a show of hands. Where a show of hands is allowed, before
or on the declaration of the result of the show of hands, a poll may be demanded by (in
each case by members present in person or by proxy or by a duly authorised corporate
representative):
( A ) a tl e a s tt w om e m b e r s ;
(B) any member or members representing not less than one-tenth of the total
voting rights of all the members having the right to vote at the meeting; or
(C) a member or members holding shares in the Company conferring a right to
vote at the meeting on which an aggregate sum has been paid equal to not less
than one-tenth of the total sum paid up on all the shares conferring that right.
Should a Clearing House or its nominee(s) be a member of the Company, such
person or persons may be authorised as it thin ks fit to act as its representative(s) at any
meeting of the Company or at any meeting of any class of members of the Company
provided that, if more than one person is so authorised, the authorisation shall specify
the number and class of shares in respect of which each such person is so authorised. A
person authorised in accordance with this provision shall be deemed to have been duly
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authorised without further evidence of the facts and be entitled to exercise the same
rights and powers on behalf of the Clearing House or its nominee(s) as if such person
were an individual member including the right to vote and the right to speak.
Where the Company has knowledge that any member is, under the Listing Rules,
required to abstain from voting on any partic ular resolution or restricted to voting only
for or only against any particular resolution, any votes cast by or on behalf of such
member in contravention of such requireme nt or restriction shall not be counted.
(iii) Annual general meetings
The Company must hold an annual general meeting each financial year other than
the financial year of the Company ’s adoption of the Articles, and such general meeting
must be held within six (6) months after the end of the Company ’s financial year unless a
longer period would not infringe the rules of the Stock Exchange.
(iv) Requisition of general meetings
Extraordinary general meetings may be convened on the requisition of one or more
members holding, at the date of deposit of the requisition, not less than one tenth of the
paid up capital of the Company having the right of voting at general meetings. Such
requisition shall be made in writing to the Board or the secretary of the Company for the
purpose of requiring an extraordinary general meeting to be called by the Board for the
transaction of any business specified in such requisition. Such meeting shall be held
within two months after the deposit of such requisition. If within 21 days of such
deposit, the Board fails to proceed to convene such meeting, the requisitionist(s) himself
( t h e m s e l v e s )m a yd os oi nt h es a m em a n n e r ,a nd all reasonable expenses incurred by the
requisitionist(s) as a result of the failu re of the Board shall be reimbursed to the
requisitionist(s) by the Company.
(v) Notices of meetings and business to be conducted
An annual general meeting of the Company shall be called by at least 21 days ’
notice in writing, and any other general meeting of the Company shall be called by at
least 14 days ’ notice in writing. The notice shall be exclusive of the day on which it is
served or deemed to be served and of the day for which it is given, and must specify the
time, place and agenda of the meeting and particulars of the resolution(s) to be
considered at that meeting and, in the case of s pecial business, the general nature of that
business.
Except where otherwise expressly stated, any notice or document (including a share
certificate) to be given or issued under the Articles shall be in writing, and may be
served by the Company on any member personally, by post to such member ’s registered
address or (in the case of a notice) by adve rtisement in the newspapers. Any member
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whose registered address is outside Hong Kong may notify the Company in writing of an
address in Hong Kong which shall be deemed to be his registered address for this
purpose. Subject to the Companies Act and the Listing Rules, a notice or document may
also be served or delivered by the Company to any member by electronic means.
Although a meeting of the Company may be called by shorter notice than as
specified above, such meeting may be deemed to have been duly called if it is so agreed:
(i) in the case of an annual general meeting, by all members of the Company
entitled to attend and vote thereat; and
(ii) in the case of any other meeting, by a majority in number of the members
having a right to attend and vote at the meeting holding not less than 95% of
the total voting rights in the Company.
All business transacted at an extraordinar y general meeting shall be deemed special
business. All business shall also be deemed special business where it is transacted at an
annual general meeting, with the exception of certain routine matters which shall be
deemed ordinary business.
(vi) Quorum for meetings and separate class meetings
No business shall be transacted at any gen eral meeting unless a quorum is present
when the meeting proceeds to business, and c ontinues to be present until the conclusion
of the meeting.
The quorum for a general meeting shall be two members present in person (or in
the case of a member being a corporation, by its duly authorised representative) or by
proxy and entitled to vote. In respect of a separate class meeting (other than an
adjourned meeting) convened to sanction th e modification of class rights the necessary
quorum shall be two persons holding or representing by proxy not less than one-third in
nominal value of the issued shares of that class.
(vii) Proxies
Any member of the Company entitled to attend and vote at a meeting of the
Company is entitled to appoint another person as his proxy to attend and vote instead of
him. A member who is the holder of two or more shares may appoint more than one
proxy to represent him and vote on his behalf at a general meeting of the Company or at
a class meeting. A proxy need not be a member of the Company and shall be entitled to
exercise the same powers on behalf of a member who is an individual and for whom he
acts as proxy as such member could exercise. In addition, a proxy shall be entitled to
exercise the same powers on behalf of a member which is a corporation and for which he
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acts as proxy as such member could exercise if it were an individual member. On a poll
or on a show of hands, votes may be given either personally (or, in the case of a member
being a corporation, by its duly authorized representative) or by proxy.
The instrument appointing a proxy shall be in writing under the hand of the
appointor or of his attorney duly authorised in writing, or if the appointor is a
corporation, either under seal or under the hand of a duly authorised officer or attorney.
Every instrument of proxy, whether for a spec ified meeting or otherwise, shall be in such
form as the Board may from time to time appr ove, provided that it shall not preclude the
use of the two-way form. Any form issued to a member for appointing a proxy to attend
and vote at an extraordinary general meeting or at an annual general meeting at which
any business is to be transacted shall be su ch as to enable the member, according to his
intentions, to instruct the proxy to vote in favour of or against (or, in default of
instructions, to exercise his discretion in respect of) each resolution dealing with any
such business.
(viii) Right to speak and vote
All members have the right to (a) speak at a general meeting; and (b) vote at a
general meeting except where a member is required, by the Listing Rules, to abstain from
voting to approve the matter under consideration.
(e) Accounts and audit
The Board shall cause proper books of account to be kept of the sums of money received
and expended by the Company, and of the asse ts and liabilities of the Company and of all
other matters required by the Companies Act (which include all sales and purchases of goods
by the company) necessary to give a true and fair view of the state of the Company ’s affairs
and to show and explain its transactions.
The books of accounts of the Company shall be kept at the head office of the Company
or at such other place or places as the Board decides and shall always be open to inspection
by any Director. No member (other than a Director) shall have any right to inspect any
account, book or document of the Company except as conferred by the Companies Act or
ordered by a court of competent jurisdiction or authorised by the Board or the Company in
general meeting.
The Board shall from time to time cause to be prepared and laid before the Company at
its annual general meeting balance sheets an d profit and loss accounts (including every
document required by law to be annexed thereto), together with a copy of the Directors ’ report
and a copy of the auditors ’ report, not less than 21 days before the date of the annual general
meeting. Copies of these documents shall be sen t to every person entitled to receive notices of
general meetings of the Company under the provisions of the Articles together with the notice
of annual general meeting, not less than 21 days before the date of the meeting.
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Subject to the rules of the stock exchange of the Relevant Territory (as defined in the
Articles), the Company may send summarized fi nancial statements to members who have, in
accordance with the rules of the stock exchange of the Relevant Territory, consented and
elected to receive summarized financial stateme nts instead of the full financial statements. The
summarized financial statements must be accompanied by any other documents as may be
required under the rules of the stock exchange of the Relevant Territory, and must be sent to
those members that have consented and elected t o receive the summarised financial statements
not less than 21 days before the general meeting.
The members may by ordinary resolution a ppoint auditor(s) to hold office until the
conclusion of the next annual general meetin go ns u c ht e r m sa n dw i t hs u c hd u t i e sa sm a yb e
agreed with the Board. The auditors ’ remuneration shall be fixed by the members in a general
meeting by an ordinary resolution in such manner as the members may determine.
The members may, at a general meeting remov e the auditor(s) by an ordinary resolution
at any time before the expiration of the ter m of office of the auditor(s) and shall, by an
ordinary resolution, at that meeting appoint new auditor(s) in place of the removed auditor(s)
for the remainder of the term.
The auditors shall audit the financial statements of the Company in accordance with
generally accepted accounting principles of Hong Kong, the International Accounting
Standards or such other standards as may be permitted by the Stock Exchange.
(f) Dividends and other methods of distribution
The Company in general meeting may declare dividends in any currency to be paid to the
members but no dividend shal l be declared in excess of the amount recommended by the
Board.
Except in so far as the rights attaching to, or the terms of issue of, any share may
otherwise provide:
(i) all dividends shall be declared and pa id according to the amounts paid up on the
shares in respect of which the dividend is paid, although no amount paid up on a
share in advance of calls shall for this purpose be treated as paid up on the share;
(ii) all dividends shall be apportioned and paid pro rata in accordance with the amount
paid up on the shares during any portion(s) of the period in respect of which the
dividend is paid; and
(iii) the Board may deduct from any dividend or other monies payable to any member
all sums of money (if any) presently payable by him to the Company on account of
calls, instalments or otherwise.
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Where the Board or the Company in general meeting has resolved that a dividend
should be paid or declared, the Board may resolve:
(aa) that such dividend be satisfied wholly or in part in the form of an allotment of
shares credited as fully paid up, provided that the members entitled to such
dividend will be entitled to elect to receive such dividend (or part thereof) in
c a s hi nl i e uo fs u c ha l l o t m e n t ;o r
(bb) that the members entitled to such di vidend will be entitled to elect to receive
an allotment of shares credited as fully paid up in lieu of the whole or such
part of the dividend as the Board may think fit.
Upon the recommendation of the Board, the Company may by ordinary resolution in
respect of any one particular dividend of the C ompany determine that it may be satisfied
wholly in the form of an allotment of shares credited as fully paid up without offering any
right to members to elect to receive such dividend in cash in lieu of such allotment.
Any dividend, bonus or other sum payable in cash to the holder of shares may be paid by
cheque or warrant sent through the post. Every such cheque or warrant shall be made payable
to the order of the person to whom it is sent and shall be sent at the holder ’s or joint holders ’
risk and payment of the cheque or warrant by the bank on which it is drawn shall constitute a
good discharge to the Company. Any one of two or more joint holders may give effectual
receipts for any dividends or other monies payabl e or property distributable in respect of the
shares held by such joint holders.
Whenever the Board or the Company in general meeting has resolved that a dividend be
paid or declared, the Board may further resolve that such dividend be satisfied wholly or in
part by the distribution of specific assets of any kind.
The Board may, if it thinks fit, receive from any member willing to advance the same,
a n de i t h e ri nm o n e yo rm o n e y’s worth, all or any part of the money uncalled and unpaid or
instalments payable upon any shares held by h im, and in respect of all or any of the monies so
advanced may pay interest at such rate (if any) not exceeding 20% per annum, as the Board
may decide, but a payment in advance of a call shall not entitle the member to receive any
dividend or to exercise any other rights or privileges as a member in respect of the share or
the due portion of the shares upon which payment has been advanced by such member before
it is called up.
All dividends, bonuses or other distributio ns unclaimed for one year after having been
declared may be invested or otherwise used by the Board for the benefit of the Company until
claimed and the Company shall not be constitute d a trustee in respect thereof. All dividends,
bonuses or other distributions unclaimed for six years after having been declared may be
forfeited by the Board and, upon such forfeiture, shall revert to the Company.
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No dividend or other monies payable by the Company on or in respect of any share shall
bear interest against the Company.
The Company may exercise the power to cease s ending cheques for di vidend entitlements
or dividend warrants by post if such cheques or w arrants remain uncashed on two consecutive
occasions or after the first occasion on which such a cheque or warrant is returned
undelivered.
(g) Inspection of corporate records
For so long as any part of the share capital of the Company is listed on the Stock
Exchange, any member may inspect any regis ter of members of the Company maintained in
Hong Kong (except when the register of members is closed) without charge and require the
provision to him of copies or extracts of such re gister in all respects as if the Company were
incorporated under and were subject to the Hong Kong Companies Ordinance.
(h) Rights of minorities in relation to fraud or oppression
There are no provisions in the Articles concerning the rights of minority members in
relation to fraud or oppression. However, certa in remedies may be available to members of the
Company under Cayman Islands law, as summarized in paragraph 3(f) of this Appendix.
(i) Procedures on liquidation
A resolution that the Company be wound up by the court or be wound up voluntarily
shall be a special resolution.
Subject to any special rights, privileges or res trictions as to the distribution of available
surplus assets on liquidation for the time being attached to any class or classes of shares:
(i) if the Company is wound up, the surplus assets remaining after payment to all
creditors shall be divided among the members in proportion to the capital paid up
on the shares held by them respectively; and
(ii) if the Company is wound up and the surpl us assets available f or distribution among
the members are insufficient to repay the whole of the paid-up capital, such assets
shall be distributed, subject to the rights of any shares which may be issued on
special terms and conditions, so that, as n early as may be, the losses shall be borne
by the members in proportion to the capital paid up on the shares held by them,
respectively.
If the Company is wound up (whether the liqui dation is voluntary or compelled by the
court), the liquidator may, with the sanction o f a special resolution and any other sanction
required by the Companies Act, divide among the members in specie or kind the whole or any
part of the assets of the Company, whether the assets consist of property of one kind or
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different kinds, and the liquidator may, for such purpose, set such value as he deems fair upon
any one or more class or classes of property to be so divided and may determine how such
division shall be carried out as between the members or different classes of members and the
members within each class. The liquidator ma y, with the like sanction, vest any part of the
assets in trustees upon such trusts for the benefit of members as the liquidator thinks fit, but
so that no member shall be compelled to accept any shares or other property upon which there
is a liability.
(j) Subscription rights reserve
Provided that it is not prohibited by and is otherwise in compliance with the Companies
Act, if warrants to subscribe for shares have been issued by the Company and the Company
does any act or engages in any transaction whi ch would result in the subscription price of
such warrants being reduced below the par value of the shares to be issued on the exercise of
such warrants, a subscription rights reserve sh all be established and applied in paying up the
difference between the subscription price and the par value of such shares.
3. CAYMAN ISLANDS COMPANY LAW
The Company was incorporated in the Cayman Islands as an exempted company on 14
September 2021 subject to the Companies Act. Cer tain provisions of Cayman Islands company law
are set out below but this section does not purpor t to contain all applicable qualifications and
exceptions or to be a complete review of all matter s of the Companies Act and taxation, which may
differ from equivalent provision s in jurisdictions with which i nterested parties may be more
familiar.
(a) Company operations
An exempted company such as the Company must conduct its operations mainly outside
the Cayman Islands. An exempted company is also required to file an annual return each year
with the Registrar of Companies of the Cayman Islands and pay a fee which is based on the
amount of its authorised share capital.
(b) Share capital
Under the Companies Act, a Cayman Islands company may issue ordinary, preference or
redeemable shares or any combination thereo f. Where a company issues shares at a premium,
whether for cash or otherwise, a sum equal to t he aggregate amount or value of the premiums
on those shares shall be transferred to an account, to be called the ‘‘share premium account ’’.
At the option of a company, these provisions may not apply to premiums on shares of that
company allotted pursuant to any arrangem ents in consideration of the acquisition or
cancellation of shares in any other company and issued at a premium. The share premium
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account may be applied by the company subject to the provisions, if any, of its memorandum
and articles of association, in such manner as the company may from time to time determine
including, but without limitation, the following:
(i) paying distributions or dividends to members;
(ii) paying up unissued shares of the company to be issued to members as fully paid
bonus shares;
(iii) any manner provided in section 37 of the Companies Act;
(iv) writing-off the preliminary expenses of the company; and
(v) writing-off the expenses of, or the commission paid or discount allowed on, any
issue of shares or debentures of the company.
Notwithstanding the foregoing, no distribution or dividend may be paid to members out
of the share premium account unless, immediatel y following the date on which the distribution
or dividend is proposed to be paid, the company will be able to pay its debts as they fall due
in the ordinary course of business.
Subject to confirmation by the court, a company limited by shares or a company limited
by guarantee and having a share capital may, if authorised to do so by its articles of
association, by special resolution reduce its share capital in any way.
(c) Financial assistance to purchase shares of a company or its holding company
There are no statutory prohibitions in the Cayman Islands on the granting of financial
assistance by a company to another person for the purchase of, or subscription for, its own, its
holding company ’s or a subsidiary ’s shares. Therefore, a company may provide financial
assistance provided the directors of the com pany, when proposing to grant such financial
assistance, discharge their duties of care and act in good faith, for a proper purpose and in the
interests of the company. Such assistance should be on an arm ’s-length basis.
(d) Purchase of shares and warrants by a company and its subsidiaries
A company limited by shares or a company limited by guarantee and having a share
capital may, if so authorised by its articles of association, issue shares which are to be
redeemed or are liable to be redeemed at the option of the company or a member and, for the
avoidance of doubt, it shall be lawful for the rights attaching to any shares to be varied,
subject to the provisions of the company ’s articles of association, so as to provide that such
shares are to be or are liable to be so redeemed. In addition, such a company may, if
authorised to do so by its articles of associa tion, purchase its own shares, including any
redeemable shares; an ordinary resolution o f the company approving the manner and terms of
the purchase will be required if the articles of association do not authorise the manner and
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terms of such purchase. A company may not redeem or purchase its shares unless they are
fully paid. Furthermore, a company may not redeem or purchase any of its shares if, as a
result of the redemption or purchase, there would no longer be any issued shares of the
company other than shares held as treasury sha res. In addition, a payment out of capital by a
company for the redemption or purchase of its own shares is not lawful unless, immediately
following the date on which the payment is proposed to be made, the company shall be able to
pay its debts as they fall due in the ordinary course of business.
Shares that have been purchased or redeemed by a company or surrendered to the
company shall not be treated as cancelled but shall be classified as treasury shares if held in
compliance with the requirements of Section 3 7A(1) of the Companies Act. Any such shares
shall continue to be classified as treasury sha res until such shares are either cancelled or
transferred pursuant to the Companies Act.
A Cayman Islands company may be able to purchase its own warrants subject to and in
accordance with the terms and conditions of the r elevant warrant instrument or certificate.
Thus there is no requirement under Cayman Islands law that a company ’s memorandum or
articles of association contain a specific provi sion enabling such purchases. The directors of a
company may under the general power contained in its memorandum of association be able to
buy, sell and deal in personal property of all kinds.
A subsidiary may hold shares in its holding company and, in certain circumstances, may
acquire such shares.
(e) Dividends and distributions
Subject to a solvency test, as prescribed in the Companies Act, and the provisions, if
any, of the company ’s memorandum and articles of associ ation, a company may pay dividends
and distributions out of its share premium account. In addition, based upon English case law
w h i c hi sl i k e l yt ob ep e r s u a s i v ei nt h eC a y m a nI slands, dividends may be paid out of profits.
For so long as a company holds treasury shares, no dividend may be declared or paid,
and no other distribution (whether i n cash or otherwise) of the company ’s assets (including
any distribution of assets to members on a wi nding up) may be made, in respect of a treasury
share.
(f) Protection of minorities and shareholders ’suits
It can be expected that the Cayman Islands cour ts will ordinarily follow English case law
precedents (particularly the rule in the case o f Foss v. Harbottle and the exceptions to that
rule) which permit a minority member to com mence a representative action against or
derivative actions in the name of the company to c hallenge acts which are u ltra vires, illegal,
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fraudulent (and performed by those in contr ol of the Company) against the minority, or
represent an irregularity in the passing of a reso lution which requires a qualified (or special)
majority which has not been obtained.
Where a company (not being a bank) is one which has a share capital divided into
shares, the court may, on the application of m embers holding not less than one-fifth of the
shares of the company in issue, appoint an insp ector to examine the affairs of the company
and, at the direction of the court, to report on such affairs. In addition, any member of a
company may petition the court, which may m ake a winding up order if the court is of the
opinion that it is just and equitable that the company should be wound up.
In general, claims against a company by its members must be based on the general laws
of contract or tort applicable in the Cayman Isl ands or be based on potential violation of their
individual rights as members as established by a company ’s memorandum and articles of
association.
(g) Disposal of assets
There are no specific restrictions on the power of directors to dispose of assets of a
company, however, the directors are expected to exercise certain duties of care, diligence and
skill to the standard that a reasonably prudent person would exercise in comparable
circumstances, in addition to fiduciary duties to act in good faith, for proper purpose and in
the best interests of the company under English common law (which the Cayman Islands
courts will ordinarily follow).
(h) Accounting and auditing requirements
A company must cause proper records of accounts to be kept with respect to: (i) all sums
of money received and expended by it; (ii) all sal es and purchases of goods by it and (iii) its
assets and liabilities.
Proper books of account shall not be deemed to be kept if there are not kept such books
as are necessary to give a true and fair view of the state of the company ’sa f f a i r sa n dt o
explain its transactions.
If a company keeps its books of account at any place other than at its registered office or
any other place within the Cayman Islands, it s hall, upon service of an order or notice by the
Tax Information Authority pursuant to the Tax Information Authority Act (2013 Revision) of
the Cayman Islands, make available, in electr onic form or any other medium, at its registered
office copies of its books of account, or any par t or parts thereof, as are specified in such
order or notice.
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(i) Exchange control
There are no exchange control regulations or currency restrictions in effect in the
Cayman Islands.
(j) Taxation
Pursuant to section 6 of the Tax Concessions Act (2018 Revision) of the Cayman
Islands, the Company has obtained an undert aking from the Financial Secretary that:
(i) no law which is enacted in the Cayman Islands imposing any tax to be levied on
profits or income or gains or appreciations shall apply to the Company or its
operations; and
(ii) no tax be levied on profits, income gains or appreciations or which is in the nature
of estate duty or inheritance tax shall be payable by the Company:
(aa) on or in respect of the shares, debentures or other obligations of the Company;
or
(bb) by way of the withholding in whole or in part of any relevant payment as
defined in section 6(3) of the Tax Concessions Act (2018 Revision).
The undertaking for the Company is for a period of 30 years from 11 October 2021.
The Cayman Islands currently levy no taxes on individuals or corporations based
upon profits, income, gains or appreciations and there is no taxation in the nature of
inheritance tax or estate duty. There are n o other taxes likely to be material to the
Company levied by the Government of the Cayman Islands save for certain stamp
duties which may be applicable, from tim e to time, on certain instruments.
(k) Stamp duty on transfers
No stamp duty is payable in the Cayman Islands on transfers of shares of Cayman
Islands companies save for those which hold interests in land in the Cayman Islands.
(l) Loans to directors
There is no express provision prohibiting the making of loans by a company to any of its
directors. However, the company ’s articles of association may provide for the prohibition of
such loans under specific circumstances.
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(m) Inspection of corporate records
The members of a company have no general right to inspect or obtain copies of the
register of members or corporate records of the company. They will, however, have such
rights as may be set out in the company ’sa r t i c l e so fa s s o c i a t i o n .
(n) Register of members
A Cayman Islands exempted company may ma intain its principal register of members
and any branch registers in any country or territory, whether within or outside the Cayman
Islands, as the company may determine from time to time. There is no requirement for an
exempted company to make any returns of members to the Registrar of Companies in the
Cayman Islands. The names and addresses of the members are, accordingly, not a matter of
public record and are not available for publi c inspection. However, an exempted company
shall make available at its registered office, in electronic form or any other medium, such
register of members, including any branch register of member, as may be required of it upon
service of an order or notice by the Tax Information Authority pursuant to the Tax
Information Authority Act (2013 Revision) of the Cayman Islands.
(o) Register of Directors and officers
Pursuant to the Companies Act, the Company is required to maintain at its registered
office a register of directors, alternate directors and officers which is not available for
inspection by the public. A copy of such register must be filed with the Registrar of
Companies in the Cayman Islands and any change must be notified to the Registrar within 30
days of any change in such directors or office rs, including a change of the name of such
directors or officers.
(p) Winding up
A Cayman Islands company may be wound up by: (i) an order of the court; (ii)
voluntarily by its members; or (iii) under the supervision of the court.
The court has authority to order winding up in a number of specified circumstances
including where, in the opinion of the court, it is just and equitable that such company be so
wound up.
Av o l u n t a r yw i n d i n gu po fac o m p a n y( o t h e rt h a nal i m i t e dd u r a t i o nc o m p a n y ,f o rw h i c h
specific rules apply) occurs where the company r esolves by special resolution that it be wound
up voluntarily or where the company in general meeting resolves that it be wound up
voluntarily because it is unable to pay its debt as they fall due. In the case of a voluntary
winding up, the company is obliged to cease to carry on its business from the commencement
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of its winding up except so far as it may be bene ficial for its winding up. Upon appointment
of a voluntary liquidator, all the powers of the directors cease, except so far as the company in
general meeting or the liquidator sanctions their continuance.
In the case of a members ’ voluntary winding up of a company, one or more liquidators
are appointed for the purpose of winding up the affairs of the company and distributing its
assets.
As soon as the affairs of a company are fully wound up, the liquidator must make a
report and an account of the winding up, showing how the winding up has been conducted and
the property of the company disposed of, and call a general meeting of the company for the
purposes of laying before it the account a nd giving an explanation of that account.
When a resolution has been pa ssed by a company to wind up voluntarily, the liquidator
or any contributory or creditor may apply to the court for an order for the continuation of the
winding up under the supervision of the court, on the grounds that: (i) the company is or is
likely to become insolvent; or (ii) the supervis ion of the court will facilitate a more effective,
economic or expeditious liquidation of the company in the interests of the contributories and
creditors. A supervision order takes effect for all purposes as if it was an order that the
company be wound up by the court except that a commenced voluntary winding up and the
prior actions of the voluntary liquidator sha ll be valid and binding upon the company and its
official liquidator.
For the purpose of conducting the proceedings in winding up a company and assisting
the court, one or more persons may be appointed to be called an official liquidator(s). The
court may appoint to such office such person or pe rsons, either provisionally or otherwise, as
it thinks fit, and if more than one person is appointed to such office, the court shall declare
whether any act required or authorized to be d one by the official liquidator is to be done by
all or any one or more of such persons. The court may also determine whether any and what
security is to be given by an official liquidator on his appointment; if no official liquidator is
appointed, or during any vacancy in such office, all the property of the company shall be in
the custody of the court.
(q) Reconstructions
Reconstructions and amalgamations may be approved by (i) 75% in value of the
shareholders or class of shareholders or (ii) a m ajority in number representing 75% in value of
the creditors or class of creditors, depending on the circumstances, as are present at a meeting
called for such purpose and thereafter sanctio n e db yt h ec o u r t s .W h i l st a dissenting member
has the right to express to the court his view that the transaction for which approval is being
sought would not provide the members with a fair value for their shares, the courts are
unlikely to disapprove the transaction on that ground alone in the absence of evidence of fraud
or bad faith on behalf of management, and if the transaction were approved and consummated
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the dissenting member would have no rights compa rable to the appraisal rights (i.e. the right
to receive payment in cash for the judicially de termined value of their shares) ordinarily
available, for example, to dissenting m embers of a United States corporation.
(r) Take-overs
Where an offer is made by a company for th e shares of another company and, within
four months of the offer, the holders of not less than 90% of the shares which are the subject
of the offer accept, the offeror may, at any time within two months after the expiration of that
four-month period, by notice require the disse nting members to transfer their shares on the
terms of the offer. A dissenting member may ap ply to the Cayman Islands courts within one
month of the notice objecting to the transfer. T he burden is on the dissenting member to show
that the court should exercise its discretion, which it will be unlikely to do unless there is
evidence of fraud or bad faith or collusion as between the offeror and the holders of the shares
who have accepted the offer as a means of unfairly forcing out minority members.
(s) Indemnification
Cayman Islands law does not limit the extent to which a company ’sa r t i c l e so f
association may provide for indemnification o f officers and directors, save to the extent any
such provision may be held by the court to be contrary to public policy, for example, where a
provision purports to provide indemnification a gainst the consequences of committing a crime.
4. GENERAL
Appleby, the Company ’s legal adviser on Cayman Islands law, has sent to the Company a
letter of advice which summarises certain aspect s of the Cayman Islands company law. This letter,
together with a copy of the Companies Act, is on display as referred to in the paragraph headed
‘‘Documents on Display ’’in Appendix V. Any person wishing to have a detailed summary of
Cayman Islands company law or advice on the differences between it and the laws of any
jurisdiction with which he is more familiar is recommended to seek independent legal advice.
APPENDIX III SUMMARY OF THE CONSTITUTION OF THE COMPANY
AND CAYMAN ISLANDS COMPANY LAW
– III-26 –


--- page 554 ---
A. FURTHER INFORMATION ABOUT OUR GROUP
1. Incorporation
Our Company was incorporated in the Cayman Islands under the Companies Act as an
exempted company with limited liability on 14 September 2021. Our Company has established
a principal place of business in Hong Kong at Units 2201 –2203, 22/F, Tai Tung Building, 8
Fleming Road, Wanchai, Hong Kong and was registered as a non-Hong Kong company in
Hong Kong under Part 16 of the Companies Ordinance on 23 May 2022. In connection with
such registration, Yiu Chun Wing has been appointed as authorised representative of our
Company for the acceptance of service of process and notices on behalf of our Company in
Hong Kong.
As our Company is incorporated in the Cayman Islands, it is subject to the Companies
Act and its constitution documents comprising the Memorandum of Association and the
Articles of Association. A summary of vari ous parts of the constitution documents and
relevant aspects of the Companies Act is set out in Appendix III to this prospectus.
2. Changes in authorised and issued share capital of our Company
(a) As at the date of incorporation, our Company had an authorised share capital of
HK$380,000 divided into 38,000,000 ordi nary shares of par value HK$0.01 each, of
which one Share was allotted and issued as fully paid to an initial subscriber on the
same date. The subscriber transferred the one subscriber Share at par to WellCell
Group. On the same date, our Company allotted and issued, credited as fully paid
199 Shares at par to WellCell Group.
(b) On 27 April 2023, pursuant to the Reorganisation Agreement, our Company
acquired the entire issued share capital of We llCell International, in consideration of
which, our Company allotted and issued 200 Shares to WellCell Group.
(c) Pursuant to the written resolutions of our sole Shareholder passed on 15 December
2023, the authorised share capital of our Company was increased from HK$380,000
divided into 38,000,000 Shares of par value HK$0.01 each to HK$10,000,000
divided into 1,000,000,000 Shares of pa r value of HK$0.01 each, by creation of a
further 962,000,000 Shares.
(d) Immediately following the completion o f the Capitalisation Issue and the Share
Offer (without taking into account any Shares which may be allotted and issued
pursuant to the exercise of the Over-allotment Option or any Shares which may be
issued pursuant to the exercise of any options which may be granted under the
Share Option Scheme), 500,000,000 Shares will be allotted and issued, all fully
paid or credited as fully paid, and 500,0 00,000 Shares will remain unissued.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-1 –


--- page 555 ---
(e) Other than any Shares which may be issued pursuant to the exercise of any options
that may fall to be granted under the Share Option Scheme, or the exercise of the
general mandate referred to in ‘‘A. Further information about our Group — 3.
Written resolutions of our sole Shareholder ’’in this Appendix, our Directors have
no present intention to issue any part of th e authorised but unissued capital of our
Company, and without the prior approval of our Shareholders in general meeting,
no issue of Shares will be made which would effectively alter the control of our
Company.
(f) Save as disclosed above, there has been no alteration in the share capital of our
Company since its incorporation.
3. Written resolutions of our sole Shareholder
Pursuant to the written resolutions of our so le Shareholder passed on 15 December 2023,
among other things:
(a) the authorised share capital of our Company was increased from HK$380,000
divided into 38,000,000 ordinary shares of par value HK$0.01 each to
HK$10,000,000 divided into 1,000,000,000 Shares of HK$0.01 each by the
creation of an additional 962,000,000 Shares of HK$0.01 each;
(b) Subject to the conditions set forth in the paragraph headed ‘‘Structure and
conditions of the Share Offer — Conditions of the Share Offer ’’in this prospectus
being fulfilled or waived (if applicable):
(i) the Share Offer were approved and our Directors or any committee of the
Board were authorised to (aa) allot and issue the Offer Shares to rank pari
passu with the then existing Shares in all respects; (bb) implement the Share
Offer and the Listing; and (cc) do all things and execute all documents in
connection with or incidental to the Share Offer and the Listing with such
amendments or modifications (if any) as our Directors may consider necessary
or appropriate;
(ii) subject to the share premium account of our Company being credited as a
result of the issue of the Offer Shares pursuant to the Share Offer, our
Directors were authorised to allot and issue a total of 374,999,600 Shares
credited as fully paid to the holders of shares on the register of members of
our Company at the close of business on 11 January 2024 (or as they may
direct) in proportion to their resp ective shareholdings (save that no
Shareholder shall be entitled to be allotted or issued any fraction of a Share)
by way of Capitalisation of the sum of HK$3,749,996 standing to the credit of
the share premium account of our Compan y, and the Shares to be allotted and
issued pursuant to this resolution shall rank pari passu in all respects with the
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-2 –


--- page 556 ---
existing issued Shares (other than the ri ght to participate in the Capitalisation
Issue), and our Directors were authorise d to give effect to such capitalisation
and distribution;
(iii) the rules of the Share Option Scheme, the principal terms of which are set out
in ‘‘D. Share Option Scheme ’’in this Appendix, were approved and adopted
and our Directors or any committee of t he Board were authorised, subject to
the terms and conditions of the Share Option Scheme, to implement the Share
Option Scheme, to grant options to subscribe for Shares thereunder and to
allot, issue and deal with the Shares pursuant to the exercise of options that
may be granted under the Share Option Scheme and to take all such steps as
may be necessary, desirable or expedient to implement the Share Option
Scheme;
(iv) a general unconditional mandate was given to our Directors to exercise all the
powers of our Company to allot, issue and deal with, otherwise than by way of
rights issues or an issue of Shares upon th e exercise of any subscription rights
attached to any warrants of our Company or pursuant to the exercise of any
options that may be granted under the Share Option Scheme or under any
other option scheme or similar arrangem ent for the time being adopted for the
grant or issue to officers and/or employees of our Company and/or any of our
subsidiaries of shares or rights to acquire shares or any scrip dividend schemes
or similar arrangements providing for the allotment and issue of shares of our
Company in lieu of the whole or part of a dividend on Shares in accordance
with the Articles of Association or a specific authority granted by our
Shareholders in general meeting, such number of Shares not exceeding the
aggregate of (1) 20% of the total number of our issued Shares as enlarged by
the Capitalisation Issue and the Share Offer (without taking into account any
Shares which may be allotted and issued pursuant to the exercise of the Over-
allotment Option or any Shares which m ay be issued pursuant to the exercise
of any options which may be granted under the Share Option Scheme); and (2)
the aggregate number of our issued Shares repurchased under the Repurchase
Mandate as defined in paragraph (v) below. Such mandate shall remain in
effect until whichever is the earliest of:
(1) the conclusion of the next annual general meeting of our Company;
(2) the expiration of the period within w hich the next annual general meeting
of our Company is required to be held by the Articles of Association or
any other applicable laws of the Cayman Islands; or
(3) the passing of an ordinary resolution of our Shareholders in general
meeting revoking, varying or renewing such mandate;
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-3 –


--- page 557 ---
(v) a general unconditional mandate (the ‘‘Repurchase Mandate ’’) was given to
our Directors to exercise all powers of our Company to repurchase on the
Stock Exchange or on any other stock exchange on which the securities of our
Company may be listed and which is recognised by the SFC and the Stock
Exchange for this purpose, such number of Shares as will represent up to 10%
of the aggregate number of our issued Shares immediately following the
completion of the Capitalisation Issue and the Share Offer (without taking into
account any Shares which may be allotted and issued pursuant to the exercise
of the Over-allotment Option or any Shares which may be issued pursuant to
the exercise of any options which may be granted under the Share Option
Scheme), such mandate shall remain in effe ct until whichever is the earliest of:
(1) the conclusion of the next annual general meeting of our Company;
(2) the expiration of the period within w hich the next annual general meeting
of our Company is required to be held by the Articles of Association or
any other applicable laws of the Cayman Islands;
(3) the passing of an ordinary resolution of our Shareholders in general
meeting revoking, varying or renewing such mandate;
(vi) the general unconditional mandate mentioned in paragraph (iv) above was
extended by the addition to the aggregate number of Shares which may be
allotted or agreed conditionally or unc onditionally to be allotted, issued or
dealt with by our Directors pursuant to s uch general mandate representing the
aggregate number of Shares repurchased by our Company pursuant to the
Repurchase Mandate referred to in paragraph (v) above provided that such
extended amount shall not exceed 10% of t he aggregate number of our issued
Shares immediately following the compl etion of the Capitalisation Issue and
the Share Offer excluding any Shares which may be issued upon exercise of
the Over-allotment Option or any options that may be granted under the Share
Option Scheme; and
(vii) our Company approved and adopted the Memorandum of Association and
Articles of Association, the terms of which are summarised in Appendix III to
this prospectus, with effect upon the Listing.
4. Reorganisation
The companies comprising our Group underwent a Reorganisation in preparation for the
Listing, details of which are set out in the paragraphs headed ‘‘History, Reorganisation and
corporate structure — Reorganisation ’’in this prospectus. Following the Reorganisation, our
Company became the holding company of our Group.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-4 –


--- page 558 ---
Diagrams showing our Group ’s structure after the Reorganisation and immediately upon
completion of the Capitalisation Issue and th e Share Offer (assuming that no Share has been
issued pursuant to the exercise of the Over-allotment Option or any option that may be
granted under the Share Option Scheme) are set out in the paragraphs headed ‘‘History,
Reorganisation and corporate structure — Reorganisation ’’in this prospectus.
5. Changes in share capital of subsidiaries
Our Company ’s subsidiaries are referred to in the Accountants ’ Report, the text of which
is set out in Appendix I to this prospectus.
Save as mentioned in the paragraphs headed ‘‘History, Reorganisation and corporate
structure — Establishment and development of our Company and our major subsidiaries ’’,
there was no material change in the share capit al of the major subsidiaries of our Company
during the two years preceding the date of this prospectus.
Save for the subsidiaries mentioned in App endix I to this prospectus, our Company has
no other subsidiaries.
6. Repurchase by our Company of its own securities
This paragraph includes information required by the Stock Exchange to be included in
this prospectus concerning the repurchase by our Company of its own securities.
(a) Provisions of the Listing Rules
The Listing Rules permit companies with ap r i m a r yl i s t i n go nt h eS t o c kE x c h a n g e
to repurchase their securities on the Stock Ex change subject to certain restrictions, the
most important of which are summarised below:
(i) Shareholders ’ approval
All proposed repurchases of securities (which must be fully paid up in the case
of shares) by a company listed on the Stock Exchange must be approved in advance
by an ordinary resolution of the shareholders in a general meeting, either by way of
general mandate or by specific approval of a particular transaction.
Note : Pursuant to the written resolutions passed by our sole Shareholder on 15 December 2023,
the Repurchase Mandate was given to our Direct ors authorising our Directors to exercise
all powers of our Company to purchase the Shares as described above in the paragraphs
headed ‘‘A. Further information about our Group — 3. Written resolutions of our sole
Shareholder ’’in this Appendix.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-5 –


--- page 559 ---
(ii) Source of funds
Any repurchases must be financed out of funds legally available for such
purpose in accordance with the Memorandum of Association and Articles of
Association and any applicable laws of the Cayman Islands. A listed company is
prohibited from repurchasing its own securities on the Stock Exchange for a
consideration other than cash or for settlement otherwise than in accordance with
the trading rules of the Stock Exchange from time to time.
Under the Cayman Islands law, any repurchases by our Company may be
made out of profits of our Company or out of the proceeds of a fresh issue of
shares made for the purposes of the repurch ase or, if authorised by the Articles of
Association and subject to the Companies Act, out of capital and, in case of any
premium payable on the repurchase, out of either or both of the profits of our
Company and/or the share premium accoun ts of our Company before or at the time
shares are repurchased, or if authorised by the Articles of Association and subject to
the Companies Act, out of capital.
(iii) Core connected persons
Under the Listing Rules, a company shall not knowingly repurchase shares
from a core connected person (as defined in the Listing Rules) and a core connected
person shall not knowingly sell his shares to the company.
(iv) Trading restrictions
The total number of shares which a listed company may repurchase on the
Stock Exchange is the number of shares representing up to a maximum of 10% of
the aggregate number of shares in issue. A company may not issue or announce a
proposed issue of new securities for a period of 30 days immediately following a
repurchase (other than an issue of securi ties pursuant to an exercise of warrants,
share options or similar instruments requiring the company to issue securities which
were outstanding prior to such repurchase) without the prior approval of the Stock
Exchange. In addition, a listed company is prohibited from repurchasing its shares
on the Stock Exchange if the purchase price is 5% or more than the average closing
market price for the five preceding trading days on which its shares were traded on
the Stock Exchange. The Listing Rules also prohibit a listed company from
repurchasing its securities if the repurch ase would result in the number of listed
securities which are in the hands of the public falling below the relevant prescribed
minimum percentage as required by the St ock Exchange. A company is required to
procure that the broker appointed by it to e ffect a repurchase of securities discloses
to the Stock Exchange such information wit h respect to the repurchase as the Stock
Exchange may require.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-6 –


--- page 560 ---
(v) Status of repurchased Shares
The listing of all purchased securi ties (whether on the Stock Exchange or
otherwise) is automatically cancelled and th e relative certificates must be cancelled
and destroyed. Under the laws of the Cayman Islands, unless, prior to the purchase
the directors of the company resolve to hold the shares purchased by the company
as treasury shares, shares purchased by the company shall be treated as cancelled
and the amount of the company ’s issued share capital shall be diminished by the
nominal value of those share. However, the purchase of shares is not to be taken as
reducing the amount of the Company ’s authorised share capital under Cayman law.
(vi) Suspension of repurchase
A listed company may not make any re purchase of securities after inside
information has come to its knowledge until the information is made publicly
available. In particular, during the peri od of one month immediately preceding the
earlier of (a) the date of the board meeting (as such date is first notified to the
Stock Exchange in accordance with the Li sting Rules) for the approval of a listed
company ’s results for any year, half-year, quarterly or any other interim period
(whether or not required under the Listing Rules) and (b) the deadline for
publication of an announcement of a listed company ’s results for any year or half-
year under the Listing Rules, or quarterly or any other interim period (whether or
not required under the Listing Rules, and ending on the date of the results
announcement), the listed company may not repurchase its shares on the Stock
Exchange other than in exceptional circum stances. In addition, the Stock Exchange
may prohibit a repurchase of securities on the Stock Exchange if a listed company
has breached the Listing Rules.
(vii) Reporting requirements
Certain information relating to repurchases of securities on the Stock
Exchange or otherwise must be reported to the Stock Exchange not later than 30
minutes before the earlier of the commencement of the morning trading session or
any pre-opening session on the following business day. In addition, a listed
company ’s annual report is required to disclos e details regarding repurchases of
securities made during the year, including a monthly breakdown the number of
securities repurchased, the purchase pri ce per share or the highest and lowest price
paid for all such repurchases, where relevant, and the aggregate prices paid.
(b) Exercise of the Repurchase Mandate
Exercise in full of the Repurchase Manda te, on the basis of 500,000,000 Shares in
issue immediately after Listing (without taking into account any Shares which may be
allotted and issued upon the exercise of th e Over-allotment Option or any options that
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-7 –


--- page 561 ---
may be granted under the Share Option Scheme), could accordingly result in up to
50,000,000 Shares being repurchased by our Company during the period in which the
Repurchase Mandate remains in force.
(c) Reasons for repurchases
Repurchases of Shares will only be made when our Directors believe that such a
repurchase will benefit our Company and Shareholders. Such repurchases may,
depending on market conditions and funding arrangements at the time, lead to an
enhancement of the net asset value and/or earnings per Share.
(d) Funding of repurchases
In repurchasing Shares, our Company may only apply funds legally available for
such purpose in accordance with our Memorandum of Association and Articles of
Association and the applicable laws an d regulations of the Cayman Islands.
On the basis of the current financial position of our Group as disclosed in this
prospectus and taking into account the current working capital position of our Group, our
Directors consider that, if the Repurchase M andate was to be exercised in full, it might
have a material adverse effect on the working capital and/or the gearing position of our
G r o u pa sc o m p a r e dw i t ht h ep o s i t i o nd i s c losed in this prosp ectus. However, our
Directors do not propose to exercise the Repurchase Mandate to such an extent as would,
in the circumstances, have a material adverse effect on the working capital requirements
of our Group or the gearing levels which in the opinion of our Directors are from time to
time appropriate for our Group.
(e) General
None of our Directors nor, to the best of their knowledge having made all
reasonable enquiries, any of their close asso ciates currently intends to sell any Shares to
our Company.
Our Directors have undertaken to the Sto ck Exchange that, so far as the same may
be applicable, they will exercise the Repurchase Mandate in accordance with the Listing
Rules, our Memorandum and Articles and the applicable laws of the Cayman Islands.
No core connected person of our Company h as notified our Company that he or she
has a present intention to sell Shares to our Company, or has undertaken not to do so, in
the event that the Repurchase Mandate is exercised.
If as a result of a repurchase of Shares, a Shareholder ’s proportionate interest in the
voting rights of our Company is increases, suc h increase will be treated as an acquisition
for the purposes of the Takeovers Code. A s a result, a Shareholder, or a group of
Shareholders acting in concert could obtain or consolidate control of our Company and
become(s) obliged to make a mandatory offer in accordance with Rule 26 of the
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-8 –


--- page 562 ---
Takeovers Code. Save as the aforesaid, our Directors are not aware of any consequence
which would arise under the Takeovers Code due to any repurchase made pursuant to the
Repurchase Mandate immediately after the Listing.
Our Directors will not exercise the Repur chase Mandate if the repurchase would
result in the number of Shares which are in the hands of the public falling below 25% of
the total number of Shares in issue (or such other percentage as may be prescribed as the
minimum public shareholding under the Listing Rules).
B. FURTHER INFORMATION ABOUT THE BUSINESS OF OUR GROUP
1. Summary of material contracts
The following contracts (not being contract s entered into in the ordinary course of
business of our Group) have been entered into by members of our Group within the two years
immediately preceding th e date of this prospectus and are or may be material:
(a) the Reorganisation Agreement;
(b) the Deed of Indemnity;
(c) the Deed of Non-competition; and
(d) the Public Offer Underwriting Agreement.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-9 –


--- page 563 ---
2. Intellectual property rights of our Group
(a) Trademark
As at the Latest Practicable Date, our Group is the registered owner of the
following trademarks in the PRC or Hong Kong which we believe are material to our
business:
Trademark
Registered
owner
Date of
registration Expiry date
Place of
registration
Registration
number Class
1.
 WellCell
Technology
14 December
2018
13 December
2028
PRC 28927676 9
2.
 WellCell
Technology
14 June 2018 13 June 2028 PRC 22380254 42
3.
 WellCell
Technology
14 June 2017 13 June 2027 PRC 19176760 42
4.
 WellCell
Technology
28 April 2012 27 April 2032 PRC 9185088 42
5.
 WellCell
Technology
28 January
2022
27 January
2032
PRC 57420429 9
6.
 WellCell HK 19 August
2019
18 August
2029
Hong Kong 305029326 9, 38, 42
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-10 –


--- page 564 ---
(b) Patents
As at the Latest Practicable Date, our Group is the registered owner of the
following patents in the PRC which we believe are material to our business:
Title of patent Registered owner
Date of
registration Expiry date
Place of
registration Registration number Patent type
1. Wireless Network
Quality Monitoring
System and Method*
(無線網絡 質量監測
系統及方法)
WellCell
Technology
15 December
2015
14 December
2035
PRC ZL201510934789.2 Invention
2. Ethernet Signal
Dispatch Method,
Device and System*
(以太網信號調度方
法、裝置和系統)
WellCell
Technology
14 January
2014
13 January
2034
PRC ZL201710787982.7 Invention
As at the Latest Practicable Date, our Grou p has applied for the following patents in
the PRC which we believe are material to our business:
Title of patent Applicant
Application
number
Place of
registration Patent type
Date of
application
1. Operational Support System for
Mobile Internet Big Data
Analysis* ( 移動互聯網大數
據分析的運營支撐
系統)
WellCell
Technology
202010485522.0 PRC Invention 1 June 2020
(c) Software copyrights
As at the Latest Practicable Date, our Group is the registered owner of the
following software copyrights in the PRC which we believe are material to our business:
Software copyright Registered owner
Date of
registration Expiry date
Place of
registration
Registration
number
1. Computer Gateway Incoming
and Outgoing Terminals
Calculation and analysis
System V1.0* ( 計算機網關
收發端計算分析系統V1.0)
WellCell
Technology
29 December 2022 31 December
2072
PRC 2022SR1625430
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-11 –


--- page 565 ---
Software copyright Registered owner
Date of
registration Expiry date
Place of
registration
Registration
number
2. Wangyou Renwoxing Wireless
Portable Signal Testing
Software and Platform
System (Wangyou
Renwoxing V5.0)* ( ‘‘網優
任我行’’便攜信號測量軟件
與平台系統(簡稱：網優任
我行V5.0))
WellCell
Technology
16 November
2022
31 December
2072
PRC 2022SR1515506
3. Qiao ’an Digital Sentry
Intelligent Bridge Safety
Warning System V1.0*
(橋安數字哨兵智能橋梁安
全預警系統V1.0)
WellCell
Technology
22 December 2022 31 December
2072
PRC 2022SR1601139
4. ‘‘Bumble Bee ’’Wireless
Sensing Base Platform
V1.0* ( ‘‘大黃蜂’’無綫感知
底座平 台V1.0)
WellCell
Technology
22 December 2022 31 December
2072
PRC 2022SR1601138
5. Equipment Room Facilities
Operation Automatic
Inspection System V1.0*
(機房設
備運行自動巡檢系
統V1.0)
WellCell
Technology
22 December 2022 31 December
2072
PRC 2022SR1601183
6. 5G Intelligent IoT Management
Platform V1.0* (5G 智聯物
聯網管理平台V1.0)
WellCell
Intelligent
28 December 2022 31 December
2070
PRC 2022SR1619598
7. Bridge Safety Fence Three
Levels Warning Monitoring
Software V1.0* ( 橋梁安全
圍欄三級預警監測軟件V1.0)
WellCell
Intelligent
28 December 2022 31 December
2071
PRC 2022SR1621355
8. Intelligent Conference Centre
Management Software
V1.0* ( 智能會議中心調度
管理軟件V1.0)
WellCell
Intelligent
28 December 2022 31 December
2071
PRC 2022SR1621009
9. FTP Server Remote Monitoring
Software V1.0* (FTP 服務器
遠程監控軟件V1.0)
WellCell
Intelligent
28 December 2022 31 December
2071
PRC 2022SR1621010
10. ‘‘Digital Employee ’’Intelligent
Robot System V1.0* ( ‘‘數字
員工’’智能機器人系統V1.0)
WellCell
Intelligent
28 December 2022 31 December
2071
PRC 2022SR1619625
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-12 –


--- page 566 ---
Software copyright Registered owner
Date of
registration Expiry date
Place of
registration
Registration
number
11. Intelligent Water Resource
Ecological Big Data
Monitoring And Analysis
System V1.0* ( 智慧水資源
生態大數據監測分析系統
V1.0)
WellCell
Intelligent
28 December 2022 31 December
2071
PRC 2022SR1621006
12. Bridge Anti-Collision
Monitoring System V1.0
Based On 5G And Edge
Computing* ( 基於5G和邊緣
計算的橋梁防撞監測系統
V1.0)
WellCell
Intelligent
28 December 2022 31 December
2072
PRC 2022SR1621037
13. Mobile Communication
Auxiliary Equipment
Network Management,
Monitoring And Analysis
System V1.0* ( 移動通信附
屬設備網管監控分析系統
V1.0)
WellCell
Intelligent
8 September 2022 31 December
2072
PRC 2022SR1348551
14. Smart City River Drainage
Outlet Monitoring System
V1.0* ( 智慧城市河道排污
口溯源監控系統V1.0)
WellCell
Intelligent
28 December 2022 31 December
2072
PRC 2022SR1621023
15. Mobile Network Quality ‘‘Sui
Xin Ce ’’Analysis Software
V1.0* ( 移動網絡質量‘‘隨心
測’’分析軟件V1.0)
WellCell
Intelligent
28 December 2022 31 December
2072
PRC 2022SR1621035
16. The New Generation Of Cloud
Network Collection Control
And Scheduling System
V1.0* ( 新一代雲網採控調
度系統V1.0)
WellCell
Intelligent
28 December 2022 31 December
2072
PRC 2022SR1621017
17. 5G Network Signal And
Perception Index Automatic
Monitoring System V1.0*
(5G 網絡信號及感知指標自
動監測系統V1.0)
WellCell
Intelligent
28 December 2022 31 December
2072
PRC 2022SR1621034
18. 5G Multi-field Application
Cloud Automatic Analysis
Platform V1.0* (5G 多領域
應用雲端自動分析平台
V1.0)
WellCell
Intelligent
28 December 2022 31 December
2072
PRC 2022SR1621033
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-13 –


--- page 567 ---
Software copyright Registered owner
Date of
registration Expiry date
Place of
registration
Registration
number
19. 5G Signal Visualization Data
Intelligence Detection
System V1.0* (5G 信號可視
化數智檢測系統V1.0)
WellCell
Intelligent
28 December 2022 31 December
2072
PRC 2022SR1621015
20. Indoor Accurate Positioning
UWB System V1.0* ( 室內
精確定位UWB 系統V1.0)
WellCell
Intelligent
28 December 2022 31 December
2072
PRC 2022SR1621008
21. Wangyou Renwoxing Wireless
Network Testing and
Analysis System V3.0*
(‘‘網優任我行’’移動網絡測
試分析系統V3.0)
WellCell
Technology
9 December 2021 31 December
2071
PRC 2021SR2033910
22. Intelligent Monitoring System
based on 5G
Communication and
Artificial Intelligence Image
Recognition V1.0*
(基於5G通信及AI圖像識別
的智能監控系統V1.0)
WellCell
Technology
19 November
2021
31 December
2071
PRC 2021SR1815009
23. Smart Ocean Big Data
Analysis and Monitoring
System V1.0* ( 智慧
海洋
大數據分析監測系統V1.0)
WellCell
Technology
19 November
2021
31 December
2071
PRC 2021SR1815010
24. Smart Bee Network
Performance Handy Testing
System V2.0*
(‘‘小蜜蜂’’Smart-bee 網絡性
能便捷測試系統V2.0)
WellCell
Technology
19 November
2021
31 December
2071
PRC 2021SR1814715
25. Wireless High-speed
Interconnection (5G/6G)
Computing Access Gateway
Software V1.0* ( 無線高速
互聯(5G/6G) 計算型接入網
關軟件V1.0)
WellCell
Technology
19 November
2021
31 December
2071
PRC 2021SR1815018
26. Smart Charging Station
Management and Operation
Analysis Large Screen
Monitoring Platform V1.0*
(智慧充電樁管理及運營分
析大屏監控平台V1.0)
WellCell
Technology
24 December 2020 31 December
2070
PRC 2020SR1891908
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-14 –


--- page 568 ---
Software copyright Registered owner
Date of
registration Expiry date
Place of
registration
Registration
number
27. Community Networking Big
Data Analysis Visualised
Monitoring Platform V1.0*
(社區網格化大數據分析可
視化監控平台V1.0)
WellCell
Technology
9 December 2020 31 December
2070
PRC 2020SR1773454
28. Network Management
Monitoring and Analysis
System for Indoor
Distribution Wireless
Auxiliary Equipment V1.0*
(室分無線附屬設備網管監
控分析系統V1.0)
WellCell
Technology
9 December 2020 31 December
2070
PRC 2020SR1773453
29. 5G Wireless Network Testing
and Analysis System V1.0*
(5G 無線網絡 測試分析系統
V1.0)
WellCell
Intelligent
21 August 2020 31 December
2070
PRC 2020SR0965591
30. Network Quality Visualised
Analysis System Based on
Mobile Wireless Network
Big Data V1.0* ( 基於移動
無線網絡 大數據的網絡質量
可視化分析系統V1.0)
WellCell
Intelligent
21 August 2020 31 December
2070
PRC 2020SR0965584
31. LTE Integrated Micro Base
Station Network
Management System V1.0*
(LTE 一體化小微基站綜合網
管系統V1.0)
WellCell
Technology
10 September
2019
31 December
2069
PRC 2019SR0943855
32. 3D Display System Platform
based on 5G and BIM
Technology V1.0*
(基於5G和BIM 技術的三維
呈現系統平台V1.0)
WellCell
Technology
10 September
2019
31 December
2069
PRC 2019SR0943854
33. Device Interconnection Sharing
and Data Platform V1.0*
(設備互聯共享和數據平台
V1.0)
WellCell
Technology
10 September
2019
31 December
2069
PRC 2019SR0942765
34. Maintenance and Operation
Support System based on
Wireless Internet Data
V1.0* ( 基於移動互聯網數
據的維護和運營支撐系統
V1.0)
WellCell
Technology
10 September
2019
31 December
2069
PRC 2019SR0938794
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-15 –


--- page 569 ---
Software copyright Registered owner
Date of
registration Expiry date
Place of
registration
Registration
number
35. Network Enhancement
Assistant APP Software
V1.0* ( 網優助手APP 軟件
V1.0)
WellCell
Technology
13 November
2018
31 December
2068
PRC 2018SR904113
36. Indoor Signal Distribution
Smart Probe Invisible
Monitoring System V1.0*
(室分信號智能探針隱形監
測系統V1.0)
WellCell
Technology
4 September 2018 31 December
2068
PRC 2018SR709783
37. Mobile Traffic Violation
Snapshot System V1.0*
(可移動式交通違法抓拍
系統V1.0)
WellCell
Technology
4 September 2018 31 December
2068
PRC 2018SR709773
38. MOS Voice Testing and
Evaluation System based on
Bluetooth Wireless
Connection V1.0* ( 基於藍
牙無線連接的MOS 語音測試
評估系統V1.0)
WellCell
Technology
31 August 2018 31 December
2068
PRC 2018SR702264
39. Handheld Portable 5G Wireless
Network Quality Testing
and Analysis System V1.0*
(手持便攜式5G無
線網絡 質
量測試及分析系統V1.0)
WellCell
Technology
31 August 2018 31 December
2068
PRC 2018SR700618
40. Handheld Portable VOLTE
Wireless Network Quality
Test and Analysis System
V1.0* ( 手持便攜式VOLTE
無線網絡 質量測試及分析系
統V1.0)
WellCell
Technology
31 August 2018 31 December
2068
PRC 2018SR700607
41. Portable High/Low Frequency
Signal Generator Software
V1.0* ( 便攜式高/低頻信號
發生器軟件V1.0)
WellCell
Technology
31 August 2018 31 December
2068
PRC 2018SR700187
42. Data Analysis System based on
MR and CDR V1.0*
(基於MR、CDR 數據解析
與分析系統V1.0)
WellCell
Technology
31 August 2018 31 December
2068
PRC 2018SR699749
43. Mobile Network Data Analysis
and Transmission System
V1.0* ( 移動網絡數據分析
和傳輸系統
V1.0)
WellCell
Technology
11 July 2018 31 December
2068
PRC 2018SR539029
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-16 –


--- page 570 ---
Software copyright Registered owner
Date of
registration Expiry date
Place of
registration
Registration
number
44. Wangyou Renwoxing Wireless
Network Testing and
Analysis System V1.0*
(‘‘網優任我行’’移動網絡測
試分析系統V1.0)
WellCell
Technology
28 March 2018 31 December
2067
PRC 2018SR214255
45. Wechat Application of
WellCell Speed Testing
System V1.0* ( 微信應用小
程序經緯測速系統V1.0)
WellCell
Technology
22 February 2018 31 December
2067
PRC 2018SR114450
46. NB_IoT Fully Automatic
Monitoring System for
Indoor IoT Signal
Distribution V1.0* (NB_IoT
物聯網室分信號全自動監測
系統V1.0)
WellCell
Technology
22 February 2018 31 December
2067
PRC 2018SR114443
47. Smart-RNP Wireless Network
Planning Simulation
Software V1.0* (Smart-RNP
無線網絡 規劃仿真軟件
V1.0)
WellCell
Technology
29 November
2017
31 December
2067
PRC 2017SR656359
48. Facial Recognition Warehouse
Asset Management System
V1.0*( 人臉識別運維倉庫資
產管理系統 V1.0)
WellCell
Technology
29 November
2017
31 December
2067
PRC 2017SR655911
49. NB_IoT Technology
Positioning and Data
Acquisition Analysis
System V1.0* (NB_IoT 物聯
網技術的定位與數據採集分
析系統V1.0)
WellCell
Technology
29 November
2017
31 December
2067
PRC 2017SR654323
50. 4G Modular CDR to CTR
Signaling Analysis System
V1.0* (4G 模塊化CDR 到
CTR 的信令分析系統V1.0)
WellCell
Technology
29 November
2017
31 December
2067
PRC 2017SR654313
51. Interference and Signal
Measurement Detection
System for UAV platform
V1.0* ( 無人機平台的干擾
與信號測量探測系統V1.0)
WellCell
Technology
29 November
2017
31 December
2067
PRC 2017SR654284
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-17 –


--- page 571 ---
Software copyright Registered owner
Date of
registration Expiry date
Place of
registration
Registration
number
52. VoLTE QOS Quality
Improvement System based
on EPS-IMS Interface Data
Analysis V1.0* ( 基於EPS-
IMS 接口數據分析的VoLTE
QOS 質量提升系統V1.0)
WellCell
Technology
27 October 2016 31 December
2066
PRC 2016SR308460
53. 4G End-user Service
Perception Impact Analysis
System V1.0* (4G 終端用戶
業務感知影響分析系統
V1.0)
WellCell
Technology
27 October 2016 31 December
2066
PRC 2016SR308455
54. Smart Tablet Signaling
Analysis System) V1.0*
(智能平板信令分析系統
V1.0)
WellCell
Technology
25 October 2016 31 December
2066
PRC 2016SR306514
55. LTE New Station Network
Acceptance Test System
V1.0* (LTE 新站入網驗收測
試系統V1.0)
WellCell
Technology
25 October 2016 31 December
2066
PRC 2016SR306500
56. Full 4G User-Perception
Wireless Network Quality
Assessment System V1.0*
(全量4G用戶
感知的移動網
絡質量評估系統V1.0)
WellCell
Technology
25 October 2016 31 December
2066
PRC 2016SR306427
57. Full-dimensional and Multi-
scene High-end User Market
Analysis System based on
Massive Big Data Support
V1.0* ( 基於海量大數據支
撐的全維度多場景高端用戶
市場分析系統V1.0)
WellCell
Technology
25 October 2016 31 December
2066
PRC 2016SR306319
58. Mobile Network Multi-
frequency, Multi-mode,
Multi-interference
Positioning and
Troubleshooting Software
V1.0* ( 移動網絡多頻多模
多干擾定位排查軟件V1.0)
WellCell
Technology
8 December 2015 31 December
2065
PRC 2015SR248143
59. Wireless Network Real-time
Video Control Software
V1.0* ( 無線網絡 實時視訊
管控軟件V1.0)
WellCell
Technology
8 December 2015 31 December
2065
PRC 2015SR248139
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-18 –


--- page 572 ---
Software copyright Registered owner
Date of
registration Expiry date
Place of
registration
Registration
number
60. Mobile Internet Wireless
Network User Perception
System V1.0* ( 移動互聯網
無線網絡 用戶感知系統
V1.0)
WellCell
Technology
8 December 2015 31 December
2065
PRC 2015SR248134
61. PLA Wireless End-user
Positioning Analysis
Software V1.0* (PLA 無線
終端用戶定位分析軟件
V1.0)
WellCell
Technology
6 August 2014 31 December
2064
PRC 2014SR114683
62. Clever Farmer Intelligent
Countryside — Big Data
Supported Wireless Network
Quality Analysis Platform
V1.0* (Clever Farmer 智能
農村— 大數據支撐無線網絡
質量分析平台V1.0)
WellCell
Technology
5 August 2014 31 December
2064
PRC 2014SR113441
63. BS-ACMC Indoor Distribution
Antenna Real-time
Monitoring Platform V1.0*
(BS-ACMC 室分天線實時監
控平台V1.0)
WellCell
Technology
4 August 2014 31 December
2064
PRC 2014SR112273
64. WellCell Smart-eagle Whole
Network Wireless Linkage
Network Management Data
Testing Platform V1.0*
(經緯Smart-eagle
全網絡無
線聯動網管數據檢測平台
V1.0)
WellCell
Technology
25 June 2014 31 December
2063
PRC 2014SR085502
65. WellCell Smart-bts Base
Station Server Room
Intelligent Monitoring
SystemV1.0* ( 經緯Smart-
bts 基站機房智能監控系統
V1.0)
WellCell
Technology
25 June 2014 31 December
2064
PRC 2014SR085483
66. Smart Bee Network
Performance Handy Testing
System V1.0* ( ‘‘小蜜蜂’’
Smart-bee 網絡性能便捷測試
系統V1.0)
WellCell
Technology
25 June 2014 31 December
2064
PRC 2014SR085360
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-19 –


--- page 573 ---
Software copyright Registered owner
Date of
registration Expiry date
Place of
registration
Registration
number
67. WellCell xcal Wireless
Network Testing and
Analysis System V1.0*
(經緯xcal 無線網絡 測試及分
析系統V1.0)
WellCell
Technology
25 June 2014 31 December
2063
PRC 2014SR085352
68. WellCell Handtest Wireless
Network Testing and
Analysis System V1.05*
(經緯Handtest 無線網絡 測
試分析系統V1.05)
WellCell
Technology
7 September 2010 31 December
2055
PRC 2010SR046621
69. HandTest-CDMA+WLAN
Intelligent Testing System
V3.2* (HandTest-CDMA
+WLAN 智能測試系統V3.2)
WellCell
Technology
23 January 2010 31 December
2059
PRC 2010SR004068
70. WellCell CT-WLAN Testing
System V2.2* ( 經緯CT-
WLAN ‘‘無線局域網’’測試
系統V2.2)
WellCell
Technology
7 July 2009 31 December
2054
PRC 2009SR026882
71. WellCell Handtest Wireless
Network Testing and
Analysis System V1.0.0*
(經緯Handtest 無線網絡 測
試分析系統V1.0.0)
WellCell
Technology
20 June 2005 31 December
2055
PRC 2005SR06421
72. CT-WLAN Testing System
V1.0.0* (CT-WLAN 無線局
域網測試系統V1.0.0)
WellCell
Technology
18 October 2004 31 December
2054
PRC 2004SR10061
73. PHS Wireless Network
Enhancement Testing and
Analysis system V3.0*
(PHS 無線網絡 優化測試分析
系統V3.0)
WellCell
Technology
19 June 2003 31 December
2053
PRC 2003SR6040
(d) Domain name
As at the Latest Practicable Date, our Gr oup had registered the following domain
names:
Domain name Registrant Date of registration Expiry date
wellcell.net WellCell Technology 28 February 2005 28 February 2027
wellcell.com.cn WellCell Technology 28 February 2005 28 February 2028
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-20 –


--- page 574 ---
Information contained in the above websites does not form part of this prospectus.
Save as disclosed above, there are no other trade or service marks, patents,
copyrights, other intellectual or industrial p roperty rights which are or may be material to
the business of our Group.
C. FURTHER INFORMATION ABOUT DIRECTORS, MANAGEMENT AND STAFF
1. Directors
(a) Disclosure of interests of Directors
Immediately following completion of the C apitalisation Issue and the Share Offer
(without taking into account any Shares whic h may be allotted and issued pursuant to the
exercise of the Over-allotment Option or any Shares which may be issued pursuant to the
exercise of any options which may be granted under the Share Option Scheme), the
interests and short positions of our Directors and chief executive of our Company in the
Shares, underlying shares and debentures of our Company or any associated corporation
(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 in which they are taken or deemed to have taken
under such provisions), 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 Lis ted Issuers, will be as follows:
(i) Long position in the Shares
Name of Directors Capacity
Number and class
of securities
Approximate
percentage of
shareholding
Mr. Jia (Note 1) Interest in a controlled
corporation
375,000,000
ordinary Shares
75%
Mr. Lin (Note 2) Interest in a controlled
corporation
375,000,000
ordinary Shares
75%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-21 –


--- page 575 ---
(ii) Long position in the ordinary sha res of associated corporations
Name of Directors
Name of associated
corporation Capacity
Approximate
percentage of
shareholding
Mr. Jia (Note 1) Shine Dynasty Beneficial owner 100%
Mr. Lin (Note 2) Cheer Partners Beneficial owner 100%
Notes :
(1) WellCell Group will be the registered and beneficial owner holding 75% of the issued
Shares of our Company. The issued share capital of WellCell Group is owned as to 51.5%
by Shine Dynasty which is in turn wholly owned by Mr. Jia.
(2) WellCell Group will be the registered and beneficial owner holding 75% of the issued
Shares of our Company. The issued share capital of WellCell Group is owned as to 37.5%
by Cheer Partners which is in turn wholly owned by Mr. Lin.
(b) Particulars of service contracts
Each of our executive Directors has entered into a service contract with our
Company for an initial fixed term of three years commencing from the Listing Date until
terminated by not less than three months ’ notice in writing served by either party.
Commencing from the Listing Date, each of our executive Directors shall be entitled to
an annual salary as set out below, such salary to be reviewed annually by our Board and
the Remuneration Committee.
In addition, each of our executive Directors may be entitled to, if so recommended
by the Remuneration Committee and approved b y the Board at its absolute discretion, a
discretionary bonus, the amount of which is determined with reference to the operating
results of our Group and the performance of the executive Director, provided that the
relevant executive Director shall abstain from voting and not be counted in the quorum
in respect of any resolution of our Board approving the amount of annual salary,
discretionary bonus and other benefits payable to him or her. Commencing from the
Listing Date, the basic annual salary of our executive Directors shall be as follows:
Name Amount
(RMB)
Mr. Jia 280,000
Ms. Liu 160,000
Mr. Cong 300,000
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-22 –


--- page 576 ---
Each of our non-executive Director and independent non-executive Directors has
entered into a letter of appointment with ou r Company for an initial term of service
commencing from the Listing Date and shall c ontinue thereafter subject to a maximum of
three years unless terminated by either party giving not less than one month ’sn o t i c ei n
writing. Commencing from the Listing Date, the annual remuneration payable to the non-
executive Director and independent non-execu tive Directors under each of the letters of
appointment shall be as follows:
Name Amount
(RMB)
Non-executive Director
Mr. Lin 150,000
Amount
(HKD)
Independent non-executive Directors
Mr. Wu Wing Kuen 120,000
Dr. Leung Kwong Sak 120,000
Mr. Yu Chi Wing 120,000
Save as disclosed above, none of our Directors has or is proposed to enter into a
service contract/letter of appointment with our Company or any of our subsidiaries (other
than contracts expiring or determinable by our Group within one year without the
payment of compensation (other than statutory compensation)).
(c) Directors ’ remuneration
Our Company ’s policies concerning remuneration of executive Directors are:
(i) the amount of remuneration payable to our executive Directors will be
determined on a case by case basis depending on the experience,
responsibility, workload and the time devoted to our Group by the relevant
Director;
(ii) non-cash benefits may be provided to our Directors under their remuneration
package; and
(iii) our executive Directors may be grante d, at the discretion of our Board, share
options of our Company, as part of their remuneration package.
The aggregate amounts of remuneration (inc luding fees, salaries, allowances and
benefits in kind, discretionary bonus and cont ributions to defined contribution plan)
which are paid to our Directors for FY2020, FY2021, FY2022 and 6M2023 were
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-23 –


--- page 577 ---
approximately RMB0.7 million, RMB0.7 million, RMB0.8 million and RMB0.3 million,
respectively. Further informa tion in respect of our Directors ’ remuneration is set out in
note 28 to the Accountant ’s Report in Appendix I to this prospectus.
It is estimated that under the arrangements currently in force as at the date of this
prospectus, the aggregate remune ration (including fees, salar ies, allowances and benefits
in kind, discretionary bonus and contributio ns to defined contribution plan) payable to
our Directors (including the independent non -executive Directors) for the year ending 31
December 2023 will be approximately RMB0.7 million.
2. Substantial shareholders
So far as our Directors are aware, immedi ately following the completion of the
Capitalisation Issue and the Share Offer and taking no account of any Shares which may be
allotted and issued upon the exercise of the Over-allotment Option or any option that may be
granted under the Share Option Scheme, the following persons/entities (not being our
Directors or chief executive of our Company) will have an interest or a short position in the
Shares or the underlying Shares which would fa ll to be disclosed to our Company under the
provisions of Divisions 2 and 3 of Part XV of the SFO, or which would be recorded in the
register of our Company required to be kept under section 336 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 circumst ances at general meetings of our Company or any
other members of our Group:
Long position in Shares, underlying Shares and debentures
Name Capacity
Number and class of
securities
Approximate
percentage of
shareholding
WellCell Group
(Note 1)
Beneficial owner 375,000,000
ordinary Shares
75%
Shine Dynasty
(Note 1)
Interest in a controlled
corporation
375,000,000
ordinary Shares
75%
Cheer Partners
(Note 1)
Interest in a controlled
corporation
375,000,000
ordinary Shares
75%
Ms. Zheng Li
(Note 2)
Interest of spouse 375,000,000
ordinary Shares
75%
Ms. Zhong Shumin
(Note 3)
Interest of spouse 375,000,000
ordinary Shares
75%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-24 –


--- page 578 ---
Notes :
(1) WellCell Group will be the registered and benefi cial owner holding 75% of the issued Shares of our
Company. The issued share capital of WellCell Group is owned as to 51.5% and 37.5% by Shine
Dynasty and Cheer Partners, respectively.
(2) Ms. Zheng Li is the spouse of Mr. Jia. Accordingly, Ms. Zheng Li is deemed to be interested in all the
Shares held by Mr. Jia under part XV of the SFO.
(3) Ms. Zhong Shumin is the spouse of Mr. Lin. Accordingly, Ms. Zhong Shumin is deemed to be
interested in all the Shares held by Mr. Lin under part XV of the SFO.
3. Related party transactions
Our related party transactions during the Tr ack Record Period are summarised in note 26
to the Accountant ’s Report as set out in Appendix I to this prospectus.
4. Disclaimers
Save as disclosed in this Appendix and the section headed ‘‘Substantial Shareholders ’’of
this prospectus:
(a) taking no account of any Shares which may be taken up or acquired under the Share
Offer or any Shares which may be allotted and issued upon the exercise of any
options that may be granted under the Share Option Scheme, our Directors are not
aware of any person who immediately foll owing completion of the Capitalisation
Issue and the Share Offer will have an interest or short position in the Shares and
underlying Shares which would fall to be disclosed to our Company under the
provisions of Divisions 2 and 3 of Part XV of the SFO or who is, either directly or
indirectly, interested in 10% or more of the nominal value of any class of share
c a p i t a lc a r r y i n gr i g h t st ov o t ei na l lc i r cumstances at the general meetings of our
Company or any other members of our Group;
(b) none of our Directors and chief executive of our Company has for the purposes of
Divisions 7 and 8 of Part XV of the SFO or the Listing Rules, nor is any of them
taken to or deemed to have under Divisions 7 and 8 of Part XV of the SFO, an
interest or short position in the shares, underlying shares and debentures of our
Company or any associated corporati ons (within the meaning of the SFO) or any
interests which will have to be entered in the register to be kept by our Company
pursuant to section 352 of the SFO or which will be required to be notified to our
Company and the Stock Exchange pursuant to the Model Code for Securities
Transactions by Directors of Listed Issue rs once the Shares are listed on the Stock
Exchange;
(c) none of our Directors nor the experts named in ‘‘E. Other information — 6.
Qualifications of experts ’’in this Appendix has any direct or indirect interest in the
promotion of, or in any assets which have been, within the two years immediately
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-25 –


--- page 579 ---
preceding the issue of this prospectus, acquired or disposed of by or leased to, any
member of our Group, or are proposed to be acquired or disposed of by or leased to
any member of our Group;
(d) none of our Directors is materially int erested in any contract or arrangement
subsisting at the date of this prospectus w h i c hi ss i g n i f i c a n ti nr e l a t i o nt ot h e
business of our Group;
(e) none of the experts named in ‘‘E. Other information — 6. Qualifications of experts ’’
in this Appendix has any shareholding in any member of our Group or the right
(whether legally enforceable or not) to s ubscribe for or to nominate persons to
subscribe for securities in any member of our Group; and
(f) none of our Directors, their close associate or any shareholders of our Company
(which to the knowledge of our Directors owns more than 5% of our Company ’s
issued capital) has any interest in our Group ’s five largest suppliers and five largest
customers in each year/period during the Track Record Period.
D. SHARE OPTION SCHEME
1. Share Option Scheme
The following is a summary of the principal terms of the Share Option Scheme approved
by our Board and conditionally approved by our sole Shareholder on 15 December 2023.
For the purpose of this section, unless the context otherwise requires:
‘‘Board ’’ means our board of Directors or a duly authorised committee
thereof;
‘‘Business Day ’’ means a day on which the Stock Exchange is open for the business
of dealing in securities;
‘‘Effective Date ’’ means the date on which the Share Option Scheme shall take effect
after certain conditions are fulfilled, including commencement of
dealing in the Shares on the Stock Exchange;
‘‘Eligible Person ’’ means any Employee Participant, any director and employee of the
Related Entity and any Service Provider;
‘‘Employee
Participant ’’
means directors and employees of our Group who in the sole
discretion of our Board have contributed or will contribute to our
Group;
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-26 –


--- page 580 ---
‘‘Exercise Period ’’ means in respect of any particular Option, the period to be
d e t e r m i n e da n dn o t i f i e db yo u rB o a r dt oe a c hP a r t i c i p a n tb u tw h i c h
shall not exceed ten years from the date of grant of such option;
‘‘Option ’’ means right to subscribe for Shares granted pursuant to the Share
Option Scheme;
‘‘Other Schemes ’’ means any other share schemes adopted by our Group from time to
time pursuant to which share options or awards may be granted;
‘‘Participant ’’ means any Eligible Person who accepts the offer of any Option in
accordance with the terms of the Share Option Scheme and (where
the context so permits) any person who is entitled to any such
Option in consequence of the death of the original Participant;
‘‘Related Entity ’’ means the holding companies, fel low subsidiaries or associated
companies of our Company;
‘‘Service
Provider(s) ’’
means any person providing services to our Group on a continuing
and recurring basis in the ordinary and usual course of business of
our Group, the grant of Options to whom is in the interests of the
l o n g - t e r mg r o w t ho fo u rG r o u pa sd e t e r m i n e db yt h eB o a r d ,n a m e l y :
(a) any person providing advisor y services and/or consultancy
services to our Group after stepping down from an employment or
director position with our Group; and (b) any person providing,
among others, advisory services, c onsultancy services, sales and
marketing services, technology services and/or administrative
services to our Group as consultants, independent contractors or
agents where the continuity and frequency of their services are akin
to those of employees; but, for the avoidance of doubt, excluding (i)
placing agents or financial advisers providing advisory services for
fundraising, mergers or acquisitions of our Company or its
subsidiaries, and (ii) professional service providers such as the
auditors or valuers who provide assurance or are required to
perform their services with impartiality and objectivity;
‘‘Shareholders ’’ means shareholders of our Co mpany from time to time; and
‘‘Subsidiary ’’ means a subsidiary for the time being and from time to time of our
Company.
(a) Purpose of the Share Option Scheme
The Share Option Scheme enables our Company to grant Options to Eligible
Persons as incentives or rewards for their contributions to our Group.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-27 –


--- page 581 ---
(b) Who may join
The eligibility of each of the Eligible Persons shall be determined by the Board (or
if the Board so resolves by a committee of the Board) from time to time and on a case-
by-case basis. Generally: ( i) with respect to Employee Participants, the Board will
consider, among others, their general worki ng performance, time com mitment (full-time
or part-time), length of their service within our Group, working experience,
responsibilities and/or empl oyment conditions with refere nce to the prevailing market
practice and industry standard; (ii) with re spect to directors and employees of the Related
Entities, the Board will consider, among others, their participation and contribution to the
development of our Group and/or the extent of benefits and synergies brought to our
Group; and (iii) with respect to Service Provi ders, the Board will con sider, among others,
their experience and expertis e, continuity and frequency of their services to our Group,
their involvement in promoting the business of our Group, or where appropriate,
contribution or potential contribution to the long-term growth of our Group.
(c) Grant of Options
Subject to the terms of the Share Option Scheme and the Listing Rules, the Board
shall be entitled at any time within the period of ten years after the Effective Date to
make an Offer to any Eligible Person as the Board may in its absolute discretion select to
subscribe for such number of Shares as the Board may determine at the Exercise Price.
Any offer of the grant of Options must not be made after inside information has
come to the knowledge of our Company until such information has been announced
pursuant to the relevant requirements of t he Listing Rules. In particular, during the
period commencing one month immediately p receding the earlier of (a) the date of our
Board meeting (as such date is first notified to the Stock Exchange in accordance with
the Listing Rules) for the approval of our Company ’s results for any year, half-year,
quarter-year period or any other interim period (whether or not required under the Listing
Rules), and (b) the deadline for our Company to publish an announcement of its results
for any year, half-year, quarter-year period or any other interim period (whether or not
required under the Listing Rules), and ending on the date of the results announcement,
no Option may be granted; nor should any offer of the grant of Option be made to an
Eligible Person during the periods or times stipulated by the Listing Rules in relation to
any restriction on the time of grant of options.
The total number of Shares issued and to be issued in respect of all options and
awards granted to a Participant under the Share Option Scheme and Other Schemes
(excluding any options and awards lapse d) in any 12-month period must not exceed 1%
of the Shares in issue, but provided that if approved by Shareholders at general meeting
with such Eligible Person and its close associat es (or its associates if the participant is a
connected person) abstaining from votin g, our Board may make a further grant of
Options to such Participant (the ‘‘Further Grant ’’). In relation to the Further Grant, our
Company must send a circular to our Shareholders, in a manner complying with, and
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-28 –


--- page 582 ---
containing the information specified in the Listing Rules. The number and terms
(including the exercise price) of the Options which is the subject of the Further Grant
shall be fixed before the general meet i n go fo u rC o m p a n ya tw h i c ht h es a m ea r e
approved.
(d) Exercise Price
The subscription price for the Shares subject to Options shall be a price determined
by our Board and notified to an Eligible Person and shall be at least the higher of (i) the
closing price of the Shares as stated in the Stock Exchange ’s daily quotations sheet on
the date of grant of the Options, which mu st be a Business Day; and (ii) the average
closing price of the Shares as stated in the Stock Exchange ’s daily quotations sheets for
the five Business Days immediately pre ceding the date of grant of the Options.
For the purpose of calculating the subscription price, in the event that on the date of
grant, our Company has been listed for less than five Business Days, the Offer Price
shall be used as the closing price for any Business Day falling within the period before
the Listing Date.
(e) Maximum number of Shares
(i) The maximum number of Shares which may be issued in respect of all options
and awards to be granted under the Share Option Scheme and Other Schemes
(the ‘‘Scheme Mandate Limit ’’) must not, in aggregate, exceed 10% of the
Shares in issue as at the Effective Date or the relevant date of approval of the
refreshment of the Scheme Mandate Limit provided that Options or awards
w h i c hh a v el a p s e di na c c o r d a n c ew i t ht h et e r m so ft h eS h a r e sO p t i o nS c h e m e
or Other Scheme will not be counted as utilised for the purpose of calculating
the Scheme Mandate Limit. On the basis of 500,000,000 Shares in issue on the
Listing Date, the Scheme Mandate Li mit will be equivalent to 50,000,000
Shares, representing 10% of the Shares in issue as at the Listing Date.
(ii) Within the Scheme Mandate Limit, the number of Shares which may be issued
in respect of all options and awards to be granted to the Service Providers
under the Share Option Scheme and Other Schemes (the ‘‘Service Provider
Sublimit ’’) must not in aggregate exceed 0.5 % of the total number of Shares
in issue as at the Effective Date or the relevant date of approval of the
refreshment of the Service Provider Sublimit. The Directors confirm the basis
for determining the Service Provider Sublimit includes (a) the potential
dilution effect arising from grants to the Service Providers; (b) the importance
of striking a balance between achieving the purpose of the Share Option
Scheme and protecting the Shareholders from the dilution effect from granting
a substantial amount of Options to the Service Providers; (c) the extent of use
of Service Providers in our Group ’s businesses, the current payment and/or
settlement arrangement with the Service Providers; (d) the expected
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-29 –


--- page 583 ---
contribution to the development and gr owth of our Company attributable to
the Service Providers; and (e) the f act that our Company expects that a
majority of Options will be granted to the Employee Participants and as such
there is a need to reserve a larger por tion of the Scheme Mandate Limit for
grants to the Employee Participants.
(iii) Subject to the approval of Shareholders in general meeting, our Company may
renew the Scheme Mandate Limit and the Service Provider Sublimit once
every three years from the date of the Shareholders ’ approval for the last
refreshment (or the Effective Date) to the extent that the Scheme Mandate
Limit so renewed must not exceed 10% an d the Service Provider Sublimit so
renewed shall not exceed 0.5%, respectively, of the Shares in issue as at the
date of such Shareholders ’ approval provided that options or awards lapsed
will not be regarded as utilised and options or awards cancelled will be
regarded as utilised for the purpose of calculating the Scheme Mandate Limit
and the Service Provider Sublimit as renewed. In relation to the Shareholders ’
approval referred to in this paragraph , our Company must send a circular to
our Shareholders containing the detai ls and information required under the
Listing Rules.
(iv) Subject to the approval of Shareholders in general meeting, our Company may
also grant Options beyond the Scheme Mandate Limit or the Service Provider
Sublimit provided that the Options in excess of the Scheme Mandate Limit or
the Service Provider Sublimit are granted only to Eligible Persons specifically
identified by our Company before such Shareholders ’ approval is sought. In
relation to the Shareholders ’ approval referred to in this paragraph, our
Company must send a circular to our Shareholders containing the information
required by the Listing Rules.
(f) Minimum vesting period and performance target
All Options granted under the Share Option Scheme will be subject to a vesting
period of no less than 12 months from the date of grant. A shorter vesting period may be
allowed for Employees Participants in certa in specific circumstances set out in the Share
Option Scheme subject to approval by the Bo ard and/or the remuneration committee of
our Company (for Options granted to the Directors or senior management) at the Board ’s
discretion, provided that such grantee ha s been specifically identified by the Board
before granting such approval.
The Board may in its absolute discretion specify such condition as it thinks fit
when making an offer of grant to an Eligible Pe rson (including, without limitation, as to
any performance criteria which must be sat isfied by the Eligible Person and/or our
Company and/or its Subsidiaries, before a n Option may be vested), provided that such
conditions shall not be inconsistent with any other terms and conditions of the Share
Option Scheme or the relevant requirements under applicable laws or the Listing Rules.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-30 –


--- page 584 ---
A grantee may be required to achieve any performance targets as the Board may then
specify in the grant before any Options granted under the Share Option Scheme can be
exercised. Such performance targets may in clude, among others, financial targets and
management targets which shall be determi ned based on the (i) individual performance,
(ii) performance of our Group and/or (iii) performance of business groups, business units,
business lines, functional departments, pro jects and/or geographical area managed by the
grantee. For the avoidance of doubt, subject to such terms and conditions as our Board
may determine as aforesaid (including suc h terms and conditions in relation to their
vesting, exercise or otherwise), there is no performance target which needs to be
achieved by a grantee before the Option can be exercised.
(g) Exercise of Option
An Option shall be vested after meeting t he vesting period and vesting conditions.
Subject to the terms of grant of any Option, an Option may be exercised in whole or in
part by the Participant (or his/her personal re presentatives) at any time before the expiry
of the Exercise Period by delivering to our Company a notice in writing in a form
approved by the Board, stating that the Option is to be exercised and the number of
Shares in respect of which it is exercised. Such notice must be accompanied by a
remittance for the full amount of the exercise price for the Shares in respect of which the
notice is given.
(h) Rights are personal to grantee
An Option shall be personal to the Part icipant and shall not be assignable or
transferable and no Participant shall in a ny way sell, transfer, charge, mortgage,
encumber or create any interest in favour of a n yt h i r dp a r t yo v e ro ri nr e l a t i o nt oa n y
Option unless a waiver is granted by the St ock Exchange or otherwise permitted or
required under the applicab le laws and regulations.
(i) Rights on ceasing to be an Eligible Person
Subject to paragraph (j), if a Participant ceases to be an Eligible Person by any
reason other than death, the outstanding Opti ons shall lapse on the date of cessation and
not be exercisable unless the Board otherw ise determines. The date of such cessation
shall be (i) if he/she is an employee of our Company, any Subsidiary or any Related
Entity, his/her last actual working day at his/her work place with our Company, any
Subsidiary or any Related Ent ity whether salary is paid in lieu of notice or not; or (ii) if
he/she is not an employee of our Company, any Subsidiary or any Related Entity, the
date on which his/her relationship with our Group which has constituted him/her an
Eligible Person ceases. If a Participant is re- employed after retirement or has changed in
position(s) but still be an Eligible Person before exercising the Option in full or at all,
the Option may continue to be exercised.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-31 –


--- page 585 ---
(j) Rights on death
If a Participant dies before exercising the Option in full, his or her legal personal
representative(s) may exercise the Option up to the Participant ’s entitlement within a
period of 12 months from the date of death.
(k) Changes in capital structure
In the event of any alteration in the capital structure of our Company, and such
event arises from a capitalisation issue, ri ghts issue, consolidation, subdivision or
reduction of capital of our Company, such corresponding alterations (if any) shall be
made in (i) the numbers of the Shares subject to any outstanding Options and/or (ii) the
Exercise Price per Share as the independent financial adviser of our Company for the
time being or the auditors of our Company shall at the request of our Company or any
Participant certify in writing to be in their opinion fair and reasonable.
Any aforementioned adjustments required must give a Participant the same
proportion of the equity capital as that to which that Participant was previously entitled
and shall be made on the basis that the aggregate exercise price payable by a Participant
on the full exercise of any Option shall rem ain as nearly as possible the same (but shall
not be greater than) as it was before such even t. For the avoidance of doubt, the issue of
securities as consideration in a transact ion may not be regarded as a circumstance
requiring adjustment. In respect of any such adjustments, other than any made on a
capitalisation issue, an independent financi a la d v i s e ro fo u rC o m p a n yo rt h ea u d i t o r so f
our Company must confirm to our Directors in writing that the adjustments satisfy the
requirements mentioned above and those of t he relevant provisions of the Listing Rules
from time to time.
(l) Rights on general offer
(i) If a general offer by way of takeover as defined in the Takeovers Code has
been made to all our Shareholders (or all such holders other than the offeror
a n d / o ra n yp e r s o na c t i n gi nc o n c e r tw i t ht h eo f f e r o r ) ,a n ds u c ho f f e rb e c o m e s
or is declared unconditional, our Company shall give notice thereof to the
Participant and the Participant shall be entitled to exercise his or her Option in
full or to the extent specified in such notice. For the purposes of this sub-
paragraph, ‘‘acting in concert ’’shall have the meaning ascribed to it under the
Takeovers Code as amended from time to time.
(ii) If a general offer by way of a scheme of arrangement is made to all the
Shareholders and the scheme has been approved by the necessary number of
Shareholders at the requisite meetings , our Company shall give notice thereof
to the Participant and the Participant may, by delivering a notice in writing to
our Company within seven days of such Shareholders ’ approval, exercise the
Option to its full extent or to the extent specified in such notice.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-32 –


--- page 586 ---
(m) Rights on winding up
In the event that a notice is given by our Company to our Shareholders to convene
a Shareholders ’ meeting for the purpose of considering and approving a resolution to
voluntarily wind up our Company, our Company shall give notice thereof to the
Participants and the Participants may, by no tice in writing to our Company accompanied
by the remittance for the total exercise pri ce payable in respect of the exercise of the
relevant Options (such notice to be received by our Company not later than seven days
prior to the proposed meeting), exercise the Options either in full or in part and our
Company shall, as soon as possible and in any event no later than the Business Day
immediately prior to the date o f the proposed Shareholders ’ meeting, allot and issue such
number of Shares to the Participants whi ch falls to be issued on such exercise.
(n) Rights on a compromise or arrangement
In the event of a compromise or arrangement between our Company and its
members or creditors being proposed in connection with a scheme for the reconstruction
or amalgamation of our Company, our Company shall give notice thereof to all
Participants on the same date as it gives notice of the meeting to its members or creditors
to consider such a scheme of arrangement, and thereupon the Participants may exercise
the Option either in full or in part and our Company shall, as soon as possible and in any
event no later than the Business Day imme diately prior to the date of the proposed
meeting, allot and issue such number of Sha res to the Participants which falls to be
issued on such exercise.
(o) Lapse of Option
An Option shall lapse forthwith and not b e exercisable (to the extent not already
exercised) on the earliest of:
(i) the expiry of the Exercise Period of the Option;
(ii) the expiry of any of the periods referred to in paragraphs (i) and (m);
(iii) subject to paragraphs (m) and (n), the date of commencement of the winding-
up of our Company or the compromise or arrangement becoming effective;
(iv) subject to the scheme of arrangement becoming effective, the expiry of the
period referred to in paragraph (l)(ii);
(v) the date on which the Participant ceas es to be an Eligible Person by reason of
summary dismissal or being dismisse d for misconduct or other breach of the
terms of his/her employment contract or ot her contract constituting him/her an
Eligible Person (including, among other s, causing material misstatement of the
financial statements of our Company), or the date on which he/she begins to
appear to be unable to pay or has no reasonable prospect of being able to pay
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-33 –


--- page 587 ---
his/her debts or has become insolvent or has made any arrangements or
composition with his/her creditors g enerally or has been convicted of any
criminal offence involving his or her integrity or honesty. A determination of
our Board or any person delegated by the Board as to whether such
employment or contract has or has not been terminated on one or more
grounds specified in this subparagraph shall be conclusive; or
(vi) the date on which the Participant commits a breach of paragraph (h).
(p) Ranking of Shares
Shares allotted and issued upon the ex ercise of an Option will be subject to our
Memorandum and Articles of Association as amended from time to time and will rank
pari passu in all respects with the existing fully paid Shares in issue on the date of such
allotment or issue and accordingly will entitl e the holders to participate in all dividends
or other distributions declared or recomme nded or resolved to be paid or made in respect
of a record date falling on or after the date of allotment and issue. Any Share allotted
upon the exercise of the Option shall not carry voting rights until the name of the grantee
has been entered into the register of members of our Company as the holder thereof.
(q) Cancellation of Options granted
Any cancellation of Options granted but not exercised in accordance with the Share
Option Scheme must be approved by the grantee concerned.
In the event that our Board elects to cancel any Options and issue new ones to the
same grantee, the issue of such new Options may only be made with available unissued
Options (excluding the cancelled Options) within the Scheme Mandate Limit and the
Service Provider Sublimit.
(r) Period of Share Option Scheme
The Share Option Scheme shall be valid and effective for a period of ten years
commencing on the Effective Date, after which period no further Options will be issued
but the provisions of the Share Option Scheme shall remain in full force and effect in all
other respects and Options granted during the life of the Share Option Scheme may
continue to be exercisable in accordance with their terms of issue.
(s) Alteration to and termination of Share Option Scheme
The Share Option Scheme may be altered in any respect by resolution of our Board,
except that the provisions of a material na ture and provisions of the Share Option
Scheme relating to matters contained in Rule 17.03 of the Listing Rules shall not be
altered to the advantage of the Participants or the prospective Participants without the
prior approval of our Shareholders in general meeting (with the Eligible Persons and
their respective associates abstaining from v oting). No such alteration shall operate to
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-34 –


--- page 588 ---
affect adversely the terms of issue of any Option granted or agreed to be granted prior to
such alteration except with the consent or sanction of such majority of the Participants as
would be required by our Shareholders under our Memorandum and Articles of
Association (as amended from time to time) fo r a variation of the rights attached to the
Shares.
Any alterations to the terms and conditions of the Options granted to a Participant
must be approved by the Board, the remune ration committee of our Company, the
independent non-executive Directors and/or th e Shareholders in general meeting (as the
case may be) if the initial grant of the Options requires such approval, except where such
alterations take effect automatically under the existing terms of the Share Option
Scheme.
Our Company may, by a resolution of our Board, at any time terminate the
o p e r a t i o no ft h eS h a r eO p t i o nS c h e m eb e f o r et h ee n do fi t sl i f ea n di ns u c he v e n tn o
further Options will be offered but the provisions of the Share Option Scheme shall
remain in all other respects in full force and effect in respect of Options granted prior
thereto but not yet exercised at the time of t ermination, which shall continue to be
exercisable in accordance with their terms of grant. Details of the Options granted,
including Options exercised or outstanding, under the Share Option Scheme, and (if
applicable) Options that become void or non- exercisable as a result of termination must
be disclosed in the circular to our Shareholders seeking approval for the first new scheme
to be established after such termination.
(t) Granting of Options to a Director, chief executive or substantial Shareholder of
our Company or any of their respective associates
Where Options are proposed to be gra nted to a Director, c hief executive or
substantial Shareholder of our Company or a ny of their respective associates, the
proposed grant must be approved by all independent non-executive Directors (excluding
any independent non-executive Director who is the grantee of the Options).
If a grant of Options to a substantial Shareholder of our Company or an
independent non-executive Director, or any of their respective associates will result in
the total number of the Shares issued and to be issued in respect of all options and
awards already granted (excluding any opt ions and awards lapsed) to such person under
the Share Option Scheme or Other Schemes in any 12-month period up to and including
the date of the grant representing in aggre gate over 0.1% (or such other percentage as
may from time to time be specified by the Stock Exchange) of the Shares in issue, then
such further grant of Options must be approved by our Shareholders. The grantee, his/her
associates and all core connected persons of our Company must abstain from voting at
such general meeting. The circular despatched to the Shareholders must contain the
information required under the Listing Rules.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-35 –


--- page 589 ---
In addition, Shareholders ’ approval as described above will also be required for any
change in terms of the Options granted to an Eligible Person who is a Director, chief
executive or substantial Shareholder o f our Company, or any of their respective
associates if the initial grant of the Options requires such approval or if as a result of the
change the grant would come to be subject to Shareholders ’ approval (except where the
changes take effect automatically under the e xisting terms of the Share Option Scheme).
For the avoidance of doubt, the requirements for the granting of Options to a
Director or chief executive (as defined in the Listing Rules) of our Company set out
above do not apply where the Eligible Person is only a proposed Director or proposed
chief executive of our Company.
(u) Conditions of Share Option Scheme
The Share Option Scheme is conditional on (i) the passing of a resolution to adopt
the Share Option Scheme by our sole Shareholder; and (ii) the Stock Exchange granting
approval for the listing of and permissio n to deal in the Shares which may be issued
pursuant to the exercise of Options and t he commencement of dealing in the Shares on
the Stock Exchange.
Application has been made to the Listing Committee for the listing of and
permission to deal in the Shares which fall to be issued pursuant to the exercise of
Options that may be granted under the Share Option Scheme.
(v) Required Disclosure
Our Company shall, for so long as the Share Option Scheme continues in operation,
make disclosures as required under the Listing Rules and all other applicable laws and
requirements.
(w) Present status of the Share Option Scheme
As at the Latest Practicable Date, no options had been granted or agreed to be
granted by our Company under the Share Option Scheme.
The terms of the Share Option Scheme are in compliance with Chapter 17 of the
Listing Rules.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-36 –


--- page 590 ---
E. OTHER INFORMATION
1. Tax and other indemnities
Each of our Controlling Shareholders (collectively, the ‘‘Indemnifiers ’’) has entered into
the Deed of Indemnity (being a ma terial contract referred to in ‘‘B. Further information about
the business of our Group — 1. Summary of material contracts — (b) the Deed of Indemnity ’’
in this Appendix) in favour of our Company (for itself and as trustee for each of our present
subsidiaries) to provide indemnities on a joint and several basis in respect of, among other
matters:
(a) any tax (which includes estate duty) liabilities in whatever part of the world which
might be payable by any member of our Group resulting from or in connection with
any income, profits or gains earned, accrued or received or deemed to have been
earned, accrued or received, or of any trans actions entered into, or the occurrence of
any matters or things on or up to the date on which the Share Offer becomes
unconditional (the ‘‘Effective Date ’’), save for any taxation to the extent that:
(i) full provision has been made for such taxation in the audited accounts of our
Group for FY2020, FY2021, FY2022 and 6M2023 (the ‘‘Accounts ’’)a ss e t
out in Appendix I to this prospectus;
(ii) falling on any member of our Group on or after the Listing Date, unless the
liability for such taxation would not have arisen but for any act or omission
of, or delay by, or transactions volunt arily effected by any member of our
Group (whether alone or in conjunction with some other act, omission, delay
or transaction, whenever occurring) other than in the ordinary course of its
business or in the ordinary course of acquiring or disposing of capital assets or
pursuant to a legally binding commitm ent created before the Listing Date;
(iii) such taxation claim arises or is incurred as a result of the imposition of
taxation as a consequence of any retrospective change in the law, rules and
regulations or the interpretation or practice thereof by the Inland Revenue
Department of Hong Kong or any other relevant authority (whether in Hong
Kong, or the Cayman Islands, or any other part of the world) coming into
force after the Effective Date or to the extent such taxation claim arises or is
increased by an increase in rates of taxation after the Effective Date with
retrospective effect; or
(iv) any provisions or reserve made for taxation in the Accounts which is finally
established to be an over-provision or an excessive reserve in which case the
Indemnifiers ’ liability (if any) in respect of such taxation shall be reduced by
an amount not exceeding such provision o r reserve, provided that the amount
of any such provision or reserve applied pursuant to the deed of indemnity to
reduce the Indemnifiers ’ liability in respect of taxation shall not be available
in respect of any such liability arising thereafter; and
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-37 –


--- page 591 ---
under the terms of the Deed of Indemnity, each of WellCell Group, Shine Dynasty, Mr. Jia,
Cheer Partners and Mr. Lin provides further inde mnities on a joint and several basis in respect
of, among other matters:
(b) all claims, actions, demands, liabilities , damages, costs, expenses, penalties, fines
and of whatever nature suffered or incurred by any of the subsidiary of our Group
directly or indirectly as a r esult of or in connection with the non-compliance or
alleged non-compliance by any subsidiary of our Group with any applicable laws,
rules and regulations in Hong Kong or any jur isdictions in the course of its business
occurred on or before the Listing Date, incl uding without limitation any liability
arising from any failure to pay any amount of social insurance or housing provident
fund by any subsidiary of our Group in connection with any employment of any
staff and/or all actions, claims, demands, pr oceedings, costs and expenses, damages,
losses and liabilities whatsoever which may be made, suffered or incurred by any of
the subsidiary of our Group in respect of or a rising directly or indirectly from or on
the basis of or in connection with any litigation, arbitration, claim and/or legal
proceedings, whether of crimin al, administrative, contract ual, tortuous or otherwise
nature instituted or threatened against a ny subsidiary of our Group and/or any act,
non-performance, omission or otherwise o f any subsidiary of our Group accrued or
arising on or before the Listing Date and/or any reorganisation involving any
subsidiary of our Group on or before the Lis ting Date; all losses, claims, actions,
demands, liabilities, damages, costs, ex penses, penalties, fines and of whatever
nature suffered or incurred by any subsidiary of our Group directly or indirectly as
a result of or in connection with the accidents on or before the Listing Date.
Our Directors have been advised that no material liability for estate duty is likely to fall
on our Company or any of its subsidiaries in the Cayman Islands, the BVI, Hong Kong and
PRC, being jurisdictions in which one or more of the companies comprising our Group were
incorporated.
2. Litigation
Save as disclosed in the paragraphs headed ‘‘Business — Litigation and non-compliance ’’
in this prospectus, neither our Company nor any of our subsidiaries is engaged in any
litigation or claims of material importance and no litigation or claims of material importance is
known to our Directors to be pending or threatened by or against our Company or any of our
subsidiaries, that would have a material adverse effect on our Group ’s results of operations or
financial condition.
3. Joint Sponsors
The Joint Sponsors have made an application for and on behalf of our Company to the
Stock Exchange for the listing of, and permission to deal in, the Shares in issue and to be
issued as mentioned in this prospectus, including the Offer Shares and any Shares which may
fall to be allotted and issued pursuant to the Capi talisation Issue and the exercise of the Over-
allotment Option or any options that may be granted under the Share Option Scheme.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-38 –


--- page 592 ---
The Joint Sponsors satisfy the independence criteria applicable to sponsors as set out in
Rule 3A.07 of the Listing Rules.
4. Preliminary expenses
The preliminary expenses relating to the incorporation of our Company are
approximately HK$48,698 and are payable by our Company.
5. Promoter
Our Company has no promoter for the purposes of the Listing Rules. Within the two
years immediately preceding the date of this pr ospectus, no cash, securities or other benefit
has been paid, allotted or given nor are any proposed to be paid, allotted or given to any
promoters in connection with the Share Offer and the related transactions described in this
prospectus.
6. Qualifications of experts
The qualifications of the experts who have given reports, letter or opinions (as the case
may be) in this prospectus are as follows:
Name Qualification
Halcyon Capital Limited A corporation licensed by the SFC to carry on type 6
(advising on corporate finance) regulated activities under
the SFO
Eddid Capital Limited A corporation licensed by the SFC to carry on type 1
(dealing in securities) and type 6 (advising on corporate
finance) regulated activities under the SFO
Appleby Legal advisers to our Company as to Cayman Islands law
China Insights Industry
Consultancy Limited
Industry consultant
Beijing DHH (Shanghai)
Law Firm
Legal advisers to our Company as to PRC law
PricewaterhouseCoopers Certified P ublic Accountants under Professional
Accountants Ordinance (Cap. 50 of the Laws of Hong
Kong) and Registered Public Interest Entity Auditor
under Accounting and Financial Reporting Council
Ordinance (Cap. 588 of the Laws of Hong Kong)
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-39 –


--- page 593 ---
7. Consents of experts
Each of the experts referred to above has given and has not withdrawn its written consent
to the issue of this prospectus with the inclusion of its reports, letters, opinions or summaries
thereof (as the case may be) and the references t o its name included in this prospectus in the
form and context in which it respectively appears.
8. Joint Sponsors ’ fees
The Joint Sponsors will be paid by our Company a total fee of HK$9,100,000 to act as
joint sponsors to our Company in connection with the Listing.
9. Binding effect
This prospectus shall have the effect, if an a pplication is made in pursuance hereof, of
rendering all persons concerned bound by all of the provisions (other than the penalty
provisions) of sections 44A and 44B of the Companies (Winding Up and Miscellaneous
Provisions) Ordinance so far as applicable.
10. Miscellaneous
(a) Save as disclosed in this Appendix and the sections headed ‘‘History,
Reorganisation and corporate structure ’’ and ‘‘Underwriting ’’ of this prospectus,
within the two years preceding the date of this prospectus:
(i) no share or loan capital of our Company or any of our subsidiaries has been
issued, agreed to be issued or is proposed to be issued fully or partly paid
either for cash or for a consideration other than cash;
(ii) no commissions, discounts, brokerages or other special terms have been
granted in connection with the issue or sale of any share or loan capital of our
Company or any of our subsidiaries; and
( i i i ) n oc o m m i s s i o nh a sb e e np a i do rp a y a ble (excluding commission payable to
sub-underwriters) for subscription, agreeing to subscribe, procuring
subscription or agreeing to procure subscription of any shares in our
Company.
(b) No share or loan capital of our Company or any of our subsidiaries is under option
or is agreed conditionally or unconditionally to be put under option.
(c) No founder, management or deferred shares of our Company or any of our
subsidiaries has been issued or agreed to be issued.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-40 –


--- page 594 ---
(d) Our Directors confirm that, up to the da te of this prospectus, save as disclosed in
the paragraphs headed ‘‘Summary — Recent developments and no material adverse
change ’’, there has been no material adverse change in the financial or trading
position or prospects of our Group since 31 December 2022 (being the date to
which the latest audited consolidated financial statements of our Group were made
up), and there had been no event since 31 December 2022 which would materially
affect the information as shown in the Accountant ’s Report.
(e) There has not been any interruption in the business of our Group which has had a
material adverse effect on the financi al position of our Group in the 24 months
preceding the date of this prospectus.
(f) None of the experts named in ‘‘E. Other information — 6. Qualifications of
experts ’’in this Appendix:
(i) is interested beneficially or non-ben eficially in any shares in any member of
our Group; or
(ii) has any right or option (whether legally enforceable or not) to subscribe for or
to nominate persons to subscribe for any shares in any member of our Group.
(g) No company within our Group is present ly listed on any stock exchange or traded
on any trading system and no part of the Shares or loan capital of our Company is
listed, traded or dealt in on any other stock exchange. At present, our Company is
not seeking or proposing to seek listing of, or permission to deal in, any part of its
Shares or loan capital on any other stock exchange.
(h) Our Company has no outstanding convertible debt securities.
(i) All necessary arrangements have been made to enable the Shares to be admitted
into CCASS for clearing and settlement.
(j) There are no arrangements under which fu ture dividends are waived or agreed to be
waived.
11. Bilingual prospectus
The English language and the Chinese langua ge versions of this prospectus are being
published separately, in reliance upon the exemption provided by section 4 of the Companies
(Exemption of Companies and Prospectuses from Compliance with Provisions) Notice
(Chapter 32L of the Laws of Hong Kong).
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-41 –


--- page 595 ---
12. Taxation of holders of Shares
(a) Hong Kong
Dealings in Shares registered on our Company ’s Hong Kong branch register of
members will be subject to Hong Kong stamp duty.
Profits from dealings in Shares arising in or derived from Hong Kong may also be
subject to Hong Kong profits tax.
(b) Cayman Islands
No stamp duty is payable in the Cayman Islands on transfers of shares of Cayman
Islands companies except those which hold i nterests in land in the Cayman Islands.
(c) Consultation with professional advisers
Intending holders of the Shares are reco mmended 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 the Shares. It is emphasised that none
of our Company, our Directors or parties involved in the Share Offer accepts
responsibility for any tax effect on, or liabilities of holders of Shares resulting from their
subscription for, purchase, holding or disposal of or dealing in the Shares.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-42 –


--- page 596 ---
DOCUMENTS DELIVERED TO THE REGI STRAR OF COMPANIES IN HONG KONG
The documents attached to the copy of this prospectus delivered to the Registrar of Companies
in Hong Kong for registration were copies of the written consents referred to in the paragraph
headed ‘‘E. Other information — 7. Consents of experts ’’in Appendix IV to this prospectus and
copies of the material contracts referred to in the paragraph headed ‘‘B. Further information about
the business of our Group — 1. Summary of material contracts ’’in Appendix IV to this prospectus.
DOCUMENTS ON DISPLAY
Copies of the following documents wil l be on display on the Stock Exchange ’s website at
www.hkexnews.hk and our Company ’s website at www.wellcell.com.cn up to and including the
date which is 14 days from the date of this prospectus:
1. the Memorandum and the Articles of Association;
2. the Accountant ’s Report and the report on unaudited pro forma financial information
from PricewaterhouseCoopers, the texts of which are set out in ‘‘Appendix I —
Accountant ’sR e p o r t’’and ‘‘Appendix II — Unaudited Pro Forma Financial Information ’’
to this prospectus, respectively;
3. the audited consolidated financial state ments of our Group for each of the three years
ended 31 December 2022 and the six months ended 30 June 2023;
4. the legal opinion prepared by Beijing DHH (Shanghai) Law Firm, the legal advisers to
our Company as to PRC law, in respect of certain aspects of our Group;
5. the letter of advice prepared by Appleby, the legal advisers to our Company as to
Cayman Islands law, summarising certain aspects of the Cayman Islands company law
referred to in Appendix III to this prospectus;
6. the Companies Act;
7. the CIC Report referred to in the section headed ‘‘Industry Overview ’’in this prospectus;
8. copies of the material contracts r e f e r r e dt oi nt h ep a r a g r a p hh e a d e d‘‘Statutory and
general information — B. Further information about the business of our Group — 1.
Summary of material contracts ’’in Appendix IV to this prospectus;
9. the service contracts and letters of appointment referred to in the paragraph headed
‘‘Statutory and general information — C. Further information about Directors,
management and staff — 1. Directors ’’in Appendix IV to this prospectus;
APPENDIX V DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES AND ON DISPLAY
– V-1 –


--- page 597 ---
10. the written consents referred to in the paragraph headed ‘‘Statutory and general
information — E. Other information — 7. Consents of experts ’’in Appendix IV to this
prospectus; and
11. the Share Option Scheme.
APPENDIX V DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES AND ON DISPLAY
– V-2 –


--- page 598 ---
WellCell Holdings Co., Limited
SHARE
OFFER
(incorporated in the Cayman Islands with limited liability)
Stock code: 02477
Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers
Joint Sponsors
Sole Overall Coordinator, Joint Global Coordinator, Joint Bookrunner and Joint Lead Manager
WellCell Holdings Co., Limited
Halcyon Capital Limited
Halcyon Securities Limited
