JC Group Holdings Limited · 4. H One(1) November 2006 July 2013 ifc mall Western – 5. PHO24 (NTP)(3) May 2010 November 2013 NTP Vietnamese PHO24 6. G Bar(1) October 2006 July 2013

Astrum Capital Management Limited

阿仕特朗資本管理有限公司

JC Group Holdings Limited

PLACINGSponsor

Joint Bookrunners and Joint Lead Managers

Stock Code: 8326

(Incorporated in the Cayman Islands with limited liability)

JC G

roup Holdings L

imited

Astrum Capital Management Limited

阿仕特朗資本管理有限公司

JC Group Holdings Limited

配售保薦人

聯席賬簿管理人及聯席牽頭經辦人

股份代號：8326（於開曼群島註冊成立之有限公司）

If you are in any doubt about any of the contents of this prospectus, you should obtain independent professional advice.

JC Group Holdings Limited(Incorporated in the Cayman Islands with limited liability)

PLACING

Number of Placing Shares : 100,000,000 Shares, comprising70,000,000 New Shares and 30,000,000Sale Shares

Placing Price : Not more than HK$0.5 per Placing Shareand expected to be not less thanHK$0.4 per Placing Share, payable infull upon application, plus brokerageof 1%, SFC transaction levy of 0.003%and Stock Exchange trading fee of0.005%

Nominal Value : HK$0.01 per ShareStock Code : 8326

Sponsor

Joint Bookrunners and Joint Lead Managers

Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong SecuritiesClearing Company Limited take no responsibility for the contents of this prospectus, make no representation as to itsaccuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in relianceupon 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 tothe Registrar of Companies in Hong Kong” in Appendix V to this prospectus, has been registered by the Registrar ofCompanies in Hong Kong as required by section 342C of the Companies Ordinance (Chapter 32 of the Laws of Hong Kong).The Securities and Futures Commission of Hong Kong and the Registrar of Companies in Hong Kong take no responsibilityas to the contents of this prospectus or any of the other documents referred to above.

The Placing Price is expected to be fixed by agreement between the Company (for itself and on behalf of the Vendor) andAstrum (for itself and on behalf of the Underwriters) on the Price Determination Date, which is currently scheduled on 14November 2013. The Placing Price will not be more than HK$0.5 per Placing Share and is expected to be not less thanHK$0.4 per Share. If the Company and Astrum are unable to reach an agreement on the Placing Price by that date or suchlater date as agreed by the Company (for itself and on behalf of the Vendor) and Astrum (for itself and on behalf of theUnderwriters), the Placing will not become unconditional and will not proceed.

Prospective investors should read the entire document carefully and, in particular, should consider the matters discussed inthe section headed “Risk Factors” in this prospectus.

The obligations of the Underwriters under the Underwriting Agreement to subscribe for and to procure placees for thesubscription for and/or purchase of the Placing Shares, are subject to termination by Astrum (for itself and on behalf of theUnderwriters) upon the occurrence of any of the events set forth in the section headed “Underwriting – Grounds forTermination” of this prospectus at any time prior to 8:00 a.m. (Hong Kong time) on the Listing Date.

IMPORTANT

14 November 2013

GEM has been positioned as a market designed to accommodate companies towhich a higher investment risk may be attached than other companies listed on theStock Exchange. Prospective investors should be aware of the potential risks ofinvesting in such companies and should make the decision to invest only after dueand careful consideration. The greater risk profile and other characteristics of GEMmean that it is a market more suited to professional and other sophisticatedinvestors.

Given the emerging nature of companies listed on GEM, there is a risk thatsecurities traded on GEM may be more susceptible to high market volatility thansecurities traded on the Main Board and no assurance is given that there will be aliquid market in the securities traded on GEM.

CHARACTERISTICS OF GEM

– i –

If there is any change to the below expected timetable, the Company will makeappropriate announcement on the HKEx website.

2013(Note 1)

Price Determination Date (Note 2) on or before . . . . . . . . . . . . . . . Thursday, 14 November

Announcement of the Placing Price and the level ofindication of interest in the Placing to be published onthe HKEx website at www.hkexnews.hk andthe Company’s website at www.jcgroup.hk on or before . . . . . Wednesday, 20 November

Allotment of Placing Shares to placees(or their designated person(s)) on or before . . . . . . . . . . . . . . . Wednesday, 20 November

Deposit of share certificates for the Placing Sharesinto CCASS on or before (Note 3) . . . . . . . . . . . . . . . . . . . . . . Wednesday, 20 November

Dealings in Shares on GEM to commence at 9:00 a.m. on . . . . . . Thursday, 21 November

Notes:

1. All times and dates refer to Hong Kong local times and dates.

2. The Price Determination Date is expected to be on or about Thursday, 14 November 2013. If for anyreason, the Placing Price is not agreed on that date, or such later date as agreed by the Company (for itselfand on behalf of the Vendor) and Astrum (for itself and on behalf of the Underwriters), the Placing will notbecome unconditional and will not proceed.

3. The share certificates for the Placing Shares to be distributed via CCASS are expected to be deposited intoCCASS on or about Wednesday, 20 November 2013 for credit to the respective CCASS participants’ stockaccounts designated by the Underwriters, the placing agents, the placees or their respective agents, as thecase may be. The Company will not issue any temporary documents of title.

4. All share certificates will only become valid certificates of title when the Placing has become unconditionalin all respects and the Underwriting Agreement has not been terminated in accordance with its terms priorto 8:00 a.m. Hong Kong time on the Listing Date. If the Underwriting Agreement does not becomeunconditional or is terminated in accordance with the terms and conditions, the Company will make anannouncement as soon as possible. No dealings in the Placing Shares should take place prior to the ListingDate, investors who trade the Shares prior to such date shall do so entirely at their own risk.

Details of the structure of the Placing, including the conditions thereto, are set out inthe section headed “Structure and Conditions of the Placing” in this prospectus.

EXPECTED TIMETABLE

– ii –

IMPORTANT NOTICE TO INVESTORS

You should rely only on the information contained in this prospectus to make yourinvestment decision. The Company, the Vendor, the Sponsor, the Joint Lead Managers,the Joint Bookrunners, and the Underwriters have not authorised anyone to provide youwith information that is different from what is contained in this prospectus. Anyinformation or representation not made in this prospectus must not be relied on by you ashaving been authorised by the Company, the Vendor, the Sponsor, the Joint LeadManagers, the Joint Bookrunners, the Underwriters, any of their respective directors,advisers, officers, employees, agents or representatives or any other person involved inthe Placing.

Page

Characteristics of GEM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i

Expected Timetable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Forward-Looking Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Waiver from Compliance with the GEM Listing Rules . . . . . . . . . . . . . . . . . . . . . . 45

Information about this Prospectus and the Placing . . . . . . . . . . . . . . . . . . . . . . . . . 46

Directors and Parties Involved in the Placing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

Corporate Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

Industry Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

History, Development and Reorganisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

Relationship with Controlling Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138

Continuing Connected Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143

Directors, Senior Management and Staff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149

CONTENTS

– iii –

Page

Substantial Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161

Share Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163

Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166

Business Strategies and Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209

Sponsor’s Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214

Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215

Structure and Conditions of the Placing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220

Appendix I – Accountants’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1

Appendix II – Unaudited Pro Forma Financial Information . . . . . . . . . . . . . . . II-1

Appendix III – Summary of the Constitution of the Company andthe Cayman Islands Company Law . . . . . . . . . . . . . . . . . . . . . III-1

Appendix IV – Statutory and General Information . . . . . . . . . . . . . . . . . . . . . . . IV-1

Appendix V – Documents Delivered to the Registrar of Companiesin Hong Kong and Available for Inspection . . . . . . . . . . . . . . . V-1

CONTENTS

– iv –

This summary aims to give you an overview of the information contained in thisprospectus and should be read in conjunction with full text of this prospectus. As this is asummary, it does not contain all of the information which may be important to you. Youshould read the whole prospectus before you decide to invest in the Placing Shares.

OVERVIEW

The Group is a food and beverage group in Hong Kong operating 6 full-servicerestaurants and 2 cake shops as at the Latest Practicable Date. The Group’s philosophy is“unique dining concepts” which is fully translated by the quality dishes accompanied by apleasant atmosphere and attentive services. The Group uses quality food ingredients toprepare cuisines based on the recipes that are created by chefs or licensed by the way offranchising arrangements, and implements quality control system to ensure consistency ofhigh food quality. Restaurants are strategically located in prime areas, contemporarydecorated and coupled with trained staff providing attentive services.

As at the Latest Practicable Date, the restaurants operated by the Group are undervarious brands and mainly serve Western, Japanese, Vietnamese and Chinese cuisines. It isthe strategy of the Group to expand its market share through promoting its brand andwidening the cuisine offered by the Group.

In September 2013, the Group has established its first Chinese cuisine restaurant underthe tradename “Pearl Dining House” in The ONE. The Group has also established afull-service restaurant in October 2013 under the tradename “Mekikinoginji − Okinawa（目利之銀次沖繩）” in V city. A cafe, named “a la Folie”, will be in operation in November 2013in GCP. Further, as part of the Group’s effort to launch the “Pearl” series restaurants, theGroup has ceased the operation of PHO24 (NTP) in early November 2013 and will replace itwith Pearl Delights, a full-service restaurant that focuses on Cantonese cuisine, in the samelocation in December 2013 shortly following the closure of PHO24 (NTP). The Directorsalso intend to launch the Pearl Chamber, the third restaurant under the “Pearl” series, by thefirst quarter of 2014 with the net proceeds from the Placing, subject to the availability ofpremises which fulfill the criteria of the Group.

The revenues for the two years ended 31 March 2012 and 2013 and the three monthsended 30 June 2013 were approximately HK$260.4 million, HK$246.1 million and HK$62.2million, respectively. The total comprehensive income for the two years ended 31 March2012 and 2013 and the three months ended 30 June 2013 were approximately HK$17.1million, HK$11.7 million and HK$1.9 million, respectively.

Sales

The table below sets forth the details of the full-service restaurants and cake shopsoperated by the Group during the Track Record Period and up to the Latest Practicable Date:

SUMMARY

– 1 –

Name of restaurant/cake shop

Date ofcommencementof operation

Date of cessationof operation Location

Cuisineserved

Name ofrestaurantoperatedunderfranchisingarrangement

1. Inakaya March 2011 – ICC Japanese Inakaya

2. Harlan’s andKaika

July 2010 – The ONE Western andJapanese

Kaika

3. Mekiki(WTC)(2)

October 2010 – WTC Western andJapanese

Mekikinoginji-Okinawa（目利之銀次沖繩）

4. H One(1) November 2006 July 2013 ifc mall Western –

5. PHO24 (NTP)(3) May 2010 November 2013 NTP Vietnamese PHO24

6. G Bar(1) October 2006 July 2013 ifc mall Western –

7. PHO24 (TST) December 2009 – iSQUARE Vietnamese PHO24

8. The Box(1) October 2006 July 2013 ifc mall Western –

9. Harlan’s cakeshop

July 2012 – The ONE Western –pastries

–

10. Carousel October 2010 – WTC Western –pastries

–

11. Pearl DiningHouse

September 2013 – The ONE Chinese –

12. Mekiki (V city) October 2013 – V city Japanese Mekikinoginji-Okinawa（目利之銀次沖繩）

Notes:

(1) H One, G Bar and The Box ceased operations in July 2013.

(2) Prior to September 2013, Mekiki (WTC) was known as Hooray Kaiko.

(3) PHO24 (NTP) has ceased operation in early November 2013 and the Group will open Pearl Delightsin the same location in December 2013. The Group plans to relaunch a PHO24 restaurant in late2014 subject to availability of suitable premises.

For details of the information of the restaurants operation, please refer to the sectionheaded “Business – Overview of the Restaurants Operation” in this prospectus.

The cuisines offered by the Group during the Track Record Period can be broadlyclassified into three categories. The table below sets forth the details of the Group’s revenueby types of cuisines and as a percentage of its total revenue during the Track Record Period:

SUMMARY

– 2 –

Year ended 31 March Three months ended 30 June2012 2013 2012 2013

Revenue(HK$’000)

% oftotal

revenueRevenue

(HK$’000)

% oftotal

revenueRevenue

(HK$’000)

% oftotal

revenueRevenue

(HK$’000)

% oftotal

revenue(Unaudited)

Western 136,468 52.4 122,643 49.8 28,684 50.0 29,696 47.8Japanese 90,409 34.7 87,753 35.7 20,233 35.2 23,067 37.1Vietnamese 33,560 12.9 35,676 14.5 8,513 14.8 9,402 15.1

260,437 100.0 246,072 100.0 57,430 100.0 62,165 100.0

The table below sets forth a breakdown of the Group’s revenue in each restaurant andcake shop and as a percentage of its total revenue during the Track Record Period and forthe three months ended 30 June 2012:


Revenue(HK$’000)

% oftotal

revenueRevenue

(HK$’000)

% oftotal

revenueRevenue

(HK$’000)

% oftotal

revenueRevenue

(HK$’000)

% oftotal

revenue(Unaudited)

Full-service restaurant– discontinued

H One (1) 37,488 14.4 26,649 10.8 6,981 12.2 7,585 12.2G Bar (1) 17,176 6.6 13,643 5.5 3,603 6.3 3,065 4.9The Box (1) 10,897 4.2 9,974 4.1 2,210 3.8 2,049 3.3PHO24 (NTP) (2) 21,626 8.3 21,957 8.9 5,337 9.3 5,890 9.5

Subtotal 87,187 33.5 72,223 29.3 18,131 31.6 18,589 29.9

Full-service restaurant– continuing

Inakaya 70,486 27.0 65,658 26.7 15,607 27.2 16,349 26.3Harlan’s and Kaika 56,166 21.6 54,591 22.2 12,169 21.2 15,018 24.2Mekiki (WTC) (3) 33,146 12.7 36,001 14.6 8,013 13.9 7,539 12.1PHO24 (TST) 11,934 4.6 13,719 5.6 3,176 5.5 3,512 5.7

Subtotal 171,732 65.9 169,969 69.1 38,965 67.8 42,418 68.3

SUMMARY

– 3 –


Revenue(HK$’000)

% oftotal

revenueRevenue

(HK$’000)

% oftotal

revenueRevenue

(HK$’000)

% oftotal

revenueRevenue

(HK$’000)

% oftotal

revenue(Unaudited)

Cake shop – continuingHarlan’s cake shop (4) – – 2,396 1.0 – – 824 1.3Carousel 1,518 0.6 1,484 0.6 334 0.6 334 0.5

Subtotal 1,518 0.6 3,880 1.6 334 0.6 1,158 1.8

Total revenue 260,437 100.0 246,072 100.0 57,430 100.0 62,165 100.0

Notes:


(2) PHO24 (NTP) has ceased operation in early November 2013 and the Group will open Pearl Delightsin the same location in December 2013. The Group plans to relaunch a PHO24 restaurant in late2014 subject to the availability of suitable premises.


(4) Harlan’s cake shop commenced operation in July 2012.

Gross profit represents revenue less cost of inventories sold. Gross margin is calculatedby dividing the gross profit by revenue. The table below sets forth the gross profit and grossmargin for each of the restaurants and cake shops during the Track Record Period:


Grossprofit

(HK$’000)

Grossmargin

(%)

Grossprofit

(HK$’000)

Grossmargin

(%)

Grossprofit

(HK$’000)

Grossmargin

(%)

Grossprofit

(HK$’000)

Grossmargin

(%)(Unaudited)


H One(1) 25,905 69.1 18,204 68.3 4,837 69.3 4,733 62.4G Bar (1) 13,486 78.5 10,492 76.9 2,793 77.5 2,366 77.2The Box (1) 8,226 75.5 7,425 74.4 1,646 74.5 1,519 74.1PHO24 (NTP) (2) 16,072 74.3 16,356 74.5 3,900 73.1 4,506 76.5

Subtotal 63,689 73.0 52,477 72.7 13,176 72.7 13,124 70.6

SUMMARY

– 4 –


Grossprofit

(HK$’000)

Grossmargin

(%)

Grossprofit

(HK$’000)

Grossmargin

(%)

Grossprofit

(HK$’000)

Grossmargin

(%)

Grossprofit

(HK$’000)

Grossmargin

(%)(Unaudited)



Subtotal 121,075 70.5 120,402 70.8 27,522 70.6 30,717 72.4

Cake shop – continuing

Harlan’s cake shop (4) – – 1,370 57.2 – – 508 61.7Carousel 580 38.2 537 36.2 96 28.7 133 39.9

Subtotal 580 38.2 1,907 49.1 96 28.7 641 55.4

Total gross profit 185,344 71.2 174,786 71.0 40,794 71.0 44,482 71.6

Notes:





For details of the financial performance of the Group, please refer to the sectionheaded “Financial Information” in this prospectus.

Franchising arrangements

Certain brands operated by the Group, namely “Inakaya”, “Kaika”, “PHO24” and“Mekikinoginji – Okinawa（目利之銀次沖繩）” are under franchising agreements. Under thefranchising agreements, the Group is required to pay franchise fees to use those brands. Forthe two years ended 31 March 2012 and 2013 and the three months ended 30 June 2013, thetotal franchise fees paid were approximately HK$2.3 million, HK$2.4 million and HK$0.6million, respectively. For details of the franchising arrangements of the Group, please referto the sections headed “Business – Franchising Agreements” and “Risk Factors – A few

SUMMARY

– 5 –

restaurants the Group operates are governed by the terms of the Group’s franchisingagreements and the Group may not be able to renew these franchising agreements” in thisprospectus.

Raw materials and suppliers

Food and beverage are the major raw materials for the Group’s business. The Grouphas developed a supplier selection system based on the experience of the Group’s seniormanagement in the food and beverage industry. For the two years ended 31 March 2012 and2013 and the three months ended 30 June 2013, the cost of inventories sold representedapproximately 28.8%, 29.0% and 28.4% of the revenue of the Group, respectively, andrepresented the largest component of the Group’s operating expenses. For details of the rawmaterials and suppliers of the Group, please refer to the sections headed “Business –Suppliers and Raw Materials” and “Risk Factors – The prices of raw materials may continueto rise and fluctuate” in this prospectus.

Staff costs

Restaurant operations are highly service-oriented and the Group’s success dependsupon the Group’s ability to retain and recruit sufficient qualified employees. Staff costs arethe second largest component of the Group’s operating expenses. For the two years ended 31March 2012 and 2013 and the three months ended 30 June 2013, staff costs representedapproximately 26.6%, 28.3% and 27.7% of the revenue of the Group, respectively. Fordetails of the employees of the Group, please refer to the sections headed “Business –Employees” and “Risk Factors – Labour shortages or increase in labour costs could slow theGroup’s growth, harm its business and reduce its profitability” in this prospectus.

Rental expenses

The Directors believe that the locations of the restaurants are vital to the Group’soperation. The Group strategically locates its restaurants in landmark shopping malls inHong Kong. Property rentals and related expenses are the third largest component of theGroup’s operating expenses. For the two years ended 31 March 2012 and 2013 and the threemonths ended 30 June 2013, the property rentals and related expenses representedapproximately 17.6%, 19.2% and 19.9% of the revenue of the Group, respectively. Fordetails of the leased properties of the Group, please refer to the sections headed “Business –Leased properties” and “Risk Factors – The Group’s profitability could be adversely affectedby the lack of commercially attractive locations, the increase in rental expenses for its foodand beverage business and failure to renew existing leases of the leased properties” in thisprospectus.

Competition

According to the Euromonitor Report, the food and beverage industry is highlycompetitive and fragmented with more than 9,000 participants in the market, with the largestrestaurant group occupying less than 5% of the market share. For details of the competition,please refer to the sections headed “Business – Competition” and “Risk Factors – The Groupoperates in a highly competitive industry” in this prospectus.

SUMMARY

– 6 –

Licences and approvals

The restaurant business in Hong Kong is subject to certain licensing requirements.Except for certain non-compliance issues in relation to the Group’s operation, details ofwhich are set out in the sections headed “Business – Legal Proceedings, Claims andCompliance” and “Risk Factors – The Group has failed to apply for water pollution controllicences for its restaurants and cake shops and may face prosecution” in this prospectus, theGroup has obtained all necessary licences for its operation as at the Latest Practicable Date.

Trademarks

As at the Latest Practicable Date, the Group has registered, applied for the registrationof or has been granted with or is in the course of obtaining the licences to use, all thetrademarks for its restaurants and cake shops. Please refer to the paragraph headed“Intellectual property rights” in Appendix IV to this prospectus for further details of theregistration or licence of the Group’s trademarks.

RECENT DEVELOPMENTS

Unaudited performance for the three months ended 30 September 2013

Based on the financial information as extracted from the unaudited combined financialstatements for the three months ended 30 September 2013 (the “September 2013 UnauditedFinancial Statements”), the unaudited total revenue and gross profit of the Group for thethree months ended 30 September 2013 was approximately HK$54.8 million and HK$38.0million, representing a decrease of approximately 9.6% and 11.1% respectively as comparedto the same period in last financial year. The cost of inventories sold was approximately30.6% of the revenue of the Group for the three months ended 30 September 2013. TheDirectors are responsible for the preparation and fair presentation of the September 2013Unaudited Financial Statements, which have been reviewed by the reporting accountants ofthe Company in accordance with the Hong Kong Standard on Review Engagements 2410“Review of Interim Financial Information Performed by the Independent Auditor of theEntity” issued by the Hong Kong Institute of Certified Public Accountants.

Without taking into consideration the IFC Restaurants the operation of which ceased inJuly 2013, the unaudited total revenue and gross profit of the Group for the three monthsended 30 September 2013 were approximately HK$53.1 million and HK$36.7 million,representing an increase of approximately 11.0% and 9.4% respectively as compared to thesame period in the last financial year. The cost of inventories sold was approximately 30.9%of the revenue of the Group for the three months ended 30 September 2013.

Closure of the restaurants at ifc mall

The licence agreement and sub-lease agreements entered into by the Group regardingthe leases of H One, G Bar and The Box in ifc mall expired in August 2013. Due toincreasing rental costs in ifc mall, the Directors intend to relocate these restaurants to otherlocations. Consequently, the Directors suspended the operations of these restaurants in July2013 and reinstatement works have been carried out immediately at a cost of approximately

SUMMARY

– 7 –

HK$2.5 million, which have been fully provided in the Group’s combined financialstatements. As the Directors consider that the amounts of write-off for any fittings andfurniture and severance payments to employees were incurred in July 2013, are immaterialand that there is no prepayment made to any suppliers of the IFC Restaurants (save for therental deposit which is fully refundable), the Group did not make any other provision inrespect of the closure of the IFC Restaurants apart from the reinstatement provision. Subjectto any unforeseeable changes on market conditions and other risks, it is the intention of theGroup to relaunch these restaurants in Central. The Company has been liaising with severallandlords and has already submitted a proposal to the landlord of a commercial building thatis still under construction in Central. As at the Latest Practicable Date, negotiations with theprospective landlord is still in progress. It is estimated by the landlord that the constructionwork of the identified building will be completed in mid 2014. Therefore, the Directorsestimate that, after considering the progress of the construction of the commercial buildingand the time required for renovation and applying for relevant licences, and subject tovarious factors such as economic conditions, rentals and suitability of available locations,the IFC Restaurants may be relaunched in the second half of 2014 in Central.

The aggregate revenue generated by the IFC Restaurants amounted to approximatelyHK$65.6 million, HK$50.3 million and HK$12.7 million, representing approximately 25.2%,20.4% and 20.4% of the total revenue of the Group for the two years ended 31 March 2012and 2013 and the three months ended 30 June 2013, respectively. In terms of EBITDA, thesethree restaurants in aggregate generated approximately HK$12.7 million, HK$5.9 million andHK$1.1 million, representing approximately 33.8%, 19.7% and 15.1% of EBITDA(excluding the Listing expenses) of the Group during the Track Record Period, respectively.Taking into account the fact that the assets of the IFC Restaurants had almost been fullydepreciated and the relevant deferred tax effect, the net profits attributable to the IFCRestaurants amounted to approximately HK$8.9 million, HK$5.1 million and HK$1.0million, representing approximately 51.7%, 43.8% and 30.9% of net profits (excluding theListing expenses) of the Group during the Track Record Period, respectively. Prospectiveinvestors should be aware that the closure of the IFC Restaurants will impair the financialperformance of the Group for the year ending 31 March 2014. Save as disclosed in thisprospectus, the Directors confirm that they do not have any plan to close any existingrestaurants in the near future.

Establishment of new restaurants

In order to continue the business momentum and further expand the variety of theGroup’s cuisine offered to its customers, the Group launched its pioneer Chinese cuisinerestaurant, the “Pearl Dining House” in September 2013 in The ONE. Pearl Dining Houseserves a wide range of Huaiyang-style appetisers, homemade dishes, noodles and dumplings.The Group utilising internal funding, has incurred approximately HK$3.9 million as capitalexpenditure and rental deposit for the opening of Pearl Dining House. Pearl Dining Houseachieved a daily revenue of over HK$45,000 for September 2013 since its soft opening on23 September 2013. As part of the Group’s effort to launch the “Pearl” series restaurantsand as a result of negotiation with the existing landlord of the premises on arm’s lengthbasis, the Group has ceased the operation of PHO24 (NTP) in early November 2013 and willinstead launch Pearl Delights, which focuses on Cantonese cuisine, at the same location inDecember 2013. The Directors consider that there are potential for the “Pearl” series to

SUMMARY

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develop in NTP, which is located in Sha Tin District, one of the most populous districts inHong Kong. Moreover, the Directors are of the view that it is the right time to bring in newCantonese cuisine dining concept that focuses on dim sum and Cantonese barbeque meat toits customers upon the expiry of the current tenancy agreement, as PHO24 (NTP) has beenin operation for over three years. The Directors intend to open the third restaurant under the“Pearl” series by introducing Pearl Chamber in the first quarter of 2014. As at the LatestPracticable Date, the Directors have identified suitable premises in a shopping mall in YauTsim Mong District for the operation of Pearl Chamber. Pearl Chamber mainly servesChinese cuisine. The Group considers that the name “Pearl” can reflect the identity of HongKong and also highlight the fact that the “Pearl” series restaurants are offering Chinesecuisine in Hong Kong. Whilst the name “Pearl” itself is common, the Group believes that itis a generally receptive name and the Group will be able to work to distinguish their “Pearl”series restaurants from other Chinese restaurants and gradually build up its own brand nameby virtue of the quality and services of their restaurants. As advised by the Legal Counsel ofthe Company, the name “Pearl” is a common ordinary word and it would not be easy forother people to object the Group including and using such a word in the name of itsrestaurants. As advised by the Legal Counsel of the Company, the use of the word “Pearl” inthe Group’s restaurants will not reasonably constitute passing off and thereby infringe theintellectual property rights of the businesses of other restaurants.

As at the Latest Practicable Date, the Group has identified a suitable location tore-open a new PHO24 restaurant in Yau Tsim Mong District and has submitted a proposal tothe landlord of the intended premises. It is expected that the new PHO24 restaurant will belaunched in late 2014 in Yau Tsim Mong District subject to availability of a suitablepremises. The revenue generated by PHO24 (NTP) amounted to approximately HK$21.6million, HK$22.0 million and HK$5.9 million, representing approximately 8.3%, 8.9% and9.5% of the total revenue of the Group for the two years ended 31 March 2012 and 2013and for the three months ended 30 June 2013, respectively. Without taking into considerationthe Listing expenses, the net profit contributed by PHO24 (NTP) amounted to approximatelyHK$2.6 million, HK$2.3 million and HK$0.9 million during the Track Record Period,representing approximately 15.1%, 19.7% and 27.7% of the total net profit of the Group,respectively. Having taken into consideration of the past performance of PHO24 (NTP), thelaunch of Pearl Delights shortly following the closure of PHO24 (NTP) and the plan torelocate the PHO24 restaurant, the Directors are of the view that the closure of PHO24(NTP) will not pose a material adverse change in the financial and trading position orprospect of the Group.

On the other hand, with a view to capture high demand in matured and denselypopulated new town, the Group has entered into a franchising agreement to operate Mekiki(V city) under the franchise name of “Mekikinoginji – Okinawa（目利之銀次沖繩）”, afamous izakaya（居酒屋）chain in Okinawa Prefecture, Japan. This restaurant commenced itsoperation in V city in October 2013. The Group utilising internal funding, has incurredapproximately HK$3.6 million as capital expenditure and rental deposit for the opening ofMekiki (V city). The Group has obtained necessary business licences and arranged staffmembers for the new restaurant. Leveraging on the Group’s previous experience in operatingand managing Japanese restaurants as well as working with Japanese franchisees under the“Inakaya” and “Kaika” brands, the Directors are of the view that the Group has ampleexperience, skills and expertise to launch and manage the two Japanese restaurants under the

SUMMARY

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franchise name of “Mekikinoginji – Okinawa（目利之銀次沖繩）”, of which Mekiki (WTC)was launched in September 2013. Mekiki (WTC) achieved daily revenue of approximatelyHK$15,000 for September 2013 since its soft opening on 19 September 2013, whichrepresented an increase of approximately 31.6% as compared with the daily revenue ofKaiko for September 2012.

The Group will also establish a cafe under the tradename “a la Folie” in GCP inNovember 2013. The Group utilising internal funding, plans to incur approximately HK$1.2million as capital expenditure and rental deposit for the opening of a la Folie. This cafe willtarget at middle to higher income consumers by serving light refreshment and offeringquality baked products, including French and Japanese style bread, rolls and pastries. Withexperience accumulated from the operation and management of Harlan’s cake shop and otherWestern restaurants in the Group, the Directors are of the view that the Group has sufficientmanagement experience and expertise in operating a la Folie. Furthermore, in order tocomplement the Group’s pastry making capability for the purpose of a la Folie, the Grouphas recruited an experienced pastry chef from Japan whose most recent role prior to joiningthe Group was the pastry sous chef at Roppongi Hills Club in Tokyo, Japan. The renovationof the cafe took place in October 2013 and the Group will obtain necessary businesslicences and arrange staff members for the new cafe in due course.

The Group has prior experience in developing new cuisines and has recruited suitablechefs to help it develop the new “Pearl” series restaurants. For instance, Mr. Fong ChunHin, Daniel, the chief operating officer of the Group has worked as manager of Sha Tin 18of Hyatt Regency, operations manager in The China Club, Chinese restaurant manager inPanda Hotel, restaurant manager in Oi Suen of the Hong Kong Jockey Club and senioradministrative manager in Beijing Chiu Chow Garden Restaurant (Beijing). Mr. Yip Yun Fat,the executive chef of production, has over 40 years’ experience in dim sum making andChinese cuisine field, and Mr. Sit Wang On, the head chef of Pearl Dining House has over15 years’ experience in Chinese cuisine, and has worked as head chef of Chiu Chow BrotherDee Restaurant and assistant head chef of the Chinese restaurant in South Pacific Hotel.Besides, these new “Pearl” series restaurants and cafe, although are to be opened in newareas, are located in landmark shopping malls or populated places, and the Directors are ofthe view that they have the necessary experiences, skills, expertise and resources to bringthe aforesaid new restaurants and cafe to success.

Further, the Group’s existing restaurants have all been profit-making in the first year ofoperation with the only exception of Hooray Kaiko (now known as Mekiki (WTC)). HoorayKaiko experienced a delay in their renovation schedule and, which had an impact on theirperformance in their first year. The situation was exacerbated by the rainy and adverseweather as Hooray Kaiko has a large outdoor terrace.

In view of (i) the Group’s plan to relocate the IFC Restaurants; (ii) the launching ofthe “Pearl” series, Mekiki (V city) and a la Folie; (iii) its recent recruitment of chefs withample experience in Chinese cuisine and pastry making; (iv) increased effort on marketingand promotion; and (v) the Group’s previous record of profit-making capability of operatingnew restaurants, the Directors are of the view and the Sponsor concurs that the Group’sbusiness is sustainable.

SUMMARY

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Listing expenses

The Group’s financial performance for the year ending 31 March 2014 will be affectedby the non-recurring expenses incurred in relation to the Listing. The Listing expenses to beborne by the Company are estimated to be approximately HK$9.5 million (assuming aPlacing Price of HK$0.45, being the midpoint of the indicative Placing Price range ofHK$0.4 to HK$0.5 per Placing Share), of which approximately HK$3.0 million is directlyattributable to the issue of New Shares which is to be accounted for as a deduction fromequity and approximately HK$6.5 million is to be charged to profit and loss of the Groupfor the year ending 31 March 2014. The Listing expenses for the amount of approximatelyHK$1.5 million have been charged to profit and loss of the Group for the three monthsended 30 June 2013. No Listing expense is charged to profit and loss of the Group for thetwo years ended 31 March 2012 and 2013.

MATERIAL ADVERSE CHANGE

The impact of the Listing expenses on the profit and loss accounts, coupled with thefinancial impact of the closure of the IFC Restaurants, have posted a material adversechange in the financial or trading position or prospect of the Group since 30 June 2013(being the date of the latest audited combined financial statements were made up).Prospective investors should be aware of the impact of the Listing expenses and closure ofthe IFC Restaurants on the financial performance of the Group for the year ending 31 March2014.

Save as disclosed above, the Directors have confirmed that, up to the date of thisprospectus, there had been no material adverse change in the financial or trading positionsor prospect of the Company or its subsidiaries since 30 June 2013 (being the date of whichthe Group’s latest audited combined financial statements were made up as set out in theAccountants’ Report in Appendix I to this prospectus) and there had been no event since 30June 2013 which would materially affect the information shown in the Accountants’ Reportin Appendix I to this prospectus.

THE COMPETITIVE STRENGTHS

The Group believes the following key strengths distinguish itself from its competitorsand position it for significant growth in the future:

� business strategy of providing high quality food and services;

� the Group is the owner or franchisee of several prestigious and well-knownbrands;

� restaurants are strategically located in prime districts of Hong Kong;

� stringent internal control criteria to ensure high quality of food; and

� strong and experienced managerial team.

SUMMARY

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BUSINESS OBJECTIVES AND STRATEGIES

The primary objectives of the Group are to strengthen its position in the food andbeverage industry in Hong Kong, and further expand its business operations with a view tocreate Shareholders’ value. To achieve such objectives, the Group intends to implement thefollowing strategies:

� diversification of product offerings;

� enhancement of existing restaurant facilities;

� strengthening of staff training; and

� enhancement of marketing and promotions.

RISK FACTORS

There are risks associated with your investment in the Placing. Some of the relativelymaterial risks relating to the Group include:

� closing of certain restaurants may affect the Group’s overall performance;

� the future growth of the Group relies on its ability to open and profitably operatenew restaurants, and the Group’s new restaurants and cafe may not operate assuccessfully as the Group has anticipated;

� a few restaurants the Group operates are governed by the terms of the Group’sfranchising agreements and the Group may not be able to renew these franchisingagreements; and

� the Group’s profitability could be adversely affected by the lack of commerciallyattractive locations, the increase in rental expenses for its food and beveragebusiness and failure to renew existing leases of the leased properties.

You should also refer to the section headed “Risk Factors” in this prospectus for moreinformation.

SUMMARY

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SELECTED COMBINED STATEMENTS OF COMPREHENSIVE INCOME ANDSTATEMENTS OF FINANCIAL POSITION ITEMS

Year ended 31 MarchThree months ended

30 June2012 2013 2012 2013

HK$’000 HK$’000 HK$’000 HK$’000(Unaudited)

Revenue 260,437 246,072 57,430 62,165Profit before tax 21,024 15,507 541 2,889Profit for the year/period 17,115 11,671 112 1,902Profit for the year/period attributable to:

Owners of the Company 13,522 9,971 66 1,176Non-controlling interests 3,593 1,700 46 726

As at 31 MarchAs at

30 June2012 2013 2013

HK$’000 HK$’000 HK$’000

Current assets 38,506 48,660 50,533Current liabilities 60,090 58,887 26,864Net current (liabilities)/assets (21,584) (10,227) 23,669Net assets 25,519 24,600 60,477Total assets 89,403 84,670 89,840

On 22 May 2013, amounts due to related parties by the Group of approximatelyHK$26.5 million were capitalised by allotting and issuing a total of 9,106 shares in VictoryStand. Please refer to the section headed “History, Development and Reorganisation – LoanCapitalisation Issue” in this prospectus. Assuming the loan capitalisation issue werecompleted as at 31 March 2013, the pro forma net current assets and net assets will beapproximately HK$16.3 million and HK$51.1 million, respectively. As at 30 June 2013, theGroup had net current assets of approximately HK$23.7 million.

SELECTED COMBINED STATEMENTS OF CASH FLOWS


30 June2012 2013 2012 2013


Net cash from operating activities 9,123 20,808 6,883 5,922Net cash used in investing activities (4,666) (4,025) (235) (377)Net cash (used in)/from financing

activities (7,890) (12,590) (2,900) 7,524

Net (decrease)/increase in cash and cashequivalents (3,433) 4,193 3,748 13,069

SUMMARY

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DIVIDEND POLICY

Total dividend of approximately HK$7.9 million, HK$12.6 million and nil was declaredby the Group during the years ended 31 March 2012 and 2013 and the three months ended30 June 2013, respectively. Aside from a balance of approximately HK$55,000 which wasincluded in the amounts due to related parties as at 30 June 2013, all dividends declaredhave been fully settled. The Directors expect that such amount will be fully settled byinternal fund of the Group before Listing.

On 23 October 2013, an interim dividend of HK$1,485,000 was appropriated to VictoryStand and Dragon Flame, the then shareholders of Glory Kind (which is a directwholly-owned subsidiary of the Company) and certain companies now comprising the Groupdeclared interim dividends of HK$515,000 to their then non-controlling shareholders.

The payment and the amount of any future dividends will be at the discretion of theDirectors and will depend on the future operations and earnings, capital requirements andsurplus, general financial condition and other factors that the Directors deem relevant.Investors should note that historical dividend distributions are not indicative of theCompany’s future dividend distribution policy. The Company does not have anypredetermined dividend payout ratio.

SHAREHOLDERS’ INFORMATION

Immediately following the completion of the Placing and the Capitalisation Issue,Victory Stand will hold 217,500,000 Shares (representing 54.375% of the enlarged issuedshare capital of the Company). Please refer to the section headed “Relationship withControlling Shareholders” for details.

REASONS FOR THE PLACING

The Directors believe that the Listing will enhance the Group’s profile and recognition.In addition, the Board is also of the view that despite the estimated net proceeds from thePlacing (based on the midpoint of the indicative Placing Price range) only amount toapproximately HK$22.1 million, the Listing and the Placing will provide the Company withadditional avenues to raise capital for its future business expansion and long-termdevelopment, and expand and diversify the Company’s capital base and Shareholders base asinstitutional funds and retail investors in Hong Kong can easily participate in the equity ofthe Company. The net proceeds from the Placing of the Placing Shares will strengthen theGroup’s financial position.

PLACING STATISTICS

Market capitalisation at Listing(1) : HK$160 million to HK$200 millionOffer size : Initially 25% of the enlarged issued share

capital of the CompanyPlacing Price per Placing Share : HK$0.4 to HK$0.5Number of Placing Shares : 100,000,000 Shares, comprising

70,000,000 New Shares and 30,000,000Sale Shares

SUMMARY

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Board lot : 5,000 SharesUnaudited pro forma adjusted net tangible

assets per Share(2): HK$0.19 based on a Placing Price of

HK$0.4 per Placing Share; andHK$0.21 based on a Placing Price ofHK$0.5 per Placing Share

Notes:

(1) The calculation of the market capitalisation of the Shares is based on 400,000,000 Shares in issue and to beissued immediately after completion of the Placing and the Capitalisation Issue.

(2) The unaudited pro forma adjusted net tangible assets per Share is prepared for the purpose of illustratingthe effect of Placing as if they had taken place on 30 June 2013 and has been arrived at after theadjustments referred to under the paragraph headed “Unaudited pro forma adjusted net tangible assets” in

the section headed “Unaudited Pro Forma Financial Information” in Appendix II to this prospectus.

USE OF PROCEEDS

Assuming the Placing Price is HK$0.45 per Placing Share (being the midpoint of theindicative Placing Price range), net proceeds to the Company from the issue of New Shareswill be approximately HK$22.1 million, after deducting the underwriting fees andcommissions and estimated expenses payable by the Company. The Group intends to applysuch net proceeds from Placing as follows:

From theLatest

PracticableDate to 31

March 2014

For the sixmonths

ending 30September

2014

For the sixmonths

ending 31March 2015

For the sixmonths

ending 30September

2015

For the sixmonths

ending 31March 2016 Total

Approximatepercentage

(HK$’000) (HK$’000) (HK$’000) (HK$’000) (HK$’000) (HK$’000) (%)

Diversification ofproduct offerings 7,300 – 3,725 – – 11,025 50.0

Enhancement ofexisting restaurantfacilities 1,800 1,000 1,610 – – 4,410 20.0

Strengthening of stafftraining 1,105 275 275 275 275 2,205 10.0

Marketing andpromotions 1,105 275 275 275 275 2,205 10.0

Additional generalworking capital 2,205 – – – – 2,205 10.0

Total 13,515 1,550 5,885 550 550 22,050 100.0

SUMMARY

– 15 –

In this prospectus, unless the context otherwise requires, the following expressions shallhave the following meanings.

“a la Folie” the cafe under the business name of a la Folie to beoperated by JC Group

“Articles of Association” or“Articles”

the articles of association of the Company approvedand adopted on 2 November 2013, as amended fromtime to time, a summary of which is set out in“Appendix III – Summary of the Constitution of theCompany and the Cayman Islands Company Law” tothis prospectus

“associate(s)” has the meaning ascribed thereto in the GEM ListingRules

“Astrum” Astrum Capital Management Limited, being one of thejoint lead managers and joint bookrunners of thePlacing, is a company incorporated in Hong Kong withlimited liability and is a licensed corporation under theSFO to conduct type 1 (dealing in securities), type 2(dealing in futures contracts), type 6 (advising oncorporate finance) and type 9 (asset management)regulated activities under the SFO

“Audit Committee” the audit committee of the Board

“Board” the board of Directors

“Buildings Department” the Buildings Department of the Government

“Bumper World” Bumper World Limited （世茂有限公司）, a companyincorporated in the BVI with limited liability on 9December 2009 which is beneficially owned as to 10%and 90% by Mr. Wu and Mr. Zhang, respectively

“Business Day” a day (other than a Saturday or a Sunday or publicholiday) on which banks in Hong Kong are generallyopen for normal banking business

“BVI” the British Virgin Islands

“Capitalisation Issue” the issue of 329,999,000 Shares to be made uponcapitalisation of part of the amount standing to thecredit of the share premium account of the Companyreferred to in the section headed “Written resolutions ofthe Shareholders passed on 2 November 2013” inAppendix IV to this prospectus

DEFINITIONS

– 16 –

“CAGR” compound annual growth rate

“Carousel” the cake shop under the business name of Carouselwhich is situated in WTC, the operation of which iscarried out by Turbo Trade

“Companies Law” the Companies Law (as revised) of the Cayman Islandsas amended, supplemented or otherwise modified fromtime to time

“CCASS” the Central Clearing and Settlement System establishedand operated by HKSCC

“CCASS Clearing Participant” a person admitted to participate in CCASS as a directclearing participant or general clearing participant

“CCASS Custodian Participant” a person admitted to participate in CCASS as acustodian participant

“CCASS Investor Participant” a person admitted to participate in CCASS as aninvestor participant who may be an individual or jointindividuals or a corporation

“CCASS Participant” a CCASS Clearing Participant, a CCASS CustodianParticipant or a CCASS Investor Participant

“Chairman” the chairman of the Board

“Chief Executive Officer” the chief executive officer of the Company

“China” or “PRC” the People’s Republic of China, but for the purposes ofthis prospectus and for geographical reference only(unless otherwise indicated), excluding Taiwan, theMacau Special Administrative Region of the PRC andHong Kong

“CK Development” CK Development Limited, a company incorporated inthe BVI on 27 October 2009 which is wholly-owned byMr. Ngan Chi Kwong, a connected person of theCompany

“CK Investments” CK Investments Limited, a company incorporated inthe BVI on 9 July 2009 which is wholly-owned by Mr.Ngan Chi Kwong, a connected person of the Company

“Company” JC Group Holdings Limited, an exempted companyincorporated in the Cayman Islands with limitedliability on 21 June 2013

DEFINITIONS

– 17 –

“Companies Ordinance” the Companies Ordinance (Chapter 32 of the Laws ofHong Kong) as amended, supplemented or otherwisemodified from time to time

“Controlling Shareholder(s)” has the meaning ascribed thereto in the GEM ListingRules and, in the context of this prospectus, means thecontrolling shareholders of the Company, namelyVictory Stand, Mr. Wu, Ms. Wong, Mr. Zhang and Mr.Lui

“connected person(s)” shall have the same meaning as defined in the GEMListing Rules

“connected transaction” the transactions stipulated and specified in Rule 20.13of the GEM Listing Rules, as amended, supplementedor otherwise modified from time to time

“DCO” the Dutiable Commodities Ordinance (Chapter 109 ofthe Laws of Hong Kong), as amended, supplemented orotherwise modified from time to time

“DCR” the Dutiable Commodities (Liquor) Regulations(Chapter 109B of the Laws of Hong Kong), asamended, supplemented or otherwise modified fromtime to time

“Deed of Indemnity” the deed of indemnity dated 2 November 2013 andentered into by the Controlling Shareholders in favourof the Company (for the Company and as trustee for itssubsidiaries), the details of which are set out in theparagraph headed “Tax and other indemnities” inAppendix IV to this prospectus

“Deed of Non-competition” the deed of non-competition dated 2 November 2013and entered into by the Controlling Shareholders infavour of the Company (for itself and as trustee for itssubsidiaries), particulars of which is set out in theparagraph headed “Non-competition undertaking” in thesection headed “Relationship with ControllingShareholders” in this prospectus

“DEP” the Director of Environmental Protection

“DFEH” the Director of Food and Environmental Hygiene

“Director(s)” the director(s) of the Company

DEFINITIONS

– 18 –

“Dragon Flame” Dragon Flame Holdings Limited, a companyincorporated in the BVI on 6 January 2012 which iswholly-owned by Mr. Pan Chik

“EBITDA” earnings before interest, tax, depreciation andamortisation

“EPD” the Environmental Protection Department

“Euromonitor Report” an independent market research report commissionedby the Company prepared by Euromonitor Internationalon the full-services restaurants market in Hong Kongissued in November 2013

“FBR” the Food Business Regulation (Chapter 132X of theLaws of Hong Kong), as amended, supplemented orotherwise modified from time to time

“FEHD” the Food and Environmental Hygiene Department

“Fire Services Department” the Hong Kong Fire Services Department

“FLC Holdings” FLC Holdings Limited, a company incorporated in theBVI with limited liability on 23 February 2006 whichis wholly-owned by Ms. Wong

“G Bar” the light refreshment restaurant under the businessname of G Bar which was situated in ifc mall, theoperation of which was carried out by J&H

“GEM” the Growth Enterprise Market of the Stock Exchange

“GEM Listing Rules” the Rules Governing the Listing of Securities on GEM,as amended, supplemented or otherwise modified fromtime to time

“Glory Kind” Glory Kind Development Limited, a companyincorporated in the BVI with limited liability on 25March 2013 and a direct wholly-owned subsidiary ofthe Company

“Good View” Good View International Investment Limited（好景國際投資有限公司）, a company incorporated in the BVI withlimited liability on 11 November 2010 which is wholly-owned by Mr. Zhang

“Government” the Government of Hong Kong

DEFINITIONS

– 19 –

“GCP” Grand Century Place, a shopping mall located at 193Prince Edward Road West, Mongkok, Kowloon

“Grand Century” Grand Century Inc Limited（世澳有限公司）, a companyincorporated in Hong Kong with limited liability on 3December 2012 and an indirect wholly-ownedsubsidiary of the Company

“Group” the Company and its subsidiaries, at the relevant time,or where the text refers to any time before theCompany became the holding company of its presentsubsidiaries, the Company’s present subsidiaries andthe respective business currently operated by suchsubsidiaries (as the case may be)

“H One” the licensed general restaurant under the business nameof H One which was situated in ifc mall, the operationof which was carried out by J&H

“H One F&B” H One F & B Management Limited, a companyincorporated in Hong Kong with limited liability on 8January 2008 and an indirect non-wholly ownedsubsidiary of the Company

“H-View” H-View F & B Group Limited, a company incorporatedin Hong Kong with limited liability on 4 May 2011 andan indirect wholly-owned subsidiary of the Company

“Harlan’s and Kaika” the licensed general restaurant under the business nameof Harlan’s and Kaika which is situated in The ONE,the operation of which is carried out by Harlan’sHolding

“Harlan’s cake shop” the cake shop under the business name of Harlan’scake shop which is situated in The ONE, the operationof which is carried out by Harlan’s Holding

“Harlan’s Holding” Harlan’s Holding Limited, a company incorporated inHong Kong with limited liability on 9 March 2010 andan indirect non-wholly owned subsidiary of theCompany

“HKEx website” the internet website at www.hkexnews.hk operated bythe Stock Exchange

DEFINITIONS

– 20 –

“HKFRSs” Hong Kong Financial Reporting Standards (includingHong Kong Accounting Standards and interpretations)issued by the Hong Kong Institute of Certified PublicAccountants

“HKSCC” Hong Kong Securities Clearing Company Limited, awholly-owned subsidiary of Hong Kong Exchanges andClearing Limited

“HKSCC Nominees” HKSCC Nominees Limited, a wholly-owned subsidiaryof HKSCC

“HK$” or “HK cents” Hong Kong dollars and cents, respectively, the lawfulcurrency of Hong Kong

“Holy Best” Holy Best Limited （吉灝有限公司）, a companyincorporated in Hong Kong with limited liability on 10March 2010 which is owned by Mr. Lui and hisspouse, Ms. Au Lai Ming in equal shares

“Hong Kong” or “HK” the Hong Kong Special Administrative Region of thePRC

“ICC” International Commerce Centre, a multi-complexbuilding located at 1 Austin Road West, Kowloon,Hong Kong

“ifc mall” ifc mall, a shopping mall in the ifc complex located at8 Finance Street, Central District, Hong Kong

“IFC Restaurants” H One, G Bar and The Box

“Inakaya” the licensed general restaurant under the business nameof Inakaya 田舍家 which is situated in ICC, theoperation of which is carried out by Inakaya (HK)Limited

“Inakaya (HK) Limited” Inakaya (HK) Limited （田舍家（香港）有限公司）, acompany incorporated in Hong Kong with limitedliability on 30 December 2008 and an indirectwholly-owned subsidiary of the Company

“Independent Third Party(ies)” an individual or a company which is independent fromand not connected with (within the meaning of theGEM Listing Rules) any Directors, chief executive,substantial shareholders of the Company, itssubsidiaries or any of their respective associates

DEFINITIONS

– 21 –

“iSQUARE” iSQUARE, a shopping and entertainment complexlocated at 63 Nathan Road, Tsim Sha Tsui, Kowloon

“J&H” J & H Company Limited, a company incorporated inHong Kong with limited liability on 2 March 2006 andan indirect non-wholly owned subsidiary of theCompany which will be dissolved after Listing

“Jack Company” Jack Company Limited, a company incorporated inHong Kong with limited liability on 30 August 2005and a substantial shareholder of H One F&B and iswholly-owned by Mr. Yang Jinxin, a connected personof the Company

“JC & Associates” JC & Associates Limited, a company incorporated inHong Kong with limited liability on 3 May 2010 whichis owned as to 31%, 31%, 15%, 15% and 8% by eachof Ms. Wong, Mr. Wu, Mr. Chui Wai Kin, Mr. TingKoon Tak and Mr. Leung Tung Shing, respectively. Tothe best knowledge of the Directors, Mr. Ting KoonTak and Mr. Leung Tung Shing are Independent ThirdParties

“JC Group” JC Group (HK) Limited, a company incorporated inHong Kong with limited liability on 16 October 2008and an indirect wholly-owned subsidiary of theCompany

“Joint Bookrunners” or “JointLead Managers”

Astrum, Orient Securities Limited and TC Capital

“Latest Practicable Date” 8 November 2013, being the latest practicable dateprior to the printing of this prospectus for ascertainingcertain information in this prospectus

“Legal Counsel of the Company” Mr. Chan Chung, barrister-at-law, the legal counsel ofthe Company

“Listing” the listing of the Shares on GEM

“Listing Date” the date on which the Shares are listed and dealings inthe Shares commence on GEM, which is expected to beon 21 November 2013

“Listing Division” the Listing Division of the Stock Exchange

“LLB” the Liquor Licensing Board of Hong Kong

DEFINITIONS

– 22 –

“Main Board” the stock market operated by the Stock Exchange,which excludes GEM of the Stock Exchange and theoptions market

“Master Franchise Agreement” the franchising agreement dated 5 June 2009 enteredinto between Rich Base and PHO24 Corporation inrelation to the franchising arrangements on PHO24restaurants

“Mekiki (WTC)” the licensed general restaurant under the business nameof Hooray Mekikinoginji – Okinawa（目利之銀次沖繩）which is situated in WTC, the operation of which iscarried out by Turbo Trade and was formerly carriedout under the tradename “Hooray Kaiko” prior toSeptember 2013

“Mekiki (V city)” the restaurant under the business name ofMekikinoginji – Okinawa（目利之銀次沖繩）which issituated in V city, the operation of which is carried outby Grand Century

“Memorandum” the memorandum of association approved and adoptedby the Company pursuant to the written resolutionspassed by the Shareholders on 2 November 2013

“Minimum Wage Ordinance” the Minimum Wage Ordinance (Chapter 608 of theLaws of Hong Kong) as amended, supplemented orotherwise modified from time to time

“Mr. Lui” Mr. Lui Hung Yen（雷鴻仁先生）, an executive Directorand one of the Controlling Shareholders

“Mr. Wu” Mr. Wu Kai Char（胡啟初先生）, an executive Directorand one of the Controlling Shareholders

“Mr. Zhang” Mr. Zhang Fuzhu（張福柱先生）, one of the ControllingShareholders

“Ms. Wong” Ms. Wong Wai Ling （黃慧玲女士）, an executiveDirector and one of the Controlling Shareholders

“New Shares” the 70,000,000 new Shares being offered forsubscription at the Placing Price pursuant to thePlacing

“Nomination Committee” the nomination committee of the Board

DEFINITIONS

– 23 –

“NTP” New Town Plaza, a shopping mall located in Sha TinCentre Street, Sha Tin, the New Territories

“Operating Companies” Grand Century, JC Group, H One F&B, H-View, J&H,Harlan’s Holding, Inakaya (HK) Limited, Turbo Trade,PHO24 (NTP) Limited and PHO24 (TST) Limited

“Oriental Island” Oriental Island Limited, a company incorporated in theBVI with limited liability on 2 July 1997 which iswholly owned by Mr. Wu

“Pearl” the brand name used by the Group to operate a seriesof Chinese restaurants

“Pearl Chamber” the restaurant under the business name of PearlChamber 明珠軒 to be established

“Pearl Delights” the restaurant under the business name of PearlDelights 明珠閣 which will be situated in NTP and theoperation of which will be carried out by JC Group toreplace the operation of PHO24 (NTP)

“Pearl Dining House” the restaurant under the business name of Pearl DiningHouse 明珠小館 which is situated in The ONE, theoperation of which is carried out by JC Group

“PHO24 (NTP)” the licensed general restaurant under the business nameof PHO24 which situated in NTP, the operation ofwhich was carried out by PHO24 (NTP) Limited

“PHO24 (NTP) Limited” PHO24 (NTP) Limited, a company incorporated inHong Kong with limited liability on 9 November 2009and an indirect non-wholly owned subsidiary of theCompany

“PHO24 (TST)” the licensed general restaurant under the business nameof PHO24 which is situated in iSQUARE, the operationof which is carried out by PHO24 (TST) Limited

“PHO24 (TST) Limited” PHO24 (TST) Limited (formerly known as ProfitEarning Limited（豐滿盈有限公司）and PH024 (iSquare)Limited), a company incorporated in Hong Kong withlimited liability on 2 January 2009 and an indirectnon-wholly owned subsidiary of the Company

DEFINITIONS

– 24 –

“Placing” the conditional placing by the Underwriters of thePlacing Shares on behalf of the Company and theVendor for cash at the Placing Price, as furtherdescribed under the section headed “Structure andConditions of the Placing” in this prospectus

“Placing Price” the final placing price per Placing Share (excludingbrokerage fee, SFC transaction levy and StockExchange trading fee) which will be not more thanHK$0.5 and is expected to be not less than HK$0.4,such price to be determined on Price DeterminationDate, as may be agreed between the Company (foritself and on behalf of the Vendor) and Astrum (foritself and on behalf of the Underwriters)

“Placing Shares” 70,000,000 New Shares offered by the Company forsubscription and 30,000,000 Sale Shares offered by theVendor for sale under the Placing

“Pre-IPO Investment” the purchase of 125 shares and subscription for 125shares of Glory Kind pursuant to the sale and purchaseagreement dated 23 May 2013 between Victory Standand Dragon Flame and the subscription agreementdated 23 May 2013 between Dragon Flame and GloryKind

“Price Determination Agreement” the agreement to be entered into by Astrum (on behalfof the Underwriters) and the Company (for itself andon behalf of the Vendor) on the Price DeterminationDate to record and fix the Placing Price

“Price Determination Date” the date on which the Placing Price is determined,which is expected to be on or around 14 November2013

“Progress Vantage” Progress Vantage Holdings Limited, a companyincorporated in the BVI with limited liability on 25March 2013 and an indirect wholly-owned subsidiaryof the Company

“Remuneration Committee” the remuneration committee of the Board

“Reorganisation” the reorganisation arrangements undergone by theGroup in preparation for the Listing as described in thesection headed “History, Development andReorganisation” in this prospectus

“Renminbi” or “RMB” Renminbi, the lawful currency of the PRC

DEFINITIONS

– 25 –

“Rich Base” Rich Base Limited （永富盈有限公司）, a companyincorporated in Hong Kong on 23 April 2008 which isowned as to 45% by Mr. Wu, 45% by CK Developmentand 10% by Good View

“Sale Shares” the 30,000,000 Shares offered for sale by the Vendorunder the Placing

“Securities and FuturesCommission” or “SFC”

the Securities and Futures Commission of Hong Kong

“SFO” the Securities and Futures Ordinance (Chapter 571 ofthe Laws of Hong Kong) as amended, supplemented orotherwise modified from time to time

“Shareholder(s)” holder(s) of the Share(s)

“Share Option Scheme” the share option scheme conditionally approved andadopted by the Company on 2 November 2013, theprincipal terms of which are summarised in the sectionheaded “Share Option Scheme” in Appendix IV to thisprospectus

“Share(s)” ordinary share(s) in the share capital of the Companywith a nominal value of HK$0.01 each

“sq. ft.” square feet

“sq. m.” square meter

“Still Profit” Still Profit Limited （尚寶有限公司）, a companyincorporated in the BVI with limited liability on 30July 2012 and an indirect wholly-owned subsidiary ofthe Company

“Stock Exchange” The Stock Exchange of Hong Kong Limited

“subsidiary(ies)” a company which is for the time being and from timeto time a subsidiary (within the meaning of theCompanies Ordinance) of the Company

“substantial shareholder(s)” has the meaning ascribed thereto in the GEM ListingRules

“Super Delights” Super Delights Limited, a company incorporated in theBVI with limited liability on 2 April 1992 which iswholly owned by Mr. Wu

DEFINITIONS

– 26 –

“Takeovers Code” the Hong Kong Code on Takeovers and Mergers, asamended, supplemented or otherwise modified fromtime to time

“TC Capital” or “Sponsor” TC Capital Asia Limited, a licensed corporation forcarrying on type 1 (dealing in securities) and type 6(advising on corporate finance) regulated activitiesunder the SFO, as the sponsor, a joint bookrunner andjoint lead manager of the Placing

“Team Glory” Team Glory International Limited（添榮國際有限公司）, acompany incorporated in the BVI with limited liabilityon 20 March 2013 and an indirect wholly-ownedsubsidiary of the Company

“The Box” the light refreshment restaurant under the businessname of The Box which was situated in ifc mall, theoperation of which was carried out by J&H

“The ONE” The ONE, a shopping mall located at 100 NathanRoad, Tsim Sha Tsui, Kowloon

“Tide Rush” Tide Rush Limited, a company incorporated in the BVIon 16 October 2012 which is wholly owned by Mr.Cheung Chun Sing, an Independent Third Party

“Track Record Period” the period comprising the two financial years ended 31March 2012 and 2013 and the three months ended 30June 2013

“Top Aim” Top Aim Enterprises Ltd, a company incorporated inthe BVI on 21 March 2013 with limited liability and anindirect wholly-owned subsidiary of the Company

“Turbo Trade” Turbo Trade Limited （勁貿有限公司）, a companyincorporated in Hong Kong with limited liability on 12February 2010 and an indirect wholly-owned subsidiaryof the Company

“Underwriters” the underwriters of the Placing named in the paragraphheaded “Underwriters” in the section headed“Underwriting” of this prospectus

“Underwriting Agreement” the conditional underwriting agreement dated 7November 2013 and entered into between theCompany, the executive Directors, the ControllingShareholders, the Vendor, the Sponsor, the Joint LeadManagers, the Joint Bookrunners and the Underwriters,brief particulars of which are summarised in the sectionheaded “Underwriting” in this prospectus

DEFINITIONS

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“United States” or “US” the United States of America

“US dollars” or “US$” United States dollars, the lawful currency for the timebeing of the United States

“V city” V city, a shopping mall located at 83, Heung Sze WuiRoad, Tuen Mun, the New Territories

“Vendor” Victory Stand

“Victory Stand” Victory Stand International Limited, a companyincorporated in the BVI with limited liability on 21March 2013 and a Controlling Shareholder

“Well-In” Well-In Hotel Supplies Company Limited（華藝酒店供應有限公司）, a company incorporated in Hong Kong withlimited liability on 4 May 1990 and is controlled byMr. Wu

“Well-In Holdings” Well-In Holdings Limited （華藝集團有限公司）, acompany incorporated in Hong Kong with limitedliability on 8 October 1991 and is controlled by Mr.Wu

“WPCO” the Water Pollution Control Ordinance (Chapter 358 ofthe Laws of Hong Kong), as amended, supplemented orotherwise modified from time to time

“WTC” WTC More, a shopping mall located at 280 GloucesterRoad, Causeway Bay, Hong Kong

“1957 & Co. (Hospitality)” 1957 & Co. (Hospitality) Limited, a companyincorporated in Hong Kong with limited liability on 27July 2009 and is owned by 1957 & Co., Mr. KwanWing Kuen, Tino, Mr. Kwok Chi Po and Ms. Luk YuenMan as to 44.45%, 35%, 8.55% and 12% respectively.To the best knowledge of the Directors, all of Mr.Kwan Wing Kuen, Tino, Mr. Kwok Chi Po and Ms.Luk Yuen Man are Independent Third Parties

“1957 & Co.” 1957 & Co. Limited, a company incorporated in HongKong with limited liability on 28 July 2008 and iswholly owned by Mr. Leung Chi Tien, Steve

“%” per cent.

DEFINITIONS

– 28 –

This prospectus contains certain forward-looking statements relating to the Group thatare based on the beliefs, intentions, expectations or predictions of the management of theCompany for the future as well as assumptions made by and information currently availableto the management of the Company as of the date of this prospectus. These forward-lookingstatements are, by their nature, subject to significant risks and uncertainties. Theseforward-looking statements include, without limitation, statements relating to:

� the Group’s operations and business prospects;

� the Group’s future developments, trends and conditions in the industry;

� geographical market in which the Group operates;

� the Group’s strategies, plans, objectives and goals;

� changes to regulatory and operating conditions in the industry and geographicalmarket in which the Group operates;

� the Group’s ability to control costs;

� the Company’s dividend policy;

� the amount and nature of, and potential for, future development of the Group’sbusiness;

� certain statements in the section headed “Financial Information” in this prospectuswith respect to trends in prices, volumes, operations, margins, overall markettrends and risk management; and

� the general economic trends and conditions.

When used in this prospectus, the words “anticipate”, “believe”, “could”, “estimate”,“expect”, “going forward”, “intend”, “may”, “ought to”, “plan”, “project”, “potential”,“seek”, “should”, “will”, “would” and similar expressions, as they relate to the Group or themanagement of the Group, are intended to identify forward-looking statements. Theseforward-looking statements reflect the views of the management of the Company as of thedate of this prospectus with respect to future events and are not a guarantee of futureperformance or developments. You are strongly cautioned that reliance on anyforward-looking statements involves known and unknown risks and uncertainties. Actualresults and events may differ materially from information contained in the forward-lookingstatements as a result of a number of factors, including:

� any changes in the laws, rules and regulations relating to any aspects of theGroup’s business operations;

� general economic, market and business conditions, including capital marketdevelopments;

FORWARD-LOOKING STATEMENTS

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� changes or volatility in interest rates, equity prices or other rates or prices;

� the actions and developments of the Company’s competitors and the effects ofcompetition in the food and beverage industry on the demand for, and price of,the Group’s services;

� various business opportunities that the Company may or may not pursue;

� persistency levels;

� the Company’s ability to identify, measure, monitor and control risks in theGroup’s business, including the Company’s ability to manage and adapt theGroup’s overall risk profile and risk management practices;

� the Company’s ability to properly price the Group’s services and establishreserves for future policy benefits;

� fluctuations in the price of raw materials;

� the Group’s ability to meet customer expectations and respond to changingcustomer preferences;

� seasonal fluctuations; and

� the risk factors discussed in this prospectus as well as other factors beyond theCompany’s control.

Subject to the requirements of the applicable laws, rules (including the GEM ListingRules) and regulations, the Group does not intend to update or otherwise revise theforward-looking statements in this prospectus, whether as a result of new information, futureevents or otherwise. As a result of these and other risks, uncertainties and assumptions, theforward-looking events and circumstances discussed in this prospectus might not occur inthe way the Group expects, or at all. Accordingly, you should not place undue reliance onany forward-looking information or statements. All forward-looking statements in thisprospectus are qualified by reference to the cautionary statements set forth in this section.The Directors confirm that these forward-looking statements are made after due and carefulconsideration.

FORWARD-LOOKING STATEMENTS

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Investors should carefully consider all of the information in this prospectus,including the risks and uncertainties described below, before making any investment inthe Placing Shares. If any of the possible events described below occur, the businessoperation, financial condition or results of operation of the Group could be materiallyand adversely affected and the market price of the Shares could fall significantly.

RISKS RELATING TO THE BUSINESS OF THE GROUP

Closing of certain restaurants may affect the Group’s overall performance

During the Track Record Period, the Group owned 8 full-service restaurants and 2 cakeshops. These restaurants and cake shops are strategically located in landmark shopping mallsin prime areas of Hong Kong, including ifc mall, ICC, WTC, NTP, The ONE and iSQUARE,and each of them is important to the Group’s turnover and development. However, due tothe increasing rental costs during the Track Record Period, the Group has closed down theIFC Restaurants in July 2013 and is looking for suitable locations to relaunch theserestaurants. These three restaurants in aggregate generated revenue of approximatelyHK$65.6 million, HK$50.3 million and HK$12.7 million for the years ended 31 March 2012and 31 March 2013 and for the three months ended 30 June 2013, respectively. In terms ofEBITDA, these three restaurants in aggregate generated approximately HK$12.7 million,HK$5.9 million and HK$1.1 million, representing approximately 33.8%, 19.7% and 15.1%of EBITDA (excluding the Listing expenses) of the Group during the Track Record Period.Taking into account that the assets of IFC Restaurants had almost been fully depreciated andthe relevant tax effect, the net profits attributable to these three restaurants amounted toapproximately HK$8.9 million, HK$5.1 million and HK$1.0 million, representingapproximately 51.7%, 43.8% and 30.9% of net profits (excluding the Listing expenses) ofthe Group during the Track Record Period, respectively. Accordingly, the results during theTrack Record Period may not be reflective of its future performance.

The closure of the IFC Restaurants poses a material adverse change in the financial ortrading position or prospect of the Group since 30 June 2013 (being the date the latestaudited combined financial statements were made up). The Group has opened “Pearl DiningHouse” in September 2013 and “Mekiki (V city)” in October 2013, respectively. The Grouphas planned to open “a la Folie” in November 2013. In addition, the Group has planned toopen Pearl Chamber by the first quarter of 2014. However, the new restaurants serve cuisineof different styles and there would be no guarantee that they will be able to generate goodrevenue. If the new restaurants to be launched prove to be unprofitable, the Group will notbe able to mitigate the impact of closing down of the aforesaid restaurants and thus theoverall performance will be adversely affected.

Further, the Group has ceased the operation of PHO24 (NTP) in early November 2013and will replace it with Pearl Delights, a full-service restaurant which focuses on Cantonesecuisine, in the same location in December 2013. The revenue generated by PHO24 (NTP)amounted to approximately HK$21.6 million, HK$22.0 million and HK$5.9 million,representing approximately 8.3%, 8.9% and 9.5% of the total revenue of the Group for theyears ended 31 March 2012 and 2013 and for the three months ended 30 June 2013,respectively. Without taking into consideration the Listing expenses, the net profitcontributed by PHO24 (NTP) amounted to approximately HK$2.6 million, HK$2.3 million

RISK FACTORS

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and HK$0.9 million during the Track Record Period, representing approximately 15.1%,19.7% and 27.7% of the total net profit of the Group, respectively. There would be noguarantee that Pearl Delights will be as well received by customers as PHO24 (NTP) andwill be able to generate revenue comparable to that of PHO24 (NTP). If Pearl Delights turnsout to be not as profitable, the overall performance of the Group may be adversely affected.

The future growth of the Group relies on its ability to open and profitably operate newrestaurants, and the Group’s new restaurants and cafe may not operate as successfullyas the Group has anticipated

The Directors believe that the future growth of the Group relies on its ability to openand operate new restaurants in a profitable manner. As at the Latest Practicable Date, theGroup has opened a new Chinese restaurant (Pearl Dining House) and a Japanese restaurantserving regional Japanese food (Mekiki (V city)) and planned to open new restaurantsserving different types of Chinese cuisine (Pearl Delights and Pearl Chamber). The targetcustomers of these restaurants are middle income level consumers. The Group will alsolaunch a cafe, “a la Folie”, in November 2013. However, its ability to successfully openthese new restaurants and a cafe is subject to a number of risks and uncertainties, includingbut not limited to, difficulties in locating suitable sites or securing leases on reasonableterms, delay in securing necessary governmental approvals and licences, shortage of qualitychefs and other employees, and delay in decoration and renovation works. In addition, theGroup will only be able to open new restaurants after all relevant licences are obtained. TheGroup expects costs will be incurred for the opening of new restaurants and the expansionplans may place substantial strain on the managerial, operational and financial resources ofthe Group. In particular, the management may be stretched or distracted by the operation ofnew restaurants. There can be no assurance that the managerial, operational and financialresources of the Group will be adequate to support the expansion plans. Moreover, there isno guarantee that the Group will be able to attract enough customers to the new restaurantsand there is no assurance that the revenue of each of the Group’s new restaurants would beequal to or exceed those of its existing restaurants. If the Group fails to run the newrestaurants profitably, the Group’s financial performance may be adversely affected.

A few restaurants the Group operates are governed by the terms of the Group’sfranchising agreements and the Group may not be able to renew these franchisingagreements

The Group has entered into franchising agreements with several parties for theoperations of “Inakaya”, “Kaika”, “PHO24” and “Mekikinoginji – Okinawa（目利之銀次沖繩）”. During the Track Record Period, these franchise fees represent approximately 0.9%,1.0% and 1.0% of the revenue of the Group. In term of gross margin, the franchisedrestaurants contributed approximately 45.5%, 47.9% and 51.4% of the total gross profit tothe Group during the Track Record Period. The franchising arrangement concerning PHO24was entered into with Rich Base (please refer to the paragraph headed “FranchisingArrangements on PHO24” under the section “Continuing Connected Transactions” in thisprospectus). Under the respective franchising agreements, the Group is required to payfranchise fees, determined after arm’s length negotiations in return for the exclusive rights touse the brands of Kaika, PHO24, Inakaya and Mekikinoginji – Okinawa（目利之銀次沖繩）in Hong Kong. The franchising agreements may be terminated in the event that the Group or

RISK FACTORS

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Rich Base (which is the master franchisee under the Master Franchise Agreement), as thecase may be, fails to comply with some of the terms therein. If the Group is unable to renewthe franchising agreements or if the franchising agreements are terminated due to theGroup’s or Rich Base’s default, or if the franchising agreements are not renewed, theGroup’s profitability and its ability to continue to carry on business in the present form maybe adversely affected.

The Group’s profitability could be adversely affected by the lack of commerciallyattractive locations, the increase in rental expenses for its food and beverage businessand failure to renew existing leases of the leased properties

Some of the Group’s restaurants are located in prime areas in Hong Kong, includinglandmark shopping malls such as ICC, WTC, The ONE, NTP, V city and iSQUARE. Theavailability of commercially attractive locations for the Group’s restaurants is important toits business. With the Group’s stringent selection criteria on the environment of itsrestaurants, the commercially viable choices are usually limited and thus there is noassurance that the Group would be able to find suitable premises for its restaurants withreasonable commercial terms in the event there is a need for relocation or the Group intendsto open new restaurants. In such event, the Group’s plan for relocation or expansion may bedelayed or cannot be implemented, which could have adverse effect on the Group’soperational and financial conditions.

As the Group operates all of its restaurants on leased properties, it is exposed to themarket conditions of the retail rental market. For the years ended 31 March 2012 and 2013and for the three months ended 30 June 2013, the Group’s restaurant rental and relatedexpenses amounted to approximately HK$45.9 million, HK$47.2 million and HK$12.3million, respectively, representing approximately 17.6%, 19.2% and 19.9% of its revenuerespectively. The rental payable under the Group’s current lease agreements for itsrestaurants is either fixed or subject to adjustment based on a fixed percentage of therevenue of the relevant restaurants during the terms of the leases. Such additional rental willnevertheless increase the costs of operation of the Group and thereby may adversely affectthe Group’s results of operation and financial position if the Group is not able to pass theincreased costs onto its customers. Prior to the expiry of each of the lease agreements of theGroup’s restaurants, the Group has to negotiate the terms of renewal with the landlord. TheGroup competes with others for locations in a highly competitive market. Therefore, there isno assurance that the Group would be able to renew such lease agreements on termsacceptable to it or lease premises at strategic locations on comparable or commerciallyviable terms. In the event that the Group is unable to renew the existing leases and needs torelocate a restaurant at the expiry of a lease, the Group will need to identify a replacementlocation to carry on the business of the relevant restaurant. As a result, its operation may bedisrupted and may pose a financial impact due to additional costs for such relocation andwrite-off of fixed assets. Failure to secure leases at commercially attractive locations couldalso adversely affect the Group’s sales, profitability and performance. Even if the Group isable to renew or extend its leases, the rental expenses may increase significantly, whichcould adversely affect its profitability.

RISK FACTORS

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The business of the Group could be adversely affected by difficulties in employeeretention

The Company believes motivating and retaining qualified employees, in particular,chefs, are a critical part of the success as a restaurant operator. The success depends uponthe ability to retain and motivate a sufficient qualified employees, including restaurant staffand chefs.

The Company has developed and implemented a number of employee retentioninitiatives in an effort to attract, retain and motivate a sufficient number of qualifiedemployees for the business operation and planned expansion. Please refer to the sectionheaded “Business – Employees – Employee Retention” in this prospectus. If these initiativesdo not achieve the intended benefits generally, the Company may not be able to successfullymotivate and retain a sufficient number of employees with necessary qualifications atcommercially reasonable costs. The failure to retain enough qualified employees could delayplanned new restaurant openings or result in higher employee turnover, either of whichcould have a material adverse effect on the business and results of operations of the Group.

The financial performance of the Group for the year ending 31 March 2014 will beaffected by certain non-recurring expenses of the Group

The financial results of the Group will be affected by certain non-recurring expensesincluding the expenses in relation to the Listing. The estimated commission and expenses inrelation to the Listing are approximately HK$9.5 million, of which approximately HK$3.0million is directly attributable to the issue of New Shares which is to be accounted for as adeduction from equity and approximately HK$6.5 million is to be charged to profit and lossof the Group for the year ending 31 March 2014. Such expense represents approximately55.7% of the net profit for the year ended 31 March 2013.

Accordingly, the Shareholders and potential investors should be informed that thefinancial results of the Group for the financial year ending 31 March 2014 will materiallyand adversely be affected by the expenses in relation to the Listing.

The Group has failed to apply for water pollution control licences for its restaurantsand cake shop and may face prosecution

During the Track Record Period, the Group has failed to apply for water pollutioncontrol licences for certain of its restaurants and cake shops in accordance with therequirements under the WPCO for discharging waste water in their daily operations. As atthe Latest Practicable Date, the Group has obtained the necessary water pollution controllicences for its restaurants and cake shop. Pursuant to section 11 of the WPCO, failure toapply for the relevant water pollution control license for discharging of trade effluents intospecific water control zones may result in the conviction of the respective directors andmanagement, the companies holding the restaurants and their respective directors andmanagement. The breach was committed due to an oversight of the respective directors andit is possible that prosecution may be taken against the Group or the respective directors forthe non-compliance occurred during the Track Record Period.

RISK FACTORS

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The Group’s self-created dishes may face competition from imitation dishes

To maintain competitiveness in the food and beverage industry, the Group’s chefs fromtime to time review and vary the dishes offered in the menu and launch new dishes for theGroup’s restaurants to cater to ever-evolving customer tastes. The Group did not apply forregistration of any intellectual property rights for the Group’s self-created dishes and theGroup’s competitors may imitate the Group’s self-created dishes and offer them at acompetitive price, causing adverse effect to the Group’s sales and profitability.

The Group’s business and results of operations could be adversely affected if there isany negative publicity associated with the Group’s restaurants or food products

During the Track Record Period, the Group owned and operated 8 full-servicerestaurants and 2 cake shops in Hong Kong under the brands “Inakaya”, “Harlan’s andKaika”, “PHO24”, “Hooray Kaiko”, “Harlan’s cake shop”, “Carousel”, “H One”, “G Bar”and “The Box”. Some of these brands are self-developed while some, such as “Inakaya”,“Kaika” and “PHO24” are franchised brands. The Group’s business may be adverselyaffected by negative publicity resulting from the publication of industry findings or researchreports in relation to concerns of any of the Group’s food products or services or anyallegations of poor standards of hygiene. Any complaints and negative publicity, regardlessof their validity, may adversely affect the Group’s business. In addition, if the complaint isserious, the relevant government authorities may suspend the business of the relevantrestaurants or cake shops, which could adversely affect the operations of the Group andhence the Group’s profitability. If there is any negative publicity or review associated withany of the Group’s restaurants or cake shops or if its brand recognition is not as good asanticipated, the results of the Group’s business operations could be adversely affected.

The Group relies primarily on customers with strong purchasing powers who may notcontribute to its results in the manner as anticipated

During the Track Record Period, the Group operated several full-service fine diningrestaurants including “Inakaya”, “Harlan’s and Kaika”, “Hooray Kaiko” and “H One” andthe target customers of the Group are middle income level consumers. In addition, “Mekiki(V city)” and new restaurants under the “Pearl” series have been/will be launched by theGroup. The Directors anticipate that the principal source of income to the Group willcontinue to be derived from customers with higher spending power in the foreseeable future.The Group focuses on food and beverage business only and due to the lack of diversificationof the Group’s business, the Group’s business may be vulnerable to economic downturn andpolitical and social instability. There can be no assurance that the economic, political andsocial conditions, as well as government policies, would always be favourable to theGroup’s business in Hong Kong. Under unfavourable economic, political and socialconditions, the Group’s restaurants in Hong Kong may not perform in the manner that theDirectors anticipate.

RISK FACTORS

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The Group’s business depends on the macro-economic situation in Hong Kong and maybe adversely affected by reductions in discretionary consumer spending as a result ofdownturns in the economy and increase in inflation

The Group’s core business is operating restaurants in Hong Kong and the performanceof which is closely related with the economic condition of Hong Kong. In the event of aneconomic downturn, consumers will tend to become more budget conscious and sensitive tothe amounts they spend on food. As the business of the Group is concentrated in HongKong, it is heavily dependent on the economy of Hong Kong. If consumers’ spendingpattern changes or if the economy of Hong Kong deteriorates and the Group is unable todivert its business to other geographic locations, its revenue, profitability and businessprospects will be materially affected.

Unforeseeable business interruptions could adversely affect the Group’s business

The Group’s operations may be interrupted by accidents or natural disasters such asfires, earthquakes, floods, power failures and power shortages, hardware and softwarefailures, computer viruses and other events, which will be beyond the Group’s control.Unforeseeable events, such as adverse weather conditions, natural disasters, severe trafficaccidents or delays, or labour strikes could lead to delay or failure of deliveries to theGroup’s restaurants, which may result in the loss of revenue or customer complaints. Theremay also be instances where the conditions of fresh or frozen food products, beingperishable goods, deteriorate due to delays in delivery, malfunction of refrigeration facilitiesor inappropriate handling during transportation by the relevant suppliers. This may result infailure of the Group to provide quality food and services to customers, thereby affecting theGroup’s business and damaging the Group’s reputation.

In addition, the Group depends on its information technology system to monitor itsdaily operations of its restaurants and food production and to maintain up to date financialdata, there may be system breakdown causing interruptions to the input, retrieval processingor transmission of data. Any such events could disrupt the Group’s operations and affectadversely its performance.

The Group may be unable to detect, deter and prevent all instances of fraud or othermisconduct committed by the Group’s employees, suppliers or other third parties

The Group may be unable to prevent, detect or deter all such instances of fraud, theft,dishonesty, or other misconduct committed by its employees, suppliers or other third parties.Any such fraud or other misconduct committed against the Group’s interests, which mayinclude past acts that have gone undetected or future acts, may have a material adverseeffect on the Group’s business, results of operations and financial condition.

The Group’s insurance coverage may be insufficient to protect the Group againstpotential liabilities arising during the course of operations

The Group does not maintain insurance policies against all risks associated with thefood and beverage industry, either because the Directors have deemed it commerciallyunfeasible to do so, or the risk is minimal, or because the insurers have carved certain risks

RISK FACTORS

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out of their standard policies. These risks include, without limitation, events such as the lossof business arising from increased competition, the loss of any business resulting fromnegative effects on changes in customers’ tastes and preferences. If an incident occurs inrelation to which the Group has inadequate insurance coverage, the business, financialposition and operating results of the Group could be materially and adversely affected.Further, there is no assurance that the Group will be able to renew the existing insurancepolicies on commercially reasonable terms.

Instances of food contamination could materially harm the Group’s reputation andnegatively impact the Group’s business

The Group’s business is susceptible to the risk of food contamination. The Groupcannot guarantee that measures taken by the Group are effective to fully prevent foodcontamination. For example, food contamination incidents can be caused by third party foodsuppliers or for reasons which are beyond the Group’s control, and multiple locations ratherthan a single restaurant may be affected. The Group’s business can be adversely affected byinstances of food contamination. Reports in the media of one or more instances of foodcontamination in the Group’s restaurants could negatively affect the Group’s restaurant sales,could force the closure or suspension of some of the Group’s restaurants and conceivablyhave a large impact if highly publicised.

The Group may be unable to adequately protect its intellectual property, which couldharm the value of its brands and adversely affect its business

The Directors believe that the Group’s brands are essential to its success and itscompetitive position. Please refer to the section headed “Business − Intellectual PropertyRights” and the paragraph headed “Intellectual property rights” in Appendix IV to thisprospectus for further details of the registration or licence of the Group’s trademarks. Thereis no assurance that any of the pending trademark applications would be successful and thatthe Group could continue to use those trademarks under licences and the Group may not beable to protect its intellectual property adequately. As at the Latest Practicable Date, theGroup has received notices of opinion from the Registrar of Trade Marks informing theGroup that applications of certain trademarks are considered to be similar to certain earliertrademarks registered, details of which are set out in the section headed “Business –Intellectual Property Rights”. If the Group fails in any of its trademark registrationapplications, or if it is held by any court or tribunal to have infringed on any trademark ofothers, its business may be adversely affected.

In addition, the Group’s efforts to maintain and protect the Group’s intellectualproperty may be inadequate, or third parties may infringe upon the Group’s intellectualproperty rights or misappropriate its proprietary knowledge, which could have a materialadverse effect on its business, financial condition or operating results. The Group may, fromtime to time, be required to initiate litigation to protect and enforce its trademarks and otherintellectual property rights, and to protect its trade secrets. Such litigation could result insubstantial costs and diversion of resources, which could negatively affect its sales,profitability and prospects.

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Moreover, even if any such litigation is resolved in favour of the Group, it may not beable to successfully enforce the judgment and remedies awarded by the court and suchremedies may not be adequate to compensate it for its actual or anticipated related losses,whether tangible or intangible. In such event, the Group’s financial performance andbusiness reputation will be adversely affected.

Pearl Dining House and the other Pearl series restaurants proposed to be opened by theGroup all include the word “Pearl” in their names. Given that the word “Pearl” is a commonordinary word, it would be difficult for the Group to object to other restaurants using orincluding such a word in their names. Any negative publicity or customer disputes andcomplaints regarding any infringing party’s unauthorised use of the Group’s trademarks,brands and logos (or any party’s legitimate use of similar trademarks, brands and logos)could confuse, dilute or tarnish (directly or indirectly) the Group’s restaurants’ brand appeal,which could materially damage the Group’s sales figures, profitability and prospects even ifthe Group is able to successfully enforce its legal rights or take the corresponding remedialmeasures. These infringements or any further infringements of the Group’s intellectualproperty rights or damages to the Group’s brands may have a material adverse effect on theGroup’s brand, business and results of operations in the future.

All the holders of the liquor licence of the Group’s restaurants were employees of theGroup

As at the Latest Practicable Date, all of the holders of the liquor licence of the Group’srestaurants were full-time employees of the Group. Please refer to the section headed“Business – Compliance” in this prospectus for details the liquor licence of the Group’srestaurants.

Under regulation 15 of the DCR, any transfer of a liquor licence must be made on theform as determined by the LLB. For a transfer application, consent of the holder of liquorlicence is required. Under regulation 24 of the DCR, in case of illness or temporary absenceof the holder of liquor licence, the secretary to the LLB may in his/her discretion authoriseany person to manage the licensed premises. The application under such regulation isrequired to be made by the holder of liquor licence. For any application for cancellation ofthe liquor licence made by the holder of liquor licence, an application for new issue of aliquor licence will be required to be made to the LLB. Under section 54 of the DCO, in caseof death or insolvency of the holder of liquor licence, his/her executor or administrator ortrustee may carry on the business in the licensed premises until the expiration of the licence.

If the relevant employee refuses to give consent to a transfer application when atransfer is required by the Group, fails to make an application in respect of illness ortemporary absence or makes a cancellation application without the Group’s consent, or if anapplication for new issue of a liquor licence is required to be made to the LLB in case ofdeath or insolvency of the relevant employee, it may cause the relevant restaurant to suspendor cease the sale of liquor for a certain period, which may adversely affect the business andprofitability of the Group.

RISK FACTORS

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The Group has a history of net current liabilities

As at 31 March 2012 and 2013, the Group had net current liabilities of approximatelyHK$21.6 million and HK$10.2 million, respectively. The net current liabilities of the Groupas at 31 March 2012 and 2013 were primarily due to amounts due to related parties ofapproximately HK$36.0 million and HK$34.0 million. During the Track Record Period, tomaintain the adequate level of working capital of the Group, instead of injecting additionalcapital or obtaining bank loans, the Directors have provided financial assistance to theGroup at nil interest in meeting the capital expenditure of the Group which resulted inincreased level of amounts due to related parties. On 22 May 2013, amounts due to relatedparties by the Group of approximately HK$26.5 million were capitalised. As at 30 June2013, the Group had net current assets of approximately HK$23.7 million. Please refer tothe section headed “History, Development and Reorganisation – Loan Capitalisation Issue”in this prospectus.

There is no assurance that the Group’s operations will generate sufficient cash inflowto finance all the Group’s activities and cover its general working capital requirements inthe future. In the event that the Group is unable to generate enough cash from its operationsto finance its future development, the performance and prospects of the Group as well as itsability to implement its business plans will be adversely affected. For further details ofindebtedness and liquidity, financial resources and capital structure of the Group, pleaserefer to the section headed “Financial Information” of this prospectus.

RISKS RELATING TO THE INDUSTRY

The prices of raw materials may continue to rise and fluctuate

The Group’s food and beverage business depends on reliable sources of large quantitiesof raw materials such as seafood, vegetable and meat. The Group’s raw materials are subjectto price volatility caused by any fluctuation in aggregate supply and demand, or otherexternal conditions, such as climate and environmental conditions where the weatherconditions or natural events or disasters may affect expected harvests of such raw materials.As a result, the price of raw materials purchased by the Group has fluctuated during theTrack Record Period. For the years ended 31 March 2012 and 2013 and for the three monthsended 30 June 2013, the Group’s cost of inventories sold accounted for approximately28.8%, 29.0% and 28.4%, respectively, of the Group’s total revenue. The Group cannotassure that the Group’s key suppliers will continue to provide the Group with raw materialsat reasonable prices, or that the Group’s raw materials prices will remain stable in thefuture, and if the Group is unable to manage these costs or to increase the prices of theGroup’s products or services, it may have adverse impact on the Group’s future profitmargin.

The Group operates in a highly competitive industry

The Group faces intense competition from a large and diverse group of restaurantchains and individual restaurant operators, and food manufacturers who are engaged in theproduction of similar products. There are numerous restaurants in Hong Kong offeringsimilar cuisine and the Group competes on the basis of taste, quality, price of food offered,

RISK FACTORS

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customer service, ambience, and the overall dining experience. Some of the Group’scompetitors may have longer operating histories, larger customer bases, better brandrecognition and reputation, and better financial positions, marketing strategies and publicrelations resources. As it competes with other competitors as well as new market entrants,the Group’s business and results of operations may be adversely affected in the event that itis not competitive in terms of its pricing, or there is deterioration in the quality of its foodproducts or its level of service.

As the Group works towards expanding its restaurant network, it has to compete withother retailers for restaurants spaces and experienced employees. The competition for primelocations may increase the bargaining power of landlords. Consequently, the Group may notbe able to rent these prime locations on terms which are comparable to its existingrestaurants, or its competitors may offer better terms than the Group does. It may also haveto offer experienced management staff higher wages in order to recruit or retain them. Suchinstances will increase the Group’s operating costs, thereby affecting its financialperformance.

The restaurant business in Hong Kong may be subject to stringent licensingrequirements, environmental protection regulations and hygiene standards which canincrease the operating costs

There can be no assurance that the requirements for obtaining general restaurantlicences, water pollution control licences and liquor licences in Hong Kong will not becomemore stringent. Operations of food and beverage establishments, including restaurants, arerequired to comply with increasingly stringent environmental protection regulations. Therequirements for obtaining the relevant hygiene permits, the approvals on fire protection andthe permits for discharging polluting materials in Hong Kong may also become morestringent.

Any failure to comply with existing regulations, or future legislative changes, couldrequire the Group to incur significant compliance costs or expenses or result in theassessment of damages, imposition of fines against it or a suspension of any part of itsbusiness, which could materially and adversely affect the Group’s financial condition andresults of operations. The Group may have to incur more costs in complying with anychanging laws and regulations in relation to the restaurants industry on hygiene, fire andsafety standards. In addition, should the Group fail to comply with these stringentrequirements, its restaurants may be required to cease operation by relevant authority and itsprofitability could be adversely affected.

Labour shortages or increases in labour costs could slow the Group’s growth, harm itsbusiness and reduce its profitability

Restaurant operations are highly service-oriented and therefore, the Group’s successdepends upon the its ability to attract, motivate and retain sufficient number of qualifiedemployees, including restaurant managers, kitchen staff and waiters or waitresses, all ofthem are necessary to keep pace with its anticipated expansion schedule and meet the needsof its existing restaurants. To support the growth of the Group’s business, it is necessary toincrease work force of skilled employees. There is no assurance that the Group will not

RISK FACTORS

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experience difficulty in recruiting personnel. Qualified individuals are in short supply andcompetition for these employees is intense. Any future inability to recruit and retainqualified individuals may delay the planned openings of new restaurants and could adverselyimpact its existing restaurants. Any such delays, any material increases in employee turnoverrates in existing restaurants or any widespread employee dissatisfaction could have amaterial adverse effect on its business and results of operations.

In addition, competition for qualified employees could also require the Group to payhigher wages which could result in higher labour costs. As at the Latest Practicable Date,the Group employed a total of 264 full-time employees working at its offices and restaurantsin Hong Kong. For each of the years ended 31 March 2012 and 2013 and for the threemonths ended 30 June 2013, the Group incurred approximately HK$69.2 million, HK$69.7million and HK$17.2 million as staff costs, respectively, representing approximately 26.6%,28.3% and 27.7% of the Group’s total revenue, respectively. It is expected that the labourcosts of the Group will increase as a result of the expected expansion of its business. Thefailure to attract experienced personnel at a desirable level of labour costs could adverselyaffect the business, financial condition and results of operations of the Group. Moreover,minimum wage requirements in Hong Kong have increased and could continue to increasethe Group’s labour costs in the future. The salary level of employees in the food andbeverage industry in Hong Kong has been increasing in the past few years. Due to intensecompetition of food and beverage industry, the Group may not be able to increase its pricesin order to pass these increased labour costs on to its customers, in which case the Group’sprofit margins would be negatively affected.

The Group’s business may be negatively affected in instances of contagious disease ofanimals, food-borne illness and outbreaks of other diseases, as well as negative publicityrelating to such instances in Hong Kong or other markets in which the Group operates

Any outbreak of food-borne diseases such as Swine Influenza, which is also known aspig flu, and Bovine Spongiform Encephalopathy, which is also known as mad cow disease,whether or not traced to restaurants of the Group, may lead to a loss in consumer confidenceand reduce customer traffic and restaurant sales. In addition, any negative publicity relatingto these and other health-related matters may affect consumers’ perception of restaurants ofthe Group and its food products, and consequently will reduce customer traffic of theGroup’s restaurants and negatively impact sales of the Group.

In addition, an epidemic outbreak, including severe acute respiratory syndrome, whichis also known as SARS, or avian influenza, in Hong Kong or other markets in which theGroup operates could severely reduce customer traffic of the Group’s restaurants and harmthe results of the Group’s operations. The Group does not have any specific insurancecoverage for any loss of the Group as a result of any outbreak of the abovementionedcontagious disease.

RISK FACTORS

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RISKS RELATING TO THE PLACING

An active trading market of the Shares may not develop

Prior to the Placing, there has been no public market for any of the Shares. The initialPlacing Price range for the Placing Shares was the result of negotiations among theCompany (for itself and on behalf of the Vendor) and Astrum (for itself and on behalf of theUnderwriters). The Placing Price may differ significantly from the market price for theShares following the Placing. However, even if approved, being listed on GEM does notguarantee that an active trading market for the Shares will develop following the Placing orthat the Shares will always be listed and traded on GEM. The Group cannot assure that anactive trading market will develop or be maintained following completion of the Placing, orthat the market price of the Shares will not fall below the Placing Price.

There has been no prior public market for the Shares, and the liquidity, market priceand trading volume of the Shares may be volatile

Upon Listing, the trading volume and market price of the Shares may be affected orinfluenced by a number of factors from time to time, including but not limited to, therevenue, earnings and cash flows of the Group and announcements of new services and/orinvestments of the Group, strategic alliances and/or acquisitions, fluctuations in marketprices for the Group’s services or fluctuations in market prices of comparable companies,changes of senior management of the Group, and general economic conditions. Any suchdevelopments may result in large and sudden changes in the volume and price at which theShares will trade. There is no assurance that such developments will or will not occur and itis difficult to quantify the impact on the Group and on the trading volume and market priceof the Shares. In addition, shares of other companies listed on GEM have experiencedsubstantial price volatility in the past. It is likely that from time to time, the Shares will besubject to changes in price that may not be directly related to the Group’s financial orbusiness performance.

Purchasers of the Placing Shares will experience an immediate dilution and mayexperience further dilution if the Company issues additional Shares or other securitiesin the future

Based on the Placing Price range, the Placing Price is expected to be higher than thenet tangible asset value per Share immediately prior to the Placing. Therefore, thepurchasers of the Placing Shares will experience an immediate dilution in unaudited proforma net tangible asset value to approximately HK$0.19 per Share and approximatelyHK$0.21 per Share based on the Placing Price of HK$0.4 per Placing Share and HK$0.5 perPlacing Share respectively. Additional funds may be required in the future to finance theexpansion or new developments of the business and operations of the Group or newacquisitions. If additional funds are raised through the issuance of new equity orequity-linked securities of the Company other than on a pro rata basis to existingShareholders, the percentage ownership of the Shareholders in the Company may be dilutedor such new securities may confer rights and privileges that take priority over thoseconferred by the Placing Shares.

RISK FACTORS

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Future sales by existing Shareholders of a substantial number of the Shares in thepublic market could materially and adversely affect the prevailing market price of theShares

The Shares held by the Controlling Shareholders are subject to lock-up beginning onthe date on which trading in the Shares commences on GEM. There is no assurance that theControlling Shareholders will not dispose of the Shares held by them. The Group cannotpredict the effect, if any, of any future sales of the Shares by any substantial shareholder ofthe Company or Controlling Shareholder, or the availability of Shares for sale by anysubstantial Shareholder or Controlling Shareholder may have on the market price of theShares. Sales of a substantial amount of Shares by any substantial Shareholder of theCompany or Controlling Shareholder or the issuance of a substantial amount of new Sharesby the Company, or the market perception that such sales or issuance may occur, couldmaterially and adversely affect the prevailing market price of the Shares.

Any options granted under the Share Option Scheme may dilute the Shareholders’equity interests

The Company has conditionally adopted the Share Option Scheme. As at the LatestPracticable Date, no option had been granted to subscribe for Shares under the Share OptionScheme. Following the issue of new Shares upon exercise of the options that may be grantedunder the Share Option Scheme, there will be an increase in the number of issued Shares.As such, there may be a dilution or reduction of shareholding of the Shareholders whichresults in a dilution or reduction of the earnings per Share or net asset value per Share. Inaddition, the fair value of the options to be granted to the eligible participants under theShare Option Scheme will be charged to the consolidated comprehensive income statementof the Group over the vesting periods of the options. The fair value of the options shall bedetermined on the date of granting of the options. Accordingly, the financial results andprofitability of the Group may be adversely affected.

Historical dividends may not be indicative of the amount of future dividend paymentsor the Company’s future dividend policy

Total dividend of approximately HK$7.9 million and HK$12.6 million was declared bythe Group during the years ended 31 March 2012 and 2013 respectively. The Company’sability to pay dividends or make other distributions to the Shareholders is subject to thefuture financial performance and cash flow position of the Group. The Company may not beable to distribute dividends to the Shareholders as a result of the abovementioned factors.

On 23 October 2013, an interim dividend of HK$1,485,000 was appropriated to VictoryStand and Dragon Flame, the then shareholders of Glory Kind (which is a direct whollyowned subsidiary of the Company) and certain companies now comprising the Groupdeclared interim dividends of HK$515,000 to their then non-controlling shareholders.

RISK FACTORS

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Accordingly, the Group’s historical dividend distribution should not be used as areference or basis to determine the level of dividends that may be declared and paid by theGroup in the future. The Group may not be able to record profits and have sufficient fundsabove its funding requirements, other obligations and business plans to declare dividends tothe Shareholders.

The laws of the Cayman Islands relating to the protection of the interests of minorityshareholders may differ from those in Hong Kong

The corporate affairs are governed by the Memorandum and Articles of Association andby the Companies Law and common law of the Cayman Islands. The laws of the CaymanIslands relating to the protection of the interests of minority shareholders may differ in somerespects from those established under statutes or judicial precedent in existence in HongKong. This may mean that the remedies available to the Company’s minority shareholdersmay be different from those they would have under the laws of other jurisdictions. Asummary of Companies Law is set out in Appendix III to this prospectus.

RISKS RELATING TO THE STATEMENTS MADE IN THIS PROSPECTUS

Statistics and facts in this prospectus have not been independently verified

This prospectus includes certain statistics and facts that have been extracted fromGovernment official sources and publications or other sources. The Company believes thesources of these statistics and facts are appropriate for such statistics and facts and has takenreasonable care in extracting and reproducing such statistics and facts. The Company has noreason to believe that such statistics and facts are false or misleading or that any fact hasbeen omitted that would render such statistics and facts false or misleading. These statisticsand facts from these sources have not been independently verified by the Company, theVendor, the Sponsor, the Joint Lead Managers, the Joint Bookrunners, the Underwriters, anyof their respective directors or any other parties involved in the Placing and therefore, theCompany makes no representation as to the accuracy or completeness of these statistics andfacts, as such these statistics and facts should not be unduly relied upon.

Forward-looking statements contained in this prospectus may prove inaccurate andtherefore investors should not place undue reliance on such information

This prospectus contains certain forward-looking statements relating to the plans,objectives, expectations and intentions of the Directors and the Group. Such forward-lookingstatements are based on numerous assumptions as to the present and future businessstrategies of the Group and the development of the environment in which the Groupoperates. These statements involve known and unknown risks, uncertainties and other factorswhich may cause the actual financial results, performance or achievements of the Group tobe materially different from the anticipated financial results, performance or achievements ofthe Group expressed or implied by these statements. The actual financial results,performance or achievements of the Group may differ materially from those discussed inthis prospectus.

RISK FACTORS

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For the purpose of the Listing, the Company has sought a waiver, as described below,from the Stock Exchange in relation to certain requirements under the GEM Listing Rules.Details of the waiver are described below.

CONTINUING CONNECTED TRANSACTIONS

Certain members of the Group have entered into and are expected to continue certaintransactions, which will constitute (1) continuing connected transactions exempt fromreporting, annual review, announcement and independent shareholders’ approvalrequirements; and (2) non-exempt continuing connected transactions subject to reporting,annual review and announcement requirements, upon Listing. Pursuant to Rule 20.42(3) ofthe GEM Listing Rules, the Company has applied for and has been granted a waiver fromstrict compliance with the relevant announcement requirement set out in Chapter 20 of theGEM Listing Rules in relation to the non-exempt continuing connected transactions of theCompany referred to above. Further details of such waiver are set out in the section headed“Continuing Connected Transactions” in this prospectus.

WAIVER FROM COMPLIANCE WITH THE GEM LISTING RULES

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DIRECTORS’ RESPONSIBILITY FOR THE CONTENTS OF THIS PROSPECTUS

This prospectus contains particulars given in compliance with the CompaniesOrdinance, the Securities and Futures (Stock Market Listing) Rules (Chapter 571V of theLaws of Hong Kong) and the GEM Listing Rules for the purposes of giving information tothe public with regard to the Group. The Directors collectively and individually accept fullresponsibility for the accuracy of the information contained in the prospectus and confirm,having made all reasonable enquiries, that to the best of their knowledge and belief:

1. the information contained in this prospectus is accurate and complete in allmaterial respects and not misleading or deceptive;

2. there are no other matters the omission of which would make any statementherein or in this prospectus misleading; and

3. all opinions expressed in this prospectus have been arrived at after due andcareful consideration and are founded on bases and assumptions that are fair andreasonable.

PLACING SHARES ARE FULLY UNDERWRITTEN

This prospectus is published solely in connection with the Placing and the listing of theShares on the Stock Exchange is sponsored by TC Capital. The Placing Shares are fullyunderwritten by the Underwriters pursuant to the Underwriting Agreement, subject to theterms and conditions of the Underwriting Agreement and that the Placing Price will be fixedby agreement between the Company (for itself and on behalf of the Vendor) and Astrum (foritself and on behalf of the Underwriters) on the Price Determination Date. Furtherinformation about the Underwriters and the underwriting arrangements are contained in thesection headed “Underwriting” in this prospectus.

PLACING PRICE

The Placing Shares are being offered at the Placing Price which will be determined inHong Kong dollar by the Company (for itself and on behalf of the Vendor) and Astrum (foritself and on behalf of the Underwriters) on the Price Determination Date. If, for whateverreason, the Company and Astrum are unable to agree on the Placing Price, the Placing willnot proceed and will lapse. For full information relating to the determination of the PlacingPrice, please refer to the section headed “Structure and Conditions of the Placing” in thisprospectus.

RESTRICTIONS ON SALE OF THE PLACING SHARES

Each person acquiring the Placing Shares will be required to confirm, or be deemed byhis acquisition of Placing Shares to confirm, that he is aware of the restrictions on placingand sales of the Placing Shares described in this prospectus.

INFORMATION ABOUT THIS PROSPECTUS AND THE PLACING

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Same as mentioned above, no action has been taken in any jurisdiction other than HongKong to permit the offering of the Placing Shares or the general distribution of thisprospectus. Accordingly, this prospectus may not be used for the purposes of, and does notconstitute, an offer or invitation in any jurisdiction or in any circumstances in which such anoffer or invitation is not authorised or to any person to whom it is unlawful to make such anoffer or invitation.

The Placing Shares are offered for subscription and sale solely on the basis of theinformation contained and representations made in this prospectus. No person is authorisedin connection with the Placing to give any information, or to make any representation, notcontained in this prospectus, and any information or representation not contained in thisprospectus must not be relied upon as having been authorised by the Company, the Vendor,the Joint Lead Managers, the Joint Bookrunners, the Underwriters, any of their respectivedirectors or any other persons or parties involved in the Placing.

APPLICATION FOR LISTING ON GEM

Application has been made to the Listing Division for the listing of, and permission todeal in, the Shares in issue and to be issued pursuant to the Capitalisation Issue, the Placingand upon the exercise of options which may be granted under the Share Option Scheme upto 10% of the issued shares upon Listing.

No part of the share or loan capital of the Company is listed on or dealt in on anyother stock exchange and no such listing or permission to list is being or is proposed to besought in the near future.

Under Section 44B(1) of the Companies Ordinance, if the permission for the Sharesoffered under this prospectus to be listed on GEM has been refused before the expiration ofthree weeks from the date of the closing of the Placing or such longer period not exceedingsix weeks as may, within the said three weeks, be notified to the Company for permissionby or on behalf of the Listing Division, then any allotment made on an application inpursuance of this prospectus shall, whenever made, be void.

Pursuant to Rule 11.23(7) of the GEM Listing Rules, at the time of listing and at alltimes thereafter, the Company must maintain the “minimum prescribed percentage” of 25%of the issued share capital of the Company in the hands of the public.

THE SHARES WILL BE ELIGIBLE FOR ADMISSION INTO CCASS

Subject to the approval of the listing of, and permission to deal in, the Shares in issueand to be issued on GEM and the compliance with the stock admission requirements ofHKSCC, the Shares will be accepted as eligible securities by HKSCC for deposit, clearanceand settlement in CCASS with effect from the Listing Date or, under contingent situation,any other date as determined by HKSCC. Settlement of transactions between participants ofthe Stock Exchange is required to take place in CCASS on the second Business Day afterany trading day.


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All activities under CCASS are subject to the General Rules of CCASS and CCASSOperational Procedures in effect from time to time.

All necessary arrangements have been made for the Shares to be admitted into CCASS.If investors are unsure about the details of CCASS settlement arrangement and how sucharrangements will affect their rights and interests, they should seek the advice of theirstockbroker or other professional adviser.

DEALINGS AND SETTLEMENT

Dealings in the Shares on GEM are expected to commence at 9:00 a.m. (Hong Kongtime) on or about 21 November 2013. Shares will be traded in board lots of 5,000 Shareseach and are freely transferable.

The GEM stock code for the Shares is 8326.

The Company will not issue any temporary document of title.

HONG KONG SHARE REGISTER AND STAMP DUTY

All the Shares will be registered on the Hong Kong branch register of members of theCompany in Hong Kong in order to enable them to be traded on GEM. Only Sharesregistered on the Company’s branch register of members maintained in Hong Kong may betraded on GEM. Dealings in the Shares registered on the Company’s branch register ofmembers maintained in Hong Kong will be subject to Hong Kong stamp duty.

Unless determined otherwise by the Company, dividends payable in Hong Kong dollarsin respect of the Shares will be paid to the Shareholders listed on the Company’s HongKong branch register of members to be maintained in Hong Kong by ordinary post, at theShareholders’ risk, to the registered address of each Shareholder, if joint Shareholders, to thefirst-named therein in accordance with the Articles.

PROFESSIONAL TAX ADVICE RECOMMENDED

Potential investors for the Placing Shares are recommended to consult theirprofessional advisers if they are in doubt as to the taxation implications of the subscriptionfor, holding, purchase, disposal of or dealing in, the Shares or exercising their rightsthereunder. It is emphasised that none of the Company, the Vendor, the Directors, theSponsor, the Joint Lead Managers, the Joint Bookrunners and the Underwriters, theirrespective directors, agents or advisers or any other persons involved in the Placing acceptsresponsibility for any tax effects on, or liabilities of, any person resulting from thesubscription for, holding, purchase, disposal of or dealing in, the Shares or exercising theirrights thereunder.

STRUCTURE AND CONDITIONS OF THE PLACING

Details of the structure of the Placing, including its conditions, are set out in thesection headed “Structure and Conditions of the Placing” in this prospectus.


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ROUNDING

Any discrepancies in any total, sums of amounts and percentages listed in thisprospectus are due to rounding.


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DIRECTORS

Name Residential Address Nationality

Executive Directors

Mr. Wu Kai Char（胡啟初先生）

(Chairman)

Flat A, 9th FloorTower 5, Dynasty Court23 Old Peak RoadMid-LevelsHong Kong

Chinese

Ms. Wong Wai Ling（黃慧玲女士）

(Chief Executive Officer)

Flat B, 17th FloorBlock 5, Cavendish Heights33 Perkins RoadJardine’s LookoutHong Kong

Chinese

Mr. Lui Hung Yen（雷鴻仁先生）

Flat B, 1st FloorBlock 2, Richmond Court1-3 Lok Yuen PathFo TanNew TerritoriesHong Kong

Chinese

Non-executive Director

Mr. Pan Chik（潘稷先生）

Flat B, 35th FloorTower ThreeThe Leighton Hill2B Broadwood RoadHappy ValleyHong Kong

Chinese

Independent non-executive Directors

Mr. Law Yiu Sing（羅耀昇先生）

Flat C, 6th FloorMarlborough House154 Tai Hang RoadTai HangHong Kong

Canadian

Ms. Yue Chung Sze Joyce（余頌詩女士）

Flat D8, 8th FloorPing On Apartment1B Babington PathMid-LevelsHong Kong

Chinese

DIRECTORS AND PARTIES INVOLVED IN THE PLACING

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Name Residential Address Nationality

Mr. Chan Wai Hung Clarence（陳偉雄先生）

Flat B, 2nd Floor, Block 1Monte Carlton363 Tai Po RoadKowloonHong Kong

British

PARTIES INVOLVED IN THE PLACING

Sponsor TC Capital Asia LimitedSuite 1904, 19th FloorTower 6, The GatewayHarbour City9 Canton RoadKowloonHong Kong

Joint Bookrunners, Joint LeadManagers and Underwriters

Astrum Capital Management Limited11th Floor, 122 QRCNos. 122-126 Queen’s Road CentralCentralHong Kong

Orient Securities LimitedRoom 2801-04, 28th FloorDah Sing Financial CentreNo. 108 Gloucester RoadWanchaiHong Kong

TC Capital Asia LimitedSuite 1904, 19th FloorTower 6, The GatewayHarbour City9 Canton RoadKowloonHong Kong

Legal advisers to the Company as to Hong Kong law:Loong & YeungSuites 2001-2005, 20th FloorJardine House1 Connaught PlaceCentralHong Kong


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as to Cayman Islands law:Appleby2206-2219 Jardine House1 Connaught PlaceCentralHong Kong

Legal advisers to the Sponsorand the Underwriters

as to Hong Kong law:CFN Lawyers24F, Neich Tower128 Gloucester RoadWan ChaiHong Kong

Auditors and reportingaccountants

HLB Hodgson Impey Cheng LimitedCertified Public Accountants31st Floor, Gloucester TowerThe Landmark11 Pedder StreetCentralHong Kong


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Registered Office in theCayman Islands

Clifton House75 Fort StreetP.O. Box 1350Grand CaymanKY1-1108Cayman Islands

Headquarter and principalplace of business in HongKong registered under PartXI of the CompaniesOrdinance

14th Floor, TAL Building45-53 Austin RoadTsim Sha TsuiKowloonHong Kong

Company’s website www.jcgroup.hk (information contained in this websitedoes not form part of this prospectus)

Company secretary Ms. Yim Sau Ping（嚴秀屏女士）CPA

Compliance officer Ms. Wong Wai Ling（黃慧玲女士）

Audit Committee Mr. Law Yiu Sing（羅耀昇先生）(Chairman)Mr. Chan Wai Hung Clarence（陳偉雄先生）Ms. Yue Chung Sze Joyce（余頌詩女士）

Remuneration Committee Mr. Law Yiu Sing（羅耀昇先生）(Chairman)Ms. Wong Wai Ling（黃慧玲女士）Mr. Chan Wai Hung Clarence（陳偉雄先生）

Nomination Committee Mr. Chan Wai Hung Clarence（陳偉雄先生）(Chairman)Ms. Wong Wai Ling（黃慧玲女士）Mr. Law Yiu Sing（羅耀昇先生）

Compliance Committee Ms. Wong Wai Ling（黃慧玲女士）(Chairman)Mr. Chan Wai Hung Clarence（陳偉雄先生）Mr. Fong Chun Hin Daniel（方駿軒先生）Mr. Chui Wai Kin（徐偉健先生）

Authorised representatives Ms. Wong Wai Ling（黃慧玲女士）Ms. Yim Sau Ping（嚴秀屏女士）

Principal share registrar andtransfer office in the CaymanIslands

Appleby Trust (Cayman) Ltd.Clifton House75 Fort StreetP.O. Box 1350Grand CaymanKY1-1108Cayman Islands

CORPORATE INFORMATION

– 53 –

Branch share registrar andtransfer office in Hong Kong

Union Registrars Limited18th Floor, Fook Lee Commercial CentreTown Place33 Lockhart RoadWanchaiHong Kong

Principal banker The Hongkong and Shanghai Banking Corporation1 Queen’s Road CentralHong Kong

Compliance adviser TC Capital Asia LimitedSuite 1904, 19th FloorTower 6, The GatewayHarbour City9 Canton RoadKowloonHong Kong

CORPORATE INFORMATION

– 54 –

Certain information and statistics relating to the industry provided in this sectionhave been derived from official government sources. In addition, this section andelsewhere in the prospectus contains information extracted from a commissioned report,or the Euromonitor Report, prepared by Euromonitor International, or Euromonitor, forpurposes of this prospectus. See “– About This Section”. Euromonitor Internationalbelieves that the sources of the information in this “Industry Overview” section areappropriate sources for such information, and Euromonitor International has takenreasonable care in extracting and reproducing such information. EuromonitorInternational has no reason to believe that such information is materially false ormisleading, and no fact has been omitted that would render such information materiallyfalse or misleading. The Company, its affiliates or advisers, the Sponsor, theUnderwriters or their respective directors, affiliates or advisers, or any party, involved inthe Placing do not, make any representation as to the accuracy, completeness or fairnessof such information and, accordingly, you should not unduly rely on such information.

FULL-SERVICE RESTAURANTS IN HONG KONG

Overview

Hong Kong is the culinary capital of Asia, housing a wide variety of restaurants thatoffer cuisine from all over the world. Within the full-service restaurant industry, there exists:Hong Kong style tea cafés, Asian restaurants that serve Chinese, Japanese, Korean and Thaicuisine, as well as non-Asian restaurants that serve European and North American cuisine.

According to the Euromonitor Report, full-service restaurants are traditional sit-downrestaurants with full table service provided by waiters and the focus of the guest experienceis on food rather than on drink. Full-service restaurants are characterised by table serviceand generally higher quality of food offerings compared to quick-service restaurants.Full-service restaurants also include à la carte, all-you-can-eat and sit-down buffets withinrestaurants. Customers at full-service restaurants generally pay after consumption of foodand time spent at full-service restaurants tends to be longer than quick-service restaurants.

According to the Euromonitor Report, the full-service restaurant industry in Hong Kongreceived a total of HK$70.8 billion in foodservice value sales, growing at a CAGR ofapproximately 3.9% in 2012. Due to poor economic performance as a result of the financialcrisis, growth in 2009 stood at a meager 0.2%. However, the full-service restaurant industryrecovered due to rising consumer confidence levels and increased spending from visitingtourists.

The following chart sets forth the foodservice value of full-service restaurants (with thebreakdown of categories of Asian and North American & European full-service restaurants)in Hong Kong from 2008 to 2012 and the projected foodservice value from 2013 to 2017,and the respective growth rates during these two periods.

INDUSTRY OVERVIEW

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Foodservice Value Sales of Full-Service Restaurants in Hong Kong 2008-2017

0

20,000

40,000

60,000

80,000

100,000

5.4% 5.5% 5.3% 5.3% 5.2% 5.1% 5.0% 5.0% 4.9% 4.8%5 4% 5 5% 5 3% 5 3% 5 2% 5 1% 5 0% 5 0% 4 9% 4 8%

14.9% 13.4% 13.3% 14.0% 14.2% 14.3% 14.2% 14.1% 13.9% 13.7%

79.6% 81.2% 81.3% 80.8% 80.6% 80.6% 80.8% 81.0% 81.3% 81.5%

60,809 60,949 64,03367,972

70,82473,379 76,414

79,346 82,106 84,236

Asian full-service restaurants

North American & Europeanfull-service restaurants

Others

2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E

HK$ million

CAGR2008-2012 2013E-2017E

Asian full-service restaurants 4.2% 3.8%North American & European full-service restaurants 2.6% 2.5%Others 2.8% 1.9%Total: Full-service restaurants 3.9% 3.5%

Sources: Official Statistics, Company sources, Trade interviews, Trade press and EuromonitorInternational estimates

Asian Full-Service Restaurants Remained the Top Choice

According to the Euromonitor Report, Asian restaurants, including: Chinese, Japanese,Korean and other Southeast Asian cuisine, continued to be the favorite choice among HongKong consumers, totaling HK$57.1 billion in 2012 and comprising an 80.6% share of thetotal value sales for the full-service restaurant industry in 2012. The total number offull-service restaurants has grown from 5,230 in 2008, to 6,520 in 2012. The residentialcomposition of Hong Kong is the primary reason for the dominating sales of Asianfull-service restaurants.

North American & European full-service restaurants and others, collectively accountedfor the remaining 19.4% of foodservice value sales in 2012. North American & Europeanfull-service restaurants and others usually target a relatively niche consumer segmentcompared to Asian full-service restaurants.

North American & European Full-Service Restaurants Hit Hard by 2008 FinancialCrisis

Foodservice sales of North American & European full-service restaurants grew at aCAGR of 2.6% from 2008 to 2012. In 2012, foodservice sales of North American &European full-service restaurant totaled HK$10.1 billion, representing 14.2% of thefull-service restaurant industry’s sales.

INDUSTRY OVERVIEW

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The financial crisis in 2008 severely affected North American & European full-servicerestaurants. Total foodservice value sales for North American & European full-servicerestaurants declined by 10.3% from 2008 to 2009. As spending per person for NorthAmerican & European full-service restaurant is generally the highest among all cuisine typesin Hong Kong, consumers, under economic pressure, either refrain from dining out, or optfor cheaper alternatives. As a result, the number of North American & European restaurantsdecreased from 710 in 2008 to 673 in 2009.

Market Outlook of Full-Service Restaurants

According to the Euromonitor Report, the total foodservice sales value of full-servicerestaurants will grow at a CAGR of 3.5% from 2013 to 2017, reaching a total foodservicesales value of HK$84.2 billion in 2017. The full-service restaurant industry is expected tocontinue with a stable and above inflation growth rate as suggested by various industryparticipants. Due to economic uncertainty in the city as well as globally, the industry willencounter a headwind, which will result in a slower year on year growth rate of 3.6% from2012 to 2013. However, from 2014 and onwards the industry will recover.

The key growth drivers for the full-service restaurant industry will be the sustainablepattern of Hong Kong citizen’s dining out patterns, coupled with a trend of increasingtourism in the city. However, rental expenses are expected to remain high for the foreseeablefuture, while food costs will continue to increase on the back of inflation and appreciationof foreign currency. These higher costs are expected to be passed on to customers and thustranslate into higher restaurant returns.

Current Industry Dynamics and Growth Drivers

As discussed above, Euromonitor International believes the current industry dynamicsand growth drivers as following:

Expanding Shares of Asian full-service restaurants

Asian full-service restaurants will continue to be the fastest growing sector among allcuisine types, growing at a CAGR of 3.8% from 2013 to 2017. The percentage share ofAsian full-service restaurant will correspondingly grow from 80.6% to 81.5%. Aside from ageneral preference towards Asian cuisine from local consumers, tourists from mainlandChina and Northeast Asian countries will support the demand for Asian cuisine for theforecast period.

Despite a slightly lower CAGR of 2.5% from 2013 to 2017 for North American &European full-service restaurants, niche offerings will still draw the attention of consumers.While Italian and North American styles should continue to be popular, Spanish tapas bistrosare gaining steam. Sophisticated diners are also seeking more niche cuisines, such as thosefrom Mexican and South American restaurants, which are growing, but still make up arelatively small portion of the market.

Sustainable Dining Out Patterns of Hong Kong Citizens Supporting Growth

Dining out is an important part of Hong Kong culture and most consumers dine outmultiple times during the week with friends, colleagues and family. Foodservice sales willcontinue to increase, with growth seen in nearly all kinds of foodservice venues, rangingfrom street kiosks to up-market Michelin-starred restaurants.

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Additionally, the gradual changes in demographics of Hong Kong citizens are favorablefactors for the full-service restaurant industry as well. Due to longer working hours andstressful work life of Hong Kong citizens, many have chosen to stay single or child free toavoid the additional economic burden. With the increasing number of single and child freehouseholds, Hong Kong citizens are expected to dine out more often.

Seeking Higher Quality and Attentive Service

Diners continue to demand higher quality and more attentive service from full-servicerestaurants. This trend is rising as the number of restaurants increases, resulting in highercompetition within the restaurant industry. Increased competition gives higher bargainingpower to customers over restaurant operators, as diners seek higher quality services on topof having high food standards.

This is also the aftermath of the difficulty in acquiring appropriate talent due to severecompetition, the Macau boom, and the lack of new talent entering the industry. This hasresulted in a drop in human resources and service quality. Customers now prefer restaurantswith stable service quality compared to those with declining ones. The need to maintainservice quality has resulted in a higher manpower cost for restaurant operators. However,restaurants that demonstrate outstanding service quality should outperform peers.

Popularity of Gourmet Blogs and Websites

The use of the internet within the restaurant industry has gained increasing popularityin recent years, with the rise of gourmet website Openrice.com and various food bloggers.With more diners using these online portals for information, reviews of restaurants on thesewebsites are becoming increasingly significant.

This increases the transparency of the industry, by adding another convenient way ofmarketing in addition to traditional press and word-of-mouth marketing of the past. This cantrigger rapid consolidation in the industry, for example: diners might avoid restaurants withbad reviews which could eventually drive them out of business. As restaurants with betterreviews tend to have better business, operators often put more effort into promotingthemselves on these online platforms to gain popularity and lure customers.

High labour and Rental Costs Translating Into Higher Foodservice Value Sales

In 2013, the Government has revised the minimum wage from HK$28 per hour toHK$30 per hour, which has an immediate impact on the foodservice industry, especially forfast-food shops and mass market Chinese restaurants. Employee wages at theseestablishments are generally low, and will force operators to face a direct upward adjustmentof human resource expenses. The issue is also hurtful to higher-end restaurant operators viaa ripple effect; employees will demand a higher salary across the industry. On top of therising labour costs, the real estate market rally in Hong Kong has come at the expense of ahike in rental prices. Despite rental terms generally being as long as 3 to 5 years, andoperators considering rental expenses controllable and manageable, shops that are renewingtheir rental agreements in the coming years will find a large increase in rental expenses.

Therefore, full-service restaurant operators are likely to pass the rising costs onto theprice that are charged to consumers. This will result in higher foodservice value sales in theforecast period.

INDUSTRY OVERVIEW

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ASIAN FULL-SERVICE RESTAURANTS IN HONG KONG

Overview

Asian full-service restaurants dominate the restaurant industry in Hong Kong, makingup the bulk of total foodservice value sales, and delivering HK$57.1 billion in 2012 asillustrated in the above chart. According to the Euromonitor Report, among the Asianfull-service restaurants, Chinese full-service restaurants contributed the largest share,accounting for 80.1% of the total foodservice value sales of Asian full-service restaurants.Japanese full-service restaurants, accounting for 14.4% of the total foodservice value salesof Asian full-service restaurants, were the second largest contributor to the industry. OtherAsian full-service restaurants, encompassing mostly cuisines from Southeast Asia contributedthe remaining shares.

Due to the financial crisis in 2008, the growth rate of foodservice value sales for Asianfull-service restaurants slowed down to 2.2% in 2009. However, foodservice value salesquickly picked up after 2009 as both local and travelling consumers returned to their regularspending patterns. From 2008 to 2012, Asian full-service restaurants grew at a CAGR of4.2%.

Market Outlook of Asian Full-Service Restaurants

The total foodservice value sales of Asian full-service restaurants will grow at a CAGRof 3.8% from 2013 to 2017, reaching a total market value of HK$68.6 billion in 2017. TheAsian full-service restaurant sector will primarily be driven by Chinese full-servicerestaurants. Despite already accounting for the largest share in Asian full-service restaurants,Chinese full-service restaurants in Hong Kong will continue to grow on the back ofpopulation composition and high tourism inflows from China. The market share of Chinesefull-service restaurants will continue to expand from 80.4% in 2013 to 81.5% in 2017.

The following chart sets forth the foodservice value of Asian full-service restaurants(with the breakdown of categories of Chinese, Japanese and other Asian full-servicerestaurants) in Hong Kong from 2008 to 2012 and the projected foodservice value from2013 to 2017, and the respective growth rates during these two periods.

Foodservice Value Sales of Asian Full-Service Restaurants in Hong Kong 2008-2017

0

20,000

40,000

60,000

80,000

6.3% 6.2% 6.0% 5.7% 5.4% 5.2% 5.0% 4.8% 4.7% 4.5%6 3% 6 2% 6 0% 5 7% 5 4% 5 2% 5 0% 4 8% 4 7% 4 5%

14.6% 16.1% 15.5% 14.5% 14.4% 14.3% 14.2% 14.1% 14.0% 14.0%

48,419 49,476 52,071

54,887 57,06159,140

61,727 64,25766,723 68,618

79.2% 77.7% 78.5% 79.8% 80.1% 80.4% 80.7% 81.1% 81.3% 81.5%

2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E

Chinese full-service restaurants

Japanese full-service restaurants

Other Asian full-service restaurants

HK$ million

INDUSTRY OVERVIEW

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CAGR2008-2012 2013E-2017E

Chinese full-service restaurants 4.5% 4.1%Japanese full-service restaurants 3.9% 3.1%Other Asian full-service restaurants 0.3% 0.2%Total: Asian full-service restaurants 4.2% 3.8%


COMPETITIVE LANDSCAPE FOR FULL-SERVICE RESTAURANTS IN HONGKONG

The full-service restaurant industry in Hong Kong is highly competitive andfragmented, with approximately 9,440 individual restaurants in the market, whereas even thelargest multi-brand restaurant group occupies less than 5% of the overall market.

Barrier of entry does not exist in the restaurant industry as licences are easy to applyfor, while capital investment varies with the size of the establishment. However, maintainingbusiness is challenging given the current market conditions due to significant costs, such as:rent, manpower and raw materials.

Significant new entrants into the market over the past 3 years were limited, with theexception of the Catalunya Group from Singapore, running a single outlet in Hong Kong.Other new entrants tend to be small and do not make up a considerable portion of themarket.

The Euromonitor Report focuses on the discussion of the competitive landscape ofJapanese full-service restaurants, and North American and European full-service restaurantsin Hong Kong.

Japanese Full-Service Restaurants

The competitive landscape of Japanese full-service restaurants is highly fragmented,with the top five brands accounting for a combined market value share of approximately17.6%. The leading brands for Japanese full-service restaurants are in the mass to mid-pricemarket where the cost per person ranges from HK$50 to HK$100. Genki Sushi and AjisenRamen are leading brands among the mass market Japanese full-service restaurants. Theremaining three brands from top five are: Itacho Sushi, Watami, and Itamae Sushi, which arepositioned in a slightly higher price range, with costs per person ranging from HK$100 toHK$150. All of the top five players operate under the chain restaurant model, with eachpossessing at least eight outlets. The premium Japanese food landscape has few players, withmost operating one to two outlets within Hong Kong. Cost spent per person at a premiumJapanese restaurant in Hong Kong is typically around HK$500 and up. Despite thenon-existence of premium Japanese full-service restaurants among the top five brands, thesepremium Japanese full-service restaurants generally have significantly higher sales peroutlet. Leading brands in the premium Japanese full-service restaurants include: Sushi Hiro,Inagiku, Nadaman, Nobu and Inakaya.

INDUSTRY OVERVIEW

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The competitive landscape of Japanese full-service restaurants was moving towardsconsolidation, with the top 5 brands combined increasing their market share from 14.8% in2010 to 17.6% in 2012. With the increasing saturation of Japanese full-service restaurants,small and independent Japanese full-service restaurants will find it even harder to compete,leading to the closing down of small and independent Japanese restaurants.

The following table sets forth the percentage of market share of top five Japanesefull-services restaurant brands in Hong Kong between 2010 and 2012.

Rank Brand 2010 2011 2012

Numbersof outlets

in 2012

Approximaterevenue per

outlet in2012

(HK$ million)

1 Genki Sushi 4.8% 6.4% 6.4% 45 11.82 Itacho Sushi 4.2% 4.8% 5.2% 31 13.83 Ajisen Ramen 3.3% 3.1% 2.9% 29 8.34 Watami 1.6% 2.0% 2.1% 17 10.45 Itamae Sushi 0.9% 0.9% 1.0% 8 10.5

Others 85.2% 82.8% 82.4% 1,030 5.8

Total 100.0% 100.0% 100.0% 1,160 7.1


Despite the non-existence of premium Japanese full-service restaurants among the topfive brands, these premium Japanese full-service restaurants generally have significantlyhigher sales per outlet. Leading brands in the premium Japanese full-service restaurantsinclude: Sushi Hiro, Inagiku, Nadaman, Nobu and Inakaya. The following table presents themarket value share as well as the revenue per outlet in 2012, for the premium restaurantsunder the Group. As observed from the table below, two out of three premium Japaneserestaurants by the Group reaped in higher revenue per outlet as compared to the leadingplayers in the industry as of 2012.

Restaurant brandsunder the Group 2010 2011 2012

Numberof outlets

in 2012


outlet in2012

(HK$ million)

Inakaya NA 0.9% 0.9% 1 70.5Kaika NA 0.2% 0.2% 1 15.0Kaiko NA 0.1% 0.1% 1 4.9

Sources: Company sources, Trade interviews and Euromonitor International estimates

INDUSTRY OVERVIEW

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North American & European Full-Service Restaurants

According to the Euromonitor Report, the competitive landscape for North American &European full-service restaurants is fragmented, with the top 5 brands accounting for acombined market value share of 17.0%. The industry has remained fragmented over theperiod between 2010 and 2012 as the combined market share of the top 5 brands remainedlargely unchanged.

The leading brands of North American & European full-service restaurants are in themass to mid-price market. The top two leading brands, Pizza Hut and Spaghetti House,benefited from mass market positioning, with an average cost of meal ranging from HK$70to HK$100. Meal offerings from Outback Steakhouse, Pizza Express and Grappas, are in themid-price range with the average cost per person ranging from HK$100 to HK$200. Costsper person for premium North American & European full-service restaurants vary largely,however, the cost spent per person is usually above HK$300. Premium North American &European full-service restaurants are usually located at high-end hotels or prime officebuildings.

The following table sets forth the percentage of market share of top five NorthAmerican & European full-services restaurant brands in Hong Kong between 2010 and 2012.

Rank Brand 2010 2011 2012

Numbersof outlets

in 2012


outlet in2012

(HK$ million)

1 Pizza Hut 9.9% 10.0% 10.3% 75 13.82 Spaghetti House 3.2% 3.0% 3.0% 29 11.43 Outback Steakhouse 1.5% 1.7% 1.6% 8 20.34 PizzaExpress 1.1% 1.1% 1.1% 11 10.35 Grappas 1.0% 0.9% 1.0% 4 24.5

Others 83.3% 83.3% 83.0% 573 15.2

Total 100.0% 100.0% 100.0% 700 14.4


INDUSTRY OVERVIEW

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Like the premium Japanese full-service restaurants, the premium North American &European full-service restaurants, especially those that offer a rich section of alcoholicbeverages to go with the food, tend to generate higher sales per outlet. The following tablepresents the market value share as well as the revenue per outlet in 2012, for the premiumNorth American and European full-service restaurants under the Group. As observed fromthe table below, all three restaurants by the Group reaped in higher revenue per outlet ascompared to the leading players in the industry as of 2012.

Restaurantbrands underthe Group 2010 2011 2012

Numberof outlets

in 2012


outlet in 2012(HK$ million)

Harlan’s 0.2% 0.5% 0.4% 1 41.2Hooray 0.0% 0.3% 0.3% 1 28.2H One 0.4% 0.4% 0.3% 1 37.5

Sources: Company sources, Trade interviews and Euromonitor International estimates

MARKET TRENDS FOR MAJOR FOOD INGREDIENTS USED BY FULL-SERVICERESTAURANTS

The major food ingredients used by the full-service restaurants in Hong Kong primarilyinclude, among other things, seafood, meat and poultry, and vegetables. The Consumer PriceIndices (“CPI”) of selected food ingredients in Hong Kong have been on the rise from 2008to 2012. The following chart sets forth the year-on-year change of CPI of selected foodingredients between 2008 and 2012.

HK$ (October2009-September 2010= 100) 2008 2009 2010 2011 2012

Salt-water fish 94.4 95.9 103.2 124.3 146.0Fresh-water fish 98.4 99.9 101.1 115.4 128.6Other fresh sea products 92.1 93.5 103.3 127.1 148.3Pork 101.6 103.2 100.4 119.0 123.4Beef 98.5 100.0 100.8 112.4 133.8Poultry 98.2 99.7 101.0 109.8 116.2Frozen meat 96.9 98.4 101.2 108.8 114.8Fresh vegetables 89.3 90.7 102.5 104.2 109.8

Source: Census and Statistics Department, Hong Kong

CPI of food ingredients reliant on imports

Among the selected categories, salt-water fish, other fresh sea products, and beefwitnessed the most drastic increase in CPI due to the increase of their average retail prices.

The CPI of selected food ingredients are rising due to Hong Kong’s heavy reliance onimports. Hong Kong food prices are closely related to food prices in China as many majorstaple food supplies (such as vegetables, meats and eggs) are often supplied by China. HongKong imported over 17% of its agricultural and food products from China, followed by theUS and Brazil in 2012.

INDUSTRY OVERVIEW

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The rising CPI of food ingredients will likely add on to the cost of living of HongKong consumers and cost of business of the food and beverage operators.

ABOUT THIS SECTION

General

This “Industry Overview” section contains information extracted from thecommissioned Euromonitor Report prepared by Euromonitor for the purposes of preparingthis prospectus. The Company agreed to pay a total of US$40,000 to EuromonitorInternational for the preparation and use of the Euromonitor Report.

Research Methodology

Euromonitor International utilised a top-down central research model with bottom upintelligence to present a comprehensive and accurate picture of the full-service restaurantindustry in Hong Kong.

Primary Research

Euromonitor’s detailed primary research involves independent trade level interviewswith local restaurant operators, government agencies, and all related trade association(s) andauthorities that are involved in the foodservice industry.

To generate an industry consensus on the market size, growth and developmentspertinent to the study, trade interviews and official published data were sourced frommultiple government organisations and restaurant operators, to ensure added perspective andaccuracy. Euromonitor is committed to establishing and maintaining successful contactswithin the foodservice industry in order to validate market assessments and bring the highestlevel of quality data possible.

Secondary Research

Secondary research was also involved, where related restaurant operator’s annualreports, industry reports and Euromonitor’s syndicated Passport database were utilised tosupport findings. Where national statistics are quoted in this review, these will be taken fromthe most updated published official statistics available.

With both primary and secondary research in place, Euromonitor has utilised both typesof sources to validate all data and information collected, with no reliance on any singlesource. Furthermore, a test of each respondent’s information and views against those ofothers and any official published data is applied to ensure reliability and eliminate bias fromthese sources. Where irregularities are found between national markets and companies,supplementary research is conducted to confirm or amend those findings.

Projection

Lastly, to ensure forecasting accuracy, Euromonitor adopted its standard practice ofquantitative and qualitative analysis of the market size and growth trends, on the basis of acomprehensive and in-depth review of the market’s historical and predicted future

INDUSTRY OVERVIEW

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performance. Data was cross-checked with established government figures, industry figures,trade interviews, and statistical tools (e.g. regression analysis, time-series analysis, datamodeling) where possible.

About Euromonitor

Established in 1972, Euromonitor is a global research organisation with offices inLondon, Chicago, Singapore, Shanghai, Vilnius, Dubai, and Cape Town. Euromonitor’smission is to build on its position as the leading provider of quality international marketintelligence on consumer products, services and lifestyles. Euromonitor’s policy ofcontinuously expanding and developing its products and technologies ensures it remains atthe cutting edge of information solutions. Euromonitor researches a wide range of consumer,industrial, service and business-to-business markets and remains independent and privatelyowned.

INDUSTRY OVERVIEW

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BUSINESS DEVELOPMENT

History

The history of the restaurant business can be traced to 2004 when Mr. Wu and Ms.Wong commenced their first restaurant under the tradename of “Harlan’s” with the vision ofproviding high quality food and beverage and services to its customers. The restaurant wasoperated by JJH Company Limited (“JJH”) which is not included in the Group for thereasons stated in the paragraph under “Excluded Business” in this section.

Business Milestones

The key events of the development of the Group are also summarised as follows:

2006 Opening of the Group’s first restaurants’ hub consisting of H One, GBar and The Box at ifc mall

December2009

Opening of the Vietnam’s rice noodle chain PHO24 in iSQUARE, TsimSha Tsui through franchising arrangements

May 2010 Opening of PHO24 in NTP (1), Sha Tin through franchising arrangements

July 2010 Opening of the signature restaurant, Harlan’s and Kaika, in The ONEin Tsim Sha Tsui, which serves continental western cuisine with a vastselection of wine and authentic Japanese cuisine

October2010

Opening of two brand-new outlets in WTC – Hooray Kaiko(2) andCarousel

March 2011 Opening of a Japanese robatayaki（爐端燒）outlet Inakaya which islocated on the 101st floor in ICC

July 2012 Opening of the Group’s second cake shop in The ONE under the brandname Harlan’s cake shop

September2013

Opening of a new Chinese cuisine outlet Pearl Dining House in TheONE and rebranding Hooray Kaiko into Mekiki (WTC)

October2013

Opening of Mekiki (V city), franchised from a famous izakaya（居酒屋）chain in Okinawa Prefecture（沖繩縣）, Japan, in V city in TuenMun

November2013

Opening of the Group’s first cafe in GCP under the brand name a laFolie (3)

(1) PHO24 (NTP) has ceased operation in early November 2013 and the Group will open Pearl Delightsin the same location in December 2013.

(2) Hooray Kaiko was rebranded as Mekiki (WTC) in September 2013.

(3) a la Folie will be launched in November 2013.

HISTORY, DEVELOPMENT AND REORGANISATION

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CORPORATE DEVELOPMENT

As at the Latest Practicable Date, the Group comprised the following majorsubsidiaries and their respective corporate history are set out below.

Harlan’s Holding

Harlan’s Holding was incorporated under the laws of Hong Kong on 9 March 2010with an authorised share capital of HK$10,000 divided into 10,000 shares of HK$1.00 each.It principally engages in the operation and management of the restaurants under thetradename “Harlan’s and Kaika” and a cake shop under the tradename “Harlan’s cake shop”.

Upon its incorporation, 1 share was allotted to each of Mr. Wu and Ms. Cheung YuetKiu, the sister of Mr. Zhang at par. On 25 June 2010, Mr. Wu and Ms. Cheung Yuet Kiutransferred their respective 1 share in Harlan’s Holding to Bumper World at par. BumperWorld was beneficially owned by Mr. Wu, Mr. Zhang, Shi Fo Lan and Ms. Li Ying as to10%, 50%, 26.67% and 13.33%, respectively, at the relevant time. Both Shi Fo Lan and Ms.Li Ying are Independent Third Parties.

With an aim to raise capital of the company, on 25 June 2010, the shareholdersresolved to increase the authorised share capital of Harlan’s Holding to HK$20,000,000 bythe creation of 19,990,000 ordinary shares of HK$1.00 each and the following allotmentswere made:

AllotteeNumber of

shares allotted Consideration(HK$)

Bumper World (note 1) 14,999,998 14,999,998Holy Best (note 2) 2,500,000 2,500,000Kwok Ka Kin (note 3) 1,000,000 1,000,000Tai Woon Shing (note 4) 500,000 500,000Ting Koon Tak (note 5) 500,000 500,000Woo Chu (note 6) 500,000 500,000

Total: 19,999,998 19,999,998

Notes:

1. Mr. Wu and Mr. Zhang were beneficially interested in 10% and 50% respectively of the issued sharecapital of Bumper World at the relevant time

2. Holy Best was wholly owned by Mr. Lui and his spouse, Ms. Au Lai Ming, in equal shares

3. Mr. Kwok Ka Kin is an Independent Third Party

4. Save as being a shareholder of Harlan’s Holding, Mr. Tai Woon Shing is an Independent Third Party

5. Mr. Ting Koon Tak is an Independent Third Party


– 67 –

6. Save as being a shareholder of Harlan’s Holding, Mr. Woo Chu is an Independent Third Party

Upon the completion of the allotment on 25 June 2010, Harlan’s Holding was ownedas to 75%, 12.5%, 5%, 2.5%, 2.5% and 2.5% by Bumper World, Holy Best, Mr. Kwok KaKin, Mr. Tai Woon Shing, Mr. Ting Koon Tak and Mr. Woo Chu respectively.

On 10 July 2012, Mr. Ting Koon Tak transferred his 500,000 shares in Harlan’sHolding to Mr. Cheng Pui Chung, an Independent Third Party, at a consideration of HK$1.

On 20 May 2013, as part of the internal restructuring of the Group, Oriental Island, acompany wholly owned by Mr. Wu, acquired from Mr. Cheng Pui Chung and Mr. Kwok KaKin 500,000 and 1,000,000 shares in Harlan’s Holding, representing 2.5% and 5% of itsissued share capital respectively. The respective considerations were HK$300,000 andHK$600,000, which were arrived at after arm’s length negotiations with reference to interalia the net asset value of Harlan’s Holding.

As part of the Reorganisation, on 21 May 2013, Top Aim, Still Profit and ProgressVantage acquired a total of 95% of the issued share capital of Harlan’s Holding with theremaining 5% minority interest being held by Mr. Woo Chu and Mr. Tai Woon Shing inequal shares. Details of the Reorganisation are set out in the paragraph headed“Reorganisation” in this section.

Inakaya (HK) Limited

Inakaya (HK) Limited was incorporated under the laws of Hong Kong on 30 December2008 with an authorised share capital of HK$10,000 divided into 10,000 shares of HK$1.00each. Upon its incorporation, 1 share was allotted to Oriental Island at par. It principallyengages in the operation and management of the restaurant under the tradename “Inakaya”.

On 11 November 2009, Oriental Island transferred its 1 share at par in Inakaya (HK)Limited to Tokioland Limited which was owned by Oriental Island, FLC Holdings, CKInvestments and James Investments Worldwide Limited as to approximately 30.3%, 9.1%,30.3% and 30.3% at the relevant time. At the relevant time, CK Investments was whollyowned by Mr. Ngan Chi Kwong who is the director of PHO24 (TST) Limited and PHO24(NTP) Limited. For James Investments Worldwide Limited, it was wholly owned by Mr.Zhang until on 12 July 2011, he transferred all his shares in James Investments WorldwideLimited to Ms. Fung Lai Ping who was Mr. Zhang’s spouse at the material time. At allmaterial times, Oriental Island and FLC Holdings was and is wholly owned by Mr. Wu andMs. Wong respectively. On 11 November 2009, 6,599 shares in Inakaya (HK) Limited wereallotted and issued to Tokioland Limited at par.

On 21 October 2010, 1,680, 1,380 and 340 shares in Inakaya (HK) Limited wereallotted and issued to Oriental Island, James Investments Worldwide Limited and Holy Bestat par.

On the same day, Oriental Island, Holy Best and James Investments Worldwide Limitedrespectively acquired from Tokioland Limited 1,320, 660 and 4,620 shares in Inakaya (HK)Limited, all at a respective consideration of HK$1.00.


– 68 –

On 6 October 2011, James Investments Worldwide Limited transferred 6,000 shares,representing all its shareholding in Inakaya (HK) Limited, to Good View at a considerationof HK$1.

As part of the Reorganisation, on 21 May 2013, Inakaya (HK) Limited was owned byTop Aim, Still Profit and Progress Vantage as to 30%, 60% and 10% respectively. Details ofthe Reorganisation are set out in the paragraph headed “Reorganisation” in this section andthe paragraph headed “Further Information about the Company – Corporate Reorganisation”in Appendix IV to this prospectus.

Turbo Trade

Turbo Trade was incorporated under the laws of Hong Kong on 12 February 2010 withan authorised share capital of HK$10,000 divided into 10,000 shares of HK$1.00 each. Itprincipally engages in the operation and management of the restaurants under the tradename“Hooray Kaiko”(1) and “Carousel”.

Upon incorporation, 1 share was allotted to a nominal subscriber who transferred the 1share at par to Mr. Wu on 19 March 2010.

On 14 April 2010, Mr. Wu transferred his 1 share in Turbo Trade at par to Fully HopeHoldings Limited. Fully Hope Holdings Limited was at all material times wholly owned byMr. Wu until the allotment of 10,000 shares on 11 June 2010 to Mr. Zhang and, since then,Fully Hope Holdings Limited has been owned by Mr. Wu and Mr. Zhang in equal shares.

On 17 September 2010, 1,000 and 8,999 shares in Turbo Trade were allotted and issuedto FLC Holdings and Top Empire Holdings Limited at par, respectively. On the same day,Fully Hope Holdings Limited transferred its 1 share in Turbo Trade to Top Empire HoldingsLimited.

Top Empire Holdings Limited was owned by Mr. Wu and Ms. Cheung Yuet Kiu inequal shares since 4 August 2010 until 26 October 2010 when Mr. Zhang and Mr. Wubecame the beneficial owners of approximately 70.8% and 29.2%, respectively, of the issuedshare capital of Top Empire Holdings Limited.

On 6 October 2011, Top Empire Holdings Limited transferred 3,000 and 6,000 shares,representing all its shareholding in Turbo Trade, to Oriental Island and Good View at arespective consideration of HK$1.00. At all material times, Good View was and is whollyowned by Mr. Zhang.

As part of the Reorganisation, on 21 May 2013, Turbo Trade was owned by TeamGlory, Top Aim and Still Profit as to 10%, 30% and 60%, respectively. Details of theReorganisation are set out in the paragraph headed “Reorganisation” in this section and theparagraph headed “Further Information about the Company – Corporate Reorganisation” inAppendix IV to this prospectus.

(1) Hooray Kaiko was rebranded as Mekiki (WTC) in September 2013.


– 69 –

H View

H View was incorporated under the laws of Hong Kong on 4 May 2011 with anauthorised share capital of HK$10,000 divided into 10,000 shares of HK$1.00 each. Its rolewas to provide management services to the Group.

Upon incorporation, H View was wholly owned by Mr. Wu and Mr. Zhang in equalshares. Its shareholding structure had remained unchanged until as part of theReorganisation, on 21 May 2013, Top Aim and Still Profit acquired all of Mr. Wu’s and Mr.Zhang’s shareholding in H View respectively and owned H View in equal shares. Details ofthe Reorganisation are set out in the paragraph headed “Reorganisation” in this section andthe paragraph headed “Further Information about the Company – Corporate Reorganisation”in Appendix IV to this prospectus.

PHO24 (TST) Limited

PHO24 (TST) Limited was incorporated under the laws of Hong Kong on 2 January2009 with an authorised share capital of HK$10,000 divided into 10,000 shares of HK$1.00each. PHO24 (TST) Limited was formerly known as “Profit Earning Limited” and its namewas changed to “PHO24 (iSquare) Limited” on 15 December 2009 and “PHO24 (TST)Limited” on 12 March 2010. It principally engages in the operation and management of therestaurant under the tradename “PHO24”.

Upon incorporation, 1 share was allotted to a nominal subscriber who transferred the 1share at par to Mr. Ngan Chi Kwong who is the director of PHO24 (TST) Limited andPHO24 (NTP) Limited, on 25 February 2009.

On 25 February 2009, 1 share in PHO24 (TST) Limited was allotted and issued to Mr.Wu at par.

On 18 November 2009, Mr. Ngan Chi Kwong transferred his 1 share in PHO24 (TST)Limited to CK Development. At all material times, CK Development was and is whollyowned by Mr. Ngan Chi Kwong. On the same day, the following shares were allotted andissued:

AllotteeNumber of


Mr. Wu 3,499 3,499CK Development 3,499 3,499James Investments Worldwide Limited 1,000 1,000FLC Holdings 1,000 1,000Mr. Wu Wing Cheung Hyphen (note 1) 1,000 1,000

Total: 9,998 9,998

Note 1: Mr. Wu Wing Cheung Hyphen is an Independent Third Party


– 70 –

Upon the completion of the allotment on 18 November 2009, PHO24 (TST) Limitedwas owned by Mr. Wu, CK Development, James Investments Worldwide Limited, FLCHoldings and Mr. Wu Wing Cheung Hyphen, an Independent Third Party, as to 35%, 35%,10%, 10% and 10% respectively.

On 9 August 2010, Mr. Wu Wing Cheung Hyphen transferred all his shareholding,representing 10% of the issued share capital of PHO24 (TST) Limited to James InvestmentsWorldwide Limited at a consideration of HK$450,000 which was determined after arm’slength negotiations.

On 6 October 2011, James Investments Worldwide Limited, which was at the relevanttime wholly owned by Ms Fung Lai Ping who was Mr. Zhang’s spouse at the material time,transferred 2,000 shares in PHO24 (TST) Limited, representing all its shareholding inPHO24 (TST) Limited to Good View at a consideration of HK$1.00.

As part of the Reorganisation, on 21 May 2013, PHO24 (TST) Limited was owned byTeam Glory, Top Aim and Still Profit as to 10%, 35% and 20% respectively with theremaining 35% minority interest being held by CK Development. Details of theReorganisation are set out in the paragraph headed “Reorganisation” in this section and theparagraph headed “Further Information about the Company – Corporate Reorganisation” inAppendix IV to this prospectus.

PHO24 (NTP) Limited

PHO24 (NTP) Limited was incorporated under the laws of Hong Kong on 9 November2009 with an authorised share capital of HK$10,000 divided into 10,000 shares of HK$1.00each. It principally engages in the operation and management of the restaurant under thetradename “PHO24”.

Upon incorporation, 1 share was allotted to Oriental Island who subsequentlytransferred the 1 share at par to Mr. Wu on 27 November 2009.

On 27 November 2009, the following shares were allotted and issued:

AllotteeNumber of


Mr. Wu 2,999 2,999CK Development 3,000 3,000James Investments Worldwide Limited 1,000 1,000FLC Holdings 1,000 1,000Mr. Wu Wing Cheung Hyphen (note 1) 1,000 1,0001957 & Co. (Hospitality) (note 2) 1,000 1,000

Total: 9,999 9,999

Note 1: Mr. Wu Wing Cheung Hyphen is an Independent Third Party


– 71 –

Note 2: To the best information of the Directors, 1957 & Co. (Hospitality) is owned by 1957 & Co., Mr.Kwan Wing Kuen, Tino, Mr. Kwok Chi Po and Ms. Luk Yuen Man as to 44.45%, 35%, 8.55% and12% respectively. 1957 & Co. is wholly owned by Mr. Leung Chi Tien, Steve. Mr. Leung ChiTien, Steve, Mr. Kwan Wing Kuen, Tino, Mr. Kwok Chi Po and Ms. Luk Yuen Man areIndependent Third Parties.

Upon the completion of the allotment on 27 November 2009, PHO24 (NTP) Limitedwas owned by Mr. Wu, CK Development, James Investments Worldwide Limited, FLCHoldings, Mr. Wu Wing Cheung Hyphen and 1957 & Co. (Hospitality) as to 30%, 30%,10%, 10%, 10% and 10% respectively.

On 20 August 2010, Mr. Wu Wing Cheung Hyphen transferred 1,000 shares in PHO24(NTP) Limited to James Investments Worldwide Limited at a consideration of HK$400,000which was arrived at after arm’s length negotiations with reference to net asset value ofPHO24 (NTP) Limited at the material time.

On 6 October 2011, James Investments Worldwide Limited transferred 2,000 shares inPHO24 (NTP) Limited, representing all its shareholding in PHO24 (NTP) Limited to GoodView at a consideration of HK$1.00.

As part of the Reorganisation, on 21 May 2013, PHO24 (NTP) Limited was owned byTeam Glory, Top Aim and Still Profit as to 10%, 30% and 20% respectively with theremaining 40% minority interest being held by CK Development and 1957 & Co.(Hospitality) as to 30% and 10% respectively. Details of the Reorganisation are set out inthe paragraph headed “Reorganisation” in this section and the paragraph headed “FurtherInformation about the Company – Corporate Reorganisation” in Appendix IV to thisprospectus.

Grand Century

Grand Century was incorporated under the laws of Hong Kong on 3 December 2012with an authorised share capital of HK$10,000 divided into 10,000 shares of HK$1.00 each.It principally engages in the operation and management of the restaurant under thetradename “Mekikinoginji – Okinawa (目利之銀次沖繩)”.

Upon incorporation, 1 share of Grand Century was allotted to a nominal subscriberwho transferred the 1 share at par to Super Delights, a company wholly owned by Mr. Wu,on 18 December 2012.

On 18 December 2012, 1 share was allotted and issued to each of FLC Holdings andHoly Best at par.


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On 15 April 2013, the following shares were allotted and issued at par:

AllotteeNumber of


Super Delights 3,999 3,999FLC Holdings 1,999 1,999Holy Best 1,999 1,999Tide Rush (note 1) 2,000 2,000

Total: 9,997 9,997

Note 1: Tide Rush is wholly-owned by Mr. Cheung Chun Sing who is an Independent Third Party

Upon the completion of the allotment on 15 April 2013, Grand Century was owned bySuper Delights, FLC Holdings, Holy Best and Tide Rush as to 40%, 20%, 20% and 20%respectively.

On 21 May 2013, as part of the internal restructuring of the Group, Top Aim acquiredall the shareholding held by Tide Rush in Grand Century at a consideration of HK$2,000which was based on the par value of the shares.

As part of the Reorganisation, on 21 May 2013, Grand Century was owned by TeamGlory, Top Aim and Progress Vantage as to 20%, 60% and 20% respectively. Details of theReorganisation are set out in the paragraph headed “Reorganisation” in this section and theparagraph headed “Further Information about the Company – Corporate Reorganisation” inAppendix IV to this prospectus.

JC Group

JC Group was incorporated under the laws of Hong Kong on 16 October 2008 with anauthorised share capital of HK$10,000 divided into 10,000 shares of HK$1.00 each. Itprincipally engages in the operation and management of the restaurant under the tradenames“Pearl Dining House”, “Pearl Delights” and “a la Folie”.

Upon incorporation, 1 share of JC Group was allotted to each of Mr. Wu and Ms.Wong at par.

On 5 February 2013, Ms. Wong transferred her 1 share in JC Group to FLC Holdingsat par and Mr. Wu transferred his 1 share in JC Group to Super Delights at par.

On 5 February 2013, 4,999, 2,499 and 2,500 shares in JC Group were allotted andissued to Super Delights, FLC Holdings and Holy Best respectively at par.


– 73 –

As part of the Reorganisation, on 21 May 2013, JC Group was owned by Team Glory,Top Aim and Progress Vantage as to 25%, 50% and 25% respectively. Details of theReorganisation are set out in the paragraph headed “Reorganisation” in this section and theparagraph headed “Further Information about the Company – Corporate Reorganisation” inAppendix IV to this prospectus.

J&H

J&H was incorporated under the laws of Hong Kong on 2 March 2006 with anauthorised share capital of HK$10,000 divided into 10,000 shares of HK$1.00 each. Itprincipally engages in the operation and management of the restaurants under the tradenames“H One”, “G Bar” and “The Box”.

Upon incorporation, 1 share of J&H was issued to each of Super Delights and KnightGlory Holdings Limited, an Independent Third Party, at par.

On 3 March 2006, the following shares were allotted and issued at par:

AllotteeNumber of


Super Delights 3,499 3,499Knight Glory Holdings Limited 2,999 2,999FLC Holdings 1,000 1,000Jack Company (note 1) 2,500 2,500

Total: 9,998 9,998

Note 1: Jack Company was deregistered on 28 March 2013 and was reinstated on 8 July 2013.Immediately prior to the de-registration of Jack Company, it was wholly owned by Mr. YangJinxin. Jack Company is a shareholder of H One F&B holding 30% of its issued share capital. Mr.Yang had little involvement in the business operation of H One F&B which has ceased to carry onany operation since July 2011. When Mr. Yang deregistered Jack Company, he overlooked thatJack Company was in fact holding the said shares of H One F&B. Pursuant to section 292 of theCompanies Ordinance, the shares would become bona vacantia and belong to the Hong KongGovernment if Jack Company was a dissolved company. Mr. Yang therefore rectified this byreinstating Jack Company. To ensure non-recurrence of similar incidents in future, the Group willstrengthen its measures with a view to enhancing and maintaining regular communications withshareholders of the companies within the Group such that the shareholders would be regularlyinformed of the news of the Group in which they have interests.

On 16 May 2006, Super Delights transferred 3,500 shares in J&H to Oriental Island ata consideration of HK$1.00.

On 24 August 2006, Knight Glory Holdings Limited, Jack Company and OrientalIsland respectively transferred 200, 200 and 200 shares in J&H to FLC Holdings at aconsideration of HK$1.00.


– 74 –

On 8 December 2008, Knight Glory Holdings Limited transferred 300, 300, 400 and1,800 shares to Jack Company, FLC Holdings, Oriental Island and Mega Chance InvestmentsLimited, at considerations of HK$214,286, HK$214,286, HK$285,714 and HK$1,607,143respectively. The considerations were arrived at after arm’s length negotiations withreference to the net asset value of J&H.

On 6 October 2011, Jack Company transferred 2,600 shares in J&H to Good View at aconsideration of HK$1.00.

As part of the Reorganisation, on 21 May 2013, J&H was owned by Team Glory, TopAim and Still Profit as to 19%, 37% and 26% respectively with 18% minority interest beingheld by Mega Chance Investments Limited. Details of the Reorganisation are set out in theparagraph headed “Reorganisation” in this section and the paragraph headed “FurtherInformation about the Company – Corporate Reorganisation” in Appendix IV to thisprospectus.

The Company intends to dissolve J&H after Listing. The IFC Restaurants to berelaunched will be held by a wholly owned subsidiary of the Company.

H One F&B

H One F&B was incorporated under the laws of Hong Kong on 8 January 2008 with anauthorised share capital of HK$10,000 divided into 10,000 shares of HK$1.00 each. Uponincorporation, 3,000, 3,000 and 4,000 shares were allotted to FLC Holdings, Jack Companyand Oriental Island respectively. Its role was to provide management services to the Group.

H One F&B has ceased to carry on any operation since July 2011 and its function wasreplaced by H View.

As part of the Reorganisation, on 21 May 2013, H One F&B was owned by TeamGlory, Top Aim as to 30% and 40% with 30% minority interest being held by JackCompany. Details of the Reorganisation are set out in the paragraph headed“Reorganisation” in this section and the paragraph headed “Further Information about theCompany – Corporate Reorganisation” in Appendix IV to this prospectus.

REORGANISATION

Prior to April 2013, the Operating Companies were indirectly owned or controlled byMr. Zhang, Mr. Wu. Ms. Wong and Mr. Lui, without a single holding company. Inpreparation of the Listing, the Group undertook the Reorganisation which comprises a seriesof restructuring steps taken place pursuant to which the Company became the holdingcompany of the Group.

The Reorganisation consisted of the following steps:

A) incorporation of intermediate holding companies of the Group;


– 75 –

B) acquisitions of the Operating Companies by the new intermediate holdingcompanies;

C) establishment of one single holding company to hold all intermediate holdingcompanies of the Group;

D) introduction of a strategic investor; and

E) incorporation of the Company and acquisition of the single holding company bythe Company.


– 76 –

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– 77 –

Note:

1. The minority interest of Grand Century was owned by Tide Rush.

2. The minority interest of H One F&B is owned by Jack Company which was deregistered on 28 March 2013and was reinstated as at the Latest Practicable Date.

3. The minority interest of J&H is owned by Mega Chance Investments Limited which was owned by Mr.Chan Chi Ho, Eric and Mr. Ip Kan Kay, John, who are Independent Third Parties, as to 90% and 10%respectively.

4. The minority interest of Harlan’s Holding is owned by Mr. Tai Woon Shing and Mr. Woo Chu as to 2.5%and 2.5% respectively. Save as being the shareholders of Harlan’s Holding, Mr. Tai Woon Shing and Mr.Woo Chu are Independent Third Parties.

5. The minority interest of PHO24 (NTP) Limited is owned by 1957 & Co. (Hospitality) and CK Developmentas to 10% and 30% respectively.

6. The minority interest of PHO24 (TST) Limited is owned by CK Development.

A) Incorporation of intermediate holding companies of the Group

Incorporation of Team Glory, Top Aim, Still Profit and Progress Vantage

(i) Team Glory was incorporated on 20 March 2013 in the BVI with limited liability.1 fully paid share was allotted and issued to Ms. Wong on 18 April 2013.

(ii) Progress Vantage was incorporated on 25 March 2013 in the BVI with limitedliability. 1,000 fully paid shares were allotted and issued to Mr. Lui on 19 April2013.

(iii) Top Aim was incorporated on 21 March 2013 in the BVI with limited liability. 1fully paid share was allotted and issued to Mr. Wu on 29 April 2013.

(iv) Still Profit was incorporated on 30 July 2012 in the BVI with limited liability. 1share of par value US$1.00 was allotted and issued to the nominee subscriber on30 July 2012 and was subsequently transferred to Mr. Zhang on 30 April 2013.

B) Acquisitions of the operating Hong Kong subsidiaries by the new intermediateholding companies

Transfer of certain shareholding interests

(i) On 21 May 2013, Still Profit acquired from Mr. Zhang 5,000 shares of H-View,representing 50% of its issued share capital. In consideration thereof, Still Profitissued and allotted 1 share of US$1.00 each in Still Profit, credited as fully paid,to Mr. Zhang.

(ii) On 21 May 2013, Top Aim acquired from Tide Rush 2,000 ordinary shares ofGrand Century, representing 20% of its issued share capital at a consideration ofHK$2,000 which was based on the par value of the shares.


– 78 –

(iii) On 21 May 2013, Top Aim and Still Profit acquired from Bumper World1,500,000 and 13,500,000 shares in Harlan’s Holding, being the equivalent 7.5%and 67.5% effective interest of Mr. Wu and Mr. Zhang held in Harlan’s Holdingthrough Bumper World, respectively. In consideration thereof and as directed byBumper World, Top Aim allotted and issued 1 share of it to Mr. Wu and StillProfit allotted and issued 1 share of it to Mr. Zhang. Subsequent to the aforesaidshare transfers, Bumper World would not be included in the Group.

(iv) On 21 May 2013, Top Aim acquired from Super Delights:

1. 4,000 ordinary shares of Grand Century, representing 40% of its issued sharecapital at a consideration of HK$4,000 which was based on the par value ofthe shares; and

2. 5,000 ordinary shares of JC Group, representing 50% of its issued sharecapital at a consideration of HK$5,000 which was based on the par value ofthe shares.

(v) On 21 May 2013, Top Aim acquired from Mr. Wu:

(a) 3,000 ordinary shares of PHO24 (NTP) Limited, representing 30% of itsissued share capital. In consideration thereof, Top Aim issued and allotted 1share, credited as fully paid, to Mr. Wu;

(b) 3,500 ordinary shares of PHO24 (TST) Limited, representing 35% of itsissued share capital. In consideration thereof, Top Aim issued and allotted 1share, credited as fully paid, to Mr. Wu; and

(c) 5,000 shares of H-View, representing 50% of its issued share capital. Inconsideration thereof, Top Aim issued and allotted 1 share, credited as fullypaid, to Mr. Wu.

Acquisitions of shareholdings held by FLC Holdings

(i) On 21 May 2013, Team Glory acquired from FLC Holdings (both of which arewholly owned by Ms. Wong):

(a) 3,000 ordinary shares of H One F&B, representing 30% of its issued sharecapital.

(b) 1,900 ordinary shares of J&H, representing 19% of its issued share capital.

(c) 1,000 ordinary shares of Turbo Trade, representing 10% of its issued sharecapital.

(d) 1,000 ordinary shares of PHO24 (NTP) Limited, representing 10% of itsissued share capital.


– 79 –

(e) 1,000 ordinary shares of PHO24 (TST) Limited, representing 10% of itsissued share capital.

(f) 2,000 ordinary shares of Grand Century, representing 20% of its issued sharecapital.

(g) 2,500 ordinary shares of JC Group, representing 25% of its issued sharecapital.

In consideration of the above transfers and as directed by FLC Holdings, TeamGlory issued and allotted 7 shares, credited as fully paid, to Ms. Wong.

Acquisitions of shareholdings held by Holy Best

(ii) On 21 May 2013, Progress Vantage acquired from Holy Best (which is owned asto 50% by Mr. Lui and 50% by Ms. Au Lai Ming, the spouse of Mr. Lui):

(a) 2,500,000 ordinary shares of Harlan’s Holding, representing 12.5% of itsissued share capital.

(b) 1,000 ordinary shares of Inakaya (HK) Limited, representing 10% of itsissued share capital.

(c) 2,000 ordinary shares of Grand Century, representing 20% of its issued sharecapital.

(d) 2,500 ordinary shares of JC Group, representing 25% of its issued sharecapital.

In consideration of the above transfers and as directed by Holy Best, ProgressVantage issued and allotted 4 shares, credited as fully paid, to Mr. Lui.

Acquisitions of shareholdings held by Oriental Island

(iii) On 21 May 2013, Top Aim acquired from Oriental Island (both of which arewholly owned by Mr. Wu):

(a) 4,000 ordinary shares of H One F&B, representing 40% of its issued sharecapital.

(b) 3,700 ordinary shares of J&H, representing 37% of its issued share capital.

(c) 3,000 ordinary shares of Inakaya (HK) Limited, representing 30% of itsissued share capital.

(d) 1,500,000 ordinary shares of Harlan’s Holding, representing 7.5% of itsissued share capital.


– 80 –

(e) 3,000 ordinary shares of Turbo Trade, representing 30% of its issued sharecapital.

In consideration of the above transfers and as directed by Oriental Island, TopAim issued and allotted 5 shares, credited as fully paid, to Mr. Wu.

Acquisitions of shareholdings held by Good View

(iv) On 21 May 2013, Still Profit acquired from Good View (both of which are whollyowned by Mr. Zhang):

(a) 2,600 ordinary shares of J&H, representing 26% of its issued share capital.

(b) 6,000 ordinary shares of Inakaya (HK) Limited, representing 60% of itsissued share capital.

(c) 6,000 ordinary shares of Turbo Trade, representing 60% of its issued sharecapital.

(d) 2,000 ordinary shares of PHO24 (NTP) Limited, representing 20% of itsissued share capital.

(e) 2,000 ordinary shares of PHO24 (TST) Limited, representing 20% of itsissued share capital.

In consideration of the above transfers and as directed by Good View, Still Profitissued and allotted 5 shares, credited as fully paid, to Mr. Zhang.

C) Establishment of one single holding company

Victory Stand was incorporated on 21 March 2013 in the BVI and is authorised toissue a maximum of 50,000 shares. On 13 May 2013, 1 share of par value US$1.00 wasallotted and issued to each of Ms. Wong, Mr. Wu, Mr. Zhang and Mr. Lui by cashconsideration.

Glory Kind was incorporated on 25 March 2013 in the BVI and is authorised to issue amaximum of 50,000 shares. On 13 May 2013, 875 ordinary shares of par value US$1.00each were allotted and issued to Victory Stand.

On 22 May 2013, Victory Stand, through Glory Kind acquired the entire issued sharecapital of Team Glory from Ms. Wong. In consideration thereof, Victory Stand allotted andissued 8 shares, credited as fully paid, to Ms. Wong.

On 22 May 2013, Glory Kind acquired the entire issued share capital of Top Aim fromMr. Wu. In consideration thereof, Victory Stand allotted and issued 198 shares, credited asfully paid, to Mr. Wu.


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On 22 May 2013, Glory Kind acquired the entire issued share capital of Still Profitfrom Mr. Zhang. In consideration thereof, Victory Stand allotted and issued 672 shares,credited as fully paid, to Mr. Zhang.

On 22 May 2013, Glory Kind acquired the entire issued share capital of ProgressVantage from Mr. Lui. In consideration thereof, Victory Stand allotted and issued 12 shares,all credited as fully paid to Mr. Lui.

The consideration was determined in accordance with the Controlling Shareholders’attributable interests in the Operating Companies calculated with reference to the net assetvalue of the Operating Companies as at 31 March 2013 on the basis of their unauditedmanagement accounts.

D) Introduction of strategic investor

On 23 May 2013, Dragon Flame entered into an agreement for the sale and purchaseand a subscription agreement respectively with Victory Stand and Glory Kind to purchase125 shares and subscribe for 125 shares in Glory Kind at respective considerations ofHK$7,500,000 and HK$7,500,000. The said considerations were arrived at after arm’s lengthnegotiations between the parties and with reference to the combined net assets value ofGlory Kind as at 31 March 2013 on the basis of its unaudited combined managementaccounts, the Loan Capitalisation Issue and the consideration amount paid by Dragon Flamefor its subscription of the new shares of Glory Kind. After the completion of thesubscription and sale and purchase, Dragon Flame holds a total of 250 shares in Glory Kind,representing 25% of the enlarged issued share capital of Glory Kind.

As advised by the Directors, the Pre-IPO Investment broadens the Shareholders basisand enhances the Company’s business network. The aforesaid transactions were completedon 23 May 2013. The Directors are of the view that the Pre-IPO Investment was enteredinto on normal commercial terms.

Details of the Pre-IPO Investment are summarised below:

Name of investor : Dragon FlameDate of the agreements in relation to

the Pre-IPO Investment: 23 May 2013

Amount of consideration paid : HK$15,000,000Payment date of the consideration : 23 May 2013Effective cost per Share paid (Note) : HK$0.182Discount to the Placing Price : 54.5% to 63.6%Shareholding upon Listing : 82,500,000 Shares representing

20.625% of the issued share capital ofthe Company upon Listing

Note: For illustration purposes only, assuming completion of the Capitalisation Issue and the Placing.

Dragon Flame is a limited company incorporated in the BVI on 6 January 2012 and itsentire issued share capital is owned by Mr. Pan Chik, a non-executive Director. Theprincipal business activity of Dragon Flame is investment holding. Mr. Pan Chik has been


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the responsible officers of companies engaged in asset management and investment advisory.As advised by Mr. Pan Chik, he has never been involved in any investment or dealings withthe Directors, Controlling Shareholders, the Group’s subsidiaries and any of their respectiveassociates save for the Pre-IPO Investment. He invested in the Group due to his confidencein the business prospects of food business in Hong Kong.

As a result of the completion of the Pre-IPO Investment, Dragon Flame was interestedin 25% of the issued share capital of the Company immediately before completion of thePlacing and the Capitalisation Issue. Upon Listing, Dragon Flame would be interested in20.625% of the issued share capital of the Company. As such, shares held by Dragon Flamewould not be considered as part of the pubic float under the GEM Listing Rules.

Pursuant to the agreements in relation to the Pre-IPO Investment, Dragon Flame doesnot enjoy any special rights in connection with the Pre-IPO Investment.

As confirmed by the Sponsor, considering that the Pre-IPO Investment was completedmore than 28 clear days before the first submission of the listing application form in respectof the Listing, the Pre-IPO Investment is in compliance with the Interim Guidance onPre-IPO Investments issued by the Listing Committee on 25 October 2012.


– 83 –

Following the introduction of the strategic investor and the change of shareholdingstructure of Victory Stand as detailed under the paragraph headed “Adjustment in theShareholding Structure of Victory Stand” in this section, the structure of the Group was asfollows:

Victory Stand

Glory Kind

Dragon Flame

Mr. Zhang Ms. Wong Mr. Wu Mr. Lui

Minority Interest

Top Aim Still ProfitProgress Vantage

J&H

Harlan’s Holding

PHO24 (NTP) Limited

PHO24 (TST) Limited

H One F&B

Turbo Trade


19%

10%

10%

37%

30%

30%

26%

60%

60%

20%

20%

12.5%

10%

30%

35%

18%

5%

40%

30%

50%

Team Glory

10%

50%

30% 40%

JC Group 25% 50% 25%

20%60%20%

15% 67.5%

35%

45.88%

Mr. PanChik

100% 16.24% 29.75% 8.13%

25% 75%

100% 100% 100% 100%

H-View

Grand Century

E) Incorporation of the Company and acquisition of the single holding company bythe Company

(1) The Company was incorporated on 21 June 2013 in the Cayman Islands with anauthorised share capital of HK$380,000 divided into 38,000,000 ordinary shareswith a par value of HK$0.01 per share. One nil-paid Share was allotted andissued to the subscriber to the Memorandum and Articles of Association of theCompany, which was later transferred to Victory Stand on 21 June 2013.

(2) On 31 October 2013, the Company acquired the entire issued share capital ofGlory Kind from Victory Stand and Dragon Flame. In consideration thereof, theCompany credited as fully paid at par the initial subscriber Share held by VictoryStand and allotted and issued 749 and 250 fully paid up Shares to each of VictoryStand and Dragon Flame respectively.


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Following the incorporation of the Company, the structure of the Company and itsmajor operating subsidiaries (excluding H One F&B) were as follows:

The Company

Glory Kind

Dragon Flame


Minority Interest


J&H

Harlan’s Holding

PHO24 (NTP) Limited

PHO24 (TST) Limited

Turbo Trade


19%

10%

10%

37%

30%

30%

26%

60%

60%

20%

20%

12.5%

10%

30%

35%

18%

5%

40%

50%

Team Glory

10%

50%

JC Group 25% 50% 25%

20%60%20%

15% 67.5%

35%

45.88%

Mr. PanChik

100% 16.24% 29.75% 8.13%

25%

100%

Victory Stand

75%

100% 100% 100% 100%

H-View

Grand Century


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LOAN CAPITALISATION ISSUE

The Group was indebted to the following entities/individuals as set out in the tablebelow:

Name of the creditor

Amount due tothe creditors

(as at 22 May2013, in HK$)

FLC Holdings 2,988,553Mr. Wu 1,049,500Oriental Island 8,520,176Super Delights 745,000Good View 12,024,474Holy Best 1,134,000

Total amount: 26,461,703

On 22 May 2013, such loans were capitalised by allotting and issuing 615, 2,776,4,915 and 800 shares in Victory Stand to Ms. Wong, Mr. Wu, Mr. Zhang and Mr. Lui at thedirection of FLC Holdings, Oriental Island, Super Delights, Good View and Holy Bestrespectively (the “Loan Capitalisation Issue”). Such allotments were made at an aggregatesubscription price of HK$26,461,703, which was satisfied by setting off pro tanto against theaggregate amount of such loans in full.

After the Loan Capitalisation Issue, the respective shareholdings of the shareholders inVictory Stand are set out as follows. The below percentages and the respective number ofshares allotted were determined in accordance with their attributable interests in theOperating Companies with reference to the net asset value of the Operating Companies as at31 March 2013 (on the basis of their unaudited management accounts) after the completionof the Loan Capitalisation Issue.

NameNumber of

shares

% of theissued share

capital

Ms. Wong 624 6.24Mr. Wu 2,975 29.75Mr. Zhang 5,588 55.88Mr. Lui 813 8.13

Total: 10,000 100%


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ADJUSTMENT IN THE SHAREHOLDING STRUCTURE OF VICTORY STAND

On 22 May 2013, Ms. Wong acquired from Mr. Zhang 1,000 ordinary shares in VictoryStand at a consideration of HK$5,300,000 which was arrived at after arm’s lengthnegotiations. The following table sets out the respective shareholding of the ControllingShareholders in Victory Stand immediately after such acquisition:

NameNumber of

shares

% of theissued share

capital

Ms. Wong 1,624 16.24Mr. Wu 2,975 29.75Mr. Zhang 4,588 45.88Mr. Lui 813 8.13

Total: 10,000 100%

EXCLUDED BUSINESS

JJH

JJH was incorporated in Hong Kong on 7 May 2004 and is, as at the Latest PracticableDate, owned as to 10%, 45% and 45% by FLC Holdings, Mr. Wu and Mr. Jiang Jun, who isan Independent Third Party, respectively. When it commenced business in 2004, its principalbusiness was to operate a western restaurant in the ifc mall under the tradename “Harlan’s”.The trademark of “Harlan’s” was held by Well-In Holdings (which is a company controlledby Mr. Wu) because Mr. Wu desired to retain the sole ownership of the trademark ofHarlan’s. In contemplation of the Listing, Mr. Wu subsequently agreed to assign thetrademark to the Group.

Upon the expiry of the lease in 2010, JJH and the landlord were unable to come to anagreement to renew the lease by reason of the high rental increment and the fact that, afterthe entry of H One in 2006, the landlord wished to avoid having restaurants of similardining style in order to maintain diversity within the mall.

After the expiry of the lease in 2010, the “Harlan’s” restaurant ceased business and JJHdid not carry on any other business until the Latest Practicable Date. As such, JJH was notincluded in the Group.

PHO24 (CWB) Limited

PHO24 (CWB) Limited (“PHO24 (CWB)”) was incorporated in Hong Kong on 3September 2010. Its principal business was to operate a restaurant serving Vietnamesecuisine in Causeway Bay, Hong Kong under the tradename “PHO24”. In view of theunsatisfactory business performance of PHO24 (CWB), the directors of PHO24 (CWB)decided to cease the business and the company was deregistered on 8 March 2013. Based onthe audited accounts of PHO24 (CWB) for the period from 3 September 2010 (date ofincorporation) to 30 June 2012 (date of cessation), the turnover, the negative EBITDA andthe operating loss were approximately HK$9.2 million, HK$3.1 million and HK$4.4 million,respectively. The Group would still be able to meet the minimum cash flow requirement


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under Rule 11.12A of the GEM Listing Rules if PHO24 (CWB) were included in the Groupduring the Track Record Period. Prior to the deregistration, PHO24 (CWB) was owned byGood View, Oriental Island and CK Development as to 35%, 32.5% and 32.5%. CKDevelopment is a BVI company wholly owned by Mr. Ngan Chi Kwong, who is the directorof PHO24 (TST) Limited and PHO24 (NTP) Limited and indirectly holds (through CKDevelopment) 35% and 30% of the issued share capital of PHO24 (TST) Limited andPHO24 (NTP) Limited, respectively, and thus Mr. Ngan Chi Kwong is a connected person ofthe Company.

As PHO24 (CWB) conducted no business activity following the cessation of itsrestaurant and it was already deregistered, PHO24 (CWB) was not included in the Group.

CAPITALISATION AND PLACING

The Company will issue certain new Shares under the Placing, and certain new Sharesto the existing shareholders of the Company pursuant to the Capitalisation Issue, resulting innot less than 25% of the enlarged issued share capital of the Company being offered underthe Placing and the remaining 75% held by Victory Stand and Dragon Flame. The Companyhas increased its authorised share capital in order to be positioned to allot and issue thePlacing Shares to the public, institutional investors and the existing shareholders of theCompany.

The following chart sets out the shareholding and corporate structure of the Companyand its major operating subsidiaries (excluding H One F&B) upon completion of the Placingand the Capitalisation Issue (without taking into account any Shares which may be grantedunder the Share Option Scheme):

25%

The Company

Glory Kind

Dragon Flame


Minority Interest


J&H

Harlan’s Holding

PHO24 (NTP) Limited

PHO24 (TST) Limited

Turbo Trade


19%

10%

10%

37%

30%

30%

26%

60%

60%

20%

20%

12.5%

10%

30%

35%

18%

5%

40%

50%

Team Glory

10%

50%

JC Group 25% 50% 25%

20%60%20%

15% 67.5%

35%

45.88%

Mr. PanChik

100% 16.24% 29.75% 8.13%

20.625%

100%

Victory Stand

54.375%

100% 100% 100% 100%

H-View

Grand Century

Public


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OVERVIEW

The Group is a food and beverage group in Hong Kong operating 6 full-servicerestaurants and 2 cake shops at the Latest Practicable Date. The Group’s philosophy is“unique dining concepts” which is fully translated by the quality dishes accompanied by apleasant atmosphere and attentive services. The Group uses quality food ingredients toprepare cuisines based on the recipes that are created by chefs or licensed by the way offranchising arrangements, and implements quality control system to ensure consistency ofhigh food quality. Restaurants are strategically located in prime areas, contemporarydecorated and coupled with trained staff providing attentive services.

COMPETITIVE STRENGTHS

The Directors believe that the following competitive strengths of the Group havecontributed to its success and enabled the Group to compete effectively in the food andbeverage industry in Hong Kong.

Business strategy of providing high quality food and services

The Directors believe that their adherence to delivering consistently high quality foodunder a pleasant, attractive and elegant environment, served by good and attentive waiters isthe key to success in the Group’s full-service restaurant business. The Group attempts torefine its food and services quality continuously by making variations to its menu itemsaccording to seasons and trends. The Directors believe that the Group’s ability to introducecreative dishes regularly and consistently improve the quality of its food and services, helpto generate more customer traffic, attract a broader customer base and thus enhance itsoperating results and reputation.

The Group also provides comfortable dining environment coupled with attentiveservices to its customers. All restaurants are equipped with contemporary decoration whilesome are even accompanied by breathtaking harbour views. In addition, there are privatethemed rooms of different concepts in certain restaurants to accommodate specific needs ofthe customers. The Directors also believe that the Group’s reliable and professional servicesto its customers contributes to the establishment of its loyal patronage. As a result, therestaurant staff are required to be properly uniformed during working hours to project aprofessional image. The Group also provides guidance and guidelines to its staff onservice-related areas such as food knowledge, food handling, personal hygiene and mannersto enhance the quality of services provided to the customers. Front-line service staff aretrained to be courteous, efficient, polite and responsive to provide good hospitality tocustomers. Managers of each of the Group’s restaurants hold briefing sessions withfront-line service staff on the daily operations of restaurants and the managers would discusscustomers’ feedbacks with service staff members. Such briefing sessions assist the front-lineservice staff in maintaining and improving service levels and quality. The Directors believethat the high quality dining environment and attentive customer services help to attract morecustomers with strong purchasing power and enhance customer loyalty, which in turn allowsthe Group to continuously drive the growth in its business.

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The Group is the owner or franchisee of several prestigious and well-known brands

The Group owns several well-known brands such as “Harlan’s” and “H One”. Inaddition, the Group is developing new brands through entering into new franchisingarrangements or developing them by opening new restaurants. For example, “Pearl DiningHouse”, a brand developed by the Group, was launched in September 2013 and the Group isthe exclusive franchisee of several well-known brands such as “Inakaya”, a renownedrobatayaki restaurant from Japan, “PHO24” from Vietnam and “Mekikinoginji – Okinawa（目利之銀次沖繩）”, a famous izakaya chain from Okinawa Prefecture, Japan. The Group

believes that it has successfully built or managed these brands to represent high quality anddelicious cuisine, which target customers with middle to high spending power, and willcontinue to put great efforts and resources into brand building. The Group believes its strongbrands help to increase its cost efficiency by strengthening its bargaining power whendealing with its suppliers, landlords and other service providers, and also strengthen theloyalty of its customers.

Restaurants are strategically located in prime districts of Hong Kong

The Directors believe that the locations of the Group’s restaurants are vital for theGroup’s strategy of targeting customers with relatively high spending power and thepromotion of the Group’s brands and reputation. The Group strategically locates itsrestaurants in landmark shopping malls (such as ICC, WTC, NTP, V city, The ONE andiSQUARE) which are situated in populous districts of Hong Kong, including Tsim Sha Tsui,Causeway Bay, Sha Tin and Tuen Mun. The Directors believe that the meticulous choice oflocations of the Group’s restaurants helps to promote the image of the Group’s full-servicerestaurants and facilitate the Group in capturing market share from the middle to high-enddining industry.

Stringent internal control criteria to ensure high quality of food

The Group imposes stringent criteria for the choice of suppliers of food ingredients,and internal control and management system in the food preparation process. To ensure foodproducts served by the Group are in good quality, the purchasing department of the Groupworks closely with the head chefs of the Group’s restaurants to set the required qualitystandards and the quantity for different food ingredients. The chefs also participate in theselection of suppliers of different raw materials to ensure the freshness of food ingredientsand the stability of supply. The Group also implements internal control and managementsystems for ensuring the quality of food products served by the Group’s restaurants. Fordetails, please refer to the paragraph headed “Quality control” in this section.

Strong and experienced managerial team

The Group’s management team consists of experienced personnel with extensiveexperiences and knowledge of the food and beverage industry and management. The Groupwas founded in 2006 by Mr. Wu, the Chairman of the Company and an executive Director.Mr. Wu is an accomplished restaurateur with over 20 years of operating experience in thehotel and restaurant supplies industry. Ms. Wong, who co-founded the Group with Mr. Wu,has been participating in the management of the Group since 2006. Other senior

BUSINESS

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management members of the Group also have significant management and operationalexperience in their respective fields. For example, the chief operating officer, Mr. Chui WaiKin, has over 20 years of experience in food and beverage industry in Hong Kong and hasbeen a well-recognised chef in the culinary scene in Hong Kong. Mr. Fong Chun Hin Danielhas 24 years of operating and managing experience in hotel and restaurant groupsaccumulated from various working experience in both Beijing and Hong Kong. Othermanagement members are also well-experienced and capable. This gives the Group a distinctcompetitive edge over its competitors as the senior management team is able to effectivelymaintain and enhance the Group’s reputation with a particular emphasis on food quality andservices. For detailed information about the industry experience of the Group’s seniormanagement, please refer to the section headed “Directors, Senior Management and Staff” inthis prospectus.

OVERVIEW OF THE RESTAURANTS OPERATION

The following map shows the approximate locations of the Group’s restaurants andcake shops in Hong Kong during the Track Record Period and up to the Latest PracticableDate.

Plover CoveReservoir

High Island Reservoir

CHEK LAP KOK

TUEN MUN

TSEUNG KWAN O

SHA TIN

TSUEN WAN

KWAI CHUNG

FANLING &SHEUNG SHUI

TAI POYUEN LONG

LAMMAISLAND

SAI KUNG

SCALE

LANTAU ISLAND HONG KONG ISLAND

KOWLOON

NEW TERRITORIES

DEEP BAY

MIRS BAY

JUNKBAY

VICTORIA HARBOUR

SHENZHEN SPECIAL ECONOMIC ZONE

CheungChau

Ina

Mekiki (V city)at V city

kaya at ICC

H One, The Box and G Bar

at ifc mall (note 1)

PHO24 at NTP(note 3)

PHO24 at iSQUAREHarlan’s and Kaika,Harlan’s cake shop

and Pearl Dining Houseat The ONE

Mekiki (WTC)(note 2) and

Carouselat WTC

Notes:

1. The operations of these three restaurants ceased in July 2013. The Directors are evaluating suitablevenues to continue the operation of restaurants under the same brand names.

2. Prior to September 2013, Mekiki (WTC) was known as Hooray Kaiko.

3. PHO24 (NTP) has ceased operation in early November 2013 and the Group will open Pearl Delightsin the same location in December 2013. The Group plans to relaunch a PHO24 restaurant subject tothe availability of suitable premises.

BUSINESS

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Yau Tsim Mong District

Yau Tsim Mong District is a core urban area of Kowloon and a major tourist hub withmany shopping malls in Hong Kong. During the Track Record Period, the Group hasoperated four restaurants in the major shopping malls in Yau Tsim Mong District. InSeptember 2013, the Group launched its first Chinese cuisine restaurant, Pearl DiningHouse, in this district and the Group will launch a cafe, a la Folie, in November 2013.

Set out below are the details of the restaurants in Yau Tsim Mong District, includingthe brands, date of commencement of operation, locations, dining environment and cuisineserved during the Track Record Period or are currently in operation as at the LatestPracticable Date.

Restaurant Date of commencement Location

Inakaya March 2011 Shop A, 101th Floor, ICCHarlan’s and Kaika July 2010 Level 19, The ONEHarlan’s cake shop July 2012 L411, 4th Floor, The ONEPHO24 (TST) December 2009 Shop 303, 3rd Floor, iSQUAREPearl Dining House September 2013 UG221, Upper Ground 2,

The ONEa la Folie November 2013 No. 247, Level 2, GCP

Dining environment

Inakaya : A modern and stylish décor with a sense of traditional Japaneseambience set on the 101th floor of ICC. featuring breathtakingharbour view with 126 seatings and three private themed roomsof different concepts

Harlan’s andKaika

: A contemporary design with a spacious alfresco outdoor terraceand breathtaking view having 102 seatings and three privaterooms, and a new-fashioned design with a Zen mood for 61seatings

Harlan’s cakeshop

: A clear and bright open area with 6 seatings

PHO24 (TST) : A clean and bright area with 86 seatings

Pearl DiningHouse

: An elegantly decorated Chinese style restaurant with 52 seatings

a la Folie : A patisserie-cafe with approximately 22 seatings exuding aFrench vibe with contemporary décor

BUSINESS

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The following images show the dining environment of the above restaurants.

Inakaya Harlan’s and Kaika Harlan’s and Kaika

PHO24 (TST) Pearl Dining House Harlan’s cake shop

Cuisine

Inakaya : A wide array of Japanese cuisine, such as yakitori, robatayaki,sashimi, teppanyaki and other traditional Japanese dishes

Harlan’s andKaika

: Continental western cuisine with a vast selection of wine andauthentic Japanese cuisine, such as teppanyaki, sushi andsashimi delicacies with sake

Harlan’s cakeshop

: Traditional French pastries with coffee and tea

PHO24 (TST) : Traditional Vietnamese rice noodle and dishes

Pearl DiningHouse

: Chinese dishes in Huaiyang-style（淮揚）, dumplings, noodlesand double-stewed soup

a la Folie : French pastries and delicacies with a Japanese twistaccompanied by coffee and tea

BUSINESS

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The following images show some of the signature dishes served by the aforesaidrestaurants.

Robatayaki kinki fish(Inakaya)

Boston lobster pasta withhome made tomato sauce

(Harlan’s and Kaika)

Teppan abalone with sea urchin(Harlan’s and Kaika)

Lemon grass chickenwing rice noodle(PHO24 (TST))

Braised pork withbean curd sheet

(Pearl Dining House)

Sexy lady(Harlan’s cake shop)

Wan Chai District

Wan Chai District is located in the north of Hong Kong Island and is a key commercialdistrict. During the Track Record Period, the Group has operated a restaurant and a cakeshop in WTC, a major shopping centre and office tower complex in Causeway Bay.Causeway Bay is also a major tourist hub on Hong Kong Island.

Set out below are the details of the restaurants in Wan Chai District, including thebrands, date of commencement of operation, locations, dining environment and cuisineserved during the Track Record Period or are currently in operation as at the LatestPracticable Date.


Mekiki (WTC)(Note) October 2010 P502 of WTCCarousel October 2010 P421b of WTC

Note: Prior to September 2013, Mekiki (WTC) was known as Hooray Kaiko.

BUSINESS

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Environment

Mekiki (WTC) : A chic design dining spot with alfresco seating overlooking thebreathtaking Victoria Harbour with 62 seatings. The restaurantincludes a Japanese design upper floor with similar view andadditional 50 seatings

Carousel : A stylish cake shop providing take-away services only

The following images show the environment of the above restaurant and cake shop.

Mekiki (WTC) Mekiki (WTC) Carousel

Cuisine

Mekiki (WTC) : Western cuisine with wine and Japanese cuisines such asrobatayaki, sushi and sashimi delicacies

Carousel : A wide range of cakes and French pastries

The following images show some of the signature dishes served by the aforesaidrestaurant and cake shop.

Grilled oyster with sea urchin sauce(Mekiki (WTC))

Banana Chocolate ball(Carousel)

BUSINESS

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Sha Tin District

Sha Tin District is one of the most populous districts in Hong Kong. During the TrackRecord Period, the Group has operated one restaurant in NTP. NTP is one of the largestshopping malls in the New Territories with around 2 million sq. ft. of total floor area.

PHO24 (NTP) commenced its operation in NTP in May 2010. It is located at Shop 127,Level 1, NTP with 144 seatings in a clean and bright open area. As part of the Group’seffort to launch the “Pearl” series restaurants and as a result of negotiation with the existinglandlord of the premises on arm’s length basis, the Group has ceased the operation ofPHO24 (NTP) in early November 2013 and will replace it with Pearl Delights, whichfocuses on Cantonese cuisine, with a capacity of approximately 120 seats at the samelocation in December 2013. The following image shows the dining environment of PHO24(NTP).

PHO24 (NTP)

PHO24 (NTP) mainly served traditional Vietnamese rice noodle and dishes. Thefollowing images show some of the signature dishes served by the restaurant.

PHO24 raw beef rice noodle Vietnamese pork & shrimp rice paper rolls

Tuen Mun District

Tuen Mun District is the westernmost continental district of Hong Kong. During theTrack Record Period, the Group did not have any restaurant operated in this district. InOctober 2013, the Group launched a famous izakaya（居酒屋）chain, Mekiki (V city), in Vcity of Tuen Mun District. The following image shows the dining environment of Mekiki (Vcity).

Mekiki (V city) Mekiki (V city)

BUSINESS

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Mekiki (V city) mainly serves Japanese cuisine, such as robatayaki, sushi and sashimidelicacies with approximately 90 seatings. The following images show some of the signaturedishes served by the restaurant.

Baked egg with spicy cod roe(Mekiki (V city))

Grilled rice ball with salmon and salmon roe(Mekiki (V city))

Chicken meat udon noodlesin chicken soup

(Mekiki (V city))

Steamed rice cake withsweet red-bean paste

(Mekiki (V city))

Central and Western District

Central and Western District is the central business district of Hong Kong with officesof various local and international corporations, in particular the financial services industry.

The Group has operated the IFC Restaurants in Central and Western District during theTrack Record Period. In July 2013, having considered the proposed rental increment and thefinancial performance of these restaurants, the Group suspended the operations of these threerestaurants pending for relaunching of these restaurants upon identifying suitable venues.

Set out below are the details of the IFC Restaurants in Central and Western District,including the brands, date of commencement of operation, locations, dining environment andcuisine served during the Track Record Period.


H One November 2006 Shop 4008, Podium Level 4, ifc mallG Bar October 2006 Shop 4009, Podium Level 4, ifc mallThe Box October 2006 Shop 4010, Podium Level 4, ifc mall

BUSINESS

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The above three restaurants were located in ifc mall, an integrated commercial complexon the waterfront of Central and Western District.

Dining environment

H One : A fashionable venue of 471.52 sq. m. featuring breathtakingharbour views with 129 seatings and three private themed roomsof different concepts

G Bar : A sensational ‘glass cube’ design pub of 156.07 sq. m. with 78seatings and an access to outdoor terrace overlooking theharbour with great selection of music

The Box : A place of 143.84 sq. m. for various private and corporateevents with breathtaking panoramic view of harbour with 54seatings

The following images show the dining environment of the above restaurants.

H One G Bar The Box

Note: The IFC Restaurants were closed in July 2013 and the Group is actively looking for suitablelocations to relaunch these restaurants. It is estimated, subject to various factors such as economicconditions, rentals and suitability of available locations, these restaurants may be relaunched in thesecond half of 2014 in Central.

BUSINESS

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Cuisine

H One : Italian cuisine with fine wine

G Bar : An array of wines, spirits, cocktails and non-alcoholic drinkswith gourmet tapas and Havana cigars

The Box : Offering a wide range of wine, spirits, beers and cocktailstogether with oyster, snacks, pizza and burgers

The following images show some of the signature dishes served by H One.

Mustard lamb rack Pesaro seafood soup

Franchising Agreements

As at the Latest Practicable Date, the Group has entered into franchising agreements(the “Franchising Agreements”) for the exclusive rights to operate Kaika, PHO24, Inakayaand Mekikinoginji – Okinawa（目利之銀次沖繩）in Hong Kong. During the Track RecordPeriod, these franchised fees represent approximately 0.9%, 1.0% and 1.0% of the revenueof the Group, and 13.2%, 20.7% and 34.0% of the net profit of the Group. Save for RichBase which is a connected person of the Group, these Franchising Agreements were enteredinto with Independent Third Parties. To the best knowledge of the Directors, there is nomaterial breach of the Franchising Agreements during Track Record Period rendering theFranchising Agreements invalid or voidable, and the Company has specifically assigned thecompany secretary and an executive Director to supervise regularly to ensure the terms ofthe Franchising Agreements are complied with. The chief operating officers are required toreport to the Board regularly on the compliance of the Franchising Agreements. In addition,to the extent it is applicable, the Group is required to retain chefs assigned by thefranchisors who will have regular meetings and discussions with the Group to ensure thefranchisors’ requirements are met. The Group would also enhance communications with thefranchisors to ensure their requirements are complied with and that the operations of thefranchised restaurants are operated in line with the Franchising Agreements.

According to the Franchising Agreements, amongst other matters, the Group is requiredto pay franchise fees, determined after arm’s length negotiations in return for the exclusiverights to use the brands of Kaika, PHO24, Inakaya and Mekikinoginji – Okinawa（目利之銀次沖繩） in Hong Kong. The Franchising Agreements set out the standards andrequirements of the franchisors such as instructions on operation, design on restaurants andcooking area, the food ingredients to be used, the quality control and marketingprogrammes. The current terms of the Franchising Agreements of Kaika, PHO24, Inakayaand Mekikinoginji – Okinawa（目利之銀次沖繩）, if not renewed, will expire in 2015, 2016,2016 and 2019, respectively.

BUSINESS

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Kaika, Inakaya and Mekikinoginji – Okinawa（目利之銀次沖繩） and PHO24 arerenowned brands in Japan and Vietnam respectively. The Directors believe that running thesewell-known brands would have positive impacts on the Group’s performance and image, andthese brands are in line with the images of other brands developed by the Group.

Set out below are the material terms of the Franchising Agreements(1):

Date Parties Location Scope Tenure

Amount andnature offranchise feespaid/to be paid

Roles andresponsibilitiesof thecontractingparties

Settlementterms

Terminationclauses

Kaika 29.04.10 Granada Co.,Ltd. (asfranchisor) andHarlan’sHolding (asfranchisee) (3)

Hong Kong For the openingof Kaikateppanyakirestaurant andthe use ofrelevant trademarks.

5 years(renewable for 3years with arenewal fee of500,000Japanese Yen)

4.5 millionJapanese Yen ascontract fee touse the brandand trademarkand 2 millionJapanese Yenfor the 2nd andsubsequentrestaurants and2% of monthlysales

Franchisor:provideoperationinstructions,design andrecipes andknow how;Franchisee:exclusive rightto use thetrademark forbusiness.

Mutualconsultationbetween bothparties

By writtennotificationunless the otherparty objectswithin 14 daysunder certaincircumstancessuch asinsolvency or 3months writtennotice prior tothe expiration

Inakaya 02.09.10 WaEntertainmentLimited (asfranchisor) andInakaya (HK)Limited (asfranchisee)(4)

Hong Kong For the openingof “InakayaRobatayakiHong Kong”and the use ofrelevant trademarks.

6 years US$150,000 ascontract fee and2.5% ofmonthly sales

Franchisor:provideoperationinstructions,design andrecipes andknow how;Franchisee:exclusive rightto use thetrademark forbusiness;arrangements onstaff, kitchen setup andrelocation ofJapanese chef.

Mutualconsultationbetween bothparties

Mutualagreement

Mekikinoginji-Okinawa（目利之銀次沖繩）

04.07.13 Mitano createco Ltd (asfranchisor) andGrand Century(asfranchisee)(5)

Hong Kong For the openingofMekikinoginji-Okinawa（目利之銀次沖繩）andthe use ofrelevant trademarks.

6 years 5 millionJapanese Yenand 1.5% ofmonthly grosssale

Franchisor:provide adviceand assistancein setting upbusiness,formulatingbusinessstrategies andshare thetechnicalknow-how;Franchisee:trade secret andmarketopportunitiesknowledge andrecipes.

N/A The franchiseemay terminateby 4 months ofprior writtennotice in case ofno breach andeither party mayterminate by 90days of priorwritten notice.

PHO24(2) 28.06.13 Rich Base (asMasterfranchisee) andPHO24 (TST)Limited andPHO24 (NTP)Limited (asfranchisees)(6)

Hong Kong For the openingof PHO24 andthe use ofrelevant trademarks.

3 years 2% of all grosssales and othermiscellaneousfees (such asrenewal feesand transferfees)

Franchisor:provideguidance onoperation andrecipes;Franchisee:ConfidentialInformation,actions againstinfringing uses.

N/A By 30 days ofprior writtennotice in certaincircumstance

(1) All of the Franchising Agreements contain no conditions on achieving total minimum number ofrestaurants required to be opened, minimum number of revenue per restaurant or minimuminvestment amounts.

BUSINESS

– 100 –

(2) Rich Base entered into the Master Franchise Agreement subsequent to which Rich Basesub-franchised the PHO24 franchise to PHO24 (TST) Limited and PHO24 (NTP) Limited. Under theMaster Franchise Agreement, the total minimum number of restaurants required to be opened is: 1new store for the 1st year; 1-2 new stores for the 2nd year; and 12-13 new stores for the 3rd to 10thyear.

(3) Granada Co., Ltd. is a limited company based in Japan and founded in June 2000, its main businessare food and beverage, restaurant management and consultation. Granada Co Ltd is an IndependentThird Party.

(4) Wa Entertainment Limited is a limited company with its main business being food and beverage witha particular strength in robatayaki. Wa Entertainment Limited is founded in 1970s and it operatesfour outlets in Tokyo, New York and Hong Kong. It is an Independent Third Party.

(5) Mitano create co., Ltd is a limited company with its main business being food and beverage in Japan.It is an Independent Third Party.

(6) PHO24 Corporation is established in 2003 with its base in Vietnam. Its main business is the sale ofVietnam noodles under the brand PHO24 and it has around 70 outlets in major cities in Vietnam.PHO24 Corporation is an Independent Third Party.

(7) The Group has assigned Ms. Yim Sau Ping, the company secretary and Ms. Wong, the executiveDirector, to supervise and review from time to time the performance and operation of the restaurantsunder the franchise arrangements to make sure that they are operated in line with the franchisors’requirements.

Franchising Arrangements on PHO24

The Master Franchise Agreement concerning PHO24 was entered into with Rich Base,a company controlled by Mr. Wu (who is a connected person) and owns the exclusivefranchise (and the right to grant sub-franchise to others) to operate PHO24 restaurants inHong Kong and Macau. The sub-franchise agreements entered into between Rich Base andthe Group do not impose any obligations on the Group to open or operate a minimumnumber of PHO24 restaurants. The sub-franchise agreement dated 28 June 2013 entered intobetween Rich Base and PHO24 (NTP) Limited provides that PHO24 (NTP) Limited mayterminate the sub-franchise agreement by obtaining Rich Base’s prior written consent. Inanticipation of the closure of PHO24 (NTP) in November 2013, Rich Base and PHO24(NTP) Limited entered into a termination agreement on 8 October 2013 to terminate thesub-franchise agreement with effect from the date of the closure of PHO24 (NTP) withoutany penalty, liabilities and further obligations on each of them. Clause 3.1 of the MasterFranchise Agreement (“Clause 3.1”) requires Rich Base to procure certain new restaurants tobe opened and in operation within certain timeline as disclosed in page 100 of thisprospectus. In the event if Rich Base fails to open and operate the requisite number ofPHO24 restaurants, such failure shall constitute a material default for which PHO24Corporation shall have the right to terminate the Master Franchise Agreement effective 180days after delivery of written notice thereof to Rich Base provided that Rich Base shall havethe right to cure such default within such 180 days from the date of receipt of such notice.In the event that Rich Base is unable to cure such default or any other default upon theexpiry of the relevant notice period under the Master Franchise Agreement, PHO24Corporation shall have the right to terminate the Master Franchise Agreement and (unless itagrees to maintain the PHO24 franchise arrangement with the Group directly) effectivelyalso to terminate the underlying sub-franchise arrangements with the Group. In such event oftermination, the ultimate impact to the Group would be the cessation of the operations of the

BUSINESS

– 101 –

PHO24 restaurants, which had contributed to approximately 12.9%, 14.5% and 15.1% of theGroup’s revenue for the year ended 31 March 2012, the year ended 31 March 2013 and thethree months ended 30 June 2013, respectively. As confirmed by Rich Base, Clause 3.1 hasbeen complied with (given that at least one PHO24 restaurant has been opened and is inoperation in Hong Kong) and it has never received any notice from PHO24 Corporationnotifying it of any breach of any terms by it relating to Clause 3.1 or other terms of theMaster Franchise Agreement. Please refer to page 145 of the prospectus for details ofanother PHO24 restaurant which has been opened by an Independent Third Party and is inoperation in Macau. Legal advice has been specifically obtained from the Legal Counsel ofthe Company on the interpretation of Clause 3.1 and the other relevant provisions of theMaster Franchise Agreement relating to the requirements on the number of new restaurantswhich need to be opened and operated starting from the third year referred to in the MasterFranchise Agreement. The opinion of the Legal Counsel of the Company is that the entiremeaning of the contractual obligation of Clause 3.1 and the other relevant provisions of theMaster Franchise Agreement is that, given that there are at least two PHO24 restaurants (inHong Kong and Macau) in operation starting from the second year, the number of newrestaurants to be opened in the third year and each subsequent year can be zero providedthat enough new restaurants are opened to make the total number of restaurants beingopened and operated to be up to fifteen by the end of the period between the third year andthe tenth year. The conclusion of his opinion is that Clause 3.1 has not been breached andthis is consistent with and confirms the understanding of Rich Base. In light of and on thebasis of the above, Clause 3.1 can continue to be complied with and will not be breachedafter the closure of PHO24 (NTP).

Details of the franchising arrangements under the Master Franchise Agreement and theother sub-franchise agreements related to PHO24 are set out in the paragraph headedFranchising Arrangements on PHO24 under the section headed “Continuing ConnectedTransactions” of this prospectus. The Group is aware of the requirement to fulfill theminimum number of restaurants to be opened in the prescribed period under the MasterFranchise Agreement. Accordingly, it will conduct periodic and annual reviews to examinewhen would be appropriate time to open additional new restaurants. Factors forconsiderations would include those set out in the paragraphs under the heading “ExpansionPlans and Site Selection Development” in the “Business” section of this prospectus.

BUSINESS

– 102 –

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BUSINESS

– 103 –

Num

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BUSINESS

– 104 –

SALES AND MARKETING

Sales

The revenue of the Group for the two years ended 31 March 2012 and 2013 and for thethree months ended 30 June 2013 amounted to approximately HK$260.4 million, HK$246.1million and HK$62.2 million, respectively. The decrease during the year ended 31 March2013 was mainly due to the drop in demand for business meals and corporate events alongwith uncertain market sentiment, and the increase in competition which affected theperformance of the Group’s fine dining restaurants, namely H One, Inakaya, and Harlan’sand Kaika. The following table sets forth a breakdown of the Group’s revenue as derivedfrom each of its restaurants and as a percentage of its total revenue for the two years ended31 March 2012 and 2013 and for the three months ended 30 June 2012 and 2013:


Revenue(HK$’000)

% oftotal

revenueRevenue

(HK$’000)

% oftotal

revenueRevenue

(HK$’000)

% oftotal

revenueRevenue

(HK$’000)

% oftotal

revenue(Unaudited)



Subtotal 87,187 33.5 72,223 29.3 18,131 31.6 18,589 29.9



Subtotal 171,732 65.9 169,969 69.1 38,965 67.8 42,418 68.3


Subtotal 1,518 0.6 3,880 1.6 334 0.6 1,158 1.8

Total revenue 260,437 100.0 246,072 100.0 57,430 100.0 62,165 100.0

BUSINESS

– 105 –

Notes:

(1) H One, G Bar and The Box ceased operation in July 2013.

(2) PHO24 (NTP) has ceased operation in early November 2013 and the Group will open Pearl Delightsin the same location in December 2013. The Group plans to relaunch a PHO24 restaurant subject tothe availability of suitable premises.



Pricing Policy

The Group mainly takes into consideration the costs of raw materials and foodingredients, and target profit margin in deciding the price of each menu item. Sometimes,the price of the dishes is determined with reference to the general market trends and thepurchasing power of the target customers. Total costs of food ingredients of each dish aremeasured based on the total unit cost of food ingredients with reference to the standardisedrecipe. The cost of inventories consumed as a percentage of revenue remained at 28.8%,29.0% and 28.4% for the two years ended 31 March 2012 and 2013 and the three monthsended 30 June 2013, respectively.

The Group reviews the main menu from time to time. Apart from reviewing theselection of menu items, the Group adjusts the menu prices in response to the pricefluctuations to the costs of raw materials and food ingredients, the operating costs and thegeneral market trends. As a result, the Group was able to maintain a relatively stable grossmargin during the Track Record Period.

Settlement

The majority of the Group’s customers settles their bills by cash or credit cards. Somecustomers will deposit earnest money to the Group’s designated bank accounts for thereservation during special festivals or special occasions. The Group also issues and sellsprepaid coupons and cash vouchers to its customers. Some customers settle by Octopuscards where available.

The table below sets forth the breakdown of the revenue by types of settlement duringthe Track Record Period.


HK$’000

% oftotal

revenue HK$’000

% oftotal

revenue HK$’000

% oftotal

revenue HK$’000

% oftotal

revenue(Unaudited)

Credit cards 205,048 78.7 189,073 76.8 45,412 79.1 49,216 79.2Cash 42,962 16.5 43,963 17.9 9,987 17.4 11,150 17.9Others (note) 12,427 4.8 13,036 5.3 2,031 3.5 1,799 2.9

Total 260,437 100.0 246,072 100.0 57,430 100.0 62,165 100.0

Note: Others include payment by prepaid coupons, cash vouchers and Octopus cards.

BUSINESS

– 106 –

Credit cards

The restaurants operated by the Group accept credit cards from all major credit cardissuers for settlements of bills. The Group normally receives remittance from the relevantcredit card issuers, net of service charges, on the second or third Business Day after the dayon which the credit card transaction is approved.

Cash

Though most of the Group’s customers settle their bills by credit cards, the Group stillhandles certain amount of cash everyday. To prevent any misappropriation of cash, theGroup implements a cash management system with a set of cash handling proceduresthroughout the Group’s restaurants, including segregation of duties and reconciliation ofcash balance by the cash register operators and operation managers on a daily basis. Cashreceived at a restaurant pending delivery to the banks is kept with sealed plastic bags in thesafes located in each restaurant. The Group also maintains insurance in respect of cash keptat the restaurants. Save as those restaurants located close to banks, the Group engagesreputable cash transport service provider to deliver cash from the restaurants to the banksregularly. The accounts department would finally cross check the balance against the recordsprovided by the restaurants, the cash transport service provider and the banks. During theTrack Record Period, there was no incident of any material cash misappropriation.

Prepaid coupons and cash vouchers

During the Track Record Period, the Group issued and sold membership packages to itscustomers. The membership package consists of a one-year membership card and somecoupons which can be used in the Group’s specified restaurant. The amount recognised asmembership income for the two years ended 31 March 2012 and 2013 and for the threemonths ended 30 June 2013 amounted to approximately HK$80,000, HK$44,000 and nil,respectively. The customers can receive certain discounts on food and beverage bypresenting the membership card while the coupons allow customers to redeem food and/orbeverage at various restaurants. Following the closure of the IFC Restaurants, the customerscan use the coupons in other restaurants. The Group did not record any compensation ormaterial claim in respect of the closure of the IFC Restaurants. In addition, the Group sellscash vouchers to its customers. Most coupons and cash vouchers are normally valid for oneyear upon issuance.

The payment from customers that the Group receives from the issuance and sales of themembership packages and cash vouchers are treated as an advance from customers on theGroup’s combined statement of financial position. The advance will only be recognised asthe Group’s revenue upon the redemption of the coupons and cash vouchers. The advancesin respect of expired coupons and cash vouchers are recognised as forfeited income in theGroup’s combined statement of comprehensive income. The amount recognised as forfeitedincome for the year ended 31 March 2013 and three months ended 30 June 2013 amountedto approximately HK$508,000 and HK$108,000, respectively. As the cost of administrationwas higher than expected, the Group ceased its membership campaign in October 2012.

BUSINESS

– 107 –

The following table sets forth the movement of the advance from customers during theTrack Record Period:


30 June2012 2013 2012 2013

(HK$’000) (HK$’000) (HK$’000) (HK$’000)(Unaudited)

At beginning of the year/period 234 671 671 300Advance received 621 424 174 22Recognised as revenue (104) (243) (50) (36)Recognised as membership income (80) (44) (22) –Recognised as forfeited income – (508) (29) (108)

At end of the year/period 671 300 744 178

Customers

During the Track Record Period, the Group’s customers are mainly retail customers andthe largest customer and top five customers accounted for less than 5% and 30% of theGroup’s total revenue, respectively.

Marketing

The Group adopts a marketing strategy that leverages on increased publicity andconsumer awareness. The marketing department is responsible for the formulation andimplementation of the Group’s marketing strategies to promote the Group’s image, brandawareness and to enhance the Group’s reputation, by ensuring the marketing activities arelaunched efficiently and are launched in line with the image of the respective restaurant.

In addition to membership packages, the Group also participates in dining promotionsorganised by credit card companies and shopping malls in which the Group’s restaurants arelocated. These promotions offer special discounts to credit card holders or shopping mallsvisitors bearing the coupons available from the shopping malls promotional materials. Themarketing department normally selects the credit card companies for this kind of promotioncampaign based on their networks and the general profile of the card holders. The marketingdepartment also arranges for placement of advertisements in different channels, such aswell-circulated food magazines. Aside from traditional marketing channels, the Group hasalso devoted its resources in electronic platforms to promote its restaurants. These electronicplatforms include the Group’s website, facebook pages, and promotional activities arrangedwith food-critic websites. Those websites contain introduction and the latest news of therestaurants of the Group, recommended dishes and latest promotion. Besides managingwebsites, the marketing department also monitors food discussion forums, food blogs andfood websites in order to capture the ratings, recommendations and criticisms posted bydiners or food critics. The marketing department also collaborates with the head chefs of therestaurants by launching marketing campaigns to promote seasonal food that enhances themenu for the Group’s customers.

BUSINESS

– 108 –

An annual budget on marketing and promotion is determined and approved by theDirectors based on the marketing budget forecast, and the marketing activities are reviewedfrom time to time to ensure their effectiveness. For the two years ended 31 March 2012 and2013 and the three months ended 30 June 2013, the Group’s expenses on marketing andpromotion amounted to approximately HK$2.6 million, HK$2.2 million and HK$0.7 million,respectively.

SUPPLIERS AND RAW MATERIALS

Suppliers

The Group’s business strategy is to serve delicious, safe and fresh food of high qualityto customers, which is reflected in the ingredients the Group used and in the foodpreparation processes. Food ingredient suppliers are selected carefully based on a set ofselection criteria, which includes type and quality of ingredients, cost, reputation, service,agility, delivery efficiency and past performance. The purchasing department maintains a listof approved food ingredient suppliers. Potential suppliers are assessed and approved by thehead chefs and the purchasing supervisor of the purchasing department based on theirbackgrounds and business operations. In order to secure continuous supply of foodingredients with consistent quality and to locate the source of supply promptly, there are atleast two suppliers for a particular ingredient. During the Track Record Period, the Grouppurchased a diverse range of quality food ingredients from more than 140 suppliers. For thesupply of ancillary equipment and utensils, the Group also maintains a list of approvedsuppliers and at least two quotations are obtained before making the purchase.

In line with the industry practice, the Group has not entered into any long-termcontract with its existing suppliers. As the numbers of suppliers are abundant, sucharrangement helps the Group to maintain flexibility in operations and pricing. During theTrack Record Period, the Group has established and maintained long-term relationships witha number of the Group’s top five food ingredient suppliers which have been supplying foodingredients to the Group for over three years. The Group is confident that it has priority insecuring supplies from its key suppliers given the Group’s long-term relationships withthem. The Group’s business with its suppliers has always been, and will aim to be,conducted on the basis of actual purchase orders placed by the Group from time to time.During the Track Record Period, none of the Group’s top five suppliers ceased or indicatedthat it would cease their supplies to the Group, and the Group did not experience anymaterial delay or interruption in securing the supply of food ingredients from its top fivesuppliers. In view of this, the Directors believe that the Group will not experience anydifficulty in securing the supply of food ingredients from its major suppliers. In addition, inorder to ensure the stable supply of food ingredients and minimise risks due to non-delivery,sub-standard products or supplier’s fault, the Group generally sources each kind of foodingredients from more than one supplier.

For the two years ended 31 March 2012 and 2013 and the three months ended 30 June2013, the total purchases from the Group’s five largest suppliers in aggregate accounted forapproximately 35.4%, 37.3% and 36.2%, respectively, and its largest supplier accounted forapproximately 10.9%, 10.2% and 10.2%, respectively, of the Group’s total purchases. Three

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of these five largest suppliers have been supplying food ingredients to the Group for threeyears and two of these five largest suppliers have been supplying food ingredients to theGroup for more than six years.

Save for the purchase from JC & Associates (a company beneficially owned as to 31%by Mr. Wu and 31% by Ms. Wong), none of the Directors, their respective associates or anyShareholder who, to the best knowledge of the Directors, owns more than 5% of the issuedshare capital of the Company had any interest in any of the Group’s five largest suppliersduring the Track Record Period.

Credit and payment terms

The Group’s accounts department is responsible for processing all payments tosuppliers. Payment would not be approved until both invoices from suppliers and deliverynotes are signed and checked by the designated officers of the Group’s restaurants andverified by the Group’s purchasing and accounts departments. The accounts department willthen arrange the settlement of invoices within the agreed credit periods. Payment termsgranted by suppliers are normally 30 days after the end of the month in which the relevantpurchases are made. During the Track Record Period, most of the purchases from theGroups’ suppliers were denominated and settled in Hong Kong dollars.

Raw materials

Food ingredients, such as vegetables, meat, seafood, frozen food and seasonings fromvarious countries, are major raw materials purchased by the Group. During the Track RecordPeriod, the Group centralised the procurement of beverage products. To the best knowledgeof the Directors, the prices of the food ingredients were determined with reference to thequality, specifications, seasonal factor, source of supply and relationship with the Groupwhen suppliers determine the prices of the food ingredients. The Directors are of the viewthat the prices of the raw materials the Group obtained during the Track Record Period wereconsistent with the then prevailing market prices and believe that the purchase prices of foodingredients will continue to follow market prices under normal operation and marketconditions. Other key supplies required by the Group include kitchen and restaurantequipments and utensils.

The Directors confirm that there is no rebate arrangement with suppliers and to thebest knowledge of the Directors, the Group had not encountered any incidents that any ofthe Group’s Directors or employees was involved in any bribery or kickback arrangementswith the suppliers during the Track Record Period.

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FOOD PREPARATION PROCESS

The diagram below illustrates the food preparation process of the Group:

Food ingredientsprocurement

Storage andPreservation

Preparation andProcessing Food Delivery

Placement of purchase orders

The Group adopts the following order placement policies in relation to the foodingredients and supplies:

Food ingredients

The head chef of each restaurant is responsible for monitoring the level of suppliesregularly and deciding the types and quantities of food ingredients to be purchased. Thehead chef then places orders to the authorised suppliers directly based on the quotationsobtained by the purchasing department of the Group. Upon delivery of the food ingredients,the head chef weighs the incoming food ingredients with an electronic scale, records thetypes and quantity of food ingredients, and checks the information on the delivery notesagainst the orders before confirming receipt of the food ingredients. Delivery notes andinvoices are delivered to the accounts department afterwards. All purchases are supported byinvoices provided by the suppliers.

Beverage, ancillary equipment and utensils

In relation to beverage, ancillary equipment and utensils, the operation manager of eachrestaurant is responsible for monitoring the stock and notifying the purchasing department tocheck the price and minimum order quantity with the Group’s authorised suppliers. At leasttwo suppliers will be selected for comparison based on price and quality of goods. For anyitem exceeding HK$5,000, orders will only be made after obtaining approval from theGroup’s senior management. The purchasing department is responsible for placing ordersand goods are delivered by the suppliers to the restaurants. The operation manageracknowledges the receipt of goods and invoices are sent to the accounts department forsettlement.

Storage and preservation

The head chef of each restaurant is responsible for ensuring proper processing andstorage of food ingredients. For food ingredients that are perishable, the head chef wouldcontrol the quantity of order to ensure the freshness of the food ingredients.

Food preparation

In order to ensure all dishes are freshly prepared, each of the Group’s restaurantsconducts its food preparation functions in its own kitchen. Each restaurant has one headchef, who is responsible for the overall operation of the kitchen of that restaurant.

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Under the coordination of the head chefs, there are division of labour for differentprocesses for food preparation in order to ensure efficiency and quality. Different divisionsof the staff are responsible for different parts of the food processing chain includingwashing, cutting, preparing, cooking, serving and dish cleaning. There are recipes developedby the Group or obtained otherwise under the franchising arrangements that the chefs wouldfollow when preparing the dishes.

Development of new dishes

The Group appreciates the importance of introducing creative dishes regularly to attracta broader customer base and to maintain loyalty of existing customers. The Group wouldupdate its menu regularly in response to the changing tastes of the customers and generalsentiment. In developing new menu items, the head chef of each of the Group’s restaurantsconsiders the market trends, seasonal factors and feedbacks from the customers. They alsomake variations to the existing dishes according to seasons and trends, conforming tomodern dietetics. Most of the head chefs of the Group’s restaurants have substantialexperiences in the food and beverage industry and are knowledgeable of local tastes andpreference. They are able to create dishes that suit the customer needs. Before launching anynew dishes, the executive chef and the head chef of the relevant restaurant gather togetherfor tasting and they are responsible for making the final approval of any new dishes andtheir pricing.

EXPANSION PLANS AND SITE SELECTION DEVELOPMENT

As part of the Group’s strategy to continue expanding the restaurant network, theDirectors participate in implementing the expansion plans and new restaurants development.

Site Selection Process

The Directors consider that identifying a suitable location for the restaurants is crucialto the success of the Group. The Group’s restaurants are situated in the central businessdistricts or the landmark shopping malls, such as The ONE, ICC, V city and WTC. TheGroup is particularly meticulous in selecting the locations of its restaurants. The Group takesinto consideration various factors including the accessibility of the potential sites to thetarget customers, spending patterns of the target customers, proximity to the competitors,rental and other costs of operation, size of the premises, structure of the premises andrestrictions on opening hours of the premises.

The Directors, chief operating officers and other senior management are involved in thesite selection process, including the evaluation, inspection and approval of new restaurantsite. The Group selects each site strategically in order to increase the market penetration andhence maximise the Group’s revenue.

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New Restaurant Development Procedures

Key steps in the development process of a new restaurant include the following:

� Lease negotiation and execution. After a potential site is identified, the Group’ssenior management would commence due diligence procedures to ascertain thesuitability of the potential site. Feasibility study report is being prepared andconsidered by the Directors and chief operating officers. After the Directors haveapproved the feasibility study, the Group will commence negotiation of the leasewith the landlord. The Group would generally require the leases to have a term ofnot less than three years. Some leases may have a rent-free period ranging from45 to 90 days to allow sufficient time for renovation and decoration.

� Renovation. Upon signing a lease agreement, the Group commences the interiordesigning of the restaurant. Restaurants are designed with different themes byinterior designers based on the cuisine, target customer groups, associated brandfeatures and location of the premises. Renovation will be carried out byindependent contractors engaged by the Group. The design and renovationgenerally require 1 to 2 months.

� Licensing and permits. Concurrently with the renovation, the Group appliesvarious licences necessary for the operation of the restaurant. It generally requires2 to 3 months to obtain the required restaurant licences and permits.

� Staffing. Upon completion of the renovations and successful application of allrequired licences and permits, the human resources department relocatesexperienced staff from the existing restaurants, recruits and trains new staff inpreparation of the launch of the new restaurant.

The typical lead time from the delivery of the site by the landlord to the opening of arestaurant is approximately 2 to 3 months.

In addition, if the restaurant to be opened for the Group to follow or operated issubject to franchising arrangement, the franchisor will provide guidance, and the Groupwould accommodate the special requirements such as renovation and staff recruitments andtraining as set out in the Franchising Agreements.

QUALITY CONTROL

The Group maintains strict quality control system and adopts high hygiene standardsthroughout the entire food production process, starting from the procurement of foodingredients to food delivery to customers. During the Track Record Period, there were onlytwo complaints lodged with the FEHD against two of the Group’s restaurants on foodquality. In both incidents, the health inspectors of FEHD had conducted inspection at therelevant restaurants and health education was delivered to the food handlers on the spot. Nomonetary claims were made by the complainants in both incidents. The managers of therelevant restaurants had promptly reported the incidents to the senior management of theGroup and the Group has strengthened staff training in relation to food, personal andenvironmental hygiene and the internal inspection. The Directors are of the view that these

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two complaints were isolated incidents and did not have any material adverse impact on thebranding, business and operations of the Group. Please refer to the paragraph headed “Foodquality and preparation” in this section for further details. Save for the two complaintswhich were taken and followed up by the FEHD, for which no penalty fine or anydisciplinary action was imposed on the Group, no material complaints or claims on theGroup’s food products and services were received by the Group nor was the Group’srestaurants subject to any investigations regarding the hygiene of its food by anygovernment authorities or relevant consumer protection organisations during the TrackRecord Period.

Food quality and preparation

The Group places great emphasis on food quality and the hygiene of food products,those being the key factors to the Group’s success in the restaurant business. The Group hasimplemented a set of internal guidelines and control measures in relation to the operation ofits business covering every process for food quality and preparation.

� Source of food ingredients. Orders for all food ingredients are only placed withthe Group’s authorised suppliers. Head chefs and the purchasing supervisor of thepurchasing department visit the suppliers to evaluate the quality of foodingredients supplied on a regular basis and the Group would cease to source fromthose suppliers who fail to provide quality food ingredients. Furthermore, therestaurant purchases reasonable level of fresh and perishable food ingredients toreduce food wastage and ensure their freshness and quality.

� Inspection of food ingredients. The head chef of each restaurant will check theincoming food ingredients to ensure that they are fresh and meet the qualitystandards.

� Storage. The Group sets guidelines on the storage method including the place andtemperature for preserving different types and quantities of food ingredients toensure the freshness of the food ingredients. Inventory levels of food ingredientsare inspected on a daily basis to prevent overstocking of perishable foodingredients. Excess perishable food will be used to prepare staff meals.

� Cooking methods. The Group endeavours to provide quality food. In addition tousing fresh and quality food ingredients, the head chefs would provide guidanceto other chefs on preparing foods in accordance with established standards andportions. The Group also distributes guidance materials and manuals on foodhandling, food and personal hygiene, food safety and quality control to ensurethat its operations are in a safe and proper manner.

� Internal inspection. The dishes prepared by the kitchen will be examined by thehead chef and the restaurant staff to see if the presentation and quality of thedishes deviate from the required standard. The Group’s senior management willoccasionally visit the restaurants and examine food and services and diningenvironment without giving prior notice. The Group has distributed an operation

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manual setting out procedures and requirement to ensure food safety and that thehygiene manager in each restaurant is responsible for ensuring the compliance ofthe Group’s food safety regulations and guidance.

Customer services

The quality of the customer services rendered by the staff of the Group is also crucialto the reputation of the Group. Therefore, the Group provides regular on-job training andguidelines to its staff on service-related area such as food handling and personal hygiene toenhance the quality of services provided to the customers. Managers of each restaurant holdregular briefing sessions with all front-line service staff to review staff performance andreflect customers’ feedbacks. In case of any customer complaint in relation to the dishes orquality of services, the restaurant managers would take initiatives to investigate and resolvethe matter and attend to the customers promptly. Further, customer comments cards arereadily available at the Group’s restaurants and customers are welcome to leave comments,suggestion or complaints with these comments cards. All customers’ comments, suggestionand complaints will be collated and reported to the marketing department which will recordand follow up with these comments, suggestions and complaints as appropriate.

Dining environment

The Group is committed to providing comfortable dining environment and maintaininghigh hygiene standard inside kitchen area. Each restaurant is thoroughly cleaned andsanitised every night by restaurant staff after the restaurant is closed. The Group alsoengages professional pest control service provider and professional cleaning company forservice on a regular basis.

AWARDS AND CERTIFICATIONS

The Group’s achievements over the years have been recognised by numerous awards.The following table sets out the various awards or certifications obtained by the Groupduring the Track Record Period:

Year ofGrant

Restaurantawarded Awards/Certifications Awarding body

2011 Kaika Hong Kong & Macau’s Best Restaurants Asia Tatler Dining2011 Inakaya HKDA Global Design Awards –

Hospitality & EntertainmentHong Kong

DesignersAssociation

2011 Harlan’s Best Restaurants with Views Weekend Weekly2011 Harlan’s U Favorite Food Awards – Best

Restaurant with ViewsU Magazine

2012 Harlan’s U Favorite Food Awards – BestRestaurant with Views

U Magazine

2012 Inakaya Best Japanese Restaurant Timeout2012 Inakaya Perspective Awards – Interior Design

(Professional) – Bar or RestaurantPerspective

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Year ofGrant

Restaurantawarded Awards/Certifications Awarding body

2012 H One Hong Kong & Macau’s Best Restaurants Asia Tatler Dining2013 H One Hong Kong & Macau’s Best Restaurants Asia Tatler Dining2013 Inakaya Hong Kong & Macau’s Best Restaurants Asia Tatler Dining2013 Inakaya Hong Kong & Macau’s Best Floor Asia Tatler Dining2013 Harlan’s U Favorite Food Awards – Best

Restaurant with ViewsU Magazine

COMPETITION

The food and beverage industry is a highly competitive, fragmented and diverseindustry with a significant number of competitors of different scale and position, rangingfrom restaurant chains to small enterprises, targeting customer groups with different demandand consumption power, and offering different kinds of cuisine and dishes. Differentrestaurant operators target different customers whose spending power and demand vary. Thesize, number, and strengths of the competitors in this industry vary widely and there is nosignificant player dominating the industry. Though different segments of the restaurantindustry have their own leading players, their individual market share varies from onesegment to the other. Accordingly, the Directors consider that none of the operators in onesegment can be treated as a direct competitor of another operator in a different segment.

Generally, competition in the food and beverage industry is based on, among otherfactors, quality of food, quality of services, price, location, dining environment andreputation. The Group considers itself being in a prominent position compared with most ofits competitors and it can maintain such position as it has the following advantages:

� the Group places high emphasis on the quality of food and services to thecustomers;

� the Group has good reputation for quality food and beverage;

� the Group imposes stringent criteria for the choice of food ingredients and itssuppliers;

� the Group’s effective measures to ensure efficient and high quality service;

� the Group has an experienced senior management team;

� the Group’s restaurants are located in major shopping malls located in prime areasof Hong Kong;

� the Group continuously introduces creative dishes;

� the Group provides comprehensive and systematic trainings to its staff; and

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� the Group’s restaurants are decently decorated and each restaurant has its ownstyle in terms of the dishes served and the dining environment.

INSURANCE

The Group maintains insurance for employees’ compensation liability for personalinjury and illness, public liability insurance to cover the Group against any claims of illness,injuries or damages to personal property of the customers, commercial general liabilityinsurance to cover any liability for damages arising out of the business operation, cash intransit or loss of money at the business premises and restaurants, fire insurance, insurancefor the properties, plant and equipment in the restaurants. Apart from this, the Group doesnot have any specific insurance coverage for any loss of the Group as a result of anyoutbreak of food-borne diseases such as Swine Influenza. The Directors are of the view thatthe aforesaid insurance coverage is sufficient and is in line with normal commercial practicein Hong Kong.

PROPERTY INTEREST

Owned properties

As at the Latest Practicable Date, the Group did not own any property.

Leased properties

The Group leased and occupied 18 properties as at the Latest Practicable Date, amongwhich 9 leased properties were used as the Group’s restaurants; 8 leased properties wereused as warehouses and staff quarters; 1 licensed property was used as office. The Group’sleases typically have a term of 1 to 3 years. Save for one property which is leased fromWell-In, the rest of them are leased from Independent Third Parties.

The following table sets out details of the properties leased and occupied by the Groupfor its restaurants as at the Latest Practicable Date:

No Restaurant Address Usable area Rental type(1) Validity period(sq.ft.)

1 Harlan’s andKaika

19/F., The ONE,100 Nathan Road,Tsim Sha Tsui,Kowloon

6,543.06 An aggregate ofbasic rent andturnover rent

Two yearscommencing on 17May 2013 andexpiring on 16 May2015 (both daysinclusive)

2 Mekiki (WTC)and Carousel

Shop Nos. P421b onPodium 4 and P502on Podium 5 of TheWorld Trade Centre,280 GloucesterRoad, CausewayBay, Hong Kong


Two yearscommencing from 1September 2013

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No Restaurant Address Usable area Rental type(1) Validity period(sq.ft.)

3 PHO24 (NTP) Shop No.127 onLevel 1 of theCommercial Units ofNew Town Plaza,Sha Tin,the New Territories


One yearcommencing on 11November 2012 andexpiring on 10November 2013(both daysinclusive)(2)

4 PHO24 (TST) Shop No.3 on thethird floor ofiSQUARE, No.63Nathan Road,Kowloon


Two yearscommencing on andinclusive of 16September 2012 andexpiring on 15September 2014(both daysinclusive)

5 Inakaya Shop A, Level 101,InternationalCommerce Centre, 1Austin Road West,Kowloon

7,746.36 Basic rent orturnover rentwhichever is thegreater

Three yearscommencing from16 January 2011 andexpiring on 15January 2014 (bothdays inclusive)(3)

6 Pearl DiningHouse

Shop UG 221,Upper Ground 2,The ONE,100 Nathan Road,Tsim Sha Tsui,Kowloon


Three yearscommencing from13 July 2013 withan option to renewfor a further ofthree years.

7 Mekiki(V city)

Shop L2-62b onConcourse Level ofthe V city,the New Territories

2,316.00 Basic rent orturnover rentwhichever is thegreater

Three yearscommencing from1 September 2013with an option torenew for a furtherperiod of threeyears.

8 a la Folie No. 247, Level 2,Grand CenturyPlaza, 193 PrinceRoad West,Mongkok,Kowloon

787.00 An aggregate ofbasic rent andturnover rent

Three yearscommencing from 1September 2013 andexpiring on 31August 2016 (bothdays inclusive)

9 Harlan’s cakeshop

Shop L411 on Level4,The ONE,100 Nathan Road,Tsim Sha Tsui,Kowloon

339.17 An aggregate ofbasic rent andturnover rent

Three yearscommencing from 1June 2012 andexpiring on 31 May2015

Notes:

(1) The basic rentals of the Group’s leased properties range between approximately HK$44.0 per sq. ft.to approximately HK$147.0 per sq. ft., which were arrived at after arm’s length negotiation with therespective landlords and also reflected the market rates at the time of entering into the respectiveleases.

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(2) As at the Latest Practicable Date, the Group has entered into a new tenancy agreement with thelandlord, the term of which commences on 11 November 2013 and expires on 10 November 2016(both days inclusive). Under the new term, the Group will replace the operation of PHO24 (NTP)with Pearl Delights.

(3) As at the Latest Practicable Date, the Company has exercised its option to renew the tenancy ofInakaya for another three years and is in the course of negotiating the revised base rental pursuant tothe option to renewal. The Directors confirm that the Group has sufficient financial resources tosettle the revised lease payment of Inakaya.

(4) It is a practice of the Group to make contact with the respective landlord of each leased property 6 to9 months in advance of expiry of such lease to discuss renewal matters. Taking into consideration theexisting financial position and cash flows from operating activities, the Directors confirm that theGroup has the financial resource to renew existing lease agreements upon their expiry.

LICENCES AND APPROVALS

Regulatory regime

In addition to the business registration certificate required for the commencement ofrestaurant business, there are four principal types of licences required to be obtained for theoperation of the Group’s restaurants and cake shops which are as follows:

(a) restaurant licence granted by the DFEH of the FEHD;

(b) water pollution control licence granted by the DEP of the EPD;

(c) liquor licence granted by the LLB; and

(d) light refreshment restaurant licence granted by the DFEH of the FEHD.

Business registration certificate

To commence the business of restaurants, bars or cafe, in addition to other businesslicences described below, it is necessary to obtain business registration certificate pursuantto section 5 of the Business Registration Ordinance (Chapter 310). The business registrationapplication shall be made within 1 month of the commencement of business.

Restaurant licence and light refreshment restaurant licence

In Hong Kong, any person carrying on restaurant business is required to obtain arestaurant licence granted by the DFEH under the Public Health and Municipal ServicesOrdinance (Chapter 132 of the Laws of Hong Kong) and the FBR before commencing therestaurant business. A general restaurant licence permits the licensee to prepare and sell anykind of food for consumption on the premises while a light refreshment restaurant licencerestricts the licensee to prepare and sell for consumption on the premises any one group ofthe food items listed in the prescribed list of approved food items for light refreshmentrestaurants. A light refreshment restaurant licence is required under the Public Health andMunicipal Services Ordinance (Chapter 132 of the Laws of Hong Kong), and the FBR forthe purpose of preparing and selling food items for consumption on the premises. Lightrefreshment restaurant licences are intended for the preparation of a limited range of food

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items, the requirements for this type of restaurants in the context of the minimum area forfood area (i.e. kitchen, food preparation room and scullery) are less stringent than those forgeneral restaurants. It is provided under section 31(1) of the FBR that no person shall carryon or cause, permit or suffer to be carried on any food business including restaurantbusiness except with a restaurant licence. Generally, before a general restaurant licence isgranted, the DFEH needs to be satisfied that certain requirements in respect of for instancemeans of ventilation, sanitary fitments, facilities for cleansing equipments and utensils,means of exit and entry and fire safety are made. In deciding the suitability of the premisesfor use as a restaurant, the FEHD will consult the Building Department, the PlanningDepartment and Fire Services Department. If their comments are such that its policy orrequirement cannot be complied with, the licencing authority will refuse the application andinform the applicant of the refusal with reasons.

Under section 33C of the FBR, the DFEH may grant provisional restaurant licences tonew applicants who have fulfilled the basic requirements in accordance with the FBRpending completion of all outstanding requirements for the issue of a full restaurant licence.A provisional restaurant licence shall be valid for a period of six months and a generalrestaurant licence is generally valid for a period of 12 months, both subject to payment ofthe prescribed licence fees and continuous compliance with the requirements under therelevant legislation and regulations. A provisional restaurant licence is renewable on oneoccasion and only on one occasion at the absolute discretion of the director of DFEH and afull restaurant licence is renewable annually.

Demerit points system

The demerit points system is a penalty system operated by the FEHD to sanction foodbusinesses for repeated violations of relevant hygiene and food safety legislation. Under thesystem:

(a) if within a period of 12 months, a total of 15 demerit points or more have beenregistered against a licensee in respect of any licensed premises, the license inrespect of such licensed premises will be subject to suspension for 7 days (“FirstSuspension”);

(b) if, within a period of 12 months from the date of the last offense leading to theFirst Suspension, a total of 15 demerit points or more have been registered againstthe licensee in respect of the same licensed premises, the license will be subjectto suspension for 14 days (“Second Suspension”);

(c) thereafter, if within a period of 12 months from the date of the last offenseleading to the Second Suspension, a total of 15 demerit points or more have beenregistered against the licensee in respect of the same licensed premises, thelicense will be subject to cancellation;

(d) for multiple offenses found during any single inspection, the total number ofdemerit points registered against the licensee will be the sum of the demeritpoints for each of the offenses;

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(e) the prescribed demerit points for a particular offense will be doubled and trebledif the same offense is committed for the second and the third time within a periodof 12 months; and

(f) any alleged offense pending, that is the subject of a hearing and not yet taken intoaccount when a license is suspended, will be carried over for consideration of asubsequent suspension if the licensee is subsequently found to have violated therelevant hygiene and food safety legislation upon the conclusion of the hearing ata later date.

Water pollution control licence

In Hong Kong, discharges of trade effluents into specific water control zones aresubject to control and the discharger is required to obtain a water pollution control licencegranted by the DEP under the WPCO before commencing the discharge.

Under section 8 of the WPCO, a person who discharges (i) any waste or pollutingmatter into the waters of Hong Kong in a water control zone; or (ii) any matter into anyinland waters in a water control zone which tends (either directly or in combination withother matter which has entered those waters) to impede the proper flow of the water in amanner leading or likely to lead to substantial aggravation of pollution, commits an offenceand where any such matter is discharged from any premises, the occupier of the premisesalso commits an offence.

Section 9 of the WPCO provides that generally a person who discharges any matterinto a communal sewer or communal drain in a water control zone commits an offence andwhere any such matter is discharged into a communal sewer or communal drain in a watercontrol zone from any premises, the occupier of the premises also commits an offence.Under section 12(1)(b) of the WPCO, a person does not commit an offence under sections8(1), 8(2), 9(1) or 9(2) of the WPCO if the discharge or deposit in question is made under,and in accordance with, a water pollution control licence.

Under section 15 of the WPCO, the DEP may grant a water pollution control licenceon terms and conditions as he thinks fit specifying requirements relevant to the discharge,such as the discharge location, provision of wastewater treatment facilities, maximumallowable quantity, effluent standards, self-monitoring requirements and keeping records.

A water pollution control licence may be granted for a period of not less than twoyears, subject to payment of the prescribed licence fee and continuous compliance with therequirements under the relevant legislation and regulations. A water pollution control licenceis renewable.

Liquor licence

Section 17(3B) of the DCO provides that where regulations prohibit the sale or supplyof any liquor except with a liquor licence, no person shall sell, or advertise or expose forsale, or supply, or possess for sale or supply, liquor except with a liquor licence.

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Any person who intends to operate a business which involves the sale of liquor forconsumption at any premises must obtain a liquor licence from the LLB under the DCRbefore commencement of such business. It is provided under Regulation 25A of the DCRprohibits the sale of liquor at any premises for consumption on those premises or at a placeof public entertainment or a public occasion for consumption at the place or occasion exceptwith a liquor licence. A liquor licence will only be issued when the relevant premises havealso been issued with a full or provisional restaurant licence. A liquor licence will only bevalid if the relevant premises remain licensed as a restaurant. All applications for liquorlicences are referred to the Commissioner of Police and the District Officer concerned forcomments.

Under regulation 15 of the DCR, any transfer of a liquor licence must be made on theform as determined by the LLB. For a transfer application, consent of the holder of liquorlicence is required. Under regulation 24 of the DCR, in case of illness or temporary absenceof the holder of liquor licence, the secretary to the LLB may in his discretion authorise anyperson to manage the licensed premises. The application under such regulation is required tobe made by the holder of liquor licence. For any application for cancellation of the liquorlicence made by the holder of liquor licence, an application for new issue of a liquor licencewill be required to be made to the LLB. Under section 54 of the DCO, in case of death orinsolvency of the holder of liquor licence, his executor or administrator or trustee may carryon the business in the licensed premises until the expiration of the licence.

A liquor licence is valid for a period of one year or a lesser period, subject to thecontinuous compliance with the requirements under the relevant legislation and regulations.

Licenses for the Group’s operation in Hong Kong

As of the Latest Practicable Date, the Group owns and operates 6 full-servicerestaurants and 2 cake shops in Hong Kong. Save as disclosed below in the paragraphheaded “Legal Proceedings, Claims and Compliance”, the Group has obtained (i) therelevant restaurant licences and water pollution control licences required for all of itsrestaurants in Hong Kong; and (ii) liquor license in respect of each of the restaurants onwhose premises it sells alcoholic beverages as at the Latest Practicable Date. The Group willapply to renew the relevant licences in due course.

As of the Latest Practicable Date, no demerit point has been registered against any ofthe Group’s restaurants.

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der(2

)L

icen

cenu

mbe

r

Valid

ityPe

riod

ofth

ecu

rren

tlic

ence

Hol

der

Lic

ence

num

ber

Valid

ityPe

riod

ofth

ecu

rren

tlic

ence

Har

lan’

s&

Kai

kaH

arla

n’s

Hol

ding

2261

8067

1324

Jan

2013

to23

Jan

2014

N/A

N/A

N/A

Chu

iWai

Kin

(Chi

efop

erat

ing

offi

cer)

5261

8210

2708

Jun

2013

to07

Jun

2014

Har

lan’

sH

oldi

ngW

T000

1625

8-20

13fr

om20

Jun

2013

to30

Jun

2018

Har

lan’

sca

kesh

opN

/AN

/AN

/AH

arla

n’s

Hol

ding

3161

8050

9128

Mar

2013

to27

Mar

2014

N/A

N/A

N/A

Har

lan’

sH

oldi

ngW

T000

1655

6-20

13fr

om26

Jul

2013

to31

Jul

2018

Inak

aya

Inak

aya

(HK

)Li

mite

d

2261

8077

7025

Nov

2012

to24

Nov

2013

N/A

N/A

N/A

Poon

Chu

ngSz

e(M

anag

er)

5261

8222

0618

Feb

2013

to17

Feb

2014

Inak

aya

(HK

)Li

mite

d

WT0

0016

254-

2013

from

20Ju

n20

13to

30Ju

n20

18

Mek

iki

(WTC

)(4)

Turb

oTr

ade

2212

8062

0114

Apr

2013

to13

Apr

2014

N/A

N/A

N/A

Lai

Chi

Wai

(Man

ager

)52

1282

1320

16N

ov20

12to

15N

ov20

13Tu

rbo

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eW

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11fr

om19

May

2011

to31

May

2016

PHO

24(T

ST)

PHO

24(T

ST)

Lim

ited

2261

8058

4425

Jun

2013

to24

Jun

2014

N/A

N/A

N/A

Won

gW

ing

Laam

(Sup

ervi

sor)

5261

8203

2528

Jan

2013

to27

Jan

2014

PHO

24(T

ST)

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ited

WT0

0016

260-

2013

from

14Ju

n20

13to

30Ju

n20

18

Pear

lD

inin

gH

ouse

(5)

JCG

roup

3861

8107

0223

Sep

2013

to22

Mar

2014

N/A

N/A

N/A

Fung

Tin

Lok

Loui

s(S

uper

viso

r)

5261

8258

8923

Sep

2013

to22

Mar

2014

JCG

roup

WT0

0016

877-

2013

from

24Se

p20

13to

30Se

p20

18

Mek

iki

(Vci

ty)

(5)

Gra

ndC

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ry38

9380

2782

9O

ct20

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8A

pr20

14N

/AN

/AN

/AW

ong

Kam

Kon

g,B

engo

(Man

ager

)

5293

8208

4111

Nov

2013

to8

Apr

il20

14ap

plic

atio

nfi

led

appl

icat

ion

file

dap

plic

atio

nfi

led

BUSINESS

– 123 –

Notes:

(1) Carousel is a retail cake shop without any seating available, therefore, it is not required to obtaingeneral restaurant licence, light refreshment restaurant licence, liquor licence nor water pollutioncontrol licence. During the Track Record Period, it has obtained the necessary business registrationcertificate for carrying on of its business.

(2) The liquor licences are held by full-time staff of the respective restaurants because the licence holdershould be present during routine inspections by relevant government authorities. To the bestknowledge of the Directors, this is in line with industry practice. In the event the liquor licenceholder resigns from his/her position in the respective restaurant, the Group is required to notify theLLB and applies for transferring the liquor licence to another employee of the respective restaurant.Prior to the issue of the new liquor licence, the respective restaurant cannot sell alcohol.

(3) Light refreshment restaurant licence is required for Harlan’s cake shop because it is a cafe with seatsallowing customers to consume the cake onsite.


(5) As at the Latest Practicable Date, provisional general restaurant licences were granted to JC Group inrespect of Pearl Dining House and Grand Century in respect of Mekiki (V city) pending the issue of

the general restaurant licences.

During the Track Record Period, save as otherwise disclosed, the Group hassuccessfully renewed all its licences and approvals. To ensure that the Group would be ableto timely obtain all necessary licences for the operations in Hong Kong, the Group hasassigned a member of the management to keep track of the expiry dates of all relevantlicences and apply for timely renewal. The Group will carry out the activities only when therelevant licences and/or permits have been obtained or renewed.

LEGAL PROCEEDINGS, CLAIMS AND COMPLIANCE

Legal Proceedings

As at the Latest Practicable Date, save as disclosed in this prospectus, the Group wasnot engaged in any litigation, arbitration, regulatory action, or claim of material importance,and no litigation, arbitration, regulatory action, or claim of material importance was knownto the Directors to be pending or threatened by or against the Group, that would have amaterial adverse effect on the operating results or financial condition. Furthermore, save asdisclosed in this prospectus, the Group has obtained all licences, permits, approvals andcertificates necessary to conduct its business operations and has complied with all applicablelaws, rules and regulations in all material respects. In addition, save as otherwise disclosed,the Group has complied with the statutory minimum wage provided under the MinimumWage Ordinance and implemented by the Labour Department in Hong Kong.

BUSINESS

– 124 –

The

foll

owin

gta

ble

sum

mar

ises

mat

eria

lno

n-co

mpl

ianc

ein

cide

nts

inre

lati

onto

the

Gro

up’s

oper

atio

nsdu

ring

the

Tra

ckR

ecor

dP

erio

d:

Inci

dent

ofm

ater

ialn

on-c

ompl

ianc

eR

easo

nsof

non-

com

plia

nce

Late

stst

atus

and

rect

ifyin

gan

dre

med

iala

ctio

nsta

ken

Lega

lcon

sequ

ence

san

dpo

tent

ial

max

imum

pena

lties

that

may

beim

pose

dan

dot

her

finan

cial

loss

es

Con

trol

mea

sure

sad

opte

dby

the

Gro

upto

prev

entr

e-oc

curr

ence

ofth

eno

n-co

mpl

ianc

e

HO

neF&

B’s

audi

ted

acco

unts

wer

ela

idat

annu

alge

nera

lmee

tings

held

onda

tes

whi

char

ebe

yond

the

time

limit

(i.e.

nine

mon

ths

from

the

date

tow

hich

the

audi

ted

acco

unts

wer

em

ade

up)a

sre

quire

dun

ders

ectio

n12

2of

the

Com

pani

esO

rdin

ance

.

Due

toov

ersig

htof

resp

ectiv

edi

rect

ors

asth

eyw

ere

nota

war

eof

such

non-

com

plia

nce

until

rece

ntly

whe

nth

eCo

mpa

ny’s

lega

ladv

isers

asto

Hon

gK

ong

law

sw

ere

enga

ged

toad

vise

onLi

sting

.

HO

neF&

Bap

plie

dto

the

Hig

hCo

urt

ofH

ong

Kon

g(th

e“C

ourt”

)on

2Ju

ly20

13fo

rord

erto

exte

ndth

etim

efo

rthe

layi

ngof

the

prof

itan

dlo

ssac

coun

ts.Th

eor

ders

wer

egr

ante

dto

HO

neF&

Bon

13Se

ptem

ber2

013

and,

assu

ch,t

hesa

idpr

ofit

and

loss

acco

unts

and

bala

nce

shee

tsha

vebe

enla

idw

ithin

the

exte

nded

perio

das

dire

cted

byth

eCo

urta

ndth

atth

eno

n-co

mpl

ianc

ew

asdu

lyre

ctifi

ed.

Ifan

ype

rson

bein

ga

dire

ctor

ofH

One

F&B

fails

tota

keal

lre

ason

able

steps

toco

mpl

yw

ithpr

ovisi

ons

ofse

ctio

n12

2of

the

Com

pani

esO

rdin

ance

,he

orsh

esh

all,

inre

spec

tofe

ach

offe

nce,

belia

ble

toim

priso

nmen

tand

afin

e.A

sad

vise

dby

the

Com

pany

’sle

gal

advi

sers

asto

Hon

gK

ong

law

s,th

elik

elih

ood

ofH

One

F&B

and

itsdi

rect

ors

bein

gpe

nalis

edis

low

since

the

com

pany

isno

long

erin

brea

chof

sect

ion

122

ofth

eCo

mpa

nies

Ord

inan

ce.

The

Gro

upha

sap

poin

ted

Ms.

Yim

Sau

Ping

,as

the

Gro

up’s

com

pany

secr

etar

yto

over

see

the

com

pany

secr

etar

ialf

unct

ion

ofth

eG

roup

,m

onito

rcom

plia

nce

with

sect

ion

122

ofth

eCo

mpa

nies

Ord

inan

cean

dre

view

the

Gro

up’s

com

plia

nce

statu

son

aqu

arte

rlyba

sis.T

heG

roup

has

also

appo

inte

dM

s.W

ong

asth

eG

roup

’sco

mpl

ianc

eof

ficer

tom

onito

rong

oing

com

plia

nce

mat

ters

.

J&H

had

notl

aid

itsac

coun

tsfo

rthe

perio

dfro

m2

Mar

ch20

06(th

eda

teof

itsin

corp

orat

ion)

upto

30Ju

ne20

07an

dth

efin

anci

alye

ars

ende

don

30Ju

ne20

08,2

009,

2010

and

2011

resp

ectiv

ely

atits

annu

alge

nera

lmee

tings

,whi

chw

ere

noti

nco

mpl

ianc

ew

ithse

ctio

n12

2of

the

Com

pani

esO

rdin

ance

.

Due

toov

ersig

htof

resp

ectiv

edi

rect

ors

asth

eyw

ere

nota

war

eof

such

non-

com

plia

nce

until

rece

ntly

whe

nth

eCo

mpa

ny’s

lega

ladv

isers

asto

Hon

gK

ong

law

sw

ere

enga

ged

toad

vise

onLi

sting

.

J&H

appl

ied

toth

eCo

urto

n3

July

2013

foro

rder

toex

tend

the

time

fort

hela

ying

ofth

epr

ofit

and

loss

acco

unts.

The

orde

rsw

ere

gran

ted

toJ&

Hon

2A

ugus

t201

3an

d,as

such

,the

said

prof

itan

dlo

ssac

coun

tsan

dba

lanc

esh

eets

have

been

laid

with

inth

eex

tend

edpe

riod

asdi

rect

edby

the

Cour

tand

that

the

non-

com

plia

nce

was

duly

rect

ified

.

Ifan

ype

rson

bein

ga

dire

ctor

ofJ&

Hfa

ilsto

take

allr

easo

nabl

este

psto

com

ply

with

prov

ision

sof

sect

ion

122

ofth

eCo

mpa

nies

Ord

inan

ce,h

eor

she

shal

l,in

resp

ecto

feac

hof

fenc

e,be

liabl

eto

impr

isonm

ent

and

afin

e.A

sad

vise

dby

the

Com

pany

’sle

gala

dvise

rsas

toH

ong

Kon

gla

ws,

the

likel

ihoo

dof

J&H

and

itsdi

rect

ors

bein

gpe

nalis

edis

low

since

the

com

pany

isno

long

erin

brea

chof

sect

ion

122

ofth

eCo

mpa

nies

Ord

inan

ce.

The

Gro

upha

sap

poin

ted

Ms.

Yim

Sau

Ping

,as

the

Gro

up’s

com

pany

secr

etar

yto

over

see

the

com

pany

secr

etar

ialf

unct

ion

ofth

eG

roup

,m

onito

rcom

plia

nce

with

sect

ion

122

ofth

eCo

mpa

nies

Ord

inan

cean

dre

view

the

Gro

up’s

com

plia

nce

statu

son

aqu

arte

rlyba

sis.T

heG

roup

has

also

appo

inte

dM

s.W

ong

asth

eG

roup

’sco

mpl

ianc

eof

ficer

tom

onito

rong

oing

com

plia

nce

mat

ters

.

BUSINESS

– 125 –

Inci

dent

ofm

ater

ialn

on-c

ompl

ianc

eR

easo

nsof

non-

com

plia

nce

Late

stst

atus

and

rect

ifyin

gan

dre

med

iala

ctio

nsta

ken

Lega

lcon

sequ

ence

san

dpo

tent

ial

max

imum

pena

lties

that

may

beim

pose

dan

dot

her

finan

cial

loss

es

Con

trol

mea

sure

sad

opte

dby

the

Gro

upto

prev

entr

e-oc

curr

ence

ofth

eno

n-co

mpl

ianc

e

Har

lan’

s&

Kai

ka,I

naka

ya,T

heBo

x,G

Bar,

PHO

24(T

ST),

PHO

24(N

TP)a

ndH

arla

n’s

cake

shop

did

noto

btai

nre

leva

ntw

ater

pollu

tion

cont

roll

icen

cepr

iort

oth

eco

mm

ence

men

toft

heir

busin

ess

oper

atio

ns.

Due

toov

ersig

htof

resp

ectiv

edi

rect

ors

asth

eyw

ere

nota

war

eof

such

non-

com

plia

nce

until

rece

ntly

whe

nth

eCo

mpa

ny’s

lega

ladv

isers

asto

Hon

gK

ong

law

sw

ere

enga

ged

toad

vise

onLi

sting

.In

addi

tion,

allo

fthe

resta

uran

tsar

elo

cate

dat

som

eof

the

larg

estm

alls

inH

ong

Kon

gof

whi

chth

edi

scha

rge

ofpo

llutin

gef

fluen

tsis

tight

lyco

ntro

lled

fori

nsta

nce

byth

eim

plem

enta

tion

ofgr

ease

inte

rcep

tors

whi

char

epl

umbi

ngde

vice

sde

signe

dto

inte

rcep

tmos

tgr

ease

san

dso

lids

befo

reth

eyen

ter

aw

aste

wat

erdi

spos

alsy

stem

.A

ccor

ding

lyth

eD

irect

ors

wer

eun

dert

heim

pres

sion

that

the

mea

sure

sad

opte

dby

the

mal

lsof

whi

chth

eG

roup

’sre

staur

ants

are

loca

ted

wou

ldha

vebe

ensu

ffici

ent

toco

mpl

yw

ithth

ere

quire

men

tsun

dert

heW

PCO

and

the

Gro

upw

asno

treq

uire

dto

sepa

rate

lyap

ply

for

such

wat

erpo

llutio

nco

ntro

llic

ence

sfo

rits

resta

uran

ts.

The

Gro

upm

ade

appl

icat

ions

for

wat

erpo

llutio

nco

ntro

llic

ence

for

allr

elev

antr

esta

uran

tsan

dEP

Dha

sgr

ante

dre

leva

ntlic

ence

sto

resp

ectiv

ere

staur

ants.

As

atth

eLa

test

Prac

ticab

leD

ate,

the

Gro

upha

sno

trec

eive

dan

ypr

osec

utio

nfro

mEP

D.

As

advi

sed

byth

eLe

galC

ouns

elof

the

Com

pany

,(in

rela

tion

toea

chof

such

resta

uran

ts)th

ees

timat

edfix

edfin

ew

ould

beap

prox

imat

ely

HK

$30,

000

and

the

daily

fine

wou

ldbe

appr

oxim

atel

yH

K$3

00.I

fsuc

hfin

eis

impo

sed

byth

eco

urt,

such

fine

will

beim

pose

don

the

Gro

upan

dan

ydi

rect

or,m

anag

eror

othe

rof

ficer

who

are

conc

erne

din

the

man

agem

ento

fHar

lan’

sH

oldi

ng,

Inak

aya

(HK

)Lim

ited,

J&H

and

PHO

24(N

TP)L

imite

d,be

ing

the

licen

ceho

lder

ofth

ere

leva

ntre

staur

ant(

“Res

pons

ible

Offi

cers

”)un

ders

ectio

n10

Aof

the

WPC

Ore

spec

tivel

yas

dire

cted

byth

eco

urt.

Inot

herw

ords

,the

fines

impo

sed

onth

eRe

spon

sible

Offi

cers

will

bebo

rne

byth

eRe

spon

sible

Offi

cers

them

selv

esan

dw

illno

tbe

inad

ditio

nto

thos

eim

pose

dto

the

Gro

up.

As

advi

sed

byth

eLe

galC

ouns

elof

the

Com

pany

,the

chan

ceof

impr

isonm

entf

orRe

spon

sible

Offi

cers

isve

ryre

mot

ean

don

the

basis

that

the

Gro

upha

sta

ken

posit

ive

steps

inco

mpl

ianc

ew

ithth

eW

PCO

,the

Lega

lCou

nsel

ofth

eCo

mpa

nyis

ofth

evi

ewth

atit

isun

likel

yth

atth

eEP

Dw

illin

itiat

ean

ycr

imin

alpr

osec

utio

nfo

rthe

past

defa

ults.

Ms.

Yim

Sau

Ping

,the

adm

inist

ratio

nan

dhu

man

reso

urce

sm

anag

er,a

sw

ella

sth

eG

roup

’sco

mpa

nyse

cret

ary,

will

supe

rvise

the

rene

wal

ofal

lreq

uire

dlic

ence

s,pe

rmits

and

appr

oval

sby

mon

itorin

gth

epe

ndin

gex

pira

tion

date

sof

all

licen

ces,

perm

itsan

dap

prov

als

and

coor

dina

ting

the

timel

ypr

epar

atio

nan

dsu

bmiss

ion

ofre

leva

ntlic

ence

sre

new

alap

plic

atio

ns.T

heG

roup

’sad

min

istra

tion

depa

rtmen

twill

also

prep

are

ach

eckl

istof

the

licen

cing

requ

irem

ents

ofne

wre

staur

ants

and

asc

hedu

lefo

rren

ewal

requ

irem

ents

ofex

istin

gre

staur

ants

and

will

repo

rtto

the

Gro

up’s

com

plia

nce

com

mitt

eein

the

futu

refo

rthe

licen

cing

proc

edur

es.T

heG

roup

’sco

mpa

nyse

cret

ary

will

also

get

invo

lved

inth

ese

lect

ion

ofex

tern

alco

nsul

tant

whi

chad

vise

son

vario

usre

staur

antl

icen

cing

mat

ters

inre

latio

nto

open

ing

ofne

wre

staur

ants

and

parti

cipa

tein

the

appl

icat

ion

forl

icen

cing

mat

ters

topr

even

tfut

ure

non-

com

plia

nce.

BUSINESS

– 126 –

Inci

dent

ofm

ater

ialn

on-c

ompl

ianc

eR

easo

nsof

non-

com

plia

nce

Late

stst

atus

and

rect

ifyin

gan

dre

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BUSINESS

– 127 –

In addition, during the Track Record Period, the Group has been involved in labourdisputes, none of them is of material nature. The Directors are of the view that these labourdisputes have no material impact on the operation and financial positions of the Group.

The Controlling Shareholders have executed the Deed of Indemnity in favour of theGroup whereby they have jointly and severally indemnified each of the members of theGroup, inter alia, all claims, actions, demands, fines suffered or incurred by the Companyand/or the relevant member of the Group as a result of directly or indirectly or in connectionwith any litigation, proceeding, claim, investigation, inquiry, enforcement or process by anygovernmental, administrative or regulatory body.

In light of the above legal proceedings, claims and non-compliance, the Group hasengaged CT Partners Consultants Limited (the “IC Consultant”) on 18 April 2013 toperform a detailed evaluation under the Committee of Sponsoring Organisations of theTreadway Commission’s framework of the adequacy and effectiveness of the Group’sinternal control system including the areas of financial, operation, compliance and riskmanagement. According to the result of the follow up review by the IC Consultant, theGroup had implemented measures and ratified deficiencies as recommended by the ICConsultants. For details of the internal control measures, please refer to the paragraph underthe heading “Internal Controls” in this section.

Measures adopted to ensure regulatory compliance

As specific measures to ensure on-going compliance with applicable laws andregulations of Hong Kong, the Group has implemented the following measures:

(i) distribution to and review by the Directors memorandum prepared by theCompany’s legal advisers as to Hong Kong laws which set out the requisiteon-going regulatory requirements in Hong Kong and obligations for the Directorsafter Listing;

(ii) the Group will have access to external professional retained or to be retained bythe Group from time to time, if applicable, including the compliance adviser, legalcounsel, auditors and other advisers as necessary and will report directly to theBoard;

(iii) the appointment of TC Capital as the Company’s compliance adviser to advise theCompany on compliance matters under the GEM Listing Rules;

(iv) training has been provided to all Directors by the Company’s legal advisers as toHong Kong laws on, among other matters, the laws and regulations related to thebusiness operations of the Group, the GEM Listing Rules, the Securities andFutures Ordinance, the Companies Ordinance, the Takeovers Code and the Codeon Share Repurchases;

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(v) the Group has established a comprehensive compliance manual which shall beobserved by the Directors and employees of the Company. Each department shallbe responsible for making all relevant staff aware of the compliance manual forensuring that they comply with its principles;

(vi) the Group has appointed an independent internal control consultant to undertakereviews on the internal control system of the Group, the operation manual andinternal policies and the proper implementation of ratification measures beforeListing;

(vii) the Group will engage an independent external consultant after Listing to reviewthe adequacy and effectiveness of the internal control system, including areas offinancial, operational, compliance and risk management;

(viii) the Group has established a compliance committee comprising four members,namely Ms. Wong, an executive Director and the compliance officer of theCompany, who will chair the committee, Mr. Fong Chun Hin Daniel and Mr. ChuiWai Kin, the chief operating officers of the Company and Mr. Chan Wai HungClarence, an independent non-executive Director of the Company, prior to theListing. The committee is responsible for establishing, executing, monitoring andmaintaining the compliance system of the Group and conducting education andtraining programmes on compliance matters;

(ix) the Group has appointed Mr. Chow Chun To, as the financial controller to overseeand develop the Group’s internal control. Mr. Chow has over 7 years ofaccounting and audit experience. Prior to joining the Group, he has obtainedexperience in dealing with internal control in his previous audit function and inhandling compliance issues. He was employed by a company listed in Hong Kongto set up company policies and procedures for internal environment. He was thesenior accountant of an international accounting firm, mainly responsible forperforming audit and internal control review for listed companies and listingapplicants in Hong Kong. He was the Financial Manager of Chiho-Tiande (HK)Limited, a wholly-owned subsidiary of Chiho-Tiande Group Limited (stock code:976) and was mainly responsible for financial reporting, compliance andsupervising internal audit team in performing internal audit function;

(x) administration department is now responsible to handle the licences and permitmatters of the Group with the assistance of external consultant. The administrationand human resources manager, as well as the company secretary, Ms. Yim SauPing will supervise the renewal of all required licences, permits and approvals bymonitoring the pending expiration dates of all licences, permits and approvals andcoordinating the timely preparation and submission of relevant licences renewalapplications. Ms. Yim has over 7 years of experience in auditing and financialmanagement in international audit firm and financial institution and prior tojoining the Group, Ms. Yim was employed in the financial reporting andcompliance department of a financial institution. Leveraging on her experience incompliance and audit work and the exposure to the food and beverage industryacquired since she joined the Group in April 2012 and with the assistance of

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external consultant, Ms. Yim is able to oversee and coordinate the licensing andcompliance matters undertaken by the administration department. Further, inrelation to opening of new restaurant, generally the Group will engage externalconsultant to advise on various restaurant licensing matters. Previously Ms. Yimwas not involved in license application matters at the initial stage but goingforward, Ms. Yim will be involved in the selection of the external consultant andparticipate in the application for licensing matters to prevent futurenon-compliances. The administration department will also prepare a checklist forthe licencing requirements of new restaurants and a schedule for renewalrequirements of existing restaurants. The administration department will report tothe compliance committee in the future for the licensing procedures;

(xi) the Group has appointed Ms. Yim Sau Ping, as the company secretary to overseethe company secretarial function of the Group, monitor compliance, avoid therecommence of non-compliance with section 122 of the Companies Ordinance andto review the Group’s compliance status on a quarterly basis. Ms. Yim is amember of the Hong Kong Institute of Certified Public Accountants;

(xii) the Group has assigned its chief operating officers to visit and check all outletsregularly and report to the compliance officer, if appropriate;

(xiii) the staff of the Group are encouraged to attend seminars or trainings to ensurethey possess the requisite knowledge to comply with the relevant rules andregulations; and

(xiv) the Group has appointed Ms. Wong, the executive Director, as the Group’scompliance officer to monitor the ongoing compliance matters.

Based on the above, the Directors and the Sponsor are of the view that the Companyhas taken reasonable steps to establish internal control system and procedures which areadequate to avoid any future recurrence of non-compliance incidents and preventnon-compliance with applicable rules and regulations by the Group.

Having considered the non-compliance incidents of the Group and the above internalcontrol measures and remedial actions taken by the Group, the Sponsor is of the view thatthe non-compliances are in the nature of one-off incidents caused by inadvertent oversight ofthe Directors, and are not repeated offences committed by the Group and did not result inany disruption in the operation of the Group, there is no further matter that the Sponsorwould consider affecting the suitability of the Directors to become directors of an issuerunder Rules 5.01, 5.02 and 11.07 under the GEM Listing Rules and the Company’ssuitability under Rule 11.06 of the GEM Listing Rules.

In addition, the Group has adopted certain specific measures to enhance its internalcontrol. Please refer to the paragraph “Internal Controls” for detailed information.

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INTERNAL CONTROLS

The Directors are responsible for the formulation and overseeing the implementation ofthe internal control measures and effectiveness of risk management system, which isdesigned to provide reasonable assurance regarding the achievement of objectives relating tooperations, reporting, and compliance.

On 18 April 2013, the Group has appointed the IC Consultant to perform a detailedevaluation under the Committee of Sponsoring Organisations of the Treadway Commission’sframework of the adequacy and effectiveness of the Group’s internal control systemincluding the areas of financial, operation, compliance and risk management. The Committeeof Sponsoring Organisations of the Treadway Commission is an organisation providingthought leadership and guidance on internal control, enterprise risk management, and frauddeterrence. The original framework published in 1992 is recognised as the leading guidancefor designing, implementing and conducting internal control and assessing its effectiveness.The IC Consultant has been appointed as an internal control consultant by a number of listedcompanies.

For details of the major findings and recommendations provided by the IC Consultantare as below:

Internal Control Review Findings Recommendations

� The Group did not have compliancemanual including inside informationpolicy before April 2013.

� The Group should set upcomprehensive compliance manualincluding inside information policy.

� The Group had no risk register todocument the different risks ofoperation.

� The Group should maintain riskregister to ensure the risk are closelymonitored by the Directors.

� The Group had no internal auditdepartment monitoring theeffectiveness of internal controlprocedures and compliance withpolicies and standards.

� The Group should consideroutsourcing the function to externalconsultant after Listing.

� The Group had no policy andprocedure regarding thewhistleblower program, includingcommunications with otherdepartments and business units.

� The Group should set up thewhistleblower program, includingcommunications with otherdepartments and business units.

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Internal Control Review Findings Recommendations

� The Group had failed to apply forwater pollution control licences forcertain of its restaurants and cakeshop in accordance with therequirements under the waterpollution control ordinance fordischarging waste water in theirdaily operations.

� The Group should apply for relevantlicences applicable to operationsimmediately.

� The cashier of Inakaya had kept thedaily cash received in a plastic zipbag instead of the pre-numberedplastic bag provided by GuardforceSecurity in sample selected.

� The Group should follow the cashprocessing procedures to keep thedaily cash received in thepre-numbered plastic bag providedby Guardforce Security.

According to the result of the follow-up reviews by the IC Consultant on 9 August and13 August 2013, the Group had implemented measures recommended by the IC Consultantto rectify the deficiencies identified by the IC Consultant.

Food and Beverage Business

The Group has detailed internal manuals governing the procedures for food andbeverage business. The staff members are required to adhere strictly to the staff handbook,internal control manual and compliance manual. Below sets out some of the significantinternal control measures in connection with the Group’s business.

Sales and Receipt Cycle

Profitability of the Group is affected partly by the ability to successfully generaterevenue from the Group’s existing restaurants. The restaurants mainly derive their revenuefrom the sales of food and beverages, and providing venues for parties or special events.

The Group determines the price of the dishes listed on the standard menu withreference to the cost of ingredients. The cost of ingredients is closely monitored and the dishprices are reviewed and approved by the chief operating officer. The special menu isdetermined by the head chef of each outlet and approved by the chief operating officer.Discount is offered only to members of the membership programme, staff or otherpromotions with banks.

The restaurant operator takes order from the customers and enters it into thepoint-of-sale system. The systems will generate a print-out of the food ordered and in thekitchen and the chef will process accordingly. The chef is not allowed to prepare foodwithout a food ordered via the point-of-sale system. The purchasing supervisor performedanalytical review on the food cost and the actual sales, if there is indication showing thecost of ingredients has significant variance from the budget cost, follow up actions will betaken by the Company.

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Save for the two cake shops which accept payments by octopus cards, customers settlethe bills either by cash or credit cards.

The operation manager records the daily sales amount in a daily sales report andsubmit to the head office. Cashier and operation manager perform the cash count andreconciliation with the daily sales report. Any discrepancy will be reported to the headoffice.

Once completed the cash counting process, the cash will then be sealed in apre-numbered plastic bag with barcode provided by Guardforce Security. GuardforceSecurity is a security company appointed by the Company to transport cash and cashprocessing. They collect the cash from some outlets three times a week and deposit into theCompany’s bank account directly. The sealed pre-numbered bags of cash will be temporarilystored in a safe of each outlet. Only managerial staff at each outlet keep the key orpassword. A bank-in slip and receipt from Guardforce Security will be sent to the financedepartment for record.

Purchase and Payment Cycle

The Group throughout its outlets maintains consistent quality which depends in partupon the ability to procure quality food ingredients. All fresh foods and vegetables arepurchased on a daily basis.

The Group regularly assesses the performance of suppliers, including the price, qualityof products, reputation of the suppliers and stability of the supply. All food and beveragescan only be ordered through the suppliers on the pre-approved list prepared by thepurchasing department.

Upon receiving the raw materials delivered by supplier, the head chef and/or secondchef counts the quantity and weight of each items received. They also inspect the quality ofthe raw materials by observing the colour and texture and measuring temperature of the rawmaterials.

Suppliers usually send the monthly statements to the purchasing department at the endof each month. Purchase department is responsible to reconcile the delivery note providedby each outlet with the monthly statement. Purchasing department may contact the supplierif there is any discrepancy and request the supplier to revise the monthly statementsaccordingly.

If there is no discrepancy, purchasing department will pass the monthly statement tofinance department to arrange payment. Finance department prepares the cheque andarranges signing by the authorised persons. The accounting officer issues the signed chequeto the supplier for settlement.

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Customers’ Feedback

Marketing department is responsible for handling customer complaints. Customers maymake complaints through designated channels provided, such as emails, hotlines andcomment cards that are made available in restaurants.

Marketing officers are responsible for receiving emails and phone calls from customersdirectly and all customers comments cards are sent to the head office for perusing, recordingand handling. Marketing director obtains information from the customers and performsinvestigations if necessary. All complaints are recorded in a complaint log book andreviewed by the senior management. For the year ended 31 March 2012 and 2013 and forthe three months ended 30 June 2013, the Group has received 63, 55 and 23 customercomplaints, respectively. The complaints the Group received from customers directly duringthe Track Record Period mostly concerned the service quality of restaurant staff, or taste andstyle of a particular dish or beverages served. Generally, if the complaint is raised to theattention of the restaurant staff on the spot, the corresponding restaurant manager will try toresolve it such as by offering to exchange the unsatisfactory dish for another dish to thecustomer’s satisfaction, or where the complaint concerns the service quality of a particularstaff, the restaurant manager will try to respond and address the concern of thecomplainants. All customer complaints will be followed up by the marketing department ofthe Group and in rare circumstance, the marketing department or the relevant restaurantmanager will invite the complainant to a complimentary meal at a restaurant under theGroup. The restaurant staff will promptly record each complaint received in the internalrecords. The marketing department and senior management will review the internal recordsof suggestions and complaints on a regular basis and strengthen employee training based onthese records in order to improve the operations of the Group. During the Track RecordPeriod, there was no monetary compensation paid to customers.

Staff Training

Staff handbook and orientation will be provided to all new staff. The handbook andorientation materials set out the Company’s policy and procedures, work flow, job duties andintroduction of the shop background to enable the staff familiar with the shop culture.

On-job trainings and safety trainings are provided to new and existing staff to ensurethe safety requirements and their responsibilities are duly communicated. At least one of therestaurant managers in each outlet is the Hygiene Manager of Food and EnvironmentHygiene Department. The Hygiene Manager is required to attend the training courses underHygiene Manager Scheme.

Anti-fraud and dishonesty

The internal control policies of the Group include measures and procedures to preventoccurrence of fraud, theft, bribery, corruption and other misconduct involving employees,customers and other third parties, including for instance, illegitimate rebates from suppliers.For examples, code of conduct of bribery is set out in the compliance manual of the Group

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of which all employees are required to follow and channel of reporting bribery are providedto staff. In the event that employees are skeptical on any inappropriate instances, they areencouraged to report to the senior management of the Group for further investigation.

EMPLOYEES

The Group had a total of 286, 268 and 286 employees as of 31 March 2012, 31 March2013 and 30 June 2013, respectively.

Restaurant operations are highly service-oriented. The Group’s success, to a certainextent, depends upon the ability to attract, motivate and retain a sufficient number ofqualified employees, including chefs, restaurant managers and staff. The Group seeks tocreate a comfortable working culture which encourages communication and sharing ofthoughts, team work and career development of employees. The Directors believe that acaring working environment could help retaining staff and encourage productivity. TheGroup is committed to promote and award employees with satisfactory performance in orderto recognise their contribution and dedication to the Group.

The Group strives to create and ensure a safe working environment to the employees.Work place safety guidelines have been implemented for all staff in the restaurants whichclearly state the work place safety policies and promoting on-site work safety. In addition,each restaurant has its own kitchen operation manual which provides clear instructions onvarious occupational and restaurant safety matters and staff are encouraged to follow. TheDirectors believe these measures help to reduce the number and seriousness of work injuriesof the employees and are adequate and effective to prevent serious work injuries.

During the Track Record Period and up to the Latest Practicable Date, the Group didnot experience any labour disputes nor any material insurance claims related to employees’injuries. In addition, the Group has complied with the statutory minimum wage providedunder the Minimum Wage Ordinance and implemented by the Labour Department in HongKong during the Track Record Period.

The Group offers competitive wages and other benefits to the restaurant employees tomanage employee attrition rate. The Group’s staff costs include all salaries and benefitspayable to all employees and staff, including executive Directors and represented 26.6%,28.3% and 27.7% of the revenue for the two years ended 31 March 2012 and 2013 and forthe three months ended 30 June 2013, respectively. As the Group had offered to itsemployees wages higher that the minimum wages required under the Minimum WageOrdinance implemented by the Labour Department prior to its implementation, theimplementation and subsequent revision of statutory minimum wages has had little impacton the operation and financial positions of the Group.

Recruiting

Recruiting in the food and beverage industry is highly competitive, especially withrespect to recruiting of restaurant staff, including chefs, cashier and kitchen staff. The Groupbelieves it is hiring suitable employees in the market by offering competitive wages andbenefits, discretionary bonuses, focused training and internal promotion opportunities.

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Training Programs

The Group conducts comprehensive training programmes for all its employees,including managers, chefs and waiters and waitresses. Completion of the relevant trainingprogrammes is required for promotion and career advancement at each level. The Groupmaintains training and performance assessment records for employees to motivate theiractive participation in the training programmes.

Employee Retention

In an effort to maintain employee loyalty and retention, apart from the comfortableworking culture, safe working environment and competitive wages and other benefits, theGroup has a number of employee incentive schemes, including:

1) giving restaurant personnel bonuses if the restaurant at which he or she worksachieves certain performance targets;

2) organising periodical chefs and employees orientation to instill our new andexisting chefs and employees;

3) providing a friendly working environment to the chefs and employees andadopting open-door policy within the organisation;

4) inviting chefs and employees to attend the management meetings and the chefsare encouraged to express their views and ideas in these meetings;

5) conducting training programmes to improve their job skills and careeradvancement; and

6) arranging overseas trainings for the Group’s chefs and other staff members for theenhancement of their performance skills.

In addition, the Company has conditionally adopted the Share Option Scheme. Thepurpose of the Share Option Scheme is to enable the Company to grant options to theparticipants in recognition of their contribution made or to be made to the Group. For moredetails, please refer to the section headed “Share Option Scheme” in Appendix IV to thisprospectus.

INTELLECTUAL PROPERTY RIGHTS

On 13 May 2013, in contemplation of the Listing, the Group entered into a trademarkassignment with Well-In Holdings, a company controlled by Mr. Wu, for the assignment ofthe trademark “Harlan’s” registered in the name of Well-In Holdings under class 43 in HongKong to the Group.

On 28 June 2013, the Group entered into two sub-franchising agreements with RichBase, which is owned as to 45% by Mr. Wu, pursuant to which Rich Base granted to theGroup the right to use the relevant trademarks for a term of 3 years from 28 June 2013.

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On 2 September 2010, the Group entered into a franchising agreement with WaEntertainment Limited (“Wa Entertainment”) pursuant to which Wa Entertainment grantedto the Group the right to use the trademarks “ ” and “ ” to the Group for aperiod of six years commencing from 2 September 2010.

On 4 July 2013, the Group entered into a franchising agreement with Mitano create coLtd (“Mitano”) pursuant to which Mitano granted to the Group the right to use thetrademarks “ ”, “ ”, “ ”, “ ” and “ ” to the Group for a period of six yearscommencing from the date when the first restaurant under the franchising agreementcommenced business in September 2013.

As at the Latest Practicable Date, the Group had registered 1 trademark and applied forregistration of 10 trademarks in Hong Kong, which are being used or intended to be used bythe Group. The Group will also register the relevant trademarks of the restaurants to belaunched and established under the “Pearl” series.

As at the Latest Practicable Date, the Group has received notices of opinion from theRegistrar of Trade Marks (the “Registrar”) informing the Group that each of the trademarks“ ” and “ ” (the “Affected Trademarks”) are considered to be similar to certainearlier trade marks registered (the “Earlier Marks”) and the latest time for the Group to filewritten representations to object to the Registrar’s opinion shall be April 2014. As advisedby the Legal Counsel of the Company, given that the Affected Trademarks containdominating component or essential feature with distinctiveness and there are only Englishwords or Chinese characters in the Earlier Marks, the use of the Affected Trademarks by theGroup will not be likely to cause confusion to the public and accordingly there is noreasonable ground constituting infringements of the Earlier Marks by reason of the Groupusing the Affected Trademarks. The Legal Counsel of the Company has also advised that, ifrepresentations are to be made to the Registrar or the court, the Group would have areasonable chance to have the Affected Trademarks registered. For the above reasons, theGroup has decided that it shall proceed with filing written objections to the Registrar’sopinion. In the event that the Group was finally refused by the Registrar to register any ofthe Affected Trademarks or any other trademarks, the Group shall modify the relevanttrademarks with a view to successfully registering the trademarks which represent the imageof the relevant restaurants or companies of the Group. The Directors consider that anyfailure to register the Affected Trademarks and necessity to modify such trademarks shallnot have any material adverse impact on the business and operations of the Group. TheControlling Shareholders have agreed to fully indemnify the Group against any potentialcosts, losses, damages, liabilities suffered as a result of any business disruptions or anylitigations suffered by the Group due to any infringement of intellectual property of otherscaused by the use of any of the trademarks which have not been registered by or for theGroup.

As at the Latest Practicable Date, the Group did not receive any claim against it forinfringement of any trademark nor was it aware of any pending or threatened claims inrelation to any such infringement, nor had any claim been made by the Group against thirdparties in relation to the infringement of intellectual property rights owned by the Group orthird parties.

Please refer to the paragraph headed “Intellectual property rights” in Appendix IV tothis prospectus for further details of the registration of Group’s trademarks and domainnames.

BUSINESS

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Overview

Immediately following completion of the Placing and the Capitalisation Issue, Mr. Wu,Ms. Wong, Mr. Lui, Mr. Zhang and Victory Stand will control more than 30% of theCompany’s issued share capital. For the purpose of the GEM Listing Rules, Mr. Wu, Ms.Wong, Mr. Lui, Mr. Zhang and Victory Stand are the Controlling Shareholders. During theTrack Record Period, the Controlling Shareholders have, in managing and operating of theoperating subsidiaries of the Company, been acting together to control the Group. Thoughthese arrangements were not formalised in writing, the Controlling Shareholders have, inmanaging and operating the operating subsidiaries of the Company and making keydecisions, acted as an unit affecting the management and control of the Group. The votingpatterns of the Controlling Shareholders, at any time when any two or more of them areshareholders or serving as directors in the same subsidiary of the Company, have beenconsistently unanimous and consensual on key decisions. With regard to exercise of thevoting rights in the general meetings of each subsidiary of the Company, there has been noinstance where any of the relevant Controlling Shareholders has exercised or attempted toexercise his/her voting rights independently without the concurrence of the other relevantControlling Shareholders.

Each of Mr. Wu, Ms. Wong, Mr. Lui, Mr. Zhang and Victory Stand confirms that it/she/he does not hold or conduct any business which competes, or is likely to compete, eitherdirectly or indirectly, with the business of the Group. Apart from the Group’s business, Mr.Wu and Ms. Wong are also interested in certain companies which have had or will continueto have business relationship with the Group during the Track Record Period and afterListing. Particulars of such transactions are set out in the paragraphs headed “Related PartyTransactions” in the section headed “Financial Information” and the section headed“Continuing Connected Transactions” in this prospectus.

During the Track Record Period, W.L. Wong & Co., an unlimited company of whichMs. Wong is the sole proprietor, had provided advisory services relating to internal controland accounting system to the Group. The relevant historical transaction amounts for suchservices for the years ended 31 March 2012 and 31 March 2013 and the three months ended30 June 2013 were approximately HK$240,000, HK$240,000 and HK$60,000, respectively.The payment was made on a lump sum basis, determined with reference to the estimatedtime spent on the work and the market rate for similar services. Upon Listing, suchcorporate services would be provided by the Group’s own company secretary departmentinstead.

INDEPENDENCE OF THE GROUP

In the opinion of the Directors, the Group is capable of carrying on its businessesindependently of, and does not place undue reliance on, the Controlling Shareholders, theirrespective associates or any other parties, taking into account the following factors:

(i) Financial independence

The Group has an independent financial system and makes financial decisionsaccording to the business needs. All loans and advances due to the ControllingShareholders and their associates will be fully settled before Listing or have beenrepaid by way of the Loan Capitalisation Issue. The Group has sufficient capital tooperate its business independently, and has adequate internal resources and creditprofile to support its daily operations.

RELATIONSHIP WITH CONTROLLING SHAREHOLDERS

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(ii) Operational independence

The Company makes business decisions independently. On the basis of thefollowing reasons, the Directors consider that the Company will continue to beoperationally independent from its Controlling Shareholders and other companiescontrolled by its Controlling Shareholders:

(i) save and except for the Sub-Franchise Agreements (details of which are setout in the section headed “Continuing Connected Transactions” in thisprospectus) under which the Group has been licensed with the right to usethe “PHO24” trademark until 2016 from Rich Base, a company controlled byMr. Wu, the Company is not reliant on trademarks owned by its ControllingShareholders, or other companies controlled by its Controlling Shareholders;

(ii) except for the liquor licence held by the employees, the Group is the holderof all relevant licences material to the operation of the restaurant businessand has sufficient capital, equipment and employees to operate the businessindependently. For the arrangement in relation to the liquor licences whichare held by individuals, see “Business – Licences and Approvals” in thisprospectus;

(iii) save for the corporate services provided by R&C to the Group (details ofwhich is set out in the section headed “Continuing Connected Transactions”in this prospectus), the Company has its own administrative governanceinfrastructure;

(iv) except for one office premise which is leased from Well-In, a companycontrolled by Mr. Wu under the Office Licence Agreement (details of whichare set out in the section headed “Continuing Connected Transactions” inthis prospectus), all of the properties used as the principal place of business,staff quarters and restaurants are leased from Independent Third Parties bythe Company or its subsidiaries;

(v) the Company has established a set of internal control procedures to facilitatethe effective operation of its business; and

(vi) save and except for the provision of utensils and bakery products providedby Well-In and JC & Associates under the Master Utensils SupplyAgreement and Master Bakery Products Supply Agreement (details of whichare set out in the section headed “Continuing Connected Transactions” inthis prospectus), the Company does not rely on its Controlling Shareholdersfor access to suppliers and customers. In particular, the Companyindependently manages its sourcing for food and equipment. Its customersare predominantly members of the public, to whom the Company hasindependent access.

Based on the above-mentioned arrangements, the Directors are of the view thatthe Company will be able to operate independently from its Controlling Shareholders.


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(iii) Management independence

On the basis of the following reasons, the Directors believe that the Directors andmembers of the senior management of the Group are able to manage the businessindependently from its Controlling Shareholders:

(i) with 3 independent non-executive Directors out of a total 7 Directors in theBoard, which complies with the requirements under the GEM Listing Rules,there will be a sufficiently robust and independent voice within the Board tocounter-balance any situation involving a conflict of interest and protect theinterests of the independent Shareholders;

(ii) all members of the senior management are full-time employees of the Groupand most have, during the entire or most of the Track Record Period,undertaken senior management supervisory responsibilities in the business.The responsibilities of the senior management team include managingoperational and financial matters, making general capital expendituredecisions and the daily implementation of the business strategies of theGroup. This ensures the independence of the daily management andoperations of the Group from those of its Controlling Shareholders;

(iii) actual or potential conflicts have been identified (see the section headed“Continuing Connected Transactions” in this prospectus) and minimised (byvirtue of the Deed of Non-Competition);

(iv) each of the Directors is aware of his/her fiduciary duties as a Director,which require, among other things, that he or she acts for the benefit and inthe best interests of the Shareholders as a whole and does not allow anyconflict between his or her duties as a Director and his or her personalinterests to affect the performance of his or her duties as a Director;

(v) connected transactions between the Company and companies controlled byits Controlling Shareholders are subject to the rules and regulations underthe GEM Listing Rules including rules relating to announcement, reportingand independent Shareholders’ approval requirements (where applicable);

(vi) all of the restaurant businesses in Hong Kong held by the ControllingShareholders have been consolidated into the Group as part of theReorganisation. Therefore, there is no competition that would adverselyaffect the management independence of the Group; and

(vii) a number of corporate governance measures are in place to avoid anypotential conflict of interest between the Company and its ControllingShareholders, and to safeguard the interests of the independent Shareholders.


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NON-COMPETITION UNDERTAKING

Ms. Wong, Mr. Wu, Mr. Zhang, Mr. Lui and Victory Stand (each a “Covenantor” andcollectively the “Covenantors”), have entered into the Deed of Non-competition in favor ofthe Company. Pursuant to the Deed of Non-competition, each of the Covenantors hasirrevocably and unconditionally undertaken to the Company (for itself and as trustee for itssubsidiaries) that, save and except that disclosed in this prospectus, during the period thatthe Deed of Non-competition remain effective, he/she/it shall not, and shall procure that his/her/its associates (other than any member of the Group) not to develop, acquire, invest in,participate in, carry on or be engaged, concerned or interested or otherwise be involved,whether directly or indirectly, in any business in competition with or likely to be incompetition with the existing business activity of any member of the Group in Hong Kongand such other parts of the world where any member of the Group may operate from time totime save for the holding of not more than 5% shareholding interests (individually or withhis/her/its associates) in any company listed on a recognised stock exchange and at any timethe relevant listed company shall have at least one shareholder (individually or with his/her/its associates, if applicable) whose shareholding interests in the relevant listed company ishigher than that of the relevant Covenantor (individually or with his/her/its associates).

Each of the Covenantors further undertakes that if he/she/it or his/her/its associatesother than any member of the Group is offered or becomes aware of any businessopportunity in Hong Kong or such other parts of the world where any member of the Groupmay operate from time to time which may compete with the business of the Group, he/she/itshall and he/she/it shall procure his/her/its associates to notify the Group in writing and theGroup shall have a right of first refusal to take up such business opportunities. The Groupshall, within 6 months after receipt of the written notice (or such longer period if the Groupis required to complete any approval procedures as set out under the GEM Listing Rulesfrom time to time), notify the Covenantor(s) whether the Group will exercise the right offirst refusal or not.

The Group shall only exercise the right of first refusal upon the approval of all theindependent non-executive Directors (who do not have any interest in such opportunity). Therelevant Covenantor(s) and the other conflicting Directors (if any) shall abstain fromparticipating in and voting at and shall not be counted as quorum at all meetings of theBoard where there is a conflict of interest or potential conflict of interest including but notlimited to the relevant meeting of the independent non-executive Directors for consideringwhether or not to exercise the right of first refusal.


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The Company will adopt the following procedures to monitor that the Deed ofNon-competition are observed:

(a) the independent non-executive Directors shall review on an annual basis the aboveundertakings from the Covenantors and to evaluate the effective implementationof the Deed of Non-competition;

(b) each of the Covenantors undertakes to provide, upon the Company’s request, anyinformation to the Company or the independent non-executive Directors, as abasis to decide whether to exercise the right of first refusal by the Company fromtime to time; and

(c) each of the Covenantors undertakes to provide, upon the request of theindependent non-executive Directors, all information necessary for the executionof the Deed of Non-competition, and to provide an annual confirmation in relationto the compliance of the non-competition undertaking in the annual report of theCompany.

The undertakings contained in the Deed of Non-competition are conditional upon theListing Division granting approval for the listing of and permission to deal in the Shares onthe Stock Exchange and all conditions precedent under the Underwriting Agreement havingbeen fulfilled (or where applicable, waived) and the Underwriting Agreement not havingbeen terminated in accordance with its terms. If any such condition is not fulfilled on orbefore the date falling 30 days after the date of this prospectus (or if such date is not aBusiness Day, the immediate preceding Business Day), the Deed of Non-competition shalllapse and cease to have any effect whatsoever and no party shall have any claim against theother under the Deed of Non-competition.

The Deed of Non-competition shall terminate on (i) in relation to any Covenantors, thedate on which it/he/she together with its/his/her associates, whether individually or takentogether, ceases to be interested in 30% (or such other amount as may from time to time bespecified in the GEM Listing Rules as being the threshold for determining a controllingshareholder of a company) or more of the entire issued share capital of the Company; or (ii)the date on which the Shares shall cease to be listed and traded on the Stock Exchange(except for temporary trading halt or suspension of trading of the Shares on the StockExchange due to any reason).

COMPETING INTEREST

The Controlling Shareholders, the Directors and their respective associates do not haveany interest in a business apart from the Group’s business which competes and is likely tocompete, directly or indirectly, with the Group’s business and would require disclosureunder Rule 11.04 of the GEM Listing Rules.


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The following transactions have been carried out by the Group and its connectedpersons during the Track Record Period and are expected to be continued following theListing.

CONTINUING CONNECTED TRANSACTIONS EXEMPT FROM REPORTING,ANNUAL REVIEW, ANNOUNCEMENT AND INDEPENDENT SHAREHOLDERS’APPROVAL REQUIREMENTS

A. Corporate Services Agreement

R & C Corporate Services Limited (“R&C”) is a company controlled by Ms. WongFung, the sister of Ms. Wong, and is therefore a connected person of the Company under theGEM Listing Rules. Any transaction between R&C and the Group thus constitutes aconnected transaction upon Listing.

During the Track Record Period, the Group engaged R&C to provide companysecretarial services to the Group and accounting services to J&H. The historical amountscharged to the Group for the two years ended 31 March 2012 and 2013 and the three monthsended 30 June 2013 were HK$395,000, HK$281,000 and HK$185,000 respectively. Thepayment was made on a lump sum basis, determined with reference to the estimated timespent on the work and the market rate for similar services. R&C had proven that it wascapable of providing good quality corporate services at a fair and reasonable price, whichsatisfies the requirements of the Group.

The Company entered into a services agreement with R&C on 2 November 2013 (the“Corporate Services Agreement”) pursuant to which R&C shall provide corporate servicesto the Group for a term from the Listing Date to 31 March 2016. During the term of theCorporate Services Agreement, either party may give the other party not less than 2 months’prior written notice to terminate the agreement.

As the highest relevant percentage ratio(s) with respect to the transactions contemplatedunder the Corporate Services Agreement is on an annual basis less than 5% and the annualconsideration is less than HK$1,000,000, the transactions under the Corporate ServicesAgreement are exempt from the reporting, annual review, announcement and independentshareholders’ approval requirements under the GEM Listing Rules.

B. Licence Agreement

Well-In is a company controlled by Mr. Wu, and is a connected person of the Companyunder the GEM Listing Rules. Any transaction between Well-In and the Group thusconstitutes a connected transaction upon Listing.

During the Track Record Period, Well-In has licensed approximately 50% of the area ofthe premises located at 14th Floor, TAL Building, 45-53 Austin Road, Kowloon, Hong Kongto the Group as its Hong Kong office (the “Premises”) at a monthly licence fee ofHK$59,120 (exclusive of rates, utility charges, administrative expenses and managementfees). Such licence fee represents 50% of the relevant total monthly rental fee payable to the


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landlord. For the two years ended 31 March 2012 and 2013 and the three months ended 30June 2013, the total licence fees paid by the Group to Well-In amounted to approximatelyHK$709,000, HK$709,000 and HK$177,000 respectively.

During the Track Record Period, Well-In has provided administrative services to theGroup concerning the use of the Premises which include utilities, telephone, internet,photocopying services and other ancillary services such as courier, postal and deliveryservices (the “Administrative Services”). The Group has reimbursed the costs incurred byWell-In for the provision of Administrative Services on a cost basis.

The Group entered into a licence agreement with Well-In on 2 November 2013 (the“Office Licence Agreement”) pursuant to which Well-In agreed to licence the Premises tothe Group for a term from 1 April 2013 to 21 March 2014 at a monthly licence fee ofHK$59,120 which was agreed after arm’s length negotiations between the parties withregard to the then prevailing market rates for similar properties in the vicinity. In respect ofcosts for the Administrative Services, the Group agreed to reimburse the actual costsincurred by Well-In which shall be payable on a monthly basis together with the licence feepayable by the Group under the Office Licence Agreement. The fees charged for theAdministrative Services shall be determined with reference to the actual use of such servicesby the Group on a cost basis which varies across different types of services.

The maximum annual amount of licence fees payable to Well-In by the Group underthe Office Licence Agreement for the year ending 31 March 2014 is estimated to be notexceeding HK$690,000. In arriving at the above amount, the Directors had considered (i) thehistorical licence fee paid by the Group to Well-In; and (ii) the estimated licence fee or rentof the properties in the same area and of similar grading as the Premises. Such amount issmaller than the annualized licence fee because the former was only calculated up to 21March 2014 on a pro rata basis rather than the financial year end which falls on 31 March2014.

Regarding the costs of the Administrative Services, they are exempt from the reporting,annual review, announcement and independent shareholders’ approval requirements pursuantto Rule 20.31(8) of the GEM Listing Rules.

Given that the highest relevant percentage ratio of the transactions in relation to thelicence fee under the Office Licence Agreement is on an annual basis less than 5% and theannual consideration is less that HK$1,000,000, the transactions under the Office LicenceAgreement and the transactions contemplated thereunder are exempt from the reporting,annual review, announcement and independent shareholders’ approval requirements under theGEM Listing Rules.

C. Franchising Arrangements on PHO24

On 5 June 2009, PHO24 Corporation (the “Master Franchisor”) entered into afranchising agreement (“Master Franchise Agreement”) with Rich Base pursuant to whichthe Master Franchisor agreed to grant the exclusive right to operate the franchised foodbusiness under the trademark of “PHO24” in Hong Kong and Macau to Rich Base. In


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consideration thereof, Rich Base agreed to pay an initial master franchise fee of US$150,000and a monthly fee equivalent to 2% the gross monthly sales generated by each of therestaurants concerned.

Rich Base has sub-franchised the PHO24 franchise in Hong Kong (the “PHO24Franchise”) to the Group by the Sub-Franchise Agreements (as defined below). Asconfirmed by Rich Base, it has sub-franchised the PHO24 franchise in Macau to anIndependent Third Party which has been operating a PHO24 restaurant in Macau. Asconfirmed by Rich Base, Rich Base is entitled to sub-franchise the PHO24 Franchise to theGroup under the Master Franchise Agreement.

Rich Base is a company which is owned as to 45% by Mr. Wu, 45% by CKDevelopment and 10% by Good View. Rich Base is therefore a connected person of theCompany under GEM Listing Rules. Any transaction between Rich Base and the Group thusconstitutes a connected transaction upon Listing.

Since 2010, Rich Base has sub-franchised the PHO24 Franchise to PHO24 (TST)Limited and PHO24 (NTP) Limited based on verbal agreement (the “Sub-FranchiseArrangement”). Under the Sub-Franchise Arrangement and as directed by Rich Base, theGroup shall pay a monthly franchise fee of the same amount under the Master FranchiseAgreement, namely 2% of the gross monthly sales generated by each of the restaurantsconcerned, to the Master Franchisor directly with no additional payment required to be madeto Rich Base. The Sub-Franchise Arrangement was accepted by the Master Franchisor byconduct and it has also accepted the Group’s monthly payment to it since 2010. As RichBase, PHO24 (TST) Limited and PHO24 (NTP) Limited are related companies by reasonthat Mr. Wu was the common shareholder and director of these three companies, the partiesdid not contemplate that a written sub-franchise agreement was necessary, particularly inlight of the fact that the Master Franchisor has consented to the Sub-franchise Arrangementby conduct. Given that the Sub-Franchise Arrangement was verbally agreed by Rich Baseand the Group, the consideration being 2% of the gross monthly sales generated by each ofthe restaurants concerned payable to Rich Base was paid to the Master Franchisor asdirected by Rich Base and the Sub-Franchise Arrangement was and has been accepted by theMaster Franchisor by conduct, the Sub-Franchise Arrangement has been valid and legal.

For the two years ended 31 March 2012 and 2013 and the three months ended 30 June2013, the sub-franchise fee payable by the Group were approximately HK$621,000,HK$640,000 and HK$171,000, respectively.

In contemplation of the Listing, Rich Base and the Group have entered intosub-franchise agreements (the “Sub-Franchise Agreements”) on 28 June 2013 to record theSub-Franchise Arrangement in writing and subsequently also provided the same to theMaster Franchisor. The Sub-Franchise Agreements reflected the identical terms andconditions under the Sub-Franchise Arrangement including the payment of the monthlyfranchise fee representing 2% of the gross monthly sales generated by each of therestaurants concerned, as directed by Rich Base, to the Master Franchisor directly with noadditional payment to Rich Base. The parties confirm that the initial term of theSub-Franchise Agreements shall expire in 2016. The franchise fee was determined based on


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arm’s length negotiations between the parties. The Sub-Franchise Agreement with respect toPHO24 (NTP) was subsequently terminated on 3 November 2013 following the closure ofPHO24 (NTP) on the same date.

The PHO24 Franchise is currently utilised by the Group and the Group expects tocontinue to utilise the PHO24 Franchise.

The Group estimates and proposes that the annual caps for franchise fees under theSub-Franchise Agreements in aggregate shall be HK$520,000, HK$430,000 and HK$730,000for the three years ending 31 March 2014, 31 March 2015 and 31 March 2016, respectively.The above annual caps are arrived on the basis that the Group’s total gross sales for thethree years ending 31 March 2014, 31 March 2015 and 31 March 2016 would amount up toHK$25,830,000, HK$21,151,000 and HK$36,109,000, respectively, taking into account thehistorical growth in respect of the sales of PHO24 (TST) and PHO24 (NTP) restaurants, theclosure of PHO24 (NTP) in November 2013 and the relaunch of a PHO24 restaurant in late2014 subject to availability of suitable premises, and the estimated incremental rate ofapproximately 5% per annum over these years.

Given that the highest relevant percentage ratio of the transactions under theSub-Franchise Agreements is on an annual basis less than 5% and the annual considerationis less than HK$1,000,000, the transactions under the Sub-Franchise Agreements are exemptfrom the reporting, annual review, announcement and independent shareholders’ approvalrequirement under the GEM Listing Rules.

NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS SUBJECT TOREPORTING, ANNUAL REVIEW AND ANNOUNCEMENT REQUIREMENTS

A. Master Utensils Supply Agreement

During the Track Record Period, Well-In has supplied utensils to the Group. For thetwo years ended 31 March 2012 and 2013 and the three months ended 30 June 2013,payments received by Well-In in respect of the supply of utensils were approximatelyHK$2,500,000, HK$700,000 and HK$57,000, respectively. The decrease in the transactionamount during the Track Record Period is due to the fact that, in terms of the timing ofopening of the two new restaurants, Inakaya was set up during the year ended 31 March2012 and Harlan’s cake shop during the year ended 31 March 2013. Since Inakaya, which isa full-service restaurant, demanded more utensils than Harlan’s cake shop, the transactionamount for purchasing utensils was higher for the year ended 31 March 2012. Given that theutensils provided by Well-In have been proven to be of satisfactory quality which fulfilledthe requirements of the Group at a fair and reasonable price, the Group intends to continueto engage Well-In to supply utensils to the Group.

Pursuant to a master utensils supply agreement dated 2 November 2013 (the “MasterUtensils Supply Agreement”), Well-In agreed to supply utensils to the Group at a pricewhich shall be determined on an arm’s length negotiations based on the prevailing marketrates or at rates similar to those offered by Well-In to Independent Third Parties for thesupply of similar utensils. The term of the Master Utensils Supply Agreement is from theListing Date to 31 March 2016.


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The Group estimates and proposes that the annual caps for amounts payable by theGroup to Well-in under the Master Utensils Supply Agreement shall be HK$2,200,000,HK$3,000,000 and HK$2,900,000 for the three years ending 31 March 2014, 31 March 2015and 31 March 2016, respectively. In arriving at the above annual caps, the Directors hadconsidered (i) the historical figures; (ii) comparable prices offered by Independent ThirdParties for the supply of similar utensils; (iii) the expected increment of the market price ofutensils in Hong Kong during the term of the Master Utensils Supply Agreement, namelyapproximately 5% per annum; and (iv) the estimated quantity of utensils to be used by theGroup, in particular the initial capital expenditure for crockery and cutlery and kitchenutensils upon the opening of 6 restaurants expected for the year ending 31 March 2014 and3 restaurants expected for the year ending 31 March 2015.

Given that the highest relevant percentage ratio of the transactions under the MasterUtensils Supply Agreement is on an annual basis less than 5%, the Master Utensils SupplyAgreement is subject to the reporting, annual review and announcement requirements butexempt from independent shareholders’ approval requirement under the GEM Listing Rules.

B. Master Bakery Products Supply Agreement

JC & Associates is a company owned as to 31% by each of Ms. Wong and Mr. Wu andis therefore a connected person of the Company under the GEM Listing Rules. Anytransaction between JC & Associates and the Group thus constitutes a connected transactionupon Listing.

During the Track Record Period, JC & Associates has supplied meat and bakeryproducts to the Group. For the two years ended 31 March 2012 and 2013 and the threemonths ended 30 June 2013, payments received by JC & Associates in respect of the supplyof meat and bakery products amounted to approximately HK$7,500,000, HK$7,300,000 andHK$1,100,000, respectively. As the bakery products supplied by JC & Associates have beenproven to be of satisfactory quality at a fair and reasonable price, the Group intends tocontinue to engage JC & Associates to supply bakery products to the Group. As the Groupexpands in its operations and capacity, it has become more cost-effective for the Group toprocure meat products directly from the suppliers. Therefore, since March 2013, JC &Associates ceased the supply of meat products to the Group.

Pursuant to a master bakery products supply agreement dated 2 November 2013 (the“Master Bakery Products Supply Agreement”), JC & Associates agreed to supply bakeryproducts to the Group at a price which shall be determined on an arm’s length negotiationsbased on the prevailing market prices or at prices similar to those offered by JC &Associates to Independent Third Parties for the supply of similar bakery products. The termof the Master Bakery Products Supply Agreement is from the Listing Date to 31 March2016.

The Group estimates and proposes that the annual caps for amounts payable by theGroup to JC & Associates under the Master Bakery Products Supply Agreement shall beHK$4,100,000, HK$5,300,000 and HK$5,800,000 for the three years ending 31 March 2014,31 March 2015 and 31 March 2016, respectively. In arriving at the above annual caps, theDirectors had considered (i) the historical figures, (ii) comparable prices which the Group iswilling to pay to Independent Third Parties for the supply of similar bakery products; (iii)


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the expected increment of the market price of bakery products in Hong Kong during theterm of the Master Bakery Products Supply Agreement, namely approximately 5% perannum; and (iv) the additional new purchase resulting from the opening of a new Harlan’sCake Shop during the year ending 31 March 2014.

Given that the highest relevant percentage ratio of the transactions under the MasterBakery Products Supply Agreement is on an annual basis less than 25% and the annualconsideration is less than HK$10,000,000, the Master Bakery Products Supply Agreement issubject to the reporting, annual review and announcement requirements but exempt fromindependent shareholders’ approval requirement under the GEM Listing Rules.

WAIVER FROM COMPLIANCE WITH THE GEM LISTING RULES

Given their recurring nature and the fact that the respective agreements for each of thecontinuing connected transactions mentioned in the paragraph headed “Non-exemptcontinuing connected transactions subject to reporting, annual review and announcementrequirements” in this section were entered into prior to the Listing Date, the Directorsconsider that compliance with the announcement requirement would be burdensome andwould add unnecessary administrative costs to the Company. Accordingly, the Company,pursuant to Rule 20.42(3) of the GEM Listing Rules, has applied for, and the StockExchange has granted to the Company, a waiver with respect to its non-exempt continuingconnected transactions referred to above from the announcement requirement of Chapter 20of the GEM Listing Rules.

CONFIRMATION FROM THE DIRECTORS

The Directors (including the independent non-executive Directors) confirm that thecontinuing connected transactions referred to above have been entered into in the ordinaryand usual course of business of the Group on normal commercial terms and the terms of theabovementioned transactions, including the proposed annual caps, are fair and reasonableand in the interests of the Shareholders as a whole. As such, the Directors (including theindependent non-executive Directors) confirm that it is in the interest of the Shareholdersand the Group as a whole to continue with these transactions after Listing.

In the event that the Group enters into any new transactions or agreements with anyconnected person in the future, the Company will comply with the relevant provisions ofChapter 20 of the GEM Listing Rules. In addition, if any of the continuing connectedtransactions shall continue after the expiry of the current waiver and/or if the transactionamount of any of the continuing connected transactions shall exceed the expected annualcaps, the Company will comply with the relevant provisions of Chapter 20 of the GEMListing Rules.

CONFIRMATION FROM THE SPONSOR

The Sponsor confirms that the non-exempt continuing connected transactions referredto above for which the waiver is sought have been entered into in the ordinary and usualcourse of business of the Group on normal commercial terms and the terms of theabovementioned transactions, including the proposed annual caps, are fair and reasonableand in the interests of the Shareholders as a whole.


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DIRECTORS

The Board consists of three executive Directors, one non-executive Director and threeindependent non-executive Directors. Listed out below is their information:

Name Age Position Appointment date Principal responsibilities

Mr. Wu Kai Char（胡啟初）

57 Chairman of theBoard andexecutiveDirector

2 November 2013 overall management and strategicplanning and development of theGroup’s business operations

Ms. Wong Wai Ling（黃慧玲）

52 ExecutiveDirector andChief ExecutiveOfficer of theGroup

2 November 2013(Note)

overall management and strategicplanning and development of theGroup’s business operations

Mr. Lui Hung Yen（雷鴻仁）

60 ExecutiveDirector

2 November 2013 overall management and strategicplanning and development of theGroup’s business operations

Mr. Pan Chik (潘稷) 45 Non-executiveDirector

2 November 2013 advising on business opportunitiesfor investment, development andexpansion of the Group

Mr. Law Yiu Sing(羅耀昇)

46 Independentnon-executiveDirector

2 November 2013 providing independent judgment onthe issues of strategy,performance, resources andstandard of conduct of theCompany

Ms. Yue Chung SzeJoyce (余頌詩)



Mr. Chan Wai HungClarence (陳偉雄)



Note: Ms. Wong was appointed as a Director on 21 June 2013. She was re-designated as an executiveDirector and appointed as the Chief Executive Officer on 2 November 2013.

DIRECTORS, SENIOR MANAGEMENT AND STAFF

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EXECUTIVE DIRECTORS

Mr. Wu Kai Char (胡啟初), aged 57Chairman and Executive Director

Mr. Wu is one of the founders of the Group and was appointed as the executiveDirector and Chairman of the Board on 2 November 2013. Mr. Wu is responsible for thestrategic development and management of the Group’s business and operations.

Mr. Wu has over 20 years of experience in the hotel and restaurant supplies industry inHong Kong and China. Mr. Wu is a director of Well-In Holdings and Well-In, amanufacturer and international supplier in food industry that produces fine quality silver andtableware equipment for international hotel chains and restaurant groups. Mr. Wu was thedirector of Yan Oi Tong (仁愛堂) for the period 1994-1998, a member of the Lions ClubInternational Foundation for the period of 1992-1993 (獅子會) and also nominated as the“Top Ten Chinese Entrepreneur” （十大優秀華人企業家） in 2010 by The World ChineseEntrepreneur Association (世界華人企業家協會).

Mr. Wu was a director of the following six companies which were all incorporated inHong Kong prior to their respective dissolution:

Name of company

Principal businessactivity prior tocessation ofbusiness

Date ofdissolution

Means ofdissolution

Reasons fordissolution

Percentage ofshareholding

held by Mr. Wuimmediatelyprior to thedissolution

Dynamic NiceInternational Limited

Investment holding 21 September2001

Striking off The companyceased to carryon any activitiesafter the disposalof the propertyheld

25%

Chain Rich Limited Never commencedbusiness

28 May 2010 Deregistration Never commencedbusiness

50%

PHO’ 24 Limited Never commencedbusiness

17 June 2011 Deregistration Never commencedbusiness

30%

Hundred Link EnterpriseCompany Limited

Trading oftableware &cutleries

29 August2003

Deregistration The shareholdersdecided to useother entity tocarry on thetrading business

60%

Good-Way Tableware &Silver ArticleManufactory Limited

Never commencedbusiness

31 August2007

Deregistration Never commencedbusiness

90%

Alliance General Limited Never commencedbusiness

13 June 2003 Deregistration Never commencedbusiness

40%

Mr. Wu confirmed that the above six companies were not engaged in any competingbusiness with the Group and that there were no claims against him in relation to the abovesix companies.


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Notes:

1. “Deregistration”, in the context of Hong Kong law, refers to the process whereby a private companyincorporated under the Companies Ordinance which has never commenced or ceased its business oroperation and is not insolvent applies to the Companies Registry of Hong Kong for deregistrationpursuant to section 291AA of the Companies Ordinance.

2. “Striking off”, in the context of Hong Kong law, refers to striking off the name of a company fromthe register of companies by the Registrar of Companies of Hong Kong under section 291 of theCompanies Ordinance where the Registrar of Companies has reasonable cause to believe that acompany is not carrying on business or in operation.

Ms. Wong Wai Ling（黃慧玲）, aged 52Executive Director and Chief Executive Officer

Ms. Wong was appointed as a Director on 21 June 2013. She was re-designated as anexecutive Director and appointed as the Chief Executive Officer on 2 November 2013. Shejoined the Group on 2 March 2006 and is one of the founders of the Group. Ms. Wong isprimarily responsible for the Group’s overall corporate strategies, financial management andbusiness development. Ms. Wong has over 7 years of experience in the food and beverageindustry since the commencement of business of the Group.

Further, Ms. Wong is a certified public accountant with over 20 years of experience inaccounting, auditing and taxation.

Ms. Wong received a bachelor of arts degree from the University of Hong Kong in1983 and a diploma in accounting and finance from the London School of Economics andPolitical Science, University of London in 1985. Ms. Wong was qualified as an associate ofthe Association of Chartered Certified Accountants in 1990 and registered as a certifiedpublic accountant of the Hong Kong Institute of Certified Public Accountants in 1991. Ms.Wong is now a fellow member of the Hong Kong Institute of Certified Public Accountantsand the Association of Chartered Certified Accountants.

Ms. Wong is an independent non-executive director of China Ruifeng RenewableEnergy Holdings Limited (stock code: 527), Overseas Chinese Town (Asia) HoldingsLimited (stock code: 3366) and AVIC International Holdings Limited (stock code: 161), allof which are companies whose shares are listed on the Main Board of the Stock Exchange.Ms. Wong also acts as the chairperson of the audit committee of each of these listedcompanies.

Mr. Lui Hung Yen (雷鴻仁), aged 60Executive Director

Mr. Lui joined the Group on 25 June 2010 and was appointed as an executive Directorof the Company on 2 November 2013. Mr. Lui is responsible for the strategic developmentand management of the Group’s business and operations together with Mr. Wu and Ms.Wong.


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Mr. Lui serves as a director of Hang Tai Metal Company Limited (恒泰五金有限公司)and Famewell Limited (豐行有限公司) and has been engaged in metal trading business since1996.

Mr. Lui is now the vice-chairman of Hong Kong Metal Merchants Association (香港五金商業總會). Mr. Lui also takes part in non-governmental organisations. He is the vicepresident of the Association of the Directors and Former Directors of Yan Oi Tong Limited(仁愛堂歷屆總理聯誼會有限公司), a director of Lions Club of Tuen Mun Limited (香港屯門獅子會有限公司), and a director of Lions Clubs Osteoporosis Education and Research FoundationLimited (國際獅子會骨質疏鬆教育及董事研究基金有限公司). Moreover, Mr. Lui was grantedwith the Tuen Mun Community Service Award (屯門區社會服務嘉許狀) in January 2013.

Mr. Lui was a director of Everglory International Limited, a company incorporated inHong Kong, prior to its dissolution on 14 July 2006. Everglory International Limited wasdissolved by way of voluntary deregistration under section 291AA of the CompaniesOrdinance where (i) all members of Everglory International Limited agreed to thederegistration, (ii) Everglory International Limited had no outstanding liabilities and (iii)Everglory International Limited either had never commenced business or operation or hadceased to carry on business or operation for more than 3 months immediately before theapplication for deregistration.

NON-EXECUTIVE DIRECTOR

Mr. Pan Chik (潘稷), aged 45Non-executive Director

Mr. Pan was appointed as a non-executive Director on 2 November 2013. Mr. Panobtained a bachelor of arts degree in accounting, finance and economics from the Universityof Essex in July 1991.

Mr. Pan has approximately 18 years of experience in investment services and assetmanagement. During the period from May 1993 to April 2007, Mr. Pan worked in LippoSecurities Holdings Limited and his last position held was the associate director –investment services.

In May 2009, Mr. Pan acquired an indirect 100% shareholding interest in Astrum andnow he holds 82.69% interest in Astrum. He is currently a director and a responsible officerof Astrum. From October 2009 to September 2013, Mr. Pan was a director of Murtsa CapitalPartners Limited, where Mr. Pan focused on providing advisory and management services tooffshore funds.

Mr. Pan is a non-executive director of Zebra Strategic Holdings Limited, whose sharesare listed on GEM (stock code: 8260) since 10 April 2013. He was also an independentnon-executive director of Chinese Energy Holdings Limited (formerly known as iMerchantsLimited) (stock code: 8009) from March 2008 to November 2009 and Sing Pao MediaEnterprises Limited (formerly known as SMI Publishing Group Limited) (stock code: 8010)from September 2009 to August 2011, all of whose shares were listed on GEM.


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INDEPENDENT NON-EXECUTIVE DIRECTORS

Mr. Law Yiu Sing（羅耀昇）, aged 46Independent non-executive Director

Mr. Law was appointed as an independent non-executive Director on 2 November2013. Mr. Law has been a certified practising accountant of the CPA Australia since 2005, acertified public accountant of the Hong Kong Institute of Certified Public Accountants since2006, and a certified tax adviser of the Taxation Institute of Hong Kong since 2013.

Mr. Law obtained a bachelor’s degree of engineering from the Concordia University inCanada in 1990. He later completed a master degree in business administration in theUniversity of Hong Kong in 1999 and completed a master degree of practicing accounting inthe Monash University in Australia in 2004. Mr. Law also obtained a graduate diploma inEnglish and Hong Kong law (Common Professional Examination) from the ManchesterMetropolitan University in 2009. Mr. Law is also a founding member of the Institute ofAccountants Exchange.

Mr. Law has over 20 years of experience in the field of financial and businessmanagement. From October 1995 to October 1997, Mr. Law was the general manager in thecorporate development department of COSCO Pacific Limited (stock code: 1199), the issuedshares of which are listed on the Main Board of the Stock Exchange. From August 2000 toMay 2002, Mr. Law was the deputy general manager of business development of ChinaChengtong Development Group Limited (stock code: 217), the issued shares of which arelisted on the Main Board of the Stock Exchange. From January 2003 to November 2004, Mr.Law served as the director of corporate finance and the assistant to the chief financialofficer of Capisces International (H.K.) Limited. From January 2006 to January 2007, Mr.Law worked at the Official Receiver’s Office as Insolvency Officer II. From February 2007to March 2009, Mr. Law served as the vice president of Yangtze Capital ManagementLimited. From July 2009 to July 2010, Mr. Law served as the chief financial officer of JimeiDevelopment Holdings Ltd.

Mr. Law is currently the treasury and merger & acquisition manager of BrightoilPetroleum (Holdings) Limited (stock code: 933), a company incorporated in Bermuda withlimited liability and the issued shares of which are listed on the Main Board of the StockExchange.

Ms. Yue Chung Sze Joyce（余頌詩）, aged 42Independent non-executive Director

Ms. Yue was appointed as an independent non-executive Director on 2 November 2013.She obtained a bachelor of arts degree from The University of Hong Kong in November1993. Ms. Yue worked in Emperor Investment (Management) Ltd. as an executive assistantof chairman’s office from August 1999 to February 2010. From January 2011 to May 2012,she was a director of Wealthy Year Investment Limited which traded under the businessname of Maia Jewelry Salon in customised diamond jewelry business.


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Ms. Yue was a director of Heview Enterprises Limited, a company incorporated inHong Kong, prior to its dissolution. As confirmed by Ms. Yue, Heview Enterprises Limitedwas an investment holding company and it was dissolved on 26 August 2005 because itceased to carry on any business or operation. Its name was thus struck off from the registerof companies by the Registrar of Companies of Hong Kong under section 291 of theCompanies Ordinance. Ms. Yue confirms that there was no claim against her during herdirectorship in Heview Enterprises Limited.

Mr. Chan Wai Hung Clarence（陳偉雄）, aged 54Independent non-executive Director

Mr. Chan was appointed as an independent non-executive Director on 2 November2013. Mr. Chan obtained a certificate in advanced food and beverage service from theHaking Wong Technical Institute in 1984. He obtained a certificate in hotel, catering andinstitutional operations in 1986 and obtained the higher certificate in hotel, catering andinstitutional management in 1989 both from the Hong Kong Polytechnic.

Mr. Chan has over 20 years of experience in the food and beverage industry. FromJune 1989 to April 1995, Mr. Chan worked in the Grand Hyatt Hong Kong, and his lastposition was manager at Grand Cafe. From April 1995 to February 2001, Mr. Chan workedin The Royal Garden and his last position was the food & beverage manager and was incharge of the food and beverage department and supervised all the outlet managers. Mr.Chan is currently the club manager of the China Club – Hong Kong.

Save as disclosed above, to the best of the knowledge, information and belief of theDirectors having made all reasonable enquiries, there were no other matters with respect tothe appointment of the Directors that need to be brought to the attention of the Shareholdersand there was no information relating to the Directors that is required to be disclosedpursuant to Rule 17.50(2) of the GEM Listing Rules as at the Latest Practicable Date.

SENIOR MANAGEMENT

Name Age Position

Mr. Chui Wai Kin（徐偉健） 42 Chief Operating OfficerMr. Fong Chun Hin Daniel（方駿軒）

45 Chief Operating Officer

Ms. Yim Sau Ping（嚴秀屏） 31 Company Secretary and Administration andHuman Resources Manager

Mr. Chow Chun To（鄒振濤） 30 Financial ControllerMs. Wu Wing Yee（胡詠儀） 30 Marketing Director

Mr. Chui Wai Kin (徐偉健), aged 42Chief Operating Officer

Mr. Chui serves as the chief operating officer of the Group since April 2012. Prior tothat, Mr. Chui was the Group’s Executive Chef overseeing the kitchen operations in kitchensof each restaurant and to ensure the foods to be served to customers are of good quality. Mr.


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Chui is in charge of kitchen operations management, chef training and chef hiring. Beforejoining the Group in 2006, Mr. Chui had worked as head chef in the “Harlan’s” restaurantoperated by JJH.

Mr. Chui has more than 20 years of experience in the food and beverage industry inHong Kong and has been a well-recognised chef in the culinary scene in Hong Kong. Mr.Chui started his career as chef in 1987. He was employed by The Aberdeen Marina Clubbetween May 1992 and May 2001, and was appointed as service manager – Kitchen (SousChef) in Aberdeen Marina Club in May 1999. Mr. Chui completed the Food Hygiene Coursein July 1999 jointly organised by Provisional Urban Council, the Provisional RegionalCouncil and the Department of Health, and completed the Wine and Spirit Seminarorganised by The Aberdeen Marina Club in March 1997.

In 1999, Mr. Chui was awarded Silver Award at the Practical Hot Cooking WesternCuisine at the “Hong Kong International Culinary Classic 99” organised by Hong KongExhibition Services Ltd and Hong Kong Tourist Association and endorsed by WorldAssociation of Cooks Societies.

Mr. Fong Chun Hin Daniel (方駿軒), aged 45Chief Operating Officer

Mr. Fong is the chief operating officer of the Group. Mr. Fong joined the Group inApril 2011 and is responsible for overseeing and managing the daily operations of theGroup’s restaurants and supervising the wait staff of the restaurants to ensure the clients ofthe restaurants are well served. Mr. Fong has around 24 years of operating and managingexperience in hotels and restaurant groups accumulated from the various working experiencein Beijing and Hong Kong. Mr. Fong has worked as operations manager in China Club,Chinese Restaurant Manager in Panda Hotel, Restaurant Manager in Hong Kong JockeyClub and Senior Administrative Manager in Beijing Chiu Chow Garden Restaurant (Beijing).Mr. Fong completed the “Wonder-Host Training” programme organised by Hong KongTourism Board and endorsed by The Hong Kong Polytechnic University in 2002. Mr. Fongalso completed a “20-Week Part-time Day Course in Food and Beverage Supervisory” courseorganised by the Hospitality Industry Training and Development Centre of VocationalTraining Council in 2001, a “Customer Service Concept Training” programme organised bythe Hong Kong Convention and Exhibition Center in 1992, a “Food & Beverage Service”course (餐飲從業員基本課程) organised by The Vocational Training Council in 1986. He wasawarded “WSET� LEVEL 2 INTERMEDIATE CERTIFICATE IN WINES AND SPIRITS” in2006 hosted by the International Wine & Spirit Centre.

Ms. Yim Sau Ping (嚴秀屏), aged 31Company Secretary and Administration and Human Resources manager

Ms. Yim joined the Group in April 2012 as Accounting Manager and was re-appointedas the Company Secretary and the Administration and Human Resources Manager on 2November 2013. Ms. Yim is primarily responsible for overseeing the Group’s finance andadministrative functions as well as company secretarial matters. Ms. Yim graduated fromThe Hong Kong Polytechnic University with a bachelor degree in accountancy in 2007 andhas been a certified public accountant of the Hong Kong Institute of Certified Public


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Accountants since 2010. Over the course of her career, Ms. Yim has accumulated over 7years of extensive experience in accounting, auditing and financial management ininternational audit firm and financial institution.

Mr. Chow Chun To (鄒振濤), aged 30Financial Controller

Mr. Chow joined the Group since 18 May 2013 and was appointed as the FinancialController of the Group on 2 November 2013. He graduated from The Hong KongPolytechnic University with a bachelor’s degree in accountancy in 2006. He has over 7 yearsof accounting and audit experience. Prior to joining the Group, he was the FinancialManager of Chiho-Tiande (HK) Limited, a wholly-owned subsidiary of Chiho-Tiande GroupLimited (stock code: 976). He was mainly responsible for financial reporting andcompliance. He worked at Deloitte Touche Tohmatsu from February 2008 to April 2011 withthe last position being a senior in audit department. Currently he is responsible for theaccounting and financial functions, as well as development of internal control of the Group.

Ms. Wu Wing Yee (胡詠儀), aged 30Marketing Director

Ms. Wu was appointed as the Marketing Director of the Group on 2 November 2013.She joined the Group in April 2012 and is responsible for leading the marketing team tohandle advertising and promotional campaigns and promote the brand awareness and imageof the restaurants in line with the marketing strategy of the Group. Ms. Wu graduated fromSimon Fraser University with a bachelor of arts degree in 2006. Ms. Wu is the daughter ofMr. Wu.

COMPANY SECRETARY

Ms. Yim Sau Ping was appointed as the company secretary of the Company on 2November 2013. Details of Ms. Yim are set out under the paragraph headed “SeniorManagement” in this section.

All of the Directors and senior management managing the Group’s operations duringthe Track Record Period were ordinarily residing in Hong Kong.

AUDIT COMMITTEE

The Company established an Audit Committee pursuant to a resolution of the Directorspassed on 2 November 2013 in compliance with Rule 5.28 of the GEM Listing Rules.Written terms of reference in compliance with paragraph, C.3.3 and C.3.7 of the CorporateGovernance Code and Corporate Governance Report as set out in Appendix 15 to the GEMListing Rules have been adopted. Among other things, the primary duties of the AuditCommittee are to make recommendations to the Board on appointment or reappointment andremoval of external auditor, review financial statements of the Company and judgments inrespect of financial reporting, and oversee internal control procedures of the Company.


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The Audit Committee consists of three independent non-executive Directors, namelyMr. Law Yiu Sing, Mr. Chan Wai Hung Clarence and Ms. Yue Chung Sze Joyce. Mr. LawYiu Sing is the chairman of the Audit Committee.

REMUNERATION COMMITTEE

The Company established a Remuneration Committee on 2 November 2013 pursuant toa resolution in compliance with Rule 5.34 of the GEM Listing Rules with written terms ofreference in compliance with paragraph B.1.2 of the Corporate Governance Code andCorporate Governance Report as set out in Appendix 15 to the GEM Listing Rules. Theprimary duties of the Remuneration Committee are to make recommendation to the Board onthe overall remuneration policy and structure relating to all Directors and seniormanagement of the Group and ensure that none of the Directors determine their ownremuneration.

The Remuneration Committee consists of three members, namely Mr. Law Yiu Sing,Ms. Wong and Mr. Chan Wai Hung Clarence. Mr. Law Yiu Sing is the chairman of theRemuneration Committee.

NOMINATION COMMITTEE

The Company established a Nomination Committee on 2 November 2013 with writtenterms of reference in compliance with paragraph A.5.2 of the Corporate Governance Codeand Corporate Governance Report as set out in Appendix 15 to the GEM Listing Rules. Theprimary duties of the Nomination Committee are to review the structure, size andcomposition of the Board annually; identify individuals suitably qualified to become Boardmembers; assess the independence of independent non-executive Directors; and makerecommendations to the Board on relevant matters relating to appointment or re-appointmentof Directors.

The Nomination Committee consists of three members, namely Mr. Law Yiu Sing, Ms.Wong and Mr. Chan Wai Hung Clarence. Mr. Chan Wai Hung Clarence is the chairman ofthe Nomination Committee.

COMPLIANCE COMMITTEE

The Company has established a Compliance Committee on 2 November 2013 withwritten terms of reference. The Compliance Committee comprises four members, namely Ms.Wong, Mr. Fong Chun Hin Daniel and Mr. Chui Wai Kin, the chief operating officers of theCompany and Mr. Chan Wai Hung Clarence. Ms. Wong has been appointed as the chairmanof the Compliance Committee. The primary duties of the Compliance Committee are toestablish, execute, monitor and maintain the compliance system of the Group and to conducteducation and training programmes on compliance matters.


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COMPLIANCE OFFICER

Ms. Wong was appointed as the compliance officer of the Company on 2 November2013. Ms. Wong is also an executive Director. For details of her qualifications andexperience, please refer to the paragraph headed “Executive Directors” in this section.

REMUNERATION POLICY

The Directors and senior management receive compensation in the form of salaries,benefits in kind and discretionary bonuses with reference to salaries paid by comparablecompanies, time commitment and the performance of the Group. The Group also reimbursesthem for expenses which are necessarily and reasonably incurred for the provision ofservices to the Group or executing their functions in relation to the operations of the Group.Duty meals are provided to the Group’s employees. The Group regularly reviews anddetermines the remuneration and compensation package of the Directors and seniormanagement, with reference to, among other things, market level of salaries paid bycomparable companies, the respective responsibilities of the Directors and seniormanagement and the performance of the Group.

RETIREMENT BENEFIT SCHEMES

The Group has participated in the mandatory provident fund prescribed by theMandatory Provident Fund Schemes Ordinance (Chapter 485 of the Laws of Hong Kong).

The Group has not participated in any other pension schemes.

COMPLIANCE ADVISER

In accordance with Rule 6A.19 of the GEM Listing Rules, the Company has appointedTC Capital to be the compliance adviser, who will have access to all relevant records andinformation relating to the Company that it may reasonably require to properly perform itsduties. Pursuant to Rule 6A.23 of the GEM Listing Rules, the Company shall consult withand, if necessary, seek advice from the compliance adviser in a timely manner in thefollowing circumstances:

(i) before the publication of any regulatory announcement, circular or financialreport;

(ii) where a transaction, which might be a notifiable or connected transaction, iscontemplated by the Company, including share issues and share repurchases;

(iii) where the Company proposes to use the proceeds of the Placing in a mannerdifferent from that detailed in this prospectus or where the business activities,developments or results of the Company deviate from any forecast, estimate (ifany) or other information in this prospectus; and

(iv) where the Stock Exchange makes an inquiry of the Company under Rule 17.11 ofthe GEM Listing Rules.


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The term of appointment shall commence on the Listing Date and end on 31 March2016 or the date on which the Company complies with Rule 18.03 of the GEM ListingRules in respect of its financial results for the second full financial year commencing afterthe Listing Date, whichever is later unless the agreement is terminated pursuant to the termof the appointment.

STAFF OF THE GROUP

As at the Latest Practicable Date, the Group had 264 employees (not including theDirectors), all of whom are located in Hong Kong. The following table shows a breakdownof the employees by function as at the Latest Practicable Date:

Functions

Numberof

Employees

Administration and human resources 6Chefs 124Marketing (including event) 6Finance and accounting 7Purchasing 2Restaurant staff (excluding chefs) 119

Total 264

STAFF RELATIONS

The Group recognises the importance of maintaining a good relationship with theemployees. The remuneration payable to the employees includes salaries and allowances.

The Group has not experienced any significant problems with its employees save asthose arising from ordinary course of business or disruption to the operations due to labourdisputes, nor has the Group experienced any significant difficulties in the recruitment andretention of staff.

The Group believes that its employee relations are satisfactory in general. The Groupbelieves that the management policies, working environment, career prospects and benefitsextended to its employees have contributed to employee retention and building of amicableemployee relations.

EMPLOYEES’ BENEFITS

The Group’s remuneration to employees includes salaries and discretionaryperformance bonus. Duty meals are also provided to employees. The Group has adopted theprofit sharing schemes under which certain employees are benefited from it. The Groupprovides insurance coverage in respect of medical care and work injury to its employees.Rental allowance are also given to certain employees.


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SHARE OPTION SCHEME

The Group has conditionally adopted the Share Option Scheme under which certainemployees, directors, consultants and advisers of the Group may be granted options tosubscribe for Shares. The principal terms of the Share Option Schemes are summarised inthe section headed “Share Option Scheme” in Appendix IV to this prospectus.


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SUBSTANTIAL SHAREHOLDERS

Immediately following completion of the Placing and the Capitalisation Issue (withouttaking into account any Shares which may be issued pursuant to the exercise of optionswhich may be granted under the Share Option Scheme), the following persons/entities willhave an interest or a short position in the Shares or the underlying Shares which would berequired to be disclosed to the Company under the provisions of Divisions 2 and 3 of PartXV of the SFO, or, directly or indirectly, be interested in 10% or more of the nominal valueof any class of share capital carrying rights to vote in all circumstances at general meetingsof any member of the Group:

Long position in the Shares

Name Nature of interestNumber

of Shares


in theCompany

Victory Stand Beneficial owner 217,500,000 54.375%

Mr. Zhang Interest in a controlledcorporation (Note 1)

217,500,000 54.375%

Dragon Flame Beneficial owner 82,500,000 20.625%

Mr. Pan Chik Interest in a controlledcorporation (Note 2)

82,500,000 20.625%

Ms. Liu Ming Lai,Lorna

Interest of spouse (Note 3) 82,500,000 20.625%

Notes:

1. These Shares are held by Victory Stand, the entire issued share capital of which is legally andbeneficially owned as to 45.88%, 29.75%, 16.24% and 8.13% by Mr. Zhang, Mr. Wu, Ms. Wong andMr. Lui, respectively. Mr. Zhang is deemed to be interested in all the Shares held by Victory Standunder the SFO. Ms. Wong, Mr. Wu and Mr. Lui are the executive Directors. Each of Mr. Zhang, Ms.Wong, Mr. Wu and Mr. Lui is a director of Victory Stand.

2. These Shares are held by Dragon Flame, the entire issued share capital of which is owned by Mr.Pan Chik, a non-executive Director. Mr. Pan Chik is deemed to be interested in all the Shares held byDragon Flame under the SFO.

3. Ms. Liu Ming Lai, Lorna is the spouse of Mr. Pan Chik. Under the SFO, Ms. Liu Ming Lai, Lorna isdeemed to be interested in all the Shares in which Mr. Pan Chik is interested.


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Substantial shareholdings in the subsidiaries of the Company

Name of the shareholder

Name of thesubsidiary inwhich theshareholder isinterested

Nature ofinterest

Numberof shares


in thesubsidiary

Jack Company H One F&B Beneficialowner

3,000 30%

Mega Chance InvestmentsLimited

J&H Beneficialowner

1,800 18%

1957 & Co. (Hospitality) PHO24 (NTP)Limited

Beneficialowner

1,000 10%

CK Development PHO24 (TST)Limited

Beneficialowner

3,500 35%

CK Development PHO24 (NTP)Limited

Beneficialowner

3,000 30%

Save as disclosed above, the Directors are not aware of any person who will,immediately following the completion of the Placing and the Capitalisation Issue, have aninterest or short position in the shares or the underlying shares which would be required tobe disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of theSFO, or, directly or indirectly, be interested in 10% or more of the nominal value of anyclass of share capital carrying rights to vote in all circumstances at general meetings of anymember of the Group.


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SHARE CAPITAL

The share capital of the Company immediately following the completion of the Placingand the Capitalisation Issue is set out in the table below. The table is prepared on the basisof the Placing becoming unconditional and the issue of New Shares and the CapitalisationIssue pursuant thereto is made as described herein. It takes no account of any Shares whichmay be allotted and issued pursuant to the exercise of options which may be granted underthe Share Option Scheme or of any Shares which may be allotted and issued or repurchasedby the Company under the general mandates for the allotment and issue or repurchase ofShares granted to the Directors as referred to below or otherwise.

HK$

Authorised share capital:

2,000,000,000 Shares 20,000,000

Issued and to be issued, fully paid or credited as fully paid upon completion of the Placingand the Capitalisation Issue:

1,000 Shares in issue as at the date of this prospectus 10329,999,000 Shares to be issued pursuant to the Capitalisation Issue 3,299,990

70,000,000 New Shares to be issued pursuant to the Placing 700,000

Total:

400,000,000 Shares 4,000,000

MINIMUM PUBLIC FLOAT

Pursuant to Rule 11.23(7) of the GEM Listing Rules, at least 25% of the total issuedshare capital of the Company must at all times be held by the public. The 100,000,000Placing Shares represent 25% of the issued share capital of the Company upon Listing.

RANKING

The Placing Shares will rank pari passu in all respects with all the Shares now in issueor to be allotted and issued as mentioned in this Prospectus and will qualify for alldividends or other distributions declared, made or paid on the Shares in respect of a recorddate which falls after the Listing Date save for any entitlement to the Capitalisation Issue.

SHARE OPTION SCHEME

The Company has conditionally adopted the Share Option Scheme, the major terms ofwhich are set out in the sections headed “Share Option Scheme” in Appendix IV to thisprospectus.

SHARE CAPITAL

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CAPITALISATION ISSUE

Pursuant to the resolutions of the Shareholders passed on 2 November 2013, subject tothe share premium account of the Company being credited as a result of the issue of PlacingShares pursuant to the Placing, the Directors are authorised to allot and issue a total of329,999,000 Shares credited as fully paid at par to the holders of Shares on the register ofmembers of the Company at the close of business on 1 November 2013 (or as they maydirect) in proportion to their respective shareholdings (save that no Shareholder shall beentitled to be allotted or issued any fraction of a Share) by way of capitalisation of the sumof HK$3,299,990 standing to the credit of the share premium account of the Company, andthe Shares to be allotted and issued pursuant to this resolution shall rank pari passu in allrespects with the existing issued Shares.

GENERAL MANDATE TO ISSUE SHARES

Subject to the Placing becoming unconditional, the Directors have been granted ageneral unconditional mandate to allot, issue and deal with the Shares or securitiesconvertible into Shares or options, warrants or similar rights to subscribe for Shares or suchsecurities convertible into Shares, and to make or grant offers, agreements or options whichmight require such Shares to be allotted and issued or dealt with subject to the requirementthat the aggregate nominal value of the Shares so allotted and issued or agreed conditionallyor unconditionally to be allotted and issued (otherwise than pursuant to a rights issue, orscrip dividend scheme or similar arrangements, or a specific authority granted by theShareholders) shall not exceed:

(a) 20% of the aggregate nominal value of the share capital of the Company in issueimmediately following the completion of the Capitalisation Issue and the Placing(not including Shares which may be allotted and issued pursuant to the exercise ofoptions which may be granted under the Share Option Scheme); and

(b) the aggregate nominal value of the share capital of the Company repurchased bythe Company (if any) pursuant to the general mandate to repurchase Sharesreferred to in the paragraph headed “General Mandate to Repurchase Shares”below.

This mandate does not cover Shares to be allotted, issued, or dealt with under a rightsissue or pursuant to the exercise of the options which may be granted under the ShareOption Scheme. This general mandate to issue Shares will remain in effect until whicheveris the earliest of:

(a) the conclusion of the next annual general meeting of the Company;

(b) the expiration of the period within which the next annual general meeting of theCompany is required by the Articles or the Companies Law or any otherapplicable laws of the Cayman Islands to be held; or

(c) the time when such mandate is revoked or varied by an ordinary resolution of theShareholders at a general meeting.

SHARE CAPITAL

– 164 –

For further details of this general mandate, please refer to the sub-paragraph headed“Written resolutions of the Shareholders passed on 2 November 2013” under the paragraph“Further information about the Company” in Appendix IV to this prospectus.

GENERAL MANDATE TO REPURCHASE SHARES

Subject to the Placing becoming unconditional, the Directors have been granted ageneral unconditional mandate to exercise all the powers of the Company to repurchaseShares with an aggregate nominal value of not more than 10% of the aggregate nominalvalue of the share capital of the Company in issue following the completion of the Placingand the Capitalisation Issue (not including Shares which may be allotted and issued pursuantto the exercise of the options that granted or may be granted under the Share OptionSchemes).

This mandate only relates to repurchases made on the Stock Exchange, or on any otherstock exchange on which the Shares which may be listed on the Stock Exchange or anyother stock exchange which is recognised by the SFC and the Stock Exchange for thispurpose, and such repurchases are made in accordance with all applicable laws and therequirements of the GEM Listing Rules. A summary of the relevant GEM Listing Rules isset out in the sub-paragraph headed “Repurchase of the Shares by the Company” under theparagraph headed “Further information about the Company” in Appendix IV to thisprospectus.

The general mandates to issue and repurchase Shares will remain in effect untilwhichever is the earliest of:

(a) the conclusion of the next annual general meeting of the Company;

(b) the expiration of the period within which the next annual general meeting of theCompany is required by any applicable law of the Cayman Islands or the Articlesto be held; or

(c) the time when such mandate is varied, revoked or renewed by an ordinaryresolution of the Shareholders in general meeting,

For further details of this general mandate, please refer to the sub-paragraph headed“Repurchase of the Shares by the Company” under the paragraph headed “Furtherinformation about the Company” in Appendix IV to this prospectus.

SHARE CAPITAL

– 165 –

You should read the following discussion and analysis of the Group’s financialcondition and results of operations in conjunction with the Group’s combined financialinformation included in the Accountants’ Report, which has been prepared in accordancewith HKFRSs, as set out in Appendix I to this prospectus, and the unaudited pro formafinancial information included in Appendix II to this prospectus, in each case togetherwith the accompanying notes. This discussion contains forward-looking statements thatinvolve risks and uncertainties. The Group’s actual results and timing of selected eventscould differ materially from those anticipated in these forward-looking statements as aresult of various factors, including those set forth under the section headed “RiskFactors” and elsewhere in this prospectus.

OVERVIEW

The Group is a food and beverage group in Hong Kong operating 6 full-servicerestaurants and 2 cake shops as at the Latest Practicable Date. The philosophy of the Groupis “unique dining concepts” which is fully translated by the quality dishes accompanied by apleasant atmosphere and attentive services.

As at the Latest Practicable Date, the restaurants operated by the Group are undervarious brands and mainly serve Western, Japanese, Vietnamese and Chinese cuisines. It isthe strategy of the Group to expand its market shares through promoting its brandrecognition and widening the cuisines offered by the Group. The restaurants and cake shopsare strategically located at the landmark shopping malls in Tsim Sha Tsui, Causeway Bay,Sha Tin and Tuen Mun.

The revenues for the years ended 31 March 2012 and 2013 and the three months ended30 June 2013 were approximately HK$260.4 million, HK$246.1 million and HK$62.2million, respectively. The total comprehensive income for the years ended 31 March 2012and 2013 and the three months ended 30 June 2013 were approximately HK$17.1 million,HK$11.7 million and HK$1.9 million, respectively.

RECENT DEVELOPMENTS

Unaudited performance for the three months ended 30 September 2013

Based on the September 2013 Unaudited Financial Statements, the unaudited totalrevenue and gross profit of the Group for the three months ended 30 September 2013 wereapproximately HK$54.8 million and HK$38.0 million, representing a decrease ofapproximately 9.6% and 11.1% respectively as compared to the same period in last financialyear. The cost of inventories sold was approximately 30.6% of the revenue of the Group forthe three months ended 30 September 2013. The Directors are responsible for thepreparation and fair presentation of the September 2013 Unaudited Financial Statements,which have been reviewed by the reporting accountants of the Company in accordance withthe Hong Kong Standard on Review Engagements 2410 “Review of Interim FinancialInformation Performed by the Independent Auditor of the Entity” issued by the Hong KongInstitute of Certified Public Accountants.

FINANCIAL INFORMATION

– 166 –

Without taking into consideration the IFC Restaurants the operation of which ceased inJuly 2013, the unaudited total revenue and gross profit of the Group for the three monthsended 30 September 2013 was approximately HK$53.1 million and HK$36.7 million,representing an increase of approximately 11.0% and 9.4% respectively as compared to thesame period in the last financial year. The cost of inventories sold was approximately 30.9%of the revenue of the Group for the three months ended 30 September 2013.

Closure of the restaurants at ifc mall

The licence agreement and sub-lease agreements entered into by the Group regardingthe leases of H One, G Bar and The Box in ifc mall expired in August 2013. Due toincreasing rental costs in ifc mall, the Directors intend to relocate these restaurants to otherlocations. Consequently, the Directors suspended the operations of these restaurants in July2013 and reinstatement works have been carried out immediately at a cost of approximatelyHK$2.5 million, which have been fully provided in the Group’s combined financialstatements. As the Directors consider that the amounts of write-off for any fittings andfurniture and severance payments to employees were incurred in July 2013, are immaterialand that there is no prepayment made to any suppliers of the IFC Restaurants (save for therental deposit which is fully refundable), the Group did not make any other provision inrespect of the closure of the IFC Restaurants apart from the reinstatement provision. Subjectto any unforeseeable changes on market conditions and other risks, it is the intention of theGroup to relaunch these restaurants in Central. The Company has been liaising with severallandlords and has already submitted a proposal to the landlord of a commercial building thatis still under construction in Central. As at the Latest Practicable Date, negotiations with theprospective landlord are still in progress. It is estimated by the landlord that the constructionwork of the identified building will be completed in mid 2014. Therefore, the Directorsestimate that, after considering the progress of the construction of the commercial buildingand the time required for renovation and applying for relevant licences, and subject tovarious factors such as economic conditions, rentals and suitability of available locations,the IFC Restaurants may be relaunched in the second half of 2014 in Central.

The aggregate revenue generated by the IFC Restaurants amounted to approximatelyHK$65.6 million, HK$50.3 million and HK$12.7 million, representing approximately 25.2%,20.4% and 20.4% of the total revenue of the Group for the two years ended 31 March 2012and 2013 and the three months ended 30 June 2013, respectively. In terms of EBITDA, thesethree restaurants in aggregate generated approximately HK$12.7 million, HK$5.9 million andHK$1.1 million, representing approximately 33.8%, 19.7% and 15.1% of EBITDA(excluding the Listing expenses) of the Group during the Track Record Period, respectively.Taking into account the assets of the IFC Restaurants had almost been fully depreciated andthe relevant deferred tax effect, the net profits attributable to the IFC Restaurants amountedto approximately HK$8.9 million, HK$5.1 million and HK$1.0 million, representingapproximately 51.7%, 43.8% and 30.9% of net profits (excluding the Listing expenses) ofthe Group during the Track Record Period, respectively. Prospective investors should beaware that the closure of the IFC Restaurants will impair the financial performance of theGroup for the year ending 31 March 2014. Save as disclosed in this prospectus, theDirectors confirm that they do not have any plan to close any existing restaurants in the nearfuture.


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Establishment of new restaurants

In order to continue the business momentum and further expand the variety of theGroup’s cuisine offered to its customers, the Group launched its pioneer Chinese cuisinerestaurant, the “Pearl Dining House” in September 2013 in The ONE. Pearl Dining Houseserves a wide range of Huaiyang-style appetisers, homemade dishes, noodles and dumplings.The Group utilising internal funding, has incurred approximately HK$3.9 million as capitalexpenditure and rental deposit for the opening of Pearl Dining House. Pearl Dining Houseachieved a daily revenue of over HK$45,000 for September 2013 since its soft opening on23 September 2013. As part of the Group’s effort to launch the “Pearl” series restaurantsand as a result of negotiation with the existing landlord of the premises on arm’s lengthbasis, the Group has ceased the operation of PHO24 (NTP) in early November 2013 and willinstead launch Pearl Delights, which focuses on Cantonese cuisine, at the same location inDecember 2013. The Directors consider that there are potentials for the “Pearl” series todevelop in NTP, which is located in Sha Tin District, one of the most populous districts inHong Kong. Moreover, the Directors are of the view that it is the right time to bring in newCantonese cuisine dining concept that focuses on dim sum and Cantonese barbeque meat toits customers upon the expiry of the current tenancy agreement, as PHO24 (NTP) has beenin operation for over three years. The Directors intend to open the third restaurant under the“Pearl” series by introducing Pearl Chamber in the first quarter of 2014. As at the LatestPracticable Date, the Directors have identified suitable premises in a shopping mall in YauTsim Mong District for the operation of Pearl Chamber. Pearl Chamber mainly servesChinese cuisine. The Group considers that the name “Pearl” can reflect the identity of HongKong and also highlight the fact that the “Pearl” series restaurants are offering Chinesecuisine in Hong Kong. Whilst the name “Pearl” itself is common, the Group believes that itis a generally receptive name and the Group will be able to work to distinguish their “Pearl”series restaurants from other Chinese restaurants and gradually build up its own brand nameby virtue of the quality and services of their restaurants. As advised by the Legal Counsel ofthe Company, the name “Pearl” is a common ordinary word and it would not be easy forother people to object the Group including and using such a word in the name of itsrestaurants. As advised by the Legal Counsel of the Company, the use of the word “Pearl” inthe Group’s restaurants will not reasonably constitute passing off and thereby infringe theintellectual property rights of the businesses of other restaurants.

As at the Latest Practicable Date, the Group has identified a suitable location tore-open a new PHO24 restaurant in Yau Tsim Mong District and has submitted a proposal tothe landlord of the intended premises. It is expected that the new PHO24 restaurant will belaunched in late 2014 in Yau Tsim Mong District subject to availability of a suitablepremises. The revenue generated by PHO24 (NTP) amounted to approximately HK$21.6million, HK$22.0 million and HK$5.9 million, representing approximately 8.3%, 8.9% and9.5% of the total revenue of the Group for the two years ended 31 March 2012 and 2013and for the three months ended 30 June 2013, respectively. Without taking into considerationthe Listing expenses, the net profit contributed by PHO24 (NTP) amounted to approximatelyHK$2.6 million, HK$2.3 million and HK$0.9 million during the Track Record Period,representing approximately 15.1%, 19.7% and 27.7% of the total net profit of the Group,respectively. Having taken into consideration the past performance of PHO24 (NTP), thelaunch of Pearl Delights shortly following the closure of PHO24 (NTP) and the plan to


– 168 –

relocate the PHO24 restaurant, the Directors are of the view that the closure of PHO24(NTP) will not pose a material adverse change in the financial and trading position orprospect of the Group.

On the other hand, with a view to capture high demand in matured and denselypopulated new town, the Group has entered into a franchising agreement to operate Mekiki(V city) under the franchise name of “Mekikinoginji – Okinawa（目利之銀次沖繩）”, afamous izakaya（居酒屋）chain in Okinawa Prefecture, Japan. This restaurant commenced itsoperation in V city in October 2013. The Group utilising internal funding, has incurredapproximately HK$3.6 million as capital expenditure and rental deposit for the opening ofMekiki (V city). The Group has obtained necessary business licences and arranged staffmembers for the new restaurant. Leveraging on the Group’s previous experience in operatingand managing Japanese restaurants as well as working with Japanese franchisees under the“Inakaya” and “Kaika” brands, the Directors are of the view that the Group has ampleexperience, skills and expertise to launch and manage the two Japanese restaurants under thefranchise name of “Mekikinoginji − Okinawa（目利之銀次沖繩）”, of which Mekiki (WTC)was launched in September 2013. Mekiki (WTC) achieved daily revenue of approximatelyHK$15,000 for September 2013 since its soft opening on 19 September 2013, whichrepresents an increase of approximately 31.6% as compared with the daily revenue of Kaikofor September 2012.

The Group will also establish a cafe under the tradename “a la Folie” in GCP inNovember 2013. The Group utilising internal funding, approximately plans to incurapproximately HK$1.2 million as capital expenditure and rental deposit for the opening of ala Folie. This cafe will target at middle to higher income consumers by serving lightrefreshment and offering quality baked products, including French and Japanese style bread,rolls and pastries. With experience accumulated from the operation and management ofHarlan’s cake shop and other Western restaurants in the Group, the Directors are of the viewthat the Group has sufficient management experience and expertise in operating a la Folie.Furthermore, in order to complement the Group’s pastry making capability for the purposeof a la Folie, the Group has recruited an experienced pastry chef from Japan whose mostrecent role prior to joining the Group was the pastry sous chef at Roppongi Hills Club inTokyo, Japan. The renovation of the cafe took place in October 2013 and the Group willobtain necessary business licences and arrange staff members for the new cafe in due course.

The Group has prior experience in developing new cuisines and has recruited suitablechefs to help it develop the new “Pearl” series restaurants. For instance, Mr. Fong ChunHin, Daniel, the chief operating officer of the Group has worked as manager of Sha Tin 18of Hyatt Regency, operations manager in The China Club, Chinese restaurant manager inPanda Hotel, restaurant manager in Oi Suen of the Hong Kong Jockey Club and senioradministrative manager in Beijing Chiu Chow Garden Restaurant (Beijing). Mr. Yip Yun Fat,the executive chef of production, has over 40 years’ experience in dim sum making andChinese cuisine field, and Mr. Sit Wang On, the head chef of Pearl Dining House has over15 years’ experience in Chinese cuisine, and has worked as head chef of Chiu Chow BrotherDee Restaurant and assistant head chef of the Chinese restaurant in South Pacific Hotel.Besides, these new “Pearl” series restaurants and cafe, although are to be opened in new


– 169 –

areas, are located in landmark shopping malls or populated places, and the Directors are ofthe view that they have the necessary experiences, skills, expertise and resources to bringthe aforesaid new restaurants and cafe to success.

Further, the Group’s existing restaurants have all been profit-making in the first year ofoperation with the only exception of Hooray Kaiko (now known as Mekiki (WTC)). HoorayKaiko experienced a delay in their renovation schedule and, which had an impact on theirperformance in their first year. The situation was exacerbated by the rainy and adverseweather as Hooray Kaiko has a large outdoor terrace.

In view of (i) the Group’s plan to relocate the IFC Restaurants; (ii) the launching ofthe “Pearl” series, Mekiki (V city) and a la Folie; (iii) its recent recruitment of chefs withample experience in Chinese cuisine and pastry making; (iv) increased effort on marketingand promotion; and (v) the Group’s previous record of profit-making capability in operatingnew restaurants, the Directors are of the view and the Sponsor concurs that the Group’sbusiness is sustainable.

BASIS OF PRESENTATION

Throughout the Track Record Period, the Group entities were under the control of theControlling Shareholders. Pursuant to the Reorganisation, as more fully described in thesection headed “History, Development and Reorganisation − Corporate Development −Reorganisation” of this prospectus and in Appendix IV to this prospectus, the Companybecame the holding company of the subsidiaries within the Group. All subsidiaries of theGroup are ultimately controlled by the Controlling Shareholders prior to and after theReorganisation. The financial information is thereby prepared using the principles of mergeraccounting and presents the combined results of operations, combined financial positions andcombined cash flows of the subsidiaries within the Group, and has been prepared as if thecurrent group structure had been in existence at the beginning of the Track Record Period,or since the companies’ respective dates of incorporation or establishment, where there is ashorter period.

FACTORS AFFECTING THE RESULTS OF THE GROUP’S OPERATIONS

The results of the Group’s operations and financial conditions have been and willcontinue to be affected by a number of factors, including those as set forth below.

The business is affected by any material change in the economic condition of HongKong

The results of the Group’s operations are vulnerable to the economy of Hong Kong.Therefore, if Hong Kong experiences any adverse economic conditions due to circumstancesbeyond the Group’s control, such as local economic downturn, natural disasters, contagiousdisease outbreaks or terrorist attacks, or if local authorities adopt regulations that placeadditional restrictions or burdens on the Group or on the industry in general, its overallbusiness and results of operations may be materially and adversely affected.


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The ability of the Group to open and profitably operate new restaurants

As at the Latest Practicable Date, the Group opened its first Chinese restaurant inSeptember 2013 and opened another restaurant serving Japanese cuisine in October 2013.The Group will also launch a cafe in November 2013 and plans to further open one moreChinese restaurant by the first quarter of 2014. However, its ability to successfully openthese new restaurants and other new outlets in the future is subject to a number ofuncertainties. If the Group is not able to attract enough customers to its new restaurants andcafe, the Group’s financial performance may be adversely affected.

The ability of the Group to adjust the pricing policy in response to the changingmarket conditions

In deciding the prices for each menu item, the Group takes into account the costs offood ingredients, target profit margin, general market trends and purchasing power ofcustomers. The price of each menu item also depends on the ability of the Group to continueto reach the target customers. If the Group fails to attract the target customers or to adjustits pricing strategy in response to the changing market environment, the operating resultsand financial performance of the Group could be affected.

Food ingredients, such as vegetable, meat, seafood, frozen food and seasonings fromvarious countries sourced through local suppliers, are the major raw materials purchased bythe Group. The Group has not entered into any long-term contract with its suppliers andtherefore is not able to control the price levels of food ingredients. The costs of foodingredients and price fluctuations will have a direct impact on the Group’s profitability.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of the combined financial information requires management to makejudgments, estimates and assumptions that affect revenues, expenses, carrying amounts ofassets and liabilities and the disclosure of contingent liabilities that are not readily apparentfrom other sources. The estimates and associated assumptions are based on experience andother factors that are considered to be relevant. Actual results may differ from thoseestimates.

The following sets out certain critical accounting policies that the managementconsiders to be critical in the portrayal of the financial position and results of operations.

Revenue recognition

Revenue is recognised when it is probable that the economic benefits will flow to theGroup and when the revenue can be measured reliably, on the following bases:

(a) from restaurant operations, when catering services have been provided to thecustomers. Payments that are related to services not yet rendered are deferred andrecognised as deferred income in liability. Upon expiry of prepaid amounts onunused coupons or cash vouchers, the corresponding deferred income is fullyrecognised as forfeited income; and


– 171 –

(b) interest income, on an accrual basis using the effective interest rate method byapplying the rate that exactly discounts the estimated future cash receipts throughthe expected life of the financial instrument or a shorter period, when appropriate,to the net carrying amount of the financial asset.

Property, plant and equipment and depreciation

Property, plant and equipment are stated at cost less accumulated depreciation and anyimpairment losses. The cost of an item of property, plant and equipment comprises itspurchase price and any directly attributable costs of bringing the asset to its workingcondition and location for its intended use. Expenditures incurred after items of property,plant and equipment have been put into operation, such as repairs and maintenance, isnormally charged to the income statement in the period in which it is incurred. In situationswhere the recognition criteria are satisfied, the expenditure for a major inspection iscapitalised in the carrying amount of the asset as a replacement. Where significant parts ofproperty, plant and equipment are required to be replaced at intervals, the Group recognisessuch parts as individual assets with specific useful lives and depreciates them accordingly.

Depreciation is calculated on the straight-line basis to write-off the cost of each item ofproperty, plant and equipment to its residual value over its estimated useful life. Theprincipal annual rates used for this purpose are as follows:

Leasehold improvements Over the shorter of the lease terms and 6 years

Furniture and fixtures 3 years to 5 years

Catering and other equipment 3 years to 5 years

Motor vehicles 2 years

Where parts of an item of property, plant and equipment have different useful lives, thecost of that item is allocated on a reasonable basis among the parts and each part isdepreciated separately.

Residual values, useful lives and the depreciation method are reviewed, and adjusted ifappropriate, at least at each financial year end.

An item of property, plant and equipment and any significant part initially recognisedis derecognised upon disposal or when no future economic benefits are expected from its useor disposal. Any gain or loss on disposal or retirement recognised in the income statement inthe year the asset is derecognised is the difference between the net sale proceeds and thecarrying amount of the relevant asset.

The carrying amount of each of property, plant and equipment is written downimmediately to its recoverable amount if its carrying amount is greater than its estimatedrecoverable amount.


– 172 –

Reinstatement costs

Provision for reinstatement costs is recognised for the costs to be incurred for thereinstatement of the premises used by the Group for its operation upon expiration of therelevant leases, which are recognised as leasehold improvements in accordance with thepolicies set out for “Property, plant and equipment and depreciation” above. It is initiallyrecognised when a new tenancy agreement with reinstatement clause is signed andrenovation for the new restaurant has been completed. It is estimated and reassessed at theend of each reporting period with reference to the latest available quotation fromindependent contractors. Estimation based on current market information may vary over timeand could differ from the actual reinstatement costs upon closures or relocation of existingpremises occupied by the Group.

SUMMARY OF RESULTS OF OPERATIONS

The following is a summary of the Group’s combined results for the Track RecordPeriod which has been extracted from the Accountants’ Report set out in Appendix I to thisprospectus.


– 173 –


30 June2012 2013 2012 2013


Revenue 260,437 246,072 57,430 62,165Other income and gains 618 1,165 311 262Cost of inventories sold (75,093) (71,286) (16,636) (17,683)Staff costs (69,152) (69,734) (17,506) (17,212)Depreciation and amortisation (16,639) (14,236) (3,906) (3,205)Property rentals and related

expenses (45,869) (47,169) (11,219) (12,341)Fuel and utility expenses (5,081) (5,432) (1,325) (1,428)Other operating expenses (28,195) (23,869) (6,607) (6,210)Listing expenses – – – (1,459)Finance costs (2) (4) (1) –

Profit before tax 21,024 15,507 541 2,889Income tax expense (3,909) (3,836) (429) (987)

Profit and total comprehensiveincome for the year/period 17,115 11,671 112 1,902

Attributable to:Owners of the Company 13,522 9,971 66 1,176Non-controlling interests 3,593 1,700 46 726

17,115 11,671 112 1,902


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PRINCIPAL STATEMENT OF COMPREHENSIVE INCOME COMPONENTS

Revenue

The Group is principally engaged in the operation and management of full-servicerestaurants and cake shops in Hong Kong. The table below sets forth a breakdown of theGroup’s revenue in each restaurant and cake shop and as a percentage of its total revenueduring the Track Record Period.


Revenue(HK$’000)

% oftotal

revenueRevenue

(HK$’000)

% oftotal

revenueRevenue

(HK$’000)

% oftotal

revenueRevenue

(HK$’000)

% oftotal

revenue(Unaudited)



Subtotal 87,187 33.5 72,223 29.3 18,131 31.6 18,589 29.9



Subtotal 171,732 65.9 169,969 69.1 38,965 67.8 42,418 68.3


Subtotal 1,518 0.6 3,880 1.6 334 0.6 1,158 1.8

Total revenue 260,437 100.0 246,072 100.0 57,430 100.0 62,165 100.0


– 175 –

Notes:





Inakaya, Harlan’s and Kaika, and H One recorded decrease in revenue for the yearended 31 March 2013. The Directors consider that the decrease in revenue of those finedining restaurants was primarily attributable to the decreasing in demand for business mealsand corporate events along with uncertain market sentiment in general. The Directors arealso of the view the decrease in revenue in Inakaya is attributable to the launching of arestaurant nearby serving similar cuisine in June 2012 which resulted in a temporary adversecondition to Inakaya. Nevertheless, with additional efforts on the promotions and the qualityfood and services provided, the performance of Inakaya has quickly improved since late2012.

The Group served three categories of cuisines during the Track Record Period. Thetable below sets forth a breakdown of the Group’s revenue by type of cuisine and as apercentage of its total revenue during the Track Record Period:


Revenue(HK$’000)

% oftotal

revenueRevenue

(HK$’000)

% oftotal

revenueRevenue

(HK$’000)

% oftotal

revenueRevenue

(HK$’000)

% oftotal

revenue(Unaudited)

Western 136,468 52.4 122,643 49.8 28,684 50.0 29,696 47.8Japanese 90,409 34.7 87,753 35.7 20,233 35.2 23,067 37.1Vietnamese 33,560 12.9 35,676 14.5 8,513 14.8 9,402 15.1

260,437 100.0 246,072 100.0 57,430 100.0 62,165 100.0

Other income and gains

The other income and gains comprises mainly:

(i) forfeited income of approximately HK$508,000 and HK$108,000 for the yearended 31 March 2013 and for the three months ended 30 June 2013, representingthe prepaid amounts on coupons and cash vouchers forfeited by the Group. As theGroup only launched the membership campaign in late 2011 and the coupons arevalid for one year, there is no forfeited income recorded for the year ended 31March 2012. Forfeited income is recognised when the prepaid amounts on unusedcoupons or cash vouchers expired;


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(ii) sponsorship income from suppliers on various marketing promotion campaignsand events (such as guest chef promotions and promotions on dinner party) ofapproximately HK$414,000, HK$151,000 and HK$123,000 for the years ended 31March 2012 and 2013 and for the three months ended 30 June 2013, respectively.The Directors consider that the decrease in sponsorship income for the year ended31 March 2013 was mainly due to the fact that suppliers tend to be more cautiousto serve as sponsors during the uncertain economic times. The sponsorship incomedoes not offset against the cost of inventories sold as the Directors considered itis indirectly related to the Group’s revenue generation from its ordinary activitywhich is provision of catering services. The sponsorship income is recognisedwhen it can be measured reliably, when there is reasonable assurance that thesponsorship income will be received and all attaching conditions will be compiledwith. There are no significant conditions attached thereto or required to befulfilled for the recognition of the sponsorship income; and

(iii) a water damage insurance claim of approximately HK$188,000 for the year ended31 March 2013.

Cost of inventories sold

The cost of inventories sold mainly represents food ingredients and beverage for theoperation of the Group’s restaurants. The major food ingredients purchased by the Groupincludes, but not limited to, vegetable, meat, seafood and frozen food. Cost of inventoriessold is the largest component of the Group’s operating expenses. Therefore, food prices havea significant effect on the Group’s results of operations.

The Group purchases food ingredients from suppliers in Hong Kong who in turn sourcefood ingredients from various overseas countries. Food prices worldwide have generallyincreased during the Track Record Period. Nevertheless, the Group has refined the menu andincreased prices of selected menu items. The Directors expect that the food ingredients pricewill continue to increase in the foreseeable future and the Group will constantly monitor andrespond to changes in the costs of food ingredients.

The table below sets forth the cost of inventories sold to the revenue for each of thecuisines offered by the Group during the Track Record Period:


Cost ofinventories

sold Revenue

Cost ofinventories

sold Revenue

Cost ofinventories

sold Revenue

Cost ofinventories

sold Revenue(HK$’000) (HK$’000) % (HK$’000) (HK$’000) % (HK$’000) (HK$’000) % (HK$’000) (HK$’000) %

(Unaudited) (Unaudited)

Western 39,106 136,468 28.7 34,902 122,643 28.5 8,045 28,684 28.0 8,818 29,696 29.7Japanese 27,477 90,409 30.4 27,191 87,753 31.0 6,365 20,233 31.5 6,790 23,067 29.4Vietnamese 8,510 33,560 25.4 9,193 35,676 25.8 2,226 8,513 26.1 2,075 9,402 22.1

Overall 75,093 260,437 28.8 71,286 246,072 29.0 16,636 57,430 29.0 17,683 62,165 28.4


– 177 –

The Group has not entered into any long-term contract with its existing suppliers.Despite the growing inflation in general in recent years, the overall cost of inventories soldrepresented approximately 28.8%, 29.0% and 28.4% of the revenue of the Group for theyears ended 31 March 2012 and 2013 and for the three months ended 30 June 2013,respectively. The Directors will continue to monitor the cost of inventories sold as apercentage of revenue, which is a key performance indicator of the overall efficiency andprofitability of the restaurant operations.

Gross profit and gross margin

Gross profit represents revenue less cost of inventories sold. Gross margin is calculatedby dividing the gross profit by revenue. The table below sets forth the gross profit and grossmargin for each of the restaurants and cake shops during the Track Record Period:


Grossprofit

(HK$’000)

Grossmargin

(%)

Grossprofit

(HK$’000)

Grossmargin

(%)

Grossprofit

(HK$’000)

Grossmargin

(%)

Grossprofit

(HK$’000)

Grossmargin

(%)(Unaudited)



Subtotal 63,689 73.0 52,477 72.7 13,176 72.7 13,124 70.6



Subtotal 121,075 70.5 120,402 70.8 27,522 70.6 30,717 72.4

Cake shop – continuing

Harlan’s cake shop (4) – – 1,370 57.2 – – 508 61.7Carousel 580 38.2 537 36.2 96 28.7 133 39.9

Subtotal 580 38.2 1,907 49.1 96 28.7 641 55.4

Total gross profit 185,344 71.2 174,786 71.0 40,794 71.0 44,482 71.6


– 178 –

Notes:





During the Track Record Period, due to the fact that the cake shops are retail in natureand the cost of inventories sold is the cost incurred for the bakery products, which havealready included other expenses and profit margin of the suppliers, while the cost ofinventories sold of full-service restaurants only consist of food ingredients and beveragecost, the gross margin generated by the cake shops was lower than the full-servicerestaurants.

Staff costs

Restaurant operations are highly service-oriented. The Group’s success, to a certainextent, depends upon the ability to attract, motivate and retain a sufficient number ofqualified employees, including restaurant managers and staff. The Group seeks to create acomfortable working culture which encourages communication and sharing of thoughts, teamwork and career development of employees. The Directors believe that a caring workingenvironment could help retaining staff and encourage productivity. The Group is committedto promote and award employees with satisfactory performance in order to recognise theircontribution and dedication to the Group. Staff cost is the second largest component of theGroup’s operating expenses.

Staff costs primarily consist of salaries, wages and allowances, pension costs and otheremployee benefits. The table below sets forth the employee benefits expenses by categoryduring the Track Record Period:


(HK$’000) % (HK$’000) % (HK$’000) % (HK$’000) %(Unaudited)

Salaries, wages and otherbenefits 64,913 93.9 65,535 94.0 16,470 94.1 16,544 96.1

Directors’ emoluments 2,298 3.3 2,105 3.0 511 2.9 195 1.1Retirement benefit scheme

contributions 1,941 2.8 2,094 3.0 525 3.0 473 2.8

Total staff costs 69,152 100.0 69,734 100.0 17,506 100.0 17,212 100.0


– 179 –

For the years ended 31 March 2012 and 2013 and for the three months ended 30 June2013, the total staff costs accounted for approximately 26.6%, 28.3% and 27.7% of therevenue of the Group, respectively. The increase in the percentage of total staff costs torevenue for the year ended 31 March 2013 was mainly attributable to the decrease inrevenue for the same period.

Due to changes in local labour laws and the general increase in labour costs in HongKong, the salary level of employees in the restaurant industry in Hong Kong has generallyincreased in recent years. The Directors expect the staff costs to continue to increase asinflationary pressures in Hong Kong continue to drive up wages and as a result of theexpected expansion of its business.

The Directors believe the resulting upward pressure on the total staff costs as apercentage of total revenue could be mitigated by (i) prioritising internal transfers andre-allocations of employees from existing restaurants; (ii) increasing productivity of the staffby providing various training programs; and (iii) minimising attrition levels by continuing toimplement various employee retention initiatives in the future to promote employee loyaltyand motivate the employees.

Depreciation and amortisation

Depreciation represents depreciation charges for property, plant and equipmentincluding, among others, leasehold improvements, equipment and kitchen utensils, furnitureand fixtures of the Group.

Amortisation represents the allocation of cost of the initial franchise fees paid by theGroup over the tenure of the franchising arrangements.

Property rentals and related expenses

As the Group operates all of its restaurants on leased properties, it is exposed to themarket conditions of the retail rental market. The rental payable under the Group’s currentlease agreements for its restaurants is either fixed or subject to adjustment based on a fixedpercentage of the revenue of the relevant restaurants during the terms of the leases. Some ofthe restaurant leases require the rent to be determined as a sum of (i) a specified fixedamount, plus (ii) a contingent rent calculated based on a certain percentage of the monthlyturnover if monthly turnover exceeds a certain amount, depending on the specific terms ofthe relevant lease agreements. Some of the restaurant leases require the rent to be the higheramount between (i) a contingent rent as a percentage of revenue and (ii) a specified fixedrent, depending on the specific terms of the relevant lease agreements. The rental rate maybe subject to a rent escalation clause. The property rentals and related expenses are the thirdlargest component of the Group’s operating expenses.

Property rentals and related expenses represent the rental expenses paid for therestaurants, office premises and warehouses. For the years ended 31 March 2012 and 2013and for the three months ended 30 June 2013, property rentals and related expensesaccounted for approximately 17.6%, 19.2% and 19.9% of the revenue of the Group,respectively.


– 180 –

As the Group intends to continue to open new restaurants and expand the restaurantnetwork, the Directors expect the property rentals and related expenses to increase generallyin the future.

Fuel and utility expenses

Fuel and utility expenses primarily consist of fuel expenses, electricity expenses andwater supplies of the Group. For the years ended 31 March 2012 and 2013 and for the threemonths ended 30 June 2013, the total fuel and utility expenses accounted for approximately2.0%, 2.2% and 2.3% of the revenue of the Group, respectively.


– 181 –

Other operating expenses

The other operating expenses represent mainly expenses incurred for the Group’soperations, including cleaning expenses, consumables and supplies, franchise fees, creditcard commission, laundry expenses, repair and maintenance expenses, insurance, legal andprofessional expenses, administrative expenses, and marketing and promotion expenses. Thetable below sets forth the breakdown of other operating expenses during the Track RecordPeriod:


(HK$’000) % (HK$’000) % (HK$’000) % (HK$’000) %(Unaudited)

Credit card commission 4,708 16.7 4,302 18.0 1,048 15.9 1,147 18.5Consumables and supplies 4,937 17.5 3,742 15.7 1,010 15.3 725 11.7Cleaning expenses 3,281 11.6 3,200 13.4 786 11.9 796 12.8Franchise fees 2,262 8.0 2,420 10.1 568 8.6 646 10.4Marketing and promotion

expenses 2,552 9.1 2,249 9.4 725 11.0 740 11.9Insurance 1,218 4.3 1,654 6.9 306 4.5 428 6.9Administrative and

telecommunicationexpenses 2,609 9.3 1,490 6.2 610 9.2 204 3.3

Repair and maintenanceexpenses 1,316 4.7 1,459 6.1 692 10.5 363 5.8

Laundry expenses 1,377 4.9 1,292 5.4 291 4.4 373 6.0Registration and licence

fees 549 1.9 571 2.4 96 1.5 113 1.8Legal and professional

expenses 882 3.1 485 2.0 246 3.7 417 6.7Travelling expenses 1,173 4.2 167 0.7 100 1.5 40 0.7Others 1,331 4.7 838 3.7 129 2.0 218 3.5

Total other operatingexpenses 28,195 100.0 23,869 100.0 6,607 100.0 6,210 100.0

For the years ended 31 March 2012 and 2013 and for the three months ended 30 June2013, the other operating expenses accounted for approximately 10.8%, 9.7% and 10.0% ofthe revenue of the Group, respectively. During the year ended 31 March 2012, the Grouphas arranged overseas training for the chefs and other staff members for the enhancement oftheir performance skills. Accordingly, the travelling expenses for the year ended 31 March2012 were higher than that of 2013.


– 182 –

Listing expenses

For the three months ended 30 June 2013, the Listing expenses for the amount ofapproximately HK$1.5 million have been charged to profit and loss of the Group. No Listingexpense was charged to profit and loss of the Group for the years ended 31 March 2012 and2013.

Income tax expense

The income tax of the Group is provided for at the applicable tax rates in accordancewith the relevant law and regulations in Hong Kong. There is no tax obligation arising fromother jurisdictions during the Track Record Period. Hong Kong profits tax was provided onthe estimated assessable profits arising in Hong Kong at a rate of 16.5% during the TrackRecord Period. The effective tax rates for the years ended 31 March 2012 and 2013 and forthe three months ended 30 June 2013 were 18.6%, 24.7% and 34.2%, respectively. Theincrease in the effective tax rate for the year ended 31 March 2013 as compared to that forthe year ended 31 March 2012 was mainly due to the temporary differences arising fromdepreciation expenses in excess of related depreciation allowance of certain restaurants ofthe Group. No deferred tax asset has been recognised due to the uncertainty as to whetherfuture taxable profit will be generated by these restaurants against which the temporarydifferences can be utilised. The increase in the effective tax rate for the three months ended30 June 2013 was mainly due to the Listing expenses which are not deductible for tax.

Non-controlling interests

Non-controlling interests represent the interests of non-controlling shareholders in thenet results of the non-wholly owned subsidiaries of the Group.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF THE RESULTS OF THEOPERATIONS

The following set forth the management’s discussion and analysis of the results of theoperations during the Track Record Period.

Year ended 31 March 2013 compared to the year ended 31 March 2012

Revenue

The revenue for the year ended 31 March 2013 amounted to approximately HK$246.1million, representing a decrease of approximately 5.5% as compared with that of the yearended 31 March 2012. The decrease was primarily attributable to the decreasing in demandfor business meals and corporate events along with uncertain market sentiment. The Grouprecognised a decrease in revenue mainly with the restaurants located in ifc mall and ICC.


– 183 –


The other income and gains increased from approximately HK$618,000 for the yearended 31 March 2012 to approximately HK$1,165,000 for the year ended 31 March 2013,representing an increase of approximately 88.5%. Such increase was mainly due to thesignificant increase in forfeited income recognised by the Group and compensation frominsurance claims for the year ended 31 March 2013, which was partially offset by the effectof the decrease in sponsorship income.


The cost of inventories sold for the year ended 31 March 2013 amounted toapproximately HK$71.3 million, representing a decrease of approximately 5.1% as comparedwith that of the year ended 31 March 2012. The decrease was in line with the decrease ofthe revenue of the Group for the year ended 31 March 2013. Those cost of inventories soldrepresented approximately 28.8% and 29.0% of the revenue of the Group for years ended 31March 2012 and 2013, respectively.

The following sensitivity analysis illustrates the impact of hypothetical fluctuations incost of inventories sold on the profit before tax for the year ended 31 March 2013.Fluctuations are assumed to be 5.0%, 10.0% and 15.0% for the year ended 31 March 2013.

Changes in cost ofinventories sold +15% +10% +5% -5% -10% -15%

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000Impact on profit before

tax for the year ended31 March 2013 (10,693) (7,129) (3,564) 3,564 7,129 10,693

Staff costs

The staff costs for the year ended 31 March 2013 amounted to approximately HK$69.7million, representing an increase of approximately 0.8% as compared with that of the yearended 31 March 2012.

The following sensitivity analysis illustrates the impact of hypothetical fluctuations instaff costs on the profit before tax for the year ended 31 March 2013. Fluctuations areassumed to be 5.0%, 10.0% and 15.0% for the year ended 31 March 2013.

Changes in staff cost +15% +10% +5% -5% -10% -15%




– 184 –


The depreciation and amortisation for the year ended 31 March 2013 amounted toapproximately HK$14.2 million, representing a decrease of approximately 14.4% ascompared with that of the year ended 31 March 2012. Such decrease was due to theleasehold improvements of certain restaurants being fully depreciated during the year ended31 March 2013.


The operating lease rental and related expenses for the year ended 31 March 2013amounted to approximately HK$47.2 million, representing an increase of approximately2.8% as compared with that of the year ended 31 March 2012. Such increase was mainlydue to the opening of Harlan’s cake shop from July 2012.

The following sensitivity analysis illustrates the impact of hypothetical fluctuations inproperty rentals and related expenses on the profit before tax for the year ended 31 March2013. Fluctuations are assumed to be 5.0%, 10.0% and 15.0% for the year ended 31 March2013.

Changes in propertyrentals and relatedexpenses +15% +10% +5% -5% -10% -15%




The fuel and utility expenses for the year ended 31 March 2013 amounted toapproximately HK$5.4 million, representing an increase of approximately 6.9% as comparedwith that of the year ended 31 March 2012. Such increase was mainly due to the increasingfuel costs during the year ended 31 March 2013. For the years ended 31 March 2012 and2013, the total fuel and utility expenses accounted for approximately 2.0% and 2.2% of therevenue of the Group, respectively.


The other operating expenses for the year ended 31 March 2013 amounted toapproximately HK$23.9 million, representing a decrease of approximately 15.3% ascompared with that of the year ended 31 March 2012. Such decrease was mainly due to thedecrease in consumables and supplies and administrative and telecommunication expenses,during the year ended 31 March 2013. The decrease in consumables and supplies wasmainly due to the decrease in expenses related to the replacement of kitchen utensils. Theadministrative and telecommunication expenses incurred for the year ended 31 March 2012include a management fee of approximately HK$701,000 paid to Well-In for accounting


– 185 –

services rendered to certain subsidiaries of the Group during the year ended 31 March 2012in that certain subsidiaries experienced staffing difficulties as a result of staff turnover. Theprovision of such services was ceased after 31 March 2012 when the Group employedadditional staff and the payments are made on a lump sum basis, determined with referenceto the estimated time spent on the work and the market rate for similar services. For theyears ended 31 March 2012 and 2013, the other operating expenses accounted forapproximately 10.8% and 9.7% of the revenue of the Group, respectively.

Income tax expenses

The income tax expenses for the year ended 31 March 2013 amounted to approximatelyHK$3.8 million, representing a decrease of approximately 1.9% as compared with that of theyear ended 31 March 2012.


Non-controlling interests decreased by approximately 52.7%, from approximatelyHK$3.6 million for the year ended 31 March 2012 to approximately HK$1.7 million for theyear ended 31 March 2013. Such decrease was attributable to the decrease in the aggregateamount of profits made by the non wholly-owned subsidiaries, particularly J&H, whichoperated the IFC Restaurants, during the year ended 31 March 2013.

Three months ended 30 June 2013 compared to the three months ended 30 June 2012

Revenue

The revenue for the three months ended 30 June 2013 amounted to approximatelyHK$62.2 million, representing an increase of approximately 8.2% as compared with that ofthe three months ended 30 June 2012. The increase was primarily attributable to the Group’sefforts in launching additional marketing and promotion campaigns and the revision of theprice of dishes listed on the standard menu.


The other income and gains decreased from approximately HK$311,000 for the threemonths ended 30 June 2012 to approximately HK$262,000 for the three months ended 30June 2013, representing a decrease of approximately 15.8%. Such decrease was mainly dueto the compensation from insurance claims for the three months ended 30 June 2012, whichwas partially offset by the effect of the increase in sponsorship income and forfeited incomefor the three months ended 30 June 2013.


The cost of inventories sold for the three months ended 30 June 2013 amounted toapproximately HK$17.7 million, representing an increase of approximately 6.3% ascompared with that of the three months ended 30 June 2012. The increase was in line withthe increase of the revenue of the Group for the three months ended 30 June 2013 as


– 186 –

compared with that of the three months ended 30 June 2012. Those cost of inventories soldrepresented approximately 29.0% and 28.4% of the revenue of the Group for three monthsended 30 June 2012 and 2013, respectively.

The following sensitivity analysis illustrates the impact of hypothetical fluctuations incost of inventories sold on the profit before tax for the three months ended 30 June 2013.Fluctuations are assumed to be 5.0%, 10.0% and 15.0% for the three months ended 30 June2013.

Changes in cost ofinventories sold +15% +10% +5% -5% -10% -15%


tax for the threemonths ended 30 June2013 (2,652) (1,768) (884) 884 1,768 2,652

Staff costs

The staff costs for the three months ended 30 June 2013 amounted to approximatelyHK$17.2 million, representing a decrease of approximately 1.7% as compared with that ofthe three months ended 30 June 2012.

The following sensitivity analysis illustrates the impact of hypothetical fluctuations instaff costs on the profit before tax for the three months ended 30 June 2013. Fluctuations areassumed to be 5.0%, 10.0% and 15.0% for the three months ended 30 June 2013.

Changes in staff cost +15% +10% +5% -5% -10% -15%




The depreciation and amortisation for the three months ended 30 June 2013 amountedto approximately HK$3.2 million, representing a decrease of approximately 17.9% ascompared with that of the three months ended 30 June 2012. Such decrease was due to theleasehold improvements of certain restaurants being fully depreciated during the threemonths ended 30 June 2013.


– 187 –


The operating lease rental and related expenses for the three months ended 30 June2013 amounted to approximately HK$12.3 million, representing an increase ofapproximately 10.0% as compared with that of the three months ended 30 June 2012. Suchincrease was mainly due to the opening of Harlan’s cake shop from July 2012.

The following sensitivity analysis illustrates the impact of hypothetical fluctuations inproperty rentals and related expenses on the profit before tax for the three months ended 30June 2013. Fluctuations are assumed to be 5.0%, 10.0% and 15.0% for the three monthsended 30 June 2013.

Changes in propertyrentals and relatedexpenses +15% +10% +5% -5% -10% -15%



As an illustration, based on the Director’s estimation, the Company will result in zerocash and cash equivalents as at 31 March 2014 as if the property rentals and relatedexpenses surge by more than 190.0% for the year ending 31 March 2014 and as at 31December 2014 as if the property rentals and related expenses increase by more than 70%for the period ending 31 December 2014.


The fuel and utility expenses for the three months ended 30 June 2013 amounted toapproximately HK$1.4 million, representing an increase of approximately 7.8% as comparedwith that of the three months ended 30 June 2012. Such increase was mainly due to theincreasing fuel costs during the three months ended 30 June 2013. For the three monthsended 30 June 2012 and 2013, the total fuel and utility expenses accounted forapproximately 2.3% and 2.3% of the revenue of the Group, respectively.


The other operating expenses for the three months ended 30 June 2013 amounted toapproximately HK$6.2 million, representing a decrease of approximately 6.0% as comparedwith that of the three months ended 30 June 2012. Such decrease was mainly due to thedecrease in consumables and supplies, insurance, laundry expenses, and registration andlicence fees during the three months ended 30 June 2013. The decrease in consumables andsupplies was mainly due to the decrease in expenses related to the replacement of kitchenutensils. For the three months ended 30 June 2012 and 2013, the other operating expensesaccounted for approximately 11.5% and 10.0% of the revenue of the Group, respectively.


– 188 –

Income tax expenses

The income tax expenses for the three months ended 30 June 2013 amounted toapproximately HK$1.0 million, representing an increase of approximately 130.1% ascompared with that of the three months ended 30 June 2012.


Non-controlling interests increased by approximately 1,478.3%, from approximatelyHK$46,000 for the three months ended 30 June 2012 to approximately HK$726,000 for thethree months ended 30 June 2013. Such increase was attributable to the increase in theaggregate amount of profits made by the non wholly-owned restaurants, particularly PHO24(TST), PHO24 (NTP) and the IFC Restaurants during the three months ended 30 June 2013.

LIQUIDITY, FINANCIAL RESOURCES AND CAPITAL STRUCTURE

During the Track Record Period, the Group generally financed its operations through acombination of advances from the related parties, non-controlling Shareholders andinternally generated funds. As at 30 June 2013, the Group had cash and cash equivalents ofapproximately HK$28.4 million.

Substantially all of the Group’s cash and cash equivalents are held in Hong Kongdollars.

The capital requirements in the past mainly related to opening of restaurants in HongKong. The Group has historically met its capital requirements principally with cashgenerated from the operations and/or advances from the related parties and non-controllingshareholders. The capital requirements in the coming years will include the opening andupgrading of restaurants in Hong Kong. The management of the Group expects that theplanned capital expenditure will be met by the estimated net proceeds from the Placing andother financial resources available including net cash generated from operating activities.

The table below sets forth the working capital of the Group as at 31 March 2012, 31March 2013, 30 June 2013 and 30 September 2013:

As at 31 MarchAs at

30 June

As at30

September2012 2013 2013 2013


Current assetsInventories 5,344 4,590 4,156 4,513Trade receivables 2,836 3,729 2,878 2,824Prepayments, deposits and other

receivables 7,523 15,574 11,334 12,712Due from related parties 9,975 7,807 2,858 3,390


– 189 –

As at 31 MarchAs at

30 June

As at30

September2012 2013 2013 2013


Due from non-controllingshareholders 1,580 611 348 389

Tax recoverable 89 997 538 –Cash and cash equivalents 11,159 15,352 28,421 24,627

Total current assets 38,506 48,660 50,533 48,455

Current liabilitiesTrade payables 5,740 5,875 5,204 9,006Other payables and accruals 8,940 8,503 9,984 12,362Due to related parties 35,985 33,963 4,467 478Due to non-controlling

shareholders 2,234 1,108 1,108 749Provision for reinstatement costs 3,052 5,529 1,664 1,899Tax payable 4,139 3,909 4,437 3,620

Total current liabilities 60,090 58,887 26,864 28,114

Net current (liabilities)/assets (21,584) (10,227) 23,669 20,341

As at 31 March 2012 and 2013, the Group had net current liabilities of approximatelyHK$21.6 million and HK$10.2 million, respectively. The net current liabilities of the Groupas at 31 March 2012 and 2013 were primarily due to the amounts due to related parties ofapproximately HK$36.0 million and HK$34.0 million, respectively. During the Track RecordPeriod, to maintain the adequate level of working capital of the Group, instead of injectingadditional capital or obtaining bank loans, the Directors have provided financial assistance tothe Group at nil interest in meeting the capital expenditure of the Group which resulted inincreased level of amounts due to related parties. On 22 May 2013, amounts due to relatedparties by the Group of approximately HK$26.5 million were capitalised. Please refer to thesection headed “History, Development and Reorganisation – Loan Capitalisation Issue” inthis prospectus. During the Track Record Period and up to the Latest Practicable Date, theGroup has not applied for any banking facilities. The Directors are of the view that there isno material obstacle for the Company to obtain banking facilities if required. Based on theexisting cash positions and the operating cash flow generated, the Directors consider that theGroup is able to finance its future plan without obtaining external banking facilities in theforeseeable future and the Company could obtain the banking facilities if it were required tofund its operations in the future. As at 30 June 2013, the Group had net current assets ofapproximately HK$23.7 million.


– 190 –

Based on the current financial conditions, the management of the Group believes thecash and cash equivalents, the cash inflow from operations, and the net proceeds from thePlacing will enable the Group to meet its working capital, capital expenditures and otherfunding requirements for the foreseeable future. Save as disclosed in this prospectus, themanagement of the Group does not foresee any material capital expenditure. Themanagement of the Group believes that, with the continuous net cash generated fromoperating activities and the net proceeds from the Placing, the Group will be able to improveits liquidity position.

Cash flows

The following table sets forth the selected cash flow data from the combinedstatements of cash flows for the Track Record Period.


30 June2012 2013 2012 2013


Net cash flows from operatingactivities 9,123 20,808 6,883 5,922

Net cash flows used in investingactivities (4,666) (4,025) (235) (377)

Net cash flows (used in)/fromfinancing activities (7,890) (12,590) (2,900) 7,524

Net (decrease)/increase in cash andcash equivalents (3,433) 4,193 3,748 13,069

Cash and cash equivalents atbeginning of the year/period 14,592 11,159 11,159 15,352

Cash and cash equivalents at endof the year/period 11,159 15,352 14,907 28,421

Cash flows from operating activities

The Group derives the cash inflow from operations principally from the receipts fromthe restaurant operations, whereas the cash outflow from operations is principally for thepayment of the purchases of food ingredients, operating lease rentals, staff costs, utilitiesand kitchen consumables.

Net cash generated from operating activities for the three months ended 30 June 2013was approximately HK$5.9 million. The Group generated net cash from operating activitiesbefore movements in working capital of approximately HK$6.1 million, and adjusted for networking capital outflow of approximately HK$172,000. The decrease in net working capital


– 191 –

was primarily attributable to the increase in prepayments, deposits and other receivables ofapproximately HK$1.9 million arising from the rental deposits and utility deposits paid forPearl Dining House, the decrease in amounts due to related parties of approximately HK$3.0million and partially offset by the decrease in amounts due from related parties ofapproximately HK$4.9 million.

Net cash generated from operating activities for the year ended 31 March 2013 wasapproximately HK$20.8 million. The Group generated net cash from operating activitiesbefore movements in working capital of approximately HK$29.9 million, and adjusted fornet working capital outflow of approximately HK$4.1 million and Hong Kong profits taxpaid of approximately HK$5.0 million. The decrease in net working capital was primarilyattributable to the increase in prepayments, deposits and other receivables of approximatelyHK$3.7 million arising from the rental deposits and utility deposits paid for Harlan’s cakeshop and Mekiki (V city), the decrease in amounts due to related parties of approximatelyHK$2.0 million and partially offset by the decrease in amounts due from related parties ofapproximately HK$2.2 million.

Net cash generated from operating activities for the year ended 31 March 2012 wasapproximately HK$9.1 million. The Group generated net cash from operating activitiesbefore movements in working capital of approximately HK$37.7 million, and adjusted fornet working capital outflow of approximately HK$26.2 million and Hong Kong profits taxpaid of approximately HK$2.5 million. The decrease in net working capital was primarilyattributable to the increase in amounts due from related parties of approximately HK$4.6million, the decrease in other payables and accruals of approximately HK$3.5 million andthe decrease in amounts due to related parties of approximately HK$13.9 million.

Cash flows from investing activities

During the Track Record Period, the cash outflow from investing activities of theGroup was primarily for the acquisitions of property, plant and equipment.

Net cash used in investing activities for the three months ended 30 June 2013 wasapproximately HK$377,000. This was primarily due to the purchase of equipment for theamount of approximately HK$175,000 and a motor vehicle for the amount of approximatelyHK$170,000.

Net cash used in investing activities for the year ended 31 March 2013 wasapproximately HK$4.0 million. This was primarily due to the purchases of leaseholdimprovements of various restaurants for the amount of approximately HK$2.9 million andthe acquisition of equipment for the amount of approximately HK$732,000.

Net cash used in investing activities for the year ended 31 March 2012 wasapproximately HK$4.7 million. This was primarily due to the purchase of cateringequipment of the newly established restaurant, Inakaya, for the amount of approximatelyHK$1.8 million and leasehold improvements of approximately HK$3.7 million.


– 192 –

Cash flows from financing activities

During the Track Record Period, the cash outflow from financing activities of theGroup was principally due to dividend payments and capital contributions from theControlling Shareholders.

Net cash from financing activities for the three months ended 30 June 2013 wasapproximately HK$7.5 million, mainly represented the proceeds received from DragonFlame for the subscription of new shares of Glory Kind.

Net cash used in financing activities for the year ended 31 March 2013 wasapproximately HK$12.6 million, mainly represented dividends paid to the ControllingShareholders of approximately HK$10.6 million and dividends paid to non-controllingshareholders of approximately HK$2.0 million.

Net cash used in financing activities for the year ended 31 March 2012 wasapproximately HK$7.9 million, mainly represented dividends paid to the ControllingShareholders of approximately HK$5.0 million and dividends paid to non-controllingshareholders of approximately HK$2.9 million.

Working capital

The Directors are of the opinion that, taking into account the financial resourcesavailable to the Group, including the internally generated funds and the estimated netproceeds from the Placing, the Group has sufficient working capital for its presentrequirements for at least the next 12 months from the date of this prospectus.

DISCUSSION OF STATEMENT OF FINANCIAL POSITION ITEMS

Property, plant and equipment

As at 31 March 2012 and 2013 and 30 June 2013, the net book value of property, plantand equipment amounted to approximately HK$41.4 million, HK$31.3 million and HK$28.5million, respectively. The decrease in the net book value of property, plant and equipmentduring the year ended 31 March 2013 was mainly due to the depreciation provided andpartially offset by the additions of leasehold improvements, furniture and fixtures, andcatering and other equipment of approximately HK$2.9 million, HK$383,000 andHK$732,000, respectively. The depreciation provided for the years ended 31 March 2012and 2013 and for the three months ended 30 June 2013 was approximately HK$16.3 million,HK$13.9 million and HK$3.1 million, respectively.

Intangible assets

Intangible assets represented the cost paid for acquiring the franchise rights. They areinitially measured at cost and subsequently amortised over their useful economic life andassessed for impairment whenever there is an indication that the intangible asset may beimpaired. As at 31 March 2012 and 2013 and 30 June 2013, the carrying amounts ofintangible assets amounted to approximately HK$1.3 million, HK$962,000 and HK$885,000,


– 193 –

respectively. The amortisation of intangible assets for the years ended 31 March 2012 and2013 and for the three months ended 30 June 2013 amounted to approximately HK$347,000,HK$306,000 and HK$77,000, respectively.

Rental deposits

Rental deposits represented the deposits paid for the leasing of the Group’s leasedproperties. As at 31 March 2012 and 2013 and 30 June 2013, the rental deposits paidamounted to approximately HK$13.1 million, HK$15.8 million and HK$17.0 million,respectively. The increase in rental deposits during the Track Record Period was mainly dueto the increase in rental deposits paid for Harlan’s cake shop and Mekiki (V city) during theyear ended 31 March 2013 and the rental deposit paid for Pearl Dining House during thethree months ended 30 June 2013.

The following table sets out information on the rental deposits as at 31 March 2012and 2013 and 30 June 2013:

As at 31 MarchAs at

30 June2012 2013 2013

(HK$’000) (HK$’000) (HK$’000)

Non-current portion 8,096 3,739 9,875Current portion 5,011 12,088 7,137

Total 13,107 15,827 17,012

The increase in the non-current portion of the rental deposits was mainly attributable tothe deposits paid for Harlan’s cake shop, Mekiki (V city) and Pearl Dining House, and therenewals of the tenancy agreements for Mekiki (WTC) and Harlan’s and Kaika.


– 194 –

Inventories

During the Track Record Period, the Group’s inventories mainly consist of foodingredients and beverage, and other operating items for restaurant operations. The followingtable sets out information on the inventory breakdown as at 31 March 2012 and 2013 and 30June 2013:

As at 31 MarchAs at

30 June2012 2013 2013

(HK$’000) (HK$’000) (HK$’000)

Food ingredients 1,961 1,391 1,143Beverage 3,292 3,118 2,941Others 91 81 72

Total 5,344 4,590 4,156

The following table sets out the inventory turnover days for the Track Record Period:

Year ended 31 March

Threemonths

ended30 June

2012 2013 2013

Inventory turnover days (note) 22.3 25.4 22.5

Note: Inventory turnover days for the years ended 31 March 2012 and 2013 and for the three monthsended 30 June 2013 are calculated by the average of the beginning and closing inventories dividedby the cost of inventories sold for the year and multiplied by 365 days for each of the two yearsended 31 March 2012 and 2013 and 91 days for the three months ended 30 June 2013.

Though the inventory turnover days increased from 22.3 days to 25.4 days, the Groupdid not record any obsolete inventory during the Track Record Period. The subsequent saleand usage of inventories up to 30 September 2013 accounted for approximately 46.1% of thetotal inventories as at 30 June 2013.

Trade receivables

During the Track Record Period, the Group’s trade receivables mainly representedreceivables from credit card companies and other corporate customers, such as propertymanagement companies. Receivables from credit card companies were normally settledwithin the week immediately after the year end date.


– 195 –

As at 31 March 2012 and 2013 and 30 June 2013, trade receivables wereapproximately HK$2.8 million, HK$3.7 million and HK$2.9 million, respectively. Thefollowing table sets out the aging analysis of trade receivables of the Group as at 31 March2012 and 2013 and 30 June 2013:

As at 31 MarchAs at

30 June2012 2013 2013

(HK$’000) (HK$’000) (HK$’000)

Within 30 days 2,092 3,508 2,53731 to 90 days 182 125 245Over 90 days 562 96 96

Total 2,836 3,729 2,878

The following table sets out the trade receivable turnover days for the Track RecordPeriod:

Year ended 31 March

Threemonths

ended30 June

2012 2013 2013

Trade receivable turnover days (note) 3.7 4.9 4.8

Note: Trade receivable turnover days for the years ended 31 March 2012 and 2013 and for the threemonths ended 30 June 2013 are calculated by the average of the beginning and closing tradereceivables divided by the total credit sales for the year and multiplied by 365 days for each of thetwo years ended 31 March 2012 and 2013 and 91 days for the three months ended 30 June 2013.

The trade receivable turnover days were stable during the Track Record Period. Duringthe Track Record Period, no provision for impairment of trade receivables was made. As at30 September 2013, 96.0% of the trade receivables as at 30 June 2013 were subsequentlysettled.

Prepayments, deposits and other receivables

During the Track Record Period, the prepayments, deposits and other receivables (otherthan rental deposits) represented mainly utility and other deposits paid, other prepaidexpenses and other receivables.


– 196 –

The following table sets out the details of the prepayments, deposits and otherreceivables (other than rental deposits) at 31 March 2012 and 2013 and 30 June 2013:

As at 31 MarchAs at

30 June2012 2013 2013

(HK$’000) (HK$’000) (HK$’000)

Prepayments 857 1,732 2,096Prepaid Listing expenses – – 310Utility and other deposits 1,527 1,664 1,660Other receivables 128 90 131

Total 2,512 3,486 4,197

The increase in prepayments, deposits and other receivables as at 31 March 2013 wasmainly due to the increase in prepayments for insurances and related expenses of Mekiki (Vcity). During the three months ended 30 June 2013, the Company prepaid Listing expensesof approximately HK$310,000.

Trade payables

The trade payables mainly represent food ingredients and beverage purchased for therestaurants. The normal payment terms were 30 to 45 days after the end of the month inwhich the relevant purchases were made. The Directors confirm that there was no default inpayment of trade payables during the Track Record Period.

As at 31 March 2012 and 2013 and 30 June 2013, the trade payables amounted toapproximately HK$5.7 million, HK$5.9 million and HK$5.2 million, respectively. Thefollowing table sets out the aging analysis of trade payables of the Group as at 31 March2012 and 2013 and 30 June 2013:

As at 31 MarchAs at

30 June2012 2013 2013

(HK$’000) (HK$’000) (HK$’000)

Within 1 month 5,564 5,833 5,113Over 1 month but less than 2 months 108 25 58Over 2 months 68 17 33

Total 5,740 5,875 5,204


– 197 –

The following table sets out the trade payable turnover days for the Track RecordPeriod:

Year ended 31 March

Threemonths

ended30 June

2012 2013 2013

Trade payable turnover days (note) 28.6 29.7 28.5

Note: Trade payable turnover days for the years ended 31 March 2012 and 2013 and for the three monthsended 30 June 2013 are calculated by the average of the beginning and closing trade payablesdivided by the cost of inventories sold for the year and multiplied by 365 days for each of the twoyears ended 31 March 2012 and 2013 and 91 days for the three months ended 30 June 2013.

The trade payable turnover days were stable during the Track Record Period. As at 30September 2013, all trade payables as at 30 June 2013 were subsequently settled.

Other payables and accruals

Other payables and accruals represented the accruals, deferred income, other payables,provision for estimated fine on water pollution and customer deposits.

The following table sets out the details of the other payables and accruals at 31 March2012 and 2013 and 30 June 2013:

As at 31 MarchAs at

30 June2012 2013 2013

(HK$’000) (HK$’000) (HK$’000)

Accruals 6,912 6,972 7,971Deferred income 478 300 178Other payables 626 351 303Provision for estimated fine on water

pollution 588 588 588Customer deposits 336 292 944

Total 8,940 8,503 9,984

Provision for reinstatement costs

Provision for reinstatement costs was recognised for the costs to be incurred for thereinstatement of the properties used by the Group for its operations upon expiration of therelevant leases.


– 198 –

The following table set out the movements on the provision for reinstatement costsduring the Track Record Period:

Year ended 31 March

Threemonths

ended30 June

2012 2013 2013(HK$’000) (HK$’000) (HK$’000)

At beginning of year/period 5,316 6,712 6,712Additional provision 1,396 – –Provision used – – (2,549)

At end of year/period 6,712 6,712 4,163

The provision for reinstatement costs used represent the payment for the wholereinstatement works of the IFC Restaurants. The relevant provision for reinstatement costsfor IFC Restaurant was initially recognised when the renovation of it had been completedduring the year ended 31 March 2007. The relevant reinstatement costs have been fullyincurred during the three months ended 30 June 2013.

INDEBTEDNESS

Borrowings

The following table sets out the borrowings of the Group as at 31 March 2012, 31March 2013, 30 June 2013 and 30 September 2013:

As at 31 MarchAs at

30 June

As at30

September2012 2013 2013 2013


Due to related parties 35,985 33,963 4,467 478Due to non-controlling

shareholders 2,234 1,108 1,108 749

38,219 35,071 5,575 1,227

On 22 May 2013, amounts due to related parties by the Group of approximatelyHK$26.5 million were capitalised. Please refer to the section headed “History, Developmentand Reorganisation – Loan Capitalisation Issue” in this prospectus. On 3 July 2013, theGroup and the non-controlling shareholders of the subsidiaries of the Group have enteredinto long-term loan agreements, pursuant to which all the amounts due to non-controlling


– 199 –

shareholders are due after one year from the date of the long-term loan agreements. Theremaining amounts due to related parties as at 30 September 2013 will be settled by theGroup before Listing.

As at 30 September 2013, being the latest practicable date for the purpose of thisindebtedness statement, the amounts due to related parties by the Group was approximatelyHK$478,000 and the amounts due to non-controlling shareholders was approximatelyHK$749,000.

Contingent liabilities

As at the Latest Practicable Date, save for disclosed in the section headed “Business –Legal Proceedings, Claims and Compliance” in this prospectus, the Group did not involve inany legal proceedings pending or threatened against the Group which could have a materialadverse effect on the Group’s business or operations. The Directors confirm that the Groupdid not have any material contingent liabilities.

Commitments

The following table sets out the capital commitments in respect of property, plant andequipment as at 31 March 2012 and 2013 and 30 June 2013:

As at 31 MarchAs at

30 June2012 2013 2013

(HK$’000) (HK$’000) (HK$’000)

Contracted, but not provided forleasehold improvement 215 35 35

Operating lease commitments

The Group leases its restaurants, office premise and warehouses under operating leasearrangements. Leases for these properties are negotiated for terms ranging from one to threeyears. As at 31 March 2012 and 2013 and 30 June 2013, the Group had total futureminimum lease payments under non-cancellable operating leases falling due as follows:

As at 31 MarchAs at

30 June2012 2013 2013

(HK$’000) (HK$’000) (HK$’000)

Within one year 32,469 30,161 32,309In the second to fifth years, inclusive 13,932 22,438 29,767Beyond five years – – –

46,401 52,599 62,076


– 200 –

The operating lease rentals for certain restaurants are based on the higher of a fixedrental and contingent rent. As the contingent rent, which is calculated based on a certainpercentage of the revenue of the restaurant, could not be reliably determined, the minimumlease commitments are based on the fixed rental.

The total future lease commitments under non-cancellable operating leases falling duewithin one year as at 31 March 2012 were lower than the lease payments under operatingleases in respect of land and building – minimum lease payments for the year ended 31March 2013, which was mainly attributable to the following:

� Certain leases which were still under the contractual lease term of the tenancyagreements as at 31 March 2012 were expired and renewed during the year ended31 March 2013. The Group continued to lease the premises and renewed thetenancy agreements with the landlord. For example, the tenancy agreement forPHO24 (TST) was expired and renewed in September 2012. Hence, the totalfuture lease commitments under non-cancellable operating leases falling duewithin one year as at 31 March 2012 for PHO24 (TST) only included the leasepayments for the remaining lease period of about 6 months;

� Certain tenancy agreements which were still under the contractual lease term ofthe tenancy agreements as at 31 March 2012 were expired during the year ended31 March 2013. The Group continued to lease the premises but has not yetentered into long-term written tenancy agreement with the landlord. For example,the tenancy agreement for H One, G Bar and The Box was expired in August2012, and was not renewed but extended on a monthly basis. Hence, the totalfuture lease commitments under non-cancellable operating leases falling duewithin one year as at 31 March 2012 for H One, G Bar and The Box onlyincluded the lease payments for the remaining lease period of about 5 months;

� Certain leased properties of the Group were leased without entering into anywritten tenancy agreements with the landlord. For example, the office premise isleased from Well-In which no tenancy agreement has been entered into during theTrack Record Period. Hence, the total future lease commitments undernon-cancellable operating leases falling due within one year as at 31 March 2012did not include any leases payments for the office premise; and

� There were a number of short-term leases which were entered into and expiredduring the year ended 31 March 2013 and other rental related expenses. Hence,the total future lease commitments under non-cancellable operating leases fallingdue within one year as at 31 March 2012 did not include these lease paymentsand other rental related expenses.

Disclaimer

Save for the aforesaid or as otherwise disclosed herein, the Group did not have anyoutstanding loan capital issued or agreed to be issued, bank overdrafts, loans or other similarindebtedness, liabilities under acceptances or acceptable credits, debentures, mortgages,


– 201 –

charges, finance leases, hire purchases commitments, guarantees or other material contingentliabilities at the close of business on 30 September 2013, being the latest practicable datefor the purpose of this indebtedness statement.

Material indebtedness change

The Directors have confirmed that there has not been any material adverse change inthe Group’s indebtedness and contingent liabilities since 30 September 2013, being the datefor determining the Group’s indebtedness.

FINANCIAL AND CAPITAL RISK MANAGEMENT OBJECTIVES AND POLICIES

Foreign currency risk

The Group’s monetary assets, liabilities and transactions are principally denominated inHong Kong dollars. The foreign currency risk is considered not material and the Grouptherefore does not have a foreign currency hedging policy.

Credit risk

The Group trades with a large number of diversified customers and trading terms aremainly on cash, credit cards and smart card settlement, hence, there is no significantconcentration of credit risk.

Liquidity risk

The Group’s objective is to maintain a balance between continuity of funding andflexibility through the use of advances from related parties and non-controlling shareholders,and internally generated funds. The Group regularly reviews its major funding positions toensure that it has adequate financial resources in meeting its financial obligations.

The maturity profile of the Group’s financial liabilities as at the end of each of theTrack Record Period, based on the contractual undiscounted payments, was as follows:

On demandor less than

1 yearHK$’000

31 March 2012Trade payables 5,740Financial liabilities included in other payables and accruals 7,538Due to related parties 35,985Due to non-controlling shareholders 2,234

51,497


– 202 –


1 yearHK$’000


48,269


1 yearHK$’000

30 June 2013Trade payables 5,204Financial liabilities included in other payables and accruals 8,274Due to related parties 4,467Due to non-controlling shareholders 1,108

19,053

Interest rate risk

The Group did not have any interest-bearing liabilities. The Directors believe theGroup’s exposure to interest rate risk is minimal.


– 203 –

KEY FINANCIAL RATIOS

The following table sets out the key financial ratios of the Group during the TrackRecord Period:

Year ended or as of31 March

Threemonths

ended or asof 30 June

2012 2013 2013

Profitability ratiosReturn on assets(1) (%) 19.1% 13.8% 8.5%Return on equity(2) (%) 83.4% 63.9% 8.1%

Liquidity ratiosCurrent ratio(3) 0.6 times 0.8 times 1.9 timesQuick ratio(4) 0.6 times 0.7 times 1.7 times

Capital adequacy ratiosGearing ratio(5) (%) 60% 59% 8%

Notes:

(1) For the years ended 31 March 2012 and 2013, return on assets is calculated based on the net profitfor the year divided by the total assets at the end of the respective year and multiplied by 100%. Forthe three months ended 30 June 2013, return on assets is calculated based on the net profit of theCompany for the period divided by the total assets as the end of the period and multiplied by 365/91and then multiplying the resulting value by 100%.

(2) For the years ended 31 March 2012 and 2013, return on equity is calculated based on the net profitattributable to the owners of the Company for the year divided by the total equity attributable to theowners of the Company at the end of the respective year multiplied by 100%. For the three monthsended 30 June 2013, return on equity is calculated based on the net profit attributable to the ownersof the Company for the period divided by the total equity as the end of the period and multiplied by365/91 and then multiplying the resulting value by 100%.

(3) Current ratio is calculated based on the total current assets at the end of the year/period divided bythe total current liabilities at the end of the respective year/period.

(4) Quick ratio is calculated based on the total current assets (excluding inventory) at the end of theyear/period divided by the total current liabilities of the respective year/period.

(5) Gearing ratio is calculated based on the total debt at the end of the year/period divided by total debtplus total equity at the end of the respective year/period. Total debt represents all liabilities excludingtrade payables, other payables and accruals and provision for reinstatement costs.


– 204 –

Return on assets

Return on assets for the two years ended 31 March 2013 was approximately 19.1% and13.8%, respectively. The decrease of return on assets was mainly due to the decrease in netprofit. The decrease in return on assets for the three months ended 30 June 2013 was mainlydue to the decrease of net profit as a result of the recognition of the Listing expenses for theamount of approximately HK$1.5 million.

Return on equity

Return on equity was approximately 83.4% and 63.9% for the two years ended 31March 2013, respectively. The decrease of return on equity was mainly due to the decreasein net profit. The significant decrease in return on equity for the three months ended 30 June2013 was mainly due to the decrease of net profit as a result of the recognition of theListing expenses for the amount of approximately HK$1.5 million and the increase of theequity base following the Loan Capitalisation Issue and the subscription of new shares ofGlory Kind by Dragon Flame.

Current ratio

As of 31 March 2012 and 2013 and 30 June 2013, current ratio was approximately 0.6times, 0.8 times and 1.9 times, respectively. The current ratios remained stable as at 31March 2012 and 2013. The increase in current ratio as at 30 June 2013 was mainly due tothe decrease of current liabilities following the Loan Capitalisation Issue.

Quick ratio

As of 31 March 2012 and 2013 and 30 June 2013, quick ratio was approximately 0.6times, 0.7 times and 1.7 times, respectively. The quick ratios remained stable as at 31 March2012 and 2013. The increase in quick ratio as at 30 June 2013 was mainly due to thedecrease of current liabilities following the Loan Capitalisation Issue.

Gearing ratio

Gearing ratio as at 31 March 2012 and 2013 and 30 June 2013 was approximately60%, 59% and 8%, respectively. The gearing ratios remained stable as at 31 March 2012 and2013. The decrease in gearing ratio was mainly due to the increase of the equity base andthe decrease of current liabilities following the Loan Capitalisation Issue.

DIVIDEND POLICY

Total dividend of approximately HK$7.9 million, HK$12.6 million and nil was declaredby the Group during the years ended 31 March 2012 and 2013 and the three months ended30 June 2013, respectively. Aside from a balance of approximately HK$55,000 which wasincluded in the amounts due to related parties as at 30 June 2013, all dividends declaredhave been fully settled. The Directors expect that such amount will be fully settled by theinternal fund of the Group before Listing.


– 205 –

On 23 October 2013, an interim dividend of HK$1,485,000 was appropriated to VictoryStand and Dragon Flame, the then shareholders of Glory Kind (which is a direct whollyowned subsidiary of the Group) and certain companies now comprising the Group declaredinterim dividends of HK$515,000 to their then non-controlling shareholders.

After completion of the Placing, the Shareholders will be entitled to receive dividendsonly when declared by the Directors. Cash dividends on the Shares, if any, will be paid inHong Kong dollars. The payment and the amount of any future dividends will be at thediscretion of the Directors and will depend on the future operations and earnings, capitalrequirements and surplus, general financial condition and other factors that the Directorsdeem relevant. As these factors and the payment of dividends is at the discretion of theBoard, which reserves the right to change its plan on the payment of dividends, there can beno assurance that any particular dividend amount, or any dividend at all, will be declaredand paid in the future. Investors should note that historical dividend distributions are notindicative of the Group’s future dividend distribution policy.

DISTRIBUTABLE RESERVE

As at 30 June 2013, the Company did not have reserve available for distribution to itsShareholders.

OFF BALANCE SHEET TRANSACTIONS

The Group has not entered into any material off balance sheet transactions orarrangements during the Track Record Period.

RELATED PARTY TRANSACTIONS

With respect to the related party transactions set out in this prospectus, the Directorsare of the opinion that these transactions were conducted on normal commercial terms.

For analysis of related party transactions, please refer to the Accountants’ Report as setout in Appendix I to this prospectus in addition to the transactions detailed elsewhere in thisprospectus.

IMPACT ON FINANCIAL RESULTS AS A RESULT OF THE EXPENSES INCURREDIN RELATION TO THE LISTING

The Group’s financial performance for the year ending 31 March 2014 will be affectedby the non-recurring expenses incurred in relation to the Listing. The Listing expenses to beborne by the Company are estimated to be approximately HK$9.5 million (assuming aPlacing Price of HK$0.45, being the midpoint of the indicative Placing Price range ofHK$0.4 to HK$0.5 per Placing Share), of which approximately HK$3.0 million is directlyattributable to the issue of New Shares which is to be accounted for as a deduction fromequity and approximately HK$6.5 million is to be charged to profit and loss of the Groupfor the year ending 31 March 2014. The Listing expenses for the amount of approximatelyHK$1.5 million have been charged to profit and loss of the Group for the three monthsended 30 June 2013. No Listing expense is charged to profit and loss of the Group for thetwo years ended 31 March 2012 and 2013.


– 206 –

UNAUDITED PRO FORMA ADJUSTED COMBINED NET TANGIBLE ASSETS

The unaudited pro forma adjusted combined net tangible assets of the Group has beenprepared, on the basis of the notes set forth below, for the purpose of illustrating the effectof the Placing as if it had taken place on 30 June 2013. It has been prepared for illustrativepurpose only and, because of its hypothetical nature, may not give a true picture of thefinancial position of the Group after the Placing or at any future dates.

Adjustedcombined net

tangible assetsof the Group

attributable toowners of the

Company asat 30 June

2013

Add:Estimated netproceeds from

the Placing

Unaudited proforma

adjusted nettangible assets

Unaudited proforma


per ShareHK$’000 HK$’000 HK$’000 HK$(Note 1) (Note 2) (Note 3)

Based on the Placing Priceof HK$0.4 per Share 57,252 18,725 75,977 0.19


Notes:

1. The adjusted combined net tangible assets of the Group attributable to owners of the Company as at30 June 2013 were determined as follows:

HK$’000

Audited combined net assets of the Group as at 30 June 2013 as shown in theAccountants’ Report as set out in Appendix I to this prospectus 58,137

Less: Intangible assets as at 30 June 2013 885

Adjusted combined net tangible assets of the Group attributable to owners of theCompany as at 30 June 2013 57,252

2. The estimated net proceeds from the Placing are based on the minimum and maximum Placing Priceof HK$0.4 and HK$0.5 per Share, respectively, after deduction of relevant estimated expenses for theListing.

3. The unaudited pro forma adjusted net tangible assets per Share are determined after the adjustmentsas described in notes 1 and 2 above and on the basis that 400,000,000 Shares are issued andoutstanding as set out in the section headed “Share Capital” in this prospectus.

4. On 23 October 2013, an interim dividend of HK$1,485,000 was appropriated to Victory StandInternational Limited and Dragon Flame Holdings Limited, the then shareholders of Glory KindDevelopment Limited (which is a direct wholly owned subsidiary of the Group). The unaudited proforma adjusted net tangible assets had not taken into account of the above transaction.


– 207 –

5. On 23 October 2013, certain companies now comprising the Group declared interim dividends ofHK$515,000 to their then non-controlling shareholders. The unaudited pro forma adjusted nettangible assets had not taken into account of the above transaction.

6. The unaudited pro forma financial information presented above does not take into account anytrading or other transactions subsequent to 30 June 2013.

DISCLOSURE UNDER RULES 17.15 TO 17.21 OF THE GEM LISTING RULES

The Directors have confirmed that as of the Latest Practicable Date, they were notaware of any circumstances which would give rise to a disclosure requirement under Rules17.15 to 17.21 of the GEM Listing Rules.

REASONS FOR THE PLACING

The Directors believe that the Listing will enhance the Group’s profile and recognition.In addition, the Board is also of the view that despite the fact that the estimated netproceeds from the Placing (based on the midpoint of the indicative Placing Price range) onlyamount to approximately HK$22.1 million, the Listing and the Placing will provide theCompany with additional avenues to raise capital for its future business expansion andlong-term development, and expand and diversify the Company’s capital base andshareholders base as institutional funds and retail investors in Hong Kong can easilyparticipate in the equity of the Company. The net proceeds from the Placing of the PlacingShares will strengthen the Group’s financial position.

MATERIAL ADVERSE CHANGE

The impact of the Listing expenses on the profit and loss accounts, coupled with thefinancial impact of the closure of the IFC Restaurants, have posted a material adversechange in the financial or trading position or prospect of the Group since 30 June 2013(being the date the latest audited combined financial statements were made up). Prospectiveinvestors should be aware of the impact of the Listing expenses and closure of therestaurants on the financial performance of the Group for the year ending 31 March 2014.

Save as disclosed above, the Directors have confirmed that, up to the date of thisprospectus, there had been no material adverse change in the financial or trading positionsor prospectus of the Company or its subsidiaries since 30 June 2013 (being the date ofwhich the Group’s latest audited combined financial statements were made up as set out inthe Accountants’ Report in Appendix I to this prospectus) and there had been no event since30 June 2013 which would materially affect the information shown in the Accountants’Report in Appendix I to this prospectus.


– 208 –

BUSINESS OBJECTIVES

As at the Latest Practicable Date, the Group owns and operates 6 full-servicerestaurants and 2 cake shops in Hong Kong. Its business philosophy is to offer qualitycuisine and attentive services to its customers. The primary objectives of the Group are tostrengthen its position in the food and beverage industry in Hong Kong and further expandits business operations with a view to enhance shareholders’ value.

BUSINESS STRATEGIES

The Group will endeavor to achieve its business objectives and adopt the followingbusiness strategies and implementation plans during the period from the Latest PracticableDate to 31 March 2016. The respective scheduled completion time for these implementationplans are based on certain bases and assumptions as set out the paragraph headed “Basesand assumptions” in this section. These bases and assumptions are inherently subject tomany uncertainties and unpredictable factors, in particular, the risk factors as set out in thesection headed “Risk Factors” in this prospectus. Therefore, there is no assurance that theGroup’s business plans will materialise in accordance with the estimated time frame and thatthe Group’s future plans will be accomplished at all.

Diversification of product offerings

To further diversify the Group’s products to be offered to its customers, the Groupopened Pearl Dining House in September 2013 and Mekiki (V city) in October 2013. TheDirectors also intend to establish a new cafe, a la Folie, in November 2013. The estimatedinvestment costs, including rental deposit, of Pearl Dining House, Mekiki (V city) and a laFolie are approximately HK$3.9 million, HK$3.6 million and HK$1.2 million, respectively,which was/will be funded by the internal resources of the Group. The Directors believe thatthe diversification strategy can assist the Group in addressing different needs of thecustomers and enlarging its market share in the food and beverage industry in Hong Kong.

To further enhance the market share of the Group, the Directors also plan to open anew restaurant, Pearl Chamber, in the first quarter of 2014, with an expected usable area andseating capacity of approximately 220 sq.m. and approximately 60 seats respectively. Thisrestaurant will be focused on Chinese cuisine. As at the Latest Practicable Date, theDirectors have identified suitable premises in a shopping mall in Yau Tsim Mong District forthe operation of Pearl Chamber. Rental offers and concept proposals for the premises havebeen submitted to the landlord for consideration. No formal lease agreement has beenentered into as at the Latest Practicable Date. The estimated investment cost isapproximately HK$7.3 million, which will be funded by the net proceeds from the Placing.Based on the historical performance of the restaurants operated by the Group, the Directorsestimate that the new restaurant to be open by the Group would be able to breakeven in thesecond year of operation. The Group expects to open another restaurant serving Japanesecuisine under the franchise name of “Mekikinoginji – Okinawa（目利之銀次沖繩）” by 31March 2015. The estimated investment cost is approximately HK$3.7 million. The intendedexpansion of the Group’s network of restaurants is expected to be financed out of the net

BUSINESS STRATEGIES AND USE OF PROCEEDS

– 209 –

proceeds to be received by the Company from the Placing for the amount of HK$3.7 millionand the remaining (if any) by internal resources generated from the Group’s operatingactivities.

On the other hand, the Group will encourage the chefs of the restaurants to explorenew varieties of food products and develop new and quality dishes in order to enrich themenu. In this regard, the Group intends to identify new food products, assess marketpotential and expand production teams.

Enhancement of existing restaurant facilities

In addition to the quality of food and services, the Directors believe that the ambienceof the restaurants is also important to the customers’ dining experience. In order to staycompetitive in the market, the Group incurred approximately HK$1.2 million renovationcosts to rebrand Hooray Kaiko as Mekiki (WTC) in September 2013. Such amount is fundedby the internal resources of the Group. As part of the Group’s effort to launch the “Pearl”series, the Group plans to cease the operation of PHO24 (NTP) in November 2013 andreplace it with Pearl Delights, which focuses on Cantonese cuisine with a capacity ofapproximately 140 seats, to be opened in December 2013 shortly following the closure ofPHO24 (NTP) in the same location. The Group expects to incur a renovation cost of HK$1.8million in November 2013, which will be funded by the net proceeds from the Placing. AfterListing, the Group will continue to enhance its restaurant equipment, utensils and generalsupplies in its existing restaurants. The Group will regularly review and refine the interiordesign of its existing restaurants and will arrange for refurbishment if necessary. The Groupalso intends to identify quality kitchen and cooking tools, equipment and appliances toincrease the efficiency of the chefs of the Group. The Directors plan to apply the netproceeds from Placing for the amount of HK$1.0 million and HK$1.6 million, respectivelyto enhance the restaurant facilities of Harlan’s and Kaika and Inakaya. Any differencebetween the net proceeds from Placing and the actual renovation costs will be funded by theinternal resources of the Group.

Strengthening of staff training

The Group is committed to enhance the knowledge and qualifications of its employees.The Group has provided and shall continue to provide on-the-job trainings to employees inrelation to food ingredients preparation and preservation, customer service, flow of foodproduction, hygiene conditions of the kitchen and quality control in different aspects of theoperations of restaurants based on their job duties in order to improve their practicalbusiness skills.

Enhancement of marketing and promotions

The Group plans to strengthen its marketing efforts in promoting its restaurants. Themarketing activities of the Group shall aim to reinforce its reputation in providing highquality of food and dining environment. In order to achieve such objectives, the Group plansto promote the restaurants through various marketing activities, including the launching of


– 210 –

promotion campaigns, and organising or sponsoring related events to enhance investors’relationship. The Group will also increase advertising activities through various media, suchas internet and press releases.

IMPLEMENTATION PLANS

The Group will endeavor to achieve the following milestone events during the periodfrom the Latest Practicable Date to 31 March 2016, and their respective scheduledcompletion time is based on certain bases and assumptions as set out in paragraph headed“Bases and assumptions” in this section. These bases and assumptions are inherently subjectto many uncertainties and unpredictable factors, in particular the risk factors as set out inthe section headed “Risk Factors” in this prospectus. Therefore, there is no assurance thatthe Group’s business plans will materialise in accordance with the estimated time frame andthat the Group’s future plans will be accomplished at all.

From theLatest

PracticableDate to

31 March2014

For the sixmonthsending

30 September2014


31 March2015


30 September2015


31 March2016 Total

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Diversification of productofferings

Capital expenditure foropening of Pearl Chamber 3,800 – – – – 3,800

Rental deposit for PearlChamber 2,200 – – – – 2,200

Working capital for PearlChamber 1,300 – – – – 1,300

Capital expenditure foropening of another newrestaurant – – 3,725 – – 3,725

7,300 – 3,725 – – 11,025

Enhancement of existingrestaurant facilities

Renovation cost forrestaurant and replacementof utensils 1,800 1,000 1,610 – – 4,410

Strengthening of stafftraining

Training programs toemployees 1,105 275 275 275 275 2,205

Marketing and promotionsPromotion campaigns and

other marketing activities 1,105 275 275 275 275 2,205

11,310 1,550 5,885 550 550 19,845


– 211 –

BASES AND ASSUMPTIONS

The business objectives and strategies set out by the Directors are based on thefollowing general assumptions:

� there will be no significant economic change in respect of inflation, interest rate,tax rate and currency exchange rate in Hong Kong which will adversely affect theGroup’s business;

� the Group will have sufficient financial resources to meet the planned capitalexpenditure and business development requirements during the period to whichthe business objectives relate;

� there will be no material adverse change in the existing laws and regulations,policies or industry or regulatory treatment relating to the Group, or in thepolitical, economic, fiscal or market conditions in which the Group operates;

� there will be no change in the funding requirement for each of the near termbusiness objectives described in this prospectus from the amount as estimated bythe Directors;

� there will be no disasters, natural, political or otherwise, which would materiallydisrupt the business or operations of the Group or cause substantial loss, damageor destruction to its properties or facilities;

� there will be no change in the effectiveness of the licences and permits obtainedby the Group; and

� the Group will not be adversely affected by the risk factors as set out under thesection headed “Risk Factors” in this prospectus.

Reasons for the Placing and Use of Proceeds

The Placing will enhance the Group’s capital base and provide the Group withadditional working capital to implement the future plans set out in the paragraph headed“Business Strategies” in this section above.

The Company intends to raise funds by the Placing in order to pursue its businessobjectives as set out in the paragraph headed “Business Objectives” in this section.

The Directors believe that the Listing will enhance the Group’s profile and recognition,and the net proceeds from the Placing will strengthen the Group’s financial position suchthat the Group is fully equipped to pursue the business plans set out in this section.


– 212 –

Assuming a Placing Price of HK$0.45 per Placing Share, being the mid-point of theindicative Placing Price range of HK$0.4 to HK$0.5 per Placing Share, the net proceedsfrom the Placing, after deducting related expenses to be borne by the Company, areestimated to amount to approximately HK$22.1 million. The Group intends to apply such netproceeds from Placing as follows:

From theLatest

PracticableDate to 31

March 2014

For the sixmonths

ending 30September

2014

For the sixmonths

ending 31March 2015

For the sixmonths

ending 30September

2015

For the sixmonths

ending 31March 2016 Total

Approximatepercentage

(HK$’000) (HK$’000) (HK$’000) (HK$’000) (HK$’000) (HK$’000) (%)

Diversification ofproduct offerings 7,300 – 3,725 – – 11,025 50.0

Enhancement ofexisting restaurants’facilities 1,800 1,000 1,610 – – 4,410 20.0

Strengthening of stafftraining 1,105 275 275 275 275 2,205 10.0

Marketing andpromotions 1,105 275 275 275 275 2,205 10.0

Additional generalworking capital 2,205 – – – – 2,205 10.0

Total 13,515 1,550 5,885 550 550 22,050 100.0

According to current estimates, the Group expects that the net proceeds from thePlacing of approximately HK$22.1 million, the cash in bank and on hand as at the LatestPracticable Date together with the projected cash flow from operations will be sufficient tofinance the implementation of the Company’s future plans up to 31 March 2016.

If the final Placing Price is set at the highest or lowest point of the indicative PlacingPrice range, the net proceeds of the Placing will increase or decrease by approximatelyHK$3.3 million, respectively. In such event, the net proceeds will be used in the sameproportions as disclosed above irrespective of whether the Placing Price is determined at thehighest or lowest point of the indicative Placing Price range.

To the extent that the net proceeds from the issue of the Placing Shares are notimmediately required for the purposes above, it is the present intention of the Directors thatsuch net proceeds will be placed on short-term interest bearing deposits with authorisedfinancial institutions in Hong Kong.

The Group will issue an announcement in accordance with the GEM Listing Rulesrequirement if there is any material change in the use of proceeds as described above.


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Save as provided for under the Underwriting Agreement, neither the Sponsor nor anyof its associates has or may, as a result of the Placing, have any interest in any securities ofthe Company or any other member of the Group (including rights to subscribe for suchsecurities).

Neither the Sponsor nor any of its associates has accrued any material benefit as aresult of the successful outcome of the Placing, other than the following:

(a) in taking up the underwriting obligations under the Underwriting Agreement;

(b) by way of an underwriting commission to be paid to the Sponsor for acting as oneof the Underwriters to the Placing pursuant to the Underwriting Agreement;

(c) by way of documentation and financial advisory fee to be paid to the Sponsor foracting as the sponsor of the Placing; and

(d) in the usual and ordinary courses of business of the Sponsor and its associateswhich involve trading of and dealing in securities may derive commissions fromthe trading of and dealing in securities of the Company or provide marginfinancing in connection thereto or purchase or sell securities of the Company orhold securities of the Company for investment purposes after its Listing on GEM.

None of the directors and employees of the Sponsor has any directorship in theCompany or any other companies comprising the Group.

SPONSOR’S INTERESTS

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UNDERWRITERS

Astrum Capital Management LimitedOrient Securities LimitedTC Capital Asia Limited

UNDERWRITING ARRANGEMENTS AND EXPENSES

Underwriting Agreement

Pursuant to the Underwriting Agreement, the Company is offering the New Shares andthe Vendor is offering the Sale Shares for placing to professional, institutional and privateinvestors at the Placing Price. Subject to, among other conditions, (i) the Stock Exchangegranting the listing of and permission to deal in the Shares in issue and to be issued asmentioned in this prospectus and such grant and permission not subsequently being revokedprior to the Listing Date; (ii) the Price Determination Agreement having been executed on orbefore the Price Determination Date; and (iii) certain other conditions set out in theUnderwriting Agreement being satisfied or waived on or before the date and time specifiedtherein and shall in any event not later than the 30th day after the date of this prospectus (orif such date is not a Business Day, the immediate preceding Business Day), the Underwritershave agreed to procure subscribers for and/or purchase the Placing Shares subject to theterms and conditions of this prospectus and the Underwriting Agreement.

Grounds for termination

Astrum (for itself and on behalf of the Sponsor and the Underwriters) shall have thesole right upon giving notice in writing to the Company at any time prior to 8:00 a.m.(Hong Kong time) on the Listing Date to rescind the Underwriting Agreement if at any timeprior to 8:00 a.m. (Hong Kong time) on the Listing Date:–

i. there comes to the notice of the Sponsor and/or the Joint Lead Managers (onbehalf of themselves and the Underwriters):

(a) any new law or regulation comes into force, or there is any change inexisting law or regulation, or any change in the interpretation or applicationthereof by any court or other competent authority; or

(b) any material change (including any event or series of events concerning orrelating to or otherwise having an effect on) in Hong Kong financial,political, military, industrial, fiscal, legal, regulatory, economic or marketconditions, stock or other financial market conditions; or

(c) any material change in the conditions of the Hong Kong securities marketsincluding, for the avoidance of doubt, any significant adverse change in theindex level or value of turnover of such markets; or

UNDERWRITING

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(d) without prejudice to sub-paragraphs (b), (c) and (e) herein, there is imposedany moratorium, suspension or material restriction on trading in securitiesgenerally on the Stock Exchange due to exceptional financial circumstanceor otherwise, or minimum prices having been established for securitiestraded thereon; or

(e) without prejudice to sub-paragraphs (b), (c) and (d) herein, a generalbanking moratorium is declared by Hong Kong authorities; or

(f) a material change or development involving a prospective change in taxationor exchange controls in Hong Kong, the British Virgin Islands, or theCayman Islands; or

(g) any material investigation or litigation or claim being threatened or institutedagainst any Director or member of the Group; or

(h) any event or series of event (including, but without limitation, any act ofGod, war, riot, public disorder, civil commotion, fire, flood, explosion,epidemic, terrorism, strike, lockout, contagious disease of animals,food-borne illness or outbreak of other diseases),

which in the sole opinion of Astrum (for itself and on behalf of the Sponsor andthe Underwriters) has or could reasonably be expected to have a material adverseeffect on the business or financial conditions or prospects of the Group taken as awhole or to the success of the Placing or the distribution of the Placing Shares; or

ii. the Joint Lead Managers, the Joint Bookrunners, the Sponsor or any of theUnderwriters becomes aware, or has reasonable cause to believe that:

(a) any statement contained in the Prospectus and any announcement or circularpublished by the Company in relation to the Placing was, when any of suchdocuments was issued, or has become, untrue, incorrect or misleading in anymaterial respect; or

(b) any matter has arisen or has been discovered or alleged which would, had itarisen or been discovered immediately before the date of the Prospectus,constitute a material omission therefrom in the context of the Placing or theListing; or

(c) there has occurred any breach which is material in the context of the Placingor the Listing, of any of the obligations and provisions (save for those fromthe Joint Lead Managers, the Joint Bookrunners, the Sponsor and/or any ofthe Underwriters) contained in the Underwriting Agreement; or

(d) there has occurred any event, act or omission which gives or is likely to giverise to any material liability of any of the Company, the Directors and theControlling Shareholders pursuant to the warranties or indemnities given inthe Underwriting Agreement; or

UNDERWRITING

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(e) there has occurred any material adverse change in the business or in thefinancial or trading positions or prospects of any member of the Groupwhich is material in the context of the Placing and the Listing.

Undertakings

Pursuant to the Underwriting Agreement, each of the Controlling Shareholders hasundertaken to and covenanted with the Company, the Sponsor, the Joint Lead Managers, theJoint Bookrunners and the Underwriters that, without the prior written consent of theSponsor and the Joint Lead Managers (for themselves and on behalf of the Underwriters)and unless in compliance with the requirements of the GEM Listing Rules, he/she/it shallnot, and shall procure his/her/its associates or companies controlled by him/her/it or anynominee or trustee holding in trust for him/her/it not to:

(a) at any time during the period commencing on the date by reference to whichdisclosure of his/her/its shareholding in the Company is made in the Prospectusand ending on the date which is six months from the Listing Date (the “FirstSix-month Period”), dispose of, nor enter into any agreement to dispose of orotherwise create any options, rights, interests or encumbrances in respect of, anyof the securities of the Company in respect of which he/she/it is shown by thisprospectus to be the beneficial owner (whether direct or indirect) (the “RelevantShares”);

(b) at any time during the period of six months commencing on the date on which theFirst Six-month Period expires, dispose of, nor enter into any agreement todispose of or otherwise create any options, rights, interests or encumbrances inrespect of any of the Relevant Shares if, immediately following such disposal orupon the exercise or enforcement of such options, rights, interests orencumbrances, the Controlling Shareholders, either individually or taken togetherwith the other of them, would cease to be a controlling shareholder (as definedunder the GEM Listing Rules) of the Company.

Each of the Controlling Shareholders undertakes to and covenants with the Company,the Sponsor, the Joint Lead Managers, the Joint Bookrunners and the Underwriters that:

(i) in the event that he/she/it disposes of his/her/its Relevant Shares after therestriction under sub-paragraph (a) above applicable to him/her/it lapses, allreasonable steps will be taken to ensure that such disposal will not create a falseor disorderly market in the Shares;

(ii) in the event that he/she/it pledges or charges any of his/her/its direct or indirectinterest in the Relevant Shares under Rule 13.18(1) of the GEM Listing Rules orpursuant to any approval given by the Stock Exchange pursuant to Rule 13.18(4)of the GEM Listing Rules, he/she/it must inform the Company, the Sponsor, theJoint Bookrunners and the Stock Exchange immediately thereafter, disclosing thedetails as specified in Rule 17.43(1) to (4) of the GEM Listing Rules; and

UNDERWRITING

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(iii) having pledged or charged any of his/her/its interests in the Relevant Shares undersub-Clause (ii) above, he/she/it must inform the Company, the Sponsor, the JointLead Managers (for themselves and on behalf of the Underwriters) and the StockExchange immediately in the event that he/she/it becomes aware that the pledgeeor chargee has disposed of or intends to dispose of such interest and of thenumber of the Relevant Shares so affected.

The Company further undertakes to and covenants with the Sponsor, the Joint LeadManagers, the Joint Bookrunners and the Underwriters that, and each of the ControllingShareholders and the executive Directors undertakes and covenants with the Sponsor, theJoint Lead Managers, the Joint Bookrunners and the Underwriters to procure that, withoutthe prior written consent of the Joint Lead Managers( for themselves, the Sponsor and onbehalf of the Underwriters), the Company will not, save pursuant to the Placing, the grant ofoption under the Share Option Scheme, the issue of Shares pursuant to the CapitalisationIssue or the exercise of any option granted or to be granted under the Share Option Schemeor any capitalisation issue or any consolidation, sub-division or capital reduction of Sharesor by way of scrip dividend schemes or other similar arrangement in accordance with theArticles of Association and the GEM Listing Rules:

(a) within the period of six months from the Listing Date, issue or agree to issue anyShares or any other securities in the Company or grant or agree to grant anyoptions, warrants or other rights carrying the rights to subscribe for, or otherwiseconvert into, or exchange for, Shares or any other securities of the Company; and

(b) at any time during the period of six months from the expiry of the six-monthperiod referred to in (a) above, unless permitted by the GEM Listing Rules, issueany Share or securities in the Company or grant or agree to grant any options,warrants or other rights carrying the rights to subscribe for, or otherwise convertinto or exchange for Shares or securities in the Company so as to result in theControlling Shareholders either individually or taken together with the other ofthem cease to be a controlling shareholder (within the meaning of the GEMListing Rules) of the Company.

Each of the Company, the Controlling Shareholders and the executive Directorsundertakes to and covenants with the Sponsor, the Joint Lead Managers, the JointBookrunners and the Underwriters that save with the prior written consent of the Joint LeadManagers (for themselves, the Sponsor and on behalf of the Underwriters), no company inthe Group will, unless permitted by the GEM Listing Rules, within the period of six monthsfrom the Listing Date purchase any Shares or any other securities of the Company.

Total commission, fee and expenses

The Underwriters will receive an underwriting commission of an amount equal to 5 percent. of the aggregate Placing Price of all Placing Shares, out of which they will pay anysub-underwriting commission, and the Sponsor will receive a financial advisory anddocumentation fee in relation to the Listing and the Sponsor, the Joint Lead Managers, theJoint Bookrunners and the Underwriters will be reimbursed for their expenses properlyincurred in connection with the Placing. Such commission, advisory and documentation feeand expenses, together with the GEM listing fees, legal and other professional fees, and

UNDERWRITING

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printing and other expenses relating to the Placing and Listing, are estimated to amount inaggregate to approximately HK$13.5 million (assuming the underwriting commission iscalculated with reference to the mid-point of the indicative Placing Price range of HK$0.4 toHK$0.5 per Placing Share) and are to be borne by the Company and the Vendor in theproportion that the total number of New Shares bears to the total number of Sale Shares.

Sub-underwriting Arrangement

Pursuant to the Underwriting Agreement, each Underwriter may, in its absolutediscretion, appoint any of its affiliates to be sub-underwriter(s) on behalf of the Companyand the Vendor for the purpose of arranging for the Placing with such authorities and rightsas such Underwriter has under the Underwriting Agreement. Such Underwriter shall remainliable for all acts and omissions of any such sub-underwriter(s) and shall procure thecompliance by any such sub-underwriter(s) with all relevant obligations and provisions towhich such Underwriter is or will be subject to or by which such Underwriter is or will bebound pursuant to the terms of the Underwriting Agreement.

In the event that an Underwriter fails to procure subscription or purchase for all or anyof the Placing Shares, such Underwriter may at its absolute discretion call upon itssub-underwriter(s) to take up such number of Placing Shares as it specifies up to the amountof its sub-underwriting participation.

Underwriter’s interests in the Company

Astrum, being one of the Joint Lead Managers, Joint Bookrunners and Underwriters, isindirectly owned as to approximately 82.69% by Mr. Pan Chik, who is a non-executiveDirector and is the sole shareholder of Dragon Flame which will be interested in 82,500,000Shares, representing approximately 20.625% of the issued share capital of the Companyupon Listing. In light of Mr. Pan Chik’s shareholding interest in Astrum and the Companyas disclosed herein and his directorship in the Company, and given the sub-underwritingarrangement as disclosed above, Mr. Pan Chik confirms that Astrum will not take up anyPlacing Share under the Placing. Save as disclosed herein, none of the Joint Lead Managers,the Joint Bookrunners and the Underwriters is interested legally or beneficially in the sharesof any member of the Group or has any right or option (whether legally enforceable or not)to subscribe for or purchase or to nominate persons to subscribe for or purchase securities inany member of the Group nor any interest in the Placing or has any other businessrelationship with the Group.

Minimum Public Float

The Directors and the Joint Lead Managers will ensure that there will be a minimum25% of the total issued Shares held in public hands in accordance with Rule 11.23(9) of theGEM Listing Rules after completion of the Placing.

UNDERWRITING

– 219 –

PLACING PRICE

The Placing Price will not be more than HK$0.5 per Placing Share and is expected tobe not less than HK$0.4 per Placing Share. Investors, when investing for the Placing Shares,shall pay the Placing Price plus brokerage of 1.0%, SFC transaction levy of 0.003% andStock Exchange trading fee of 0.005%. Assuming the Placing Price of HK$0.5 or HK$0.4per Placing Share (being the highest and lowest prices of the indicative Placing Price rangerespectively), investors shall pay HK$2,525.21 or HK$2,020.16 for every board lot of 5,000Shares.

The Placing Price will be fixed by an agreement expected to be entered into betweenthe Company (for itself and on behalf of the Vendor) and Astrum (for itself and on behalf ofthe Underwriters) on the Price Determination Date which is scheduled on or about 14November 2013 (or such later date as may be agreed between the Company (for itself andon behalf of the Vendor) and Astrum (for itself and on behalf of the Underwriters)). If theCompany and Astrum are unable to reach an agreement on the Placing Price by the PriceDetermination Date or such later date as may be agreed, or if the Price DeterminationAgreement is not signed, the Placing will not become unconditional and will lapse.Prospective investors of the Placing Shares should be aware that the Placing Price to bedetermined on the Price Determination Date may be, but is currently not expected to be,lower than the indicative range of the Placing Price as stated in this prospectus.

Astrum (for itself and on behalf of the Underwriters) may, with the consent of theCompany, reduce the indicative Placing Price range to below that stated in this prospectus atany time prior to the Price Determination Date. In such a case, the Company shall, as soonas practicable following the decision to make such reduction, publish an announcement onthe reduction of the indicative Placing Price range on the Stock Exchange’s website atwww.hkexnews.hk and the Company’s website at www.jcgroup.hk.

The level of indication of interests in the Placing and the basis of allocations of thePlacing Shares will be announced on the Stock Exchange’s website at www.hkexnews.hk andthe Company’s website at www.jcgroup.hk at or before 9:00 a.m. on 20 November 2013.

THE PLACING

The Placing comprises 100,000,000 Placing Shares conditionally offered by theCompany and the Vendor. The Company is offering 70,000,000 New Shares for subscriptionand the Vendor is offering 30,000,000 Sale Shares for sale by way of private placements toprofessional, institutional or other investors. The Placing Shares will represent 25% of theCompany’s enlarged issued share capital immediately after completion of the CapitalisationIssue and the Placing. The Placing is fully underwritten by the Underwriters (subject to theterms and conditions of the Underwriting Agreement, and the Placing Price having beenfixed by agreement between the Company (for itself and on behalf of the Vendor) andAstrum (for itself and on behalf of the Underwriters) on or before the Price DeterminationDate). The minimum subscription or purchase size for each subscriber or purchaser of thePlacing Shares is 5,000 Shares and thereafter in integral multiples of board lot size of 5,000Shares.


– 220 –

BASIS OF ALLOCATION

Allocation of the Placing Shares will be based on a number of factors, including thelevel and timing of demand and whether or not it is expected that the relevant investor islikely to purchase further Shares or hold or sell the Shares after the Listing. Such allocationis intended to result in a distribution of the Placing Shares which would lead to theestablishment of a solid professional, institutional and individual shareholder base for thebenefit of the Company and the Shareholders as a whole. In particular, the Placing Shareswill be allocated pursuant to Rule 11.23(8) of the GEM Listing Rules such that not morethan 50% of the Shares in public hands at the time of the Listing will be owned by the threelargest public Shareholders. No allocations of the Placing Shares will be permitted tonominee companies unless the name of the ultimate beneficiary is disclosed. There will notbe any preferential treatment in the allocation of the Placing Shares to any persons.

The Placing is subject to the conditions as stated in the paragraph headed “Conditionsof the Placing” in this section.

CONDITIONS OF THE PLACING

The Placing is conditional upon, among others:

(a) the Stock Exchange granting listing of, and permission to deal in, the Shares inissue and to be issued as mentioned in this prospectus (including any Shareswhich may fall to be issued pursuant to the Placing or the Capitalisation Issue orupon the exercise of any options which may be granted under the Share OptionScheme);

(b) the Price Determination Agreement having been executed on or before the PriceDetermination Date; and

(c) the obligations of the Underwriters under the Underwriting Agreement becomingunconditional (including, if relevant, as a result of the waiver of any condition(s)by Astrum (for itself and on behalf of the Underwriters)) and the UnderwritingAgreement not being terminated in accordance with its terms or otherwise prior to8:00 a.m. (Hong Kong time) on the Listing Date.

If the conditions referred to above are not fulfilled or waived on or before the 30th dayfrom the date of this prospectus (or if such date is not a Business Day, the immediatepreceding Business Day) pursuant to the terms of the Underwriting Agreement, the Placingwill lapse and the subscription and purchase monies will be returned to the placees or theUnderwriters without interest. Notice of lapse of the Placing will be published by theCompany on the website of the Stock Exchange at www.hkexnews.hk and the Company’swebsite at www.jcgroup.hk on the next day after such lapse. Details of the UnderwritingAgreement and grounds for termination are set out in the section headed “Underwriting” inthis prospectus.


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COMMENCEMENT OF DEALINGS IN THE SHARES

Dealings in the Shares on the Stock Exchange are expected to commence at 9:00 a.m.on Thursday, 21 November 2013. Shares will be traded in board lots of 5,000 Shares each.

SHARES WILL BE ELIGIBLE FOR ADMISSION INTO CCASS

Application has been made to the Stock Exchange for the listing of, and permission todeal in, the Shares in issue and to be issued as mentioned in this prospectus. If the StockExchange grants the listing of, and permission to deal in, the Shares and the Companycomplies with the stock admission requirements of HKSCC, the Shares will be accepted aseligible securities by HKSCC for deposit, clearance and settlement in CCASS with effectfrom the date of commencement of dealings in the Shares on the Stock Exchange or, undercontingent situation, any other date as HKSCC may choose. Settlement of transactionsbetween participants of the Stock Exchange is required to take place in CCASS on thesecond business day after any trading day.

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 CCASS and CCASSOperational Procedures in effect from time to time. Investors should seek advice from theirstockbrokers or other professional advisers for details of those settlement arrangements andhow such arrangements will affect their rights and interests.

Details of the Placing will be announced in accordance with Rules 10.12(4), 16.08 and16.16 of the GEM Listing Rules.


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The following is the text of a report, prepared for the purpose of incorporation in thisprospectus, received from the independent reporting accountants, HLB Hodgson ImpeyCheng Limited, Certified Public Accountants, Hong Kong.

Hodgson Impey Cheng Limited

國衛會計師事務所有限公司

31/F, Gloucester TowerThe Landmark11 Pedder StreetCentralHong Kong

14 November 2013

The DirectorsJC Group Holdings LimitedTC Capital Asia Limited

Dear Sirs,

We set out below our report on the financial information (the “Financial Information”)regarding JC Group Holdings Limited (the “Company”) and its subsidiaries (hereinaftercollectively referred to as the “Group”) for the years ended 31 March 2012 and 2013 andthe three months ended 30 June 2013 (the “Relevant Periods”), for inclusion in theprospectus of the Company dated 14 November 2013 (the “Prospectus”) in connection withthe proposed listing of the Company’s shares on the Growth Enterprise Market (“GEM”) ofThe Stock Exchange of Hong Kong Limited (the “Stock Exchange”).

The Company was incorporated as an exempted company with limited liability in theCayman Islands under the Companies Law of the Cayman Islands on 21 June 2013. Througha corporate reorganisation as more fully explained in the paragraph headed “Reorganisation”under the section headed “History, Development and Reorganisation” to the Prospectus (the“Corporate Reorganisation”), the Company became the holding company of the subsidiariesnow comprising the Group on 31 October 2013.

As at the date of this report, the Company has the following subsidiaries:

Name of subsidiaryLegal form, date and place ofincorporation/operations

Issued and fullypaid up sharecapital

Proportionownershipinterest held bythe Company

Principalactivities

Glory KindDevelopment Limited(“Glory Kind”)

Limited liability companyincorporated on 25 March 2013,British Virgin Islands (“BVI”)

1,000 shares of US$1each

100% (direct) Investmentholding

Team GloryInternational Limited(“Team Glory”)

Limited liability companyincorporated on 20 March 2013,BVI

8 shares of US$1each

100% (indirect) Investmentholding

Top Aim Enterprises Ltd(“Top Aim”)




APPENDIX I ACCOUNTANTS’ REPORT

– I-1 –

Name of subsidiaryLegal form, date and place ofincorporation/operations

Issued and fullypaid up sharecapital

Proportionownershipinterest held bythe Company

Principalactivities

Still Profit Limited(“Still Profit”)

Limited liability companyincorporated on 30 July 2012,BVI



Progress VantageHoldings Limited(“Progress Vantage”)


1,004 shares of US$1each


Grand Century IncLimited (“GrandCentury”)

Limited liability companyincorporated on 3 December2012, Hong Kong

10,000 shares ofHK$1 each

100% (indirect) Restaurantoperation

H One F & BManagement Limited(“H One F&B”)

Limited liability companyincorporated on 8 January 2008,Hong Kong


70% (indirect) Managementservice

H-View F & B GroupLimited (“H-View”)

Limited liability companyincorporated on 4 May 2011,Hong Kong


100% (indirect) Managementservice

Harlan’s HoldingLimited (“Harlan’sHolding”)

Limited liability companyincorporated on 9 March 2010,Hong Kong

20,000,000 shares ofHK$1 each


Inakaya (HK) Limited(“Inakaya”)

Limited liability companyincorporated on 30 December2008, Hong Kong



J & H Company Limited(“J&H”)

Limited liability companyincorporated on 2 March 2006,Hong Kong



JC Group (HK) Limited(“JC Group”)

Limited liability companyincorporated on 16 October 2008,Hong Kong



PHO24 (NTP) Limited Limited liability companyincorporated on 9 November2009, Hong Kong



PHO24 (TST) Limited Limited liability companyincorporated on 2 January 2009,Hong Kong



Turbo Trade Limited(“Turbo Trade”)

Limited liability companyincorporated on 12 February2010, Hong Kong



Except for Turbo Trade, Inakaya, J&H, H One F&B and H-View which have adopted30 June as their financial year end date, all companies now comprising the Group haveadopted 31 March as their financial year end date.

No audited statutory financial statements have been prepared for the Company since itsdate of incorporation as it was incorporated in a country where there is no statutory auditrequirement and the Company has not carried on any business other than those transactionsrelating to the Corporate Reorganisation.


– I-2 –

No audited statutory financial statements have been prepared for Glory Kind, TeamGlory, Top Aim, Still Profit and Progress Vantage since their dates of incorporation as theywere incorporated in a country where there is no statutory audit requirement.

The statutory financial statements of the subsidiaries now comprising the Group, wherethere is a statutory audit requirement, were prepared in accordance with the Hong KongFinancial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of CertifiedPublic Accountants (the “HKICPA”) and were audited by:

Name of subsidiary Financial year / periodName of certified publicaccountants

H One F&B Years ended 30 June 2011 and2012

Kwok Chun Chung

H-View For the period from 4 May2011 (date of incorporation)to 30 June 2012

S. W. Sze & Co.

Harlan’s Holding Year ended 31 March 2012 S. W. Sze & Co.Year ended 31 March 2013 HLB Hodgson Impey Cheng

LimitedInakaya Years ended 30 June 2011 and

2012S. W. Sze & Co.

J&H Year ended 30 June 2011 Kwok Chun ChungYear ended 30 June 2012 S. W. Sze & Co.

JC Group Years ended 31 March 2012and 2013

S. W. Sze & Co.

PHO24 (NTP)Limited

Year ended 31 March 2012 Kwok Chun Chung

Year ended 31 March 2013 HLB Hodgson Impey ChengLimited

PHO24 (TST)Limited

Year ended 31 March 2012 S. W. Sze & Co.

Year ended 31 March 2013 HLB Hodgson Impey ChengLimited

Turbo Trade Years ended 30 June 2011 and2012

S. W. Sze & Co.

Grand Century For the period from 3December 2012 (date ofincorporation) to 31 March2013

HLB Hodgson Impey ChengLimited


– I-3 –

For the purpose of this report, the directors of the Company have prepared thecombined financial statements of the Company and its subsidiaries now comprising theGroup for the Relevant Periods (the “Underlying Financial Statements”) in accordance withHKFRSs issued by the HKICPA.

We have undertaken an independent audit on the Underlying Financial Statements forthe Relevant Periods in accordance with Hong Kong Standards on Auditing issued by theHKICPA. We have examined the Underlying Financial Statements in accordance with theAuditing Guideline 3.340 “Prospectuses and the Reporting Accountant” as recommended bythe HKICPA.

The Financial Information of the Group for the Relevant Periods set out in this reporthas been prepared from the Underlying Financial Statements on the basis set out in Note 1of Section A below and no adjustments to the Underlying Financial Statements areconsidered necessary in the preparation of this report for inclusion in the Prospectus.

The Underlying Financial Statements are the responsibility of the directors of theCompany who approved their issue. The directors of the Company are responsible for thecontents of the Prospectus in which this report is included. It is our responsibility to compilethe Financial Information set out in this report from the Underlying Financial Statements, toform an independent opinion on the Financial Information and to report our opinion to you.

In our opinion, on the basis of presentation set out in Note 1 of Section A below, theFinancial Information gives, for the purpose of this report, a true and fair view of the stateof affairs of the Group as at 31 March 2012 and 2013 and 30 June 2013, and of thecombined results and combined cash flows of the Group for the Relevant Periods.

The comparative combined statement of comprehensive income, combined statement ofchanges in equity and combined statement of cash flows of the Group for the three monthsended 30 June 2012 together with the notes thereon have been extracted from the Group’sunaudited combined financial information for the same period (the “June 2012 FinancialInformation”), which was prepared by the directors of the Company solely for the purposeof this report. We have reviewed the June 2012 Financial Information in accordance with theHong Kong Standard on Review Engagements 2410 “Review of Interim FinancialInformation Performed by the Independent Auditor of the Entity” issued by the HKICPA.Our review consists principally of making enquiries of the Group’s management andapplying analytical and other review procedures to the June 2012 Financial Information andbased thereon, assessing whether the accounting policies and presentation have beenconsistently applied unless otherwise disclosed. A review excludes audit procedures such astests of controls and verification of assets, liabilities and transactions. It is substantially lessin scope than an audit and therefore provides a lower level of assurance than an audit.Accordingly, we do not express an audit opinion on the June 2012 Financial Information.Based on our review, nothing has come to our attention that causes us to believe that theJune 2012 Financial Information is not prepared, in all material respects, in accordance withthe accounting policies consistent with those used in the preparation of the FinancialInformation which conform with HKFRSs.


– I-4 –

A. FINANCIAL INFORMATION

Combined statements of comprehensive income

Year ended 31 MarchThree monthsended 30 June

2012 2013 2012 2013Notes HK$’000 HK$’000 HK$’000 HK$’000

(Unaudited)

REVENUE 5 260,437 246,072 57,430 62,165Other income and gains 6 618 1,165 311 262Cost of inventories sold (75,093) (71,286) (16,636) (17,683)Staff costs (69,152) (69,734) (17,506) (17,212)Depreciation and amortisation (16,639) (14,236) (3,906) (3,205)Property rentals and related

expenses (45,869) (47,169) (11,219) (12,341)Fuel and utility expenses (5,081) (5,432) (1,325) (1,428)Other operating expenses (28,195) (23,869) (6,607) (6,210)Listing expenses − − – (1,459)Finance costs 7 (2) (4) (1) –

PROFIT BEFORE TAX 8 21,024 15,507 541 2,889

Income tax expense 11 (3,909) (3,836) (429) (987)

PROFIT FOR THE YEAR/PERIOD 17,115 11,671 112 1,902

Other comprehensive income,net of tax – – – –

TOTAL COMPREHENSIVEINCOME FOR THE YEAR/PERIOD 17,115 11,671 112 1,902

Attributable to:Owners of the Company 13,522 9,971 66 1,176Non-controlling interests 3,593 1,700 46 726

17,115 11,671 112 1,902

Details of the dividends payable and proposed for the Relevant Periods are disclosed innote 12 to the Financial Information.


– I-5 –

Combined statements of financial position

As at 31 MarchAs at 30

June2012 2013 2013

Notes HK$’000 HK$’000 HK$’000

NON-CURRENT ASSETSProperty, plant and equipment 14 41,393 31,309 28,547Intangible assets 15 1,268 962 885Non-current rental deposits 18 8,096 3,739 9,875Deferred tax assets 24 140 – –

Total non-current assets 50,897 36,010 39,307

CURRENT ASSETSInventories 16 5,344 4,590 4,156Trade receivables 17 2,836 3,729 2,878Prepayments, deposits and other receivables 18 7,523 15,574 11,334Due from related parties 19 9,975 7,807 2,858Due from non-controlling shareholders 23 1,580 611 348Tax recoverable 89 997 538Cash and cash equivalents 20 11,159 15,352 28,421

Total current assets 38,506 48,660 50,533

CURRENT LIABILITIESTrade payables 21 5,740 5,875 5,204Other payables and accruals 22 8,940 8,503 9,984Due to related parties 19 35,985 33,963 4,467Due to non-controlling shareholders 23 2,234 1,108 1,108Provision for reinstatement costs 3,052 5,529 1,664Tax payable 4,139 3,909 4,437

Total current liabilities 60,090 58,887 26,864

NET CURRENT (LIABILITIES)/ASSETS (21,584) (10,227) 23,669

TOTAL ASSETS LESS CURRENTLIABILITIES 29,313 25,783 62,976


– I-6 –

As at 31 MarchAs at 30

June2012 2013 2013

Notes HK$’000 HK$’000 HK$’000

NON-CURRENT LIABILITIESProvision for reinstatement costs 3,660 1,183 2,499Deferred tax liabilities 24 134 – –

Total non-current liabilities 3,794 1,183 2,499

Net assets 25,519 24,600 60,477

EQUITYEquity attributable to owners of the CompanyIssued capital 25 11,558 11,568 7Reserves 26 4,663 4,029 58,130

16,221 15,597 58,137Non-controlling interests 9,298 9,003 2,340

Total equity 25,519 24,600 60,477


– I-7 –

Combined statements of changes in equity

Attributable to owners of the Company

Issuedcapital

Sharepremium

Otherreserves

Retainedprofits Total

Non-controlling

interestsTotal

equityHK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000(Note 25) (Note 26(b))

At 1 April 2011 11,545 – – (3,492) 8,053 8,241 16,294

Profit for the year – – – 13,522 13,522 3,593 17,115

Total comprehensive incomefor the year – – – 13,522 13,522 3,593 17,115

Acquisition of additionalinterest in a subsidiary 3 – – (337) (334) 334 –

Shares issued by subsidiaries toControlling Shareholders 10 – – – 10 – 10

2012 Interim dividend(Note 12) – – – (5,030) (5,030) (2,870) (7,900)

At 31 March 2012 and1 April 2012 11,558 – – 4,663 16,221 9,298 25,519

Profit for the year – – – 9,971 9,971 1,700 11,671

Total comprehensive incomefor the year – – – 9,971 9,971 1,700 11,671

Shares issued by subsidiaries toControlling Shareholders 10 – – – 10 – 10

2013 Interim dividend(Note 12) – – – (10,605) (10,605) (1,995) (12,600)

At 31 March 2013 and 1 April2013 11,568 – – 4,029 15,597 9,003 24,600

Profit for the period – – – 1,176 1,176 726 1,902

Total comprehensive incomefor the period – – – 1,176 1,176 726 1,902

Acquisition of additionalinterest in a subsidiary 7,500 – – (111) 7,389 (7,389) –

Shares issued by subsidiaries toshareholders 25 7,499 – – 7,524 – 7,524

Loan capitalisation – – 26,462 – 26,462 – 26,462Corporate Reorganisation (19,086) 52,986 (33,911) – (11) – (11)

At 30 June 2013 7 60,485 (7,449) 5,094 58,137 2,340 60,477

(Unaudited)At 1 April 2012 11,558 – – 4,663 16,221 9,298 25,519

Profit for the period – – – 66 66 46 112

Total comprehensive incomefor the period – – – 66 66 46 112

2013 Interim dividend(Note 12) – – – (2,900) (2,900) – (2,900)

At 30 June 2012 11,558 – – 1,829 13,387 9,344 22,731


– I-8 –

Combined statements of cash flows


2012 2013 2012 2013Notes HK$’000 HK$’000 HK$’000 HK$’000

(Unaudited)

CASH FLOWS FROMOPERATING ACTIVITIES

Profit before tax 21,024 15,507 541 2,889Adjustments for:

Amortisation of intangibleassets 8 347 306 77 77

Depreciation 8 16,292 13,930 3,829 3,128Write-off of items of property,

plant and equipment 8 69 179 – –Finance costs 7 2 4 1 –

37,734 29,926 4,448 6,094(Increase)/decrease in

inventories (1,506) 754 (63) 434(Increase)/decrease in trade

receivables (273) (893) 657 851Increase in prepayments,

deposits and other receivables (309) (3,694) (1,220) (1,896)(Increase)/decrease in amounts

due from related parties (4,551) 2,168 1,339 4,949(Increase)/decrease in amounts

due from non-controllingshareholders (618) 969 – 263

(Decrease)/increase in tradepayables (295) 135 31 (671)

(Decrease)/increase in otherpayables and accruals (3,471) (437) 1,437 1,481

(Decrease)/increase in amountsdue to related parties (13,923) (2,022) 622 (3,034)

Decrease in amounts due tonon-controlling shareholders (1,204) (1,126) – –

Decrease in provision ofreinstatement costs – – – (2,549)

Cash generated from operations 11,584 25,780 7,251 5,922Interest paid (2) (4) (1) –Hong Kong profits tax paid (2,459) (4,968) (367) –

Net cash flows from operatingactivities 9,123 20,808 6,883 5,922


– I-9 –


2012 2013 2012 2013Notes HK$’000 HK$’000 HK$’000 HK$’000

(Unaudited)

CASH FLOWS FROMINVESTING ACTIVITIES

Purchases of items of property,plant and equipment (4,666) (4,025) (235) (366)

Acquisition of interest ofsubsidiaries – – – (11)

Net cash flows used in investingactivities (4,666) (4,025) (235) (377)

CASH FLOWS FROMFINANCING ACTIVITIES

Capital contributions from theshareholders 10 10 – 7,524

Dividends paid to theControlling Shareholders (5,030) (10,605) (2,900) –

Dividends paid tonon-controlling shareholders (2,870) (1,995) – –

Net cash flows (used in)/fromfinancing activities (7,890) (12,590) (2,900) 7,524

NET (DECREASE)/INCREASEIN CASH AND CASHEQUIVALENTS (3,433) 4,193 3,748 13,069

Cash and cash equivalents atbeginning of year/period 14,592 11,159 11,159 15,352

CASH AND CASHEQUIVALENTS AT END OFYEAR/PERIOD 11,159 15,352 14,907 28,421

ANALYSIS OF BALANCES OFCASH AND CASHEQUIVALENTS

Cash and bank balances 20 11,159 15,352 14,907 28,421


– I-10 –

Notes to the Financial Information

1. GENERAL INFORMATION AND BASIS OF PRESENTATION OF THE FINANCIALINFORMATION

The Company was incorporated in the Cayman Islands on 21 June 2013 as an exempted company withlimited liability. Its parent and ultimate holding company is Victory Stand International Limited, a companyincorporated in the BVI and owned as to 45.88% by Mr. Zhang Fuzhu, 29.75% by Mr. Wu Kai Char, 16.24% byMs. Wong Wai Ling and 8.13% by Mr. Lui Hung Yen (“Controlling Shareholder(s)”).

The addresses of the registered office and the principal place of business of the Company are set out in thesection headed “Corporate Information” to the Prospectus. The Company is an investment holding company. TheGroup is principally engaged in the operation and management of restaurants and cake shops in Hong Kong.

Throughout the Relevant Periods, the group entities were under the control of Mr. Wu Kai Char, Mr. ZhangFuzhu, Ms. Wong Wai Ling and Mr. Lui Hung Yen. They collectively and beneficially held more than 50% equityinterests in each of the companies now comprising the Group during the Relevant Periods. Through the CorporateReorganisation as more fully explained in the paragraph headed “Reorganisation” under the section headed“History, Development and Reorganisation” to the Prospectus, the Company became the holding company of thecompanies now comprising the Group on 31 October 2013. Accordingly, for the purpose of the preparation of theFinancial Information of the Group, the Company has been considered as the holding company of the companiesnow comprising the Group throughout the Relevant Periods. The Group comprising the Company and itssubsidiaries resulting from the Corporate Reorganisation is regarded as a continuing entity. The Group was underthe control of Mr. Wu Kai Char, Mr. Zhang Fuzhu, Ms. Wong Wai Ling and Mr. Lui Hung Yen prior to and afterthe Corporate Reorganisation.

The Financial Information has been prepared as if the Company had been the holding company of theGroup throughout the Relevant Periods in accordance with Accounting Guideline 5 “Merger Accounting forCommon Control Combinations” issued by the HKICPA. The combined statements of comprehensive income,combined statements of changes in equity and combined statements of cash flows for the Relevant Periods, whichinclude the results, changes in equity and cash flows of the companies now comprising the Group, have beenprepared as if the current group structure had been in existence throughout the Relevant Periods, or since theirrespective dates of incorporation where this is a shorter period. The combined statements of financial position asat the respective reporting dates have been prepared to present the assets and liabilities of the companies nowcomprising the Group as if the current group structure had been in existence at those dates.

The Financial Information is presented in Hong Kong dollars (“HK$”), which is the same as the functionalcurrency of the Company. The choice of presentation currency is to better reflect the currency that mainlydetermines the economic effects of transactions, events and conditions of the Group.

2. APPLICATION OF HONG KONG FINANCIAL REPORTING STANDARDS

For the purpose of preparing and presenting the Financial Information for the Relevant Periods, the Grouphas throughout the Relevant Periods consistently adopted HKFRSs, Hong Kong Accounting Standards (“HKASs”),amendments and interpretations, which are effective for financial periods beginning on 1 April 2013.

The Group has not early applied the following new and revised HKFRSs, that have been issued by theHKICPA but are not yet effective, in the Financial Information:

HKFRS 7 and HKFRS 9 Amendments Mandatory Effective Date of HKFRS 9 and TransitionDisclosures2

HKFRS 9 Financial Instruments2

HKFRS 10, HKFRS 12 and HKAS 27(2011) Amendments

Amendments to HKFRS10, HKFRS 12 and HKAS 27 (2011) –Investment Entities1

HKAS 32 Amendments Amendments to HKAS 32 Financial Instruments: Presentation– Offsetting Financial Assets and Financial Liabilities1

HKAS 36 Amendments Amendments to HKAS 36 Impairment of Assets − RecoverableAmount Disclosures for Non-Financial Assets1


– I-11 –

HKAS 39 Amendments Amendments to HKAS 39 Financial Instruments: Recognitionand Measurement − Novation of Derivatives andContinuation of Hedge Accounting1

HK(IFRIC) – Int 21 Levies1

1 Effective for annual periods beginning on or after 1 January 20142 Effective for annual periods beginning on or after 1 January 2015

The Group is in the process of making an assessment of the impact of these new and revised HKFRSs uponinitial application but is not yet in a position to state whether these new and revised HKFRSs would have asignificant impact on its results of operations and financial position.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Financial Information has been prepared in accordance with HKFRSs issued by the HKICPA. Inaddition, the Financial Information includes applicable disclosures required by the Rules Governing the Listing ofSecurities on the GEM of the Stock Exchange (the “GEM Listing Rules”) and by the Hong Kong CompaniesOrdinance.

The Financial Information has been prepared under the historical cost convention.

Basis of consolidation

The Financial Information incorporates the financial statements of the Company and its subsidiariesfor the Relevant Periods. The financial statements of the subsidiaries are prepared for the same reportingperiod as the Company, using consistent accounting policies. As explained in Note 1 above, the acquisitionof subsidiaries under common control has been accounted for using the merger method of accounting.

All intra-group balances, transactions, unrealised gains and losses resulting from intra-grouptransactions and dividends are eliminated on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for anequity transaction.

Non-controlling interests represent the equity in a subsidiary not attributable, directly or indirectly, toa parent. Total comprehensive income within a subsidiary is attributed to the non-controlling interest even ifthat results in a deficit balance.

Merger accounting for common control combinations

The Financial Information incorporates the financial statement items of the combining entities orbusinesses in which the common control combination occurs as if they had been combined from the datewhen the combining entities or businesses first came under the control of the controlling party.

The net assets of the combining entities or businesses are consolidated using the existing book valuesfrom the controlling parties’ perspective. No amount is recognised in respect of goodwill or excess ofacquirer’s interest in the net fair value of acquiree’s identifiable assets, liabilities and contingent liabilitiesover cost at the time of common control combination, to the extent of the continuation of the controllingparty’s interest. The combined statements of comprehensive income include the results of each of thecombining entities or businesses from the earliest date presented or since the date when the combiningentities or businesses first came under the common control, where this is a shorter period, regardless of thedate of the common control combination.


– I-12 –

Subsidiaries

A subsidiary is an entity whose financial and operating policies the Company controls, directly orindirectly, so as to obtain benefits from its activities.

The results of subsidiaries are included in the Company’s income statement to the extent of dividendsreceived and receivable. The Company’s investments in subsidiaries are stated at cost less any impairmentlosses.

Related parties

A party is considered to be related to the Group if:

(a) the party is a person or a close member of that person’s family and that person

(i) has control or joint control over the Group;

(ii) has significant influence over the Group; or

(iii) is a member of the key management personnel of the Group or of a parent of the Group;

or

(b) the party is an entity where any of the following conditions applies:

(i) the entity and the Group are members of the same group;

(ii) one entity is an associate or joint venture of the other entity (or of a parent, subsidiaryor fellow subsidiary of the other entity);

(iii) the entity and the Group are joint ventures of the same third party;

(iv) one entity is a joint venture of a third entity and the other entity is an associate of thethird entity;

(v) the entity is a post-employment benefit plan for the benefit of employees of either theGroup or an entity related to the Group; and the sponsoring employers of thepost-employment benefit plan;

(vi) the entity is controlled or jointly controlled by a person identified in (a); and

(vii) a person identified in (a)(i) has significant influence over the entity or is a member ofthe key management personnel of the entity (or of a parent of the entity).

Property, plant and equipment and depreciation

Property, plant and equipment are stated at cost less accumulated depreciation and any impairmentlosses. The cost of an item of property, plant and equipment comprises its purchase price and any directlyattributable costs of bringing the asset to its working condition and location for its intended use.Expenditure incurred after items of property, plant and equipment have been put into operation, such asrepairs and maintenance, is normally charged to the income statement in the period in which it is incurred.In situations where the recognition criteria are satisfied, the expenditure for a major inspection is capitalisedin the carrying amount of the asset as a replacement. Where significant parts of property, plant andequipment are required to be replaced at intervals, the Group recognises such parts as individual assets withspecific useful lives and depreciates them accordingly.


– I-13 –

Depreciation is calculated on the straight-line basis to write off the cost of each item of property,plant and equipment to its residual value over its estimated useful life. The principal annual rates used forthis purpose are as follows:

Leasehold improvements Over the shorter of the lease terms and 6 years

Furniture and fixtures 3 years to 5 years

Catering and other equipment 3 years to 5 years

Motor vehicles 2 years

Where parts of an item of property, plant and equipment have different useful lives, the cost of thatitem is allocated on a reasonable basis among the parts and each part is depreciated separately.

Residual values, useful lives and the depreciation method are reviewed, and adjusted if appropriate,at least at each financial year end.

An item of property, plant and equipment and any significant part initially recognised is derecognisedupon disposal or when no future economic benefits are expected from its use or disposal. Any gain or losson disposal or retirement recognised in the income statement in the year the asset is derecognised is thedifference between the net sale proceeds and the carrying amount of the relevant asset.

Intangible assets (other than goodwill)

Intangible assets acquired separately are measured on initial recognition at cost. The cost ofintangible assets acquired in a business combination is the fair value at the date of acquisition. The usefullives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives aresubsequently amortised over the useful economic life and assessed for impairment whenever there is anindication that the intangible asset may be impaired. The amortisation period and the amortisation methodfor an intangible asset with a finite useful life are reviewed at least at end of each of the Relevant Periods.

Impairment of non-financial assets

Where an indication of impairment exists, or when annual impairment testing for an asset is required(other than inventories and financial assets), the asset’s recoverable amount is estimated. An asset’srecoverable amount is the higher of the asset’s or cash-generating unit’s value in use and its fair value lesscosts to sell, and is determined for an individual asset, unless the asset does not generate cash inflows thatare largely independent of those from other assets or groups of assets, in which case, the recoverableamount is determined for the cash-generating unit to which the asset belongs.

An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverableamount. In assessing value in use, the estimated future cash flows are discounted to their present valueusing a pre-tax discount rate that reflects current market assessments of the time value of money and therisks specific to the asset. An impairment loss is charged to the income statement in the period in which itarises.

An assessment is made at the end of each of the Relevant Periods as to whether there is anyindication that previously recognised impairment losses may no longer exist or may have decreased. If suchan indication exists, the recoverable amount is estimated. A previously recognised impairment loss of anasset is reversed only if there has been a change in the estimates used to determine the recoverable amountof that asset, but not to an amount higher than the carrying amount that would have been determined (net ofany depreciation) had no impairment loss been recognised for the asset in prior years. A reversal of such animpairment loss is credited to the income statement in the period in which it arises.

Leases

Leases that transfer substantially all the rewards and risks of ownership of assets to the Group, otherthan legal title, are accounted for as finance leases. At the inception of a finance lease, the cost of theleased asset is capitalised at the present value of the minimum lease payments and recorded together withthe obligation, excluding the interest element, to reflect the purchase and financing. Assets held undercapitalised finance leases, including prepaid land lease payments under finance leases, are included in


– I-14 –

property, plant and equipment, and depreciated over the shorter of the lease terms and the estimated usefullives of the assets. The finance costs of such leases are charged to the income statement so as to provide aconstant periodic rate of charge over the lease terms.

Assets acquired through hire purchase contracts of a financing nature are accounted for as financeleases, but are depreciated over their estimated useful lives.

Leases where substantially all the rewards and risks of ownership of assets remain with the lessor areaccounted for as operating leases. Where the Group is the lessee, rentals payable under operating leases netof any incentives received from the lessor are charged to the income statement on the straight-line basisover the lease terms.

When the lease payments cannot be allocated reliably between the land and buildings elements, theentire lease payments are included in the cost of the land and buildings as a finance lease in property, plantand equipment.

Other financial assets

Initial recognition and measurement

Financial assets within the scope of HKAS 39 are classified as financial assets at fair value throughprofit or loss, loans and receivables and available-for-sale financial investments, or as derivatives designatedas hedging instruments in an effective hedge, as appropriate. The Group determines the classification of itsfinancial assets at initial recognition. When financial assets are recognised initially, they are measured atfair value, plus transaction costs, except in the case of financial assets recorded at fair value through profitor loss.

All regular way purchases and sales of financial assets are recognised on the trade date, that is, thedate that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases orsales of financial assets that require delivery of assets within the period generally established by regulationor convention in the marketplace.

The Group’s financial assets include cash and bank balances, trade receivables, other receivables anddeposits, and amounts due from shareholders and related companies.

Subsequent measurement

The subsequent measurement of financial assets depends on their classification as follows:

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments thatare not quoted in an active market. After initial measurement, such assets are subsequently measured atamortised cost using the effective interest rate method less any allowance for impairment. Amortised cost iscalculated by taking into account any discount or premium on acquisition and includes fees or costs that arean integral part of the effective interest rate. The effective interest rate amortisation is included in financeincome in the income statement. The loss arising from impairment is recognised in the income statement infinance costs for loans and in other operating expenses for receivables.

Derecognition of financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similarfinancial assets) is derecognised when:

� the rights to receive cash flows from the asset have expired; or


– I-15 –

� the Group has transferred its rights to receive cash flows from the asset, or has assumed anobligation to pay the received cash flows in full without material delay to a third party under a“pass-through” arrangement; and either (a) the Group has transferred substantially all the risksand rewards of the asset, or (b) the Group has neither transferred nor retained substantially allthe risks and rewards of the asset, but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has entered into apass-through arrangement, it evaluates if and to what extent it has retained the risk and rewards ofownership of the asset. When it has neither transferred nor retained substantially all the risks and rewardsof the asset nor transferred control of the asset, the asset is recognised to the extent of the Group’scontinuing involvement in the asset. In that case, the Group also recognises an associated liability. Thetransferred asset and the associated liability are measured on a basis that reflects the rights and obligationsthat the Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured atthe lower of the original carrying amount of the asset and the maximum amount of consideration that theGroup could be required to repay.

Impairment of financial assets

The Group assesses at the end of each of the Relevant Periods whether there is any objectiveevidence that a financial asset or a group of financial assets is impaired. A financial asset or a group offinancial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as aresult of one or more events that occurred after the initial recognition of the asset (an incurred “loss event”)and that loss event has an impact on the estimated future cash flows of the financial asset or the group offinancial assets that can be reliably estimated. Evidence of impairment may include indications that a debtoror a group of debtors is experiencing significant financial difficulty, default or delinquency in interest orprincipal payments, the probability that they will enter bankruptcy or other financial reorganisation andobservable data indicating that there is a measurable decrease in the estimated future cash flows, such aschanges in arrears or economic conditions that correlate with defaults.

Financial assets carried at amortised cost

For financial assets carried at amortised cost, the Group first assesses individually whether objectiveevidence of impairment exists for financial assets that are individually significant, or collectively forfinancial assets that are not individually significant. If the Group determines that no objective evidence ofimpairment exists for an individually assessed financial asset, whether significant or not, it includes theasset in a group of financial assets with similar credit risk characteristics and collectively assesses them forimpairment. Assets that are individually assessed for impairment and for which an impairment loss is, orcontinues to be, recognised are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss has been incurred, the amount of the loss ismeasured as the difference between the asset’s carrying amount and the present value of estimated futurecash flows (excluding future credit losses that have not yet been incurred). The present value of theestimated future cash flows is discounted at the financial asset’s original effective interest rate (i.e., theeffective interest rate computed at initial recognition). If a loan has a variable interest rate, the discount ratefor measuring any impairment loss is the current effective interest rate.

The carrying amount of the asset is reduced through the use of an allowance account and the amountof the loss is recognised in the income statement. Interest income continues to be accrued on the reducedcarrying amount and is accrued using the rate of interest used to discount the future cash flows for thepurpose of measuring the impairment loss. Loans and receivables together with any associated allowanceare written off when there is no realistic prospect of future recovery.

If, in a subsequent period, the amount of the estimated impairment loss increases or decreasesbecause of an event occurring after the impairment was recognised, the previously recognised impairmentloss is increased or reduced by adjusting the allowance account. If a write-off is later recovered, therecovery is credited to the income statement.


– I-16 –

Impairment of intangible assets (other than goodwill)

The Group assesses whether there are any indicators of impairment for all intangible assets at the endof each of the Relevant Periods. Indefinite life intangible assets are tested for impairment annually and atother times when such an indicator exists. Other intangible assets are tested for impairment when there areindicators that the carrying amounts may not be recoverable. An impairment exists when the carrying valueof an asset or a cash-generating unit exceeds its recoverable amount, which is the higher of its fair valueless costs to sell and its value in use. The calculation of the fair value less costs to sell is based onavailable data from binding sales transactions in an arm’s length transaction of similar assets or observablemarket prices less incremental costs for disposing of the asset. When value in use calculations areundertaken, management must estimate the expected future cash flows from the asset or cash-generatingunit and choose a suitable discount rate in order to calculate the present value of those cash flows.

Financial liabilities

Initial recognition and measurement

Financial liabilities within the scope of HKAS 39 are classified as loans and borrowings. The Groupdetermines the classification of its financial liabilities at initial recognition.

All financial liabilities are recognised initially at fair value and in the case of loans and borrowings,plus directly attributable transaction costs.

The Group’s financial liabilities include trade and other payables, accruals, shareholders’ loans,amounts due to shareholders and related parties.

Subsequent measurement

Loans and borrowings

After initial recognition, interest-bearing bank and other borrowings are subsequently measured atamortised cost, using the effective interest rate method unless the effect of discounting would beimmaterial, in which case they are stated at cost. Gains and losses are recognised in the income statementwhen the liabilities are derecognised as well as through the effective interest rate amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and feesor costs that are an integral part of the effective interest rate. The effective interest rate amortisation isincluded in finance costs in the income statement.

Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled,or expires.

When an existing financial liability is replaced by another from the same lender on substantiallydifferent terms, or the terms of an existing liability are substantially modified, such an exchange ormodification is treated as a derecognition of the original liability and a recognition of a new liability, andthe difference between the respective carrying amounts is recognised in the income statement.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the statement offinancial position if, and only if, there is a currently enforceable legal right to offset the recognisedamounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilitiessimultaneously.


– I-17 –

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined on the first-in,first-out basis. Net realisable value is based on estimated selling prices less any estimated costs to beincurred to completion and disposal.

Cash and cash equivalents

For the purpose of the combined statements of cash flows, cash and cash equivalents comprise cashon hand and demand deposits, and short term highly liquid investments that are readily convertible intoknown amounts of cash, are subject to an insignificant risk of changes in value, and have a short maturityof generally within three months when acquired, less bank overdrafts which are repayable on demand andform an integral part of the Group’s cash management.

For the purpose of the combined statements of financial position, cash and cash equivalents comprisecash on hand and at banks which are not restricted as to use.

Income tax

Income tax comprises current and deferred tax. Income tax relating to items recognised outside profitor loss is recognised either in other comprehensive income or directly in equity.

Current tax assets and liabilities for the current and prior periods are measured at the amountexpected to be recovered from or paid to the taxation authorities, based on tax rates (and tax laws) thathave been enacted or substantively enacted by the end of each of the Relevant Periods, taking intoconsideration interpretations and practices prevailing in the countries in which the Group operates.

Deferred tax is provided, using the liability method, on all temporary differences at the end of eachof the Relevant Periods between the tax bases of assets and liabilities and their carrying amounts forfinancial reporting purposes.

Deferred tax liabilities are recognised for all taxable temporary differences, except:

� when the deferred tax liability arises from the initial recognition of an asset or liability in atransaction that is not a business combination and, at the time of the transaction, affects neitherthe accounting profit nor taxable profit or loss; and

� in respect of taxable temporary differences associated with investments in subsidiaries andjoint ventures, when the timing of the reversal of the temporary differences can be controlledand it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, the carryforward ofunused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it isprobable that taxable profit will be available against which the deductible temporary differences, thecarryforward of unused tax credits and unused tax losses can be utilised, except:

� when the deferred tax asset relating to the deductible temporary differences arises from theinitial recognition of an asset or liability in a transaction that is not a business combinationand, at the time of the transaction, affects neither the accounting profit nor taxable profit orloss; and

� in respect of deductible temporary differences associated with investments in subsidiaries andjoint ventures, deferred tax assets are only recognised to the extent that it is probable that thetemporary differences will reverse in the foreseeable future and taxable profit will be availableagainst which the temporary differences can be utilised.


– I-18 –

The carrying amount of deferred tax assets is reviewed at the end of each of the Relevant Periodsand reduced to the extent that it is no longer probable that sufficient taxable profit will be available toallow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed atthe end of each of the Relevant Periods and are recognised to the extent that it has become probable thatsufficient taxable profit will be available to allow all or part of the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to theperiod when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have beenenacted or substantively enacted by the end of each of the Relevant Periods.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set offcurrent tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity andthe same taxation authority.

Revenue recognition

Revenue is recognised when it is probable that the economic benefits will flow to the Group andwhen the revenue can be measured reliably, on the following bases:

(a) from restaurant operations, when catering services have been provided to the customers.Payments that are related to services not yet rendered are deferred and recognised as deferredincome in liability. Upon expiry of prepaid amounts on unused coupons or cash vouchers, thecorresponding deferred income is fully recognised as forfeited income; and

(b) interest income, on an accrual basis using the effective interest rate method by applying therate that exactly discounts the estimated future cash receipts through the expected life of thefinancial instrument or a shorter period, when appropriate, to the net carrying amount of thefinancial asset.

Other employee benefits

Retirement benefit schemes

The Group operates a defined contribution Mandatory Provident Fund retirement benefit scheme (the“MPF Scheme”) under the Mandatory Provident Fund Schemes Ordinance for all of its Hong Kongemployees. Contributions are made based on a percentage of the employees’ basic salaries and are chargedto the income statement as they become payable in accordance with the rules of the MPF Scheme. Theassets of the MPF Scheme are held separately from those of the Group in an independently administeredfund. The Group’s employer contributions vest fully with the employees when contributed into the MPFScheme.

Borrowing costs

Borrowing costs directly attributable to the acquisition, that is, assets that necessarily take asubstantial period of time to get ready for their intended use or sale, are capitalised as part of the cost ofthose assets. The capitalisation of such borrowing costs ceases when the assets are substantially ready fortheir intended use or sale. Investment income earned on the temporary investment of specific borrowingspending their expenditure on qualifying assets is deducted from the borrowing costs capitalised. All otherborrowing costs are expensed in the period in which they are incurred. Borrowing costs consist of interestand other costs that an entity incurs in connection with the borrowing of funds.

Dividends

Interim dividends proposed by the directors are classified as a separate allocation of retained profitswithin the equity section of the statement of financial position, until they have been approved by theshareholders in a general meeting. When these dividends have been approved by the shareholders anddeclared, they are recognised as a liability.


– I-19 –

Foreign currencies

The Financial Information is presented in HK$, which is the Company’s functional and presentationcurrency. Each entity in the Group determines its own functional currency and items included in thefinancial statements of each entity are measured using that functional currency. Foreign currencytransactions recorded by the entities in the Group are initially recorded using their respective functionalcurrency rates ruling at the dates of the transactions. Monetary assets and liabilities denominated in foreigncurrencies are retranslated at the functional currency rates of exchange ruling at the end of each of theRelevant Periods. All differences arising on settlement or translation of monetary items are taken to theincome statement.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translatedusing the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair valuein a foreign currency are translated using the exchange rates at the dates when the fair value wasdetermined. The gain or loss arising on retranslation of a non-monetary item is treated in line with therecognition of the gain or loss on change in fair value of the item (i.e., translation differences on itemwhose fair value gain or loss is recognised in other comprehensive income or profit or loss is alsorecognised in other comprehensive income or profit or loss, respectively).

The functional currencies are currencies other than the Hong Kong dollars. As at the end of each ofthe Relevant Periods, the assets and liabilities of foreign operation are translated into the presentationcurrency of the Company at the exchange rates ruling at the end of the reporting period and their incomestatements are translated into Hong Kong dollars at the weighted average exchange rates for the year. Theresulting exchange differences are recognised in other comprehensive income and accumulated in theexchange fluctuation reserve. On disposal of a foreign operation, the component of other comprehensiveincome relating to that particular foreign operation is recognised in the income statement.

For the purpose of the combined statements of cash flows, the cash flows of overseas subsidiaries aretranslated into Hong Kong dollars at the exchange rates ruling at the dates of the cash flows. Frequentlyrecurring cash flows of overseas subsidiaries which arise throughout the year are translated into HK$ at theweighted average exchange rates for each of the Relevant Periods.

Provisions

Provisions are recognised when: the Group has a present legal or constructive obligation as a resultof past events; it is probable that an outflow of resources will be required to settle the obligation; and theamount has been reliably estimated. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required insettlement is determined by considering the class of obligations as a whole. A provision is recognised evenif the likelihood of an outflow with respect to any one item included in the same class of obligations maybe small.

Provisions are measured at the present value of the expenditures expected to be required to settle theobligation.

4. SIGNIFICANT ACCOUNTING ESTIMATES

The preparation of the Financial Information requires management to make estimates and assumptions thataffect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingentliabilities, at the end of each of the Relevant Periods. However, uncertainty about these assumptions and estimatescould result in outcomes that could require a material adjustment to the carrying amounts of the assets orliabilities affected in the future.

Estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the endof each of the Relevant Periods, that have a significant risk of causing a material adjustment to the carryingamounts of assets and liabilities within the next financial year, are discussed below.


– I-20 –

Useful lives and residual values of items of property, plant and equipment

In determining the useful lives and residual values of items of property, plant and equipment, theGroup has to consider various factors, such as technical or commercial obsolescence arising from changesor improvements in the production and provision of services, or from a change in the market demand forthe product or service output of the asset, expected usage of the asset, expected physical wear and tear, careand maintenance of the asset, and legal or similar limits on the use of the asset. The estimation of theuseful life of the asset is based on the experience of the Group with similar assets that are used in a similarway. Additional depreciation is made if the estimated useful lives and/or residual values of items ofproperty, plant and equipment are different from previous estimation. Useful lives and residual values arereviewed at the end of each reporting period based on changes in circumstances.

Deferred tax assets

Deferred tax assets are recognised for all unused tax losses to the extent that it is probable thattaxable profits will be available against which the losses can be utilised. Significant management judgementis required to determine the amount of deferred tax assets that can be recognised, based upon the likelytiming and level of future taxable profits together with future tax planning strategies. The carrying amountsof deferred tax assets relating to recognised tax losses at 31 March 2012 and 2013 and 30 June 2013 wereapproximately HK$46,000, nil and nil, respectively.

Provision for reinstatement costs

Provision for reinstatement costs is estimated and reassessed at the end of each reporting period withreference to the latest available quotation from independent contractors. Estimation based on current marketinformation may vary over time and could differ from the actual reinstatement cost upon closures orrelocation of existing premises occupied by the Group.

5. SEGMENT INFORMATION AND REVENUE

The directors of the Company review the Group’s internal financial reporting and other information andalso obtain other relevant external information in order to assess performance and allocate resources and operatingsegment is identified with reference to these.

The directors of the Company consider that the business of the Group is organised in one operating segmentwhich is operation and management of restaurants and cake shops in Hong Kong. Additional disclosure in relationto segment information is not presented as the directors assess the performance of the only operating segmentidentified based on the consistent information as disclosed in the Financial Information.

The total net segment income is equivalent to total comprehensive income for the Relevant Periods asshown in the combined statements of comprehensive income and the total segment assets and total segmentliabilities are equivalent to total assets and total liabilities as shown in the combined statements of financialposition.

Details of interest income, depreciation and amortisation in relation to the operating segment are disclosedin Notes 6 and 8, respectively.

The Company is domiciled in the Cayman Islands with the Group’s major operations located in Hong Kong.Substantially all of the Group’s revenues from external customers during the Relevant Periods are derived fromHong Kong, the place of domicile of the Group’s operating subsidiaries. All the non-current assets of the Groupare located in Hong Kong.

As no revenue derived from sales to a single customer of the Group has individually accounted for 10% ofthe Group’s total revenue during the Relevant Periods, no information about major customers is presented.


– I-21 –

Revenue, which is also the Group’s turnover, represents amounts received and receivable from the operationof restaurants, net of sales discounts. An analysis of revenue is as follows:


2012 2013 2012 2013HK$’000 HK$’000 HK$’000 HK$’000

(Unaudited)

RevenueRestaurant operations 260,437 246,072 57,430 62,165

6. OTHER INCOME AND GAINS


2012 2013 2012 2013HK$’000 HK$’000 HK$’000 HK$’000

(Unaudited)

Forfeited income – 508 29 108Management fee income 10 – – –Membership income 80 44 22 –Sponsorship income 414 151 41 123Compensation from insurance claims – 188 188 –Others 114 274 31 31

618 1,165 311 262

7. FINANCE COSTS


2012 2013 2012 2013HK$’000 HK$’000 HK$’000 HK$’000

(Unaudited)

Interest on extended rental payments 2 4 1 –


– I-22 –

8. PROFIT BEFORE TAX

The Group’s profit before tax is arrived at after charging:


2012 2013 2012 2013HK$’000 HK$’000 HK$’000 HK$’000

(Unaudited)

Cost of inventories sold 75,093 71,286 16,636 17,683Amortisation of intangible assets 347 306 77 77Auditors’ remuneration 246 128 126 170Depreciation 16,292 13,930 3,829 3,128Lease payments under operating lease in

respect of land and buildings:Minimum lease payments 40,169 43,114 10,261 11,298Contingent rents 4,105 2,649 566 813

44,274 45,763 10,827 12,111

Employee benefits expenses (excludingdirectors’ remuneration (note 9)):Salaries, wages and other benefits 64,913 65,535 16,470 16,544Retirement benefit scheme contributions 1,941 2,094 525 473

66,854 67,629 16,995 17,017

Write-off of items of property, plant andequipment 69 179 – –

Listing expenses – – – 1,459Foreign exchange differences, net 6 3 1 5

9. DIRECTORS’ AND CHIEF EXECUTIVE’S REMUNERATION

Directors’ remuneration for the Relevant Periods, disclosed pursuant to the GEM Listing Rules and Section161 of the Hong Kong Companies Ordinance, is as follows:


2012 2013 2012 2013HK$’000 HK$’000 HK$’000 HK$’000

(Unaudited)

Fees – – – –Other emoluments:

Salaries, allowances and benefits in kind 2,233 2,040 511 195Discretionary bonuses 65 65 – –Retirement benefit scheme contributions – – – –

2,298 2,105 511 195


– I-23 –

(a) Independent non-executive directors

The fees paid to independent non-executive directors during the Relevant Periods were as follows:

Fees

Salaries,allowances

and benefitsin kind

Discretionarybonuses

Retirementbenefitscheme

contributions TotalHK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Year ended 31 March 2012Mr. Law Yiu Sing – – – – –Ms. Yue Chung Sze Joyce – – – – –Mr. Chan Wai Hung

Clarence – – – – –

– – – – –

Year ended 31 March 2013Mr. Law Yiu Sing – – – – –Ms. Yue Chung Sze Joyce – – – – –Mr. Chan Wai Hung


– – – – –

Three months ended30 June 2013

Mr. Law Yiu Sing – – – – –Ms. Yue Chung Sze Joyce – – – – –Mr. Chan Wai Hung


– – – – –

Three months ended30 June 2012(Unaudited)

Mr. Law Yiu Sing – – – – –Ms. Yue Chung Sze Joyce – – – – –Mr. Chan Wai Hung


– – – – –


– I-24 –

(b) Non-executive director

Fees

Salaries,allowances

and benefitsin kind




Year ended 31 March 2012Mr. Pan Chik – – – – –

– – – – –

Year ended 31 March 2013Mr. Pan Chik – – – – –

– – – – –


Mr. Pan Chik – – – – –

– – – – –


Mr. Pan Chik – – – – –

– – – – –


– I-25 –

(c) Executive directors

Fees

Salaries,allowances

and benefitsin kind




Year ended 31 March 2012Mr. Wu Kai Char – 1,556 50 – 1,606Ms. Wong Wai Ling

(Chief Executive Officer) – 497 – – 497Mr. Lui Hung Yen – 180 15 – 195

– 2,233 65 – 2,298

Year ended 31 March 2013Mr. Wu Kai Char – 1,338 50 – 1,388Ms. Wong Wai Ling

(Chief Executive Officer) – 522 – – 522Mr. Lui Hung Yen – 180 15 – 195

– 2,040 65 – 2,105


Mr. Wu Kai Char – 150 – – 150Ms. Wong Wai Ling

(Chief Executive Officer) – – – – –Mr. Lui Hung Yen – 45 – – 45

– 195 – – 195


Mr. Wu Kai Char – 335 – – 335Ms. Wong Wai Ling

(Chief Executive Officer) – 131 – – 131Mr. Lui Hung Yen – 45 – – 45

– 511 – – 511

There was no arrangement under which a director waived or agreed to waive any remunerationduring the Relevant Periods.

During the Relevant Periods, no remuneration was paid by the Group to the directors as aninducement to join or upon joining the Group or as compensation for loss of office.


– I-26 –

10. FIVE HIGHEST PAID INDIVIDUALS

1, 1, 1 and 1 of the five highest paid individuals was a director of the Company for the years ended 31March 2012 and 2013 and the three months ended 30 June 2012 and 2013, respectively.

Details of the remuneration of the remaining non-director, highest paid individuals for each of the RelevantPeriods are analysed as follows:


30 June2012 2013 2012 2013


Salaries, allowances and benefits in kind 3,761 3,608 810 699Discretionary bonuses 205 175 – –Retirement benefit scheme contributions 36 15 3 8

4,002 3,798 813 707

The number of the non-director, highest paid individuals whose remuneration fell within the followingbands is as follows:

Number of individuals


30 June2012 2013 2012 2013

(Unaudited)

Nil to HK$1,000,000 2 2 4 4HK$1,000,001 to HK$1,500,000 2 2 – –

4 4 4 4

During the Relevant Periods, no remuneration was paid by the Group to any of the five highest paidindividuals as an inducement to join or upon joining the Group or as compensation for loss of office.

11. INCOME TAX EXPENSE

Hong Kong profits tax has been provided on the estimated assessable profits arising in Hong Kong at a rateof 16.5% during the Relevant Periods.


30 June2012 2013 2012 2013


CurrentCharge for the year 4,074 3,830 423 987

Deferred tax (note 24) (165) 6 6 –

Total tax charge for the year/period 3,909 3,836 429 987


– I-27 –

The income tax on the Group’s profit before tax differs from the theoretical amount that would arise usingthe Hong Kong profits tax rate as follows:


30 June2012 2013 2012 2013


Profit before tax 21,024 15,507 541 2,889

Tax at the statutory tax rates 3,469 2,559 89 477Expenses not deductible for tax 161 109 20 292Tax effect of temporary differences not

recognised 519 1,289 503 235Over-provision in current years 96 109 8 19Tax losses for which no deferred tax was

recognised – 36 − −Tax concession granted by local authority (54) – − −Utilisation of tax losses previously not

recognised (282) (266) (191) (36)

Tax charge at the Group’s effective rates 3,909 3,836 429 987

12. DIVIDENDS


30 June2012 2013 2012 2013


Interim dividend 7,900 12,600 2,900 –

No dividends have been paid or declared by the Company since its incorporation. The above amountsrepresented the dividends paid by the respective subsidiaries to their then equity holders prior to the CorporateReorganisation.

The rate of dividend and the number of shares ranking for dividends have not been presented as suchinformation is not meaningful having regard to the purpose of this report.

13. EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THECOMPANY

Earnings per share information is not presented as its inclusion, for the purpose of this report, is notconsidered meaningful due to the Corporate Reorganisation and the presentation of the results of the Group for theRelevant Periods as disclosed in note 1 above.


– I-28 –

14. PROPERTY, PLANT AND EQUIPMENT

Leaseholdimprovements

Furnitureand fixtures

Cateringand other

equipmentMotor

vehicles TotalHK$’000 HK$’000 HK$’000 HK$’000 HK$’000

31 March 2012At 1 April 2011:Cost 49,941 6,578 19,734 – 76,253Accumulated depreciation (15,647) (1,781) (7,133) – (24,561)

Net carrying amount 34,294 4,797 12,601 – 51,692

At 1 April 2011, net ofaccumulated depreciation 34,294 4,797 12,601 – 51,692

Additions 3,693 561 1,808 – 6,062Write-off (11) (2) (56) – (69)Depreciation provided

during the year (11,682) (1,265) (3,345) – (16,292)

At 31 March 2012, net ofaccumulated depreciation 26,294 4,091 11,008 – 41,393

At 31 March 2012:Cost 53,565 7,106 21,358 – 82,029Accumulated depreciation (27,271) (3,015) (10,350) – (40,636)


31 March 2013At 31 March 2012 and

1 April 2012:Cost 53,565 7,106 21,358 – 82,029Accumulated depreciation (27,271) (3,015) (10,350) – (40,636)



Additions 2,910 383 732 – 4,025Write-off – (179) – – (179)Depreciation provided

during the year (9,386) (1,242) (3,302) – (13,930)

At 31 March 2013, net ofaccumulated depreciation 19,818 3,053 8,438 – 31,309

At 31 March 2013:Cost 56,475 7,199 22,034 – 85,708Accumulated depreciation (36,657) (4,146) (13,596) – (54,399)



– I-29 –

Leaseholdimprovements

Furnitureand fixtures

Cateringand other

equipmentMotor

vehicles TotalHK$’000 HK$’000 HK$’000 HK$’000 HK$’000

30 June 2013At 31 March 2013 and

1 April 2013:Cost 56,475 7,199 22,034 – 85,708Accumulated depreciation (36,657) (4,146) (13,596) – (54,399)



Additions – 21 175 170 366Depreciation provided

during the period (2,033) (287) (794) (14) (3,128)

At 30 June 2013, net ofaccumulated depreciation 17,785 2,787 7,819 156 28,547

At 30 June 2013:Cost 56,475 7,220 22,209 170 86,074Accumulated depreciation (38,690) (4,433) (14,390) (14) (57,527)

Net carrying amount 17,785 2,787 7,819 156 28,547

15. INTANGIBLE ASSETS

Franchisecost

HK$’000

31 March 2012At 1 April 2011:Cost 1,726Accumulated amortisation (111)

Net carrying amount 1,615

At 1 April 2011, net of accumulated amortisation 1,615Amortisation provided during the year (347)

At 31 March 2012, net of accumulated amortisation 1,268

At 31 March 2012:Cost 1,726Accumulated amortisation (458)


31 March 2013At 31 March 2012 and 1 April 2012:Cost 1,726Accumulated amortisation (458)



– I-30 –

Franchisecost

HK$’000

At 1 April 2012, net of accumulated amortisation 1,268Amortisation provided during the year (306)

At 31 March 2013, net of accumulated amortisation 962

At 31 March 2013:Cost 1,726Accumulated amortisation (764)

Net carrying amount 962

30 June 2013At 31 March 2013 and 1 April 2013:Cost 1,726Accumulated amortisation (764)


At 1 April 2013, net of accumulated amortisation 962Amortisation provided during the period (77)

At 30 June 2013, net of accumulated amortisation 885

At 30 June 2013:Cost 1,726Accumulated amortisation (841)


16. INVENTORIES

As at 31 March As at 30 June2012 2013 2013

HK$’000 HK$’000 HK$’000

Food and beverage, and other operating items for restaurantoperations 5,344 4,590 4,156

17. TRADE RECEIVABLES


HK$’000 HK$’000 HK$’000

Trade receivables 2,836 3,729 2,878

The Group’s trading terms with its customers are mainly on cash, credit card and smart card settlement. TheGroup seeks to maintain strict control over its outstanding receivables to minimise credit risk. Trade receivablesare non-interest-bearing.


– I-31 –

An aged analysis of the trade receivables, based on the invoice date, is as follows:


HK$’000 HK$’000 HK$’000

Within 1 month 2,092 3,508 2,5371 to 3 months 182 125 245Over 3 months 562 96 96

2,836 3,729 2,878

The trade receivables included in the above aging analysis are considered not impaired as there is no recenthistory of default. As at 31 March 2012 and 2013 and 30 June 2013, no trade receivables were past due orimpaired. No provision for impairment of trade receivables was made as at 31 March 2012 and 2013 and 30 June2013.

18. PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES


HK$’000 HK$’000 HK$’000

Prepayments 857 1,732 2,096Prepaid listing expenses – – 310Rental deposits 13,107 15,827 17,012Utility and other deposits 1,527 1,664 1,660Other receivables 128 90 131

15,619 19,313 21,029Current portion included in prepayments, deposits and other

receivables (7,523) (15,574) (11,334)

Non-current portion included in rental deposits 8,096 3,739 9,875

At 31 March 2012 and 2013 and 30 June 2013, the balances of deposits and other receivables were neitherpast due nor impaired. Financial assets included in the above balances relate to receivables for which there was norecent history of default.


– I-32 –

19. BALANCES WITH RELATED PARTIES

An analysis of the amounts due from related parties is as follows:

31 March2012

Maximumamount

outstandingduring the

year 1 April 2011HK$’000 HK$’000 HK$’000

Amounts due from related partiesMr. Wu Kai Char (note i) 311 569 114Mr. Zhang Fuzhu (note i) 1,163 1,444 32Mr. Lui Hung Yen (note i) 21 21 –Ms. Wong Wai Ling (note i) 804 804 11Bumper World Limited (note ii) 7,000 7,000 4,100Fully Hope Holdings Limited (note ii) 9 9 9JJH Company Limited (note iii) – 84 42PHO24 (CWB) Limited (note iv) – 26 26Oriental Island Limited (note v) – 1,179 1,090Rich Base Limited (note xiii) 31 31 –Well-in Silver Article Company Limited (note vi) 636 636 –

9,975 5,424

31 March2013

Maximumamount


year1 April

2012HK$’000 HK$’000 HK$’000

Amounts due from related partiesMr. Wu Kai Char (note i) 496 554 311Mr. Zhang Fuzhu (note i) 483 1,447 1,163Mr. Lui Hung Yen (note i) 23 58 21Ms. Wong Wai Ling (note i) 81 804 804Bumper World Limited (note ii) 5,188 7,000 7,000Holy Best Limited (note vii) 15 15 –Oriental Island Limited (note v) 45 45 –Good View International Investment Limited (note viii) 119 119 –FLC Holdings Limited (note ix) 25 25 –Fully Hope Holdings Limited (note ii) – 9 9JC & Associates Limited (note x) 2 2 –Rich Base Limited (note xiii) 31 31 31Great Lead Inc Limited (note xi) 8 8 –JC Group Holding Limited (note xii) 10 10 –Way Full Limited (note xi) 8 8 –Well-in Silver Article Company Limited (note ii) 1,273 1,273 636

7,807 9,975


– I-33 –

30 June2013

Maximumamount


period1 April

2013HK$’000 HK$’000 HK$’000

Amounts due from related partiesMr. Wu Kai Char (note i) 763 941 496Mr. Zhang Fuzhu (note i) 652 652 483Mr. Lui Hung Yen (note i) 47 50 23Ms. Wong Wai Ling (note i) 166 166 81Victory Stand International Limited (note xiv) 568 568 –Dragon Flame Holdings Limited (note xv) 190 190 –Bumper World Limited (note ii) 63 5,188 5,188Holy Best Limited (note vii) 15 15 15Oriental Island Limited (note v) 39 45 45Good View International Investment Limited (note viii) 119 119 119FLC Holdings Limited (note ix) 25 25 25JC & Associates Limited (note x) – 2 2Rich Base Limited (note xiii) 31 31 31Great Lead Inc Limited (note xi) 8 8 8JC Group Holding Limited (note xii) 10 10 10Way Full Limited (note xi) 8 8 8Well-in Silver Article Company Limited (note ii) 154 1,375 1,273

2,858 7,807

An analysis of the amounts due to related parties is as follows:


HK$’000 HK$’000 HK$’000

Amounts due to related partiesMr. Wu Kai Char (note i) 908 1,049 –FLC Holdings Limited (note ix) 2,605 3,287 996Oriental Island Limited (note v) 10,407 9,938 –Good View International Investment Limited (note viii) 20,958 17,498 225Super Delights Limited (note v) – 945 2,394Holy Best Limited (note vii) 849 1,234 798JJH Company Limited (note iii) 10 – –JC & Associates Limited (note x) – – 42PHO24 (CWB) Limited (note iv) 248 12 12

35,985 33,963 4,467

Notes:

(i) Controlling Shareholders of the Company

(ii) Controlled by Mr. Wu Kai Char and Mr. Zhang Fuzhu, Controlling Shareholders of the Company

(iii) Controlled by Mr. Wu Kai Char and indirectly controlled by Ms. Wong Wai Ling, ControllingShareholders of the Company


– I-34 –

(iv) Indirectly controlled by Mr. Wu Kai Char and Mr. Zhang Fuzhu, Controlling Shareholders of theCompany

(v) Controlled by Mr. Wu Kai Char, Controlling Shareholder of the Company

(vi) Controlled by Mr. Wu Kai Char, Controlling Shareholder of the Company, and his spouse

(vii) Controlled by Mr. Lui Hung Yen, Controlling Shareholder of the Company, and his spouse

(viii) Controlled by Mr. Zhang Fuzhu, Controlling Shareholder of the Company

(ix) Controlled by Ms. Wong Wai Ling, Controlling Shareholder of the Company

(x) Controlled by Mr. Wu Kai Char and Ms. Wong Wai Ling, Controlling Shareholders of the Company

(xi) Indirectly controlled by Mr. Wu Kai Char, Controlling Shareholder of the Company

(xii) Indirectly controlled by Mr. Wu Kai Char, Mr. Lui Hung Yen and Ms. Wong Wai Ling, ControllingShareholders of the Company

(xiii) Controlled by Mr. Wu Kai Char and indirectly controlled by Mr. Zhang Fuzhu, ControllingShareholders of the Company

(xiv) A holding company of the Company

(xv) Wholly-owned by Mr. Pan Chik, non-executive director of the Company

Balances with related parties are unsecured, interest-free and have no fixed terms of repayment.

None of the amounts due from related parties is either past due or impaired. The financial assets included inthe above balances related to receivables for which there was no recent history of default.

All amounts due from/to related parties will be fully settled before Listing.

20. CASH AND CASH EQUIVALENTS


HK$’000 HK$’000 HK$’000

Cash and bank balances 11,159 15,352 28,421

Cash and cash equivalents denominated in:HK$ 10,919 15,183 28,255United States dollars (“US$”) 221 150 150Japanese Yen (“JPY”) 19 19 16

11,159 15,352 28,421

Cash at banks earn interest at floating rates based on daily bank deposit rates. The bank balances aredeposited with creditworthy banks with no recent history of default.


– I-35 –

21. TRADE PAYABLES

An aged analysis of the trade payables as at the end of each of the Relevant Periods, based on the invoicedate, is as follows:


HK$’000 HK$’000 HK$’000

Within 1 month 5,564 5,833 5,113Over 1 month but less than 2 months 108 25 58Over 2 months 68 17 33

5,740 5,875 5,204

The trade payables are non-interest-bearing and generally have payment terms of 30 – 45 days.

Included in the Group’s trade payables as at 31 March 2012 and 2013 and 30 June 2013 is a balance ofapproximately HK$405,000, HK$286,000 and HK$232,000 respectively payable to JC & Associates Limited. Therelevant trade payable is repayable on similar credit terms to those offered by the major suppliers of the Group.

22. OTHER PAYABLES AND ACCRUALS


HK$’000 HK$’000 HK$’000

Deferred income 478 300 178Other payables 626 351 303Accruals 6,912 6,972 7,971Provision for estimated fine on water pollution 588 588 588Customer deposits 336 292 944

8,940 8,503 9,984

Other payables are non-interest-bearing.

23. BALANCES WITH NON-CONTROLLING SHAREHOLDERS


HK$’000 HK$’000 HK$’000

Amounts due from non-controlling shareholders ofsubsidiaries 1,580 611 348

Amounts due to non-controlling shareholders ofsubsidiaries 2,234 1,108 1,108

Balances with non-controlling shareholders of subsidiaries are unsecured, interest-free and have no fixedterms of repayment. The amounts due from non-controlling shareholders of subsidiaries are neither past due norimpaired.

All amounts due from non-controlling shareholders of subsidiaries will be fully settled before Listing.


– I-36 –

On 3 July 2013, the Group and the non-controlling shareholders of the subsidiaries have entered intolong-term loan agreements, pursuant to which all the amounts due to non-controlling shareholders are due afterone year from the date of the long-term loan agreements.

24. DEFERRED TAX

The movements in deferred tax assets and liabilities during the Relevant Periods are as follows:

Deferred tax assets

Depreciation inexcess of related

depreciationallowance

Losses availablefor offsetting

against futuretaxable profits Total

HK$’000 HK$’000 HK$’000

At 1 April 2011 7 220 227Credited/(charged) to the combined

income statement during the year(note 11) 87 (174) (87)

At 31 March 2012 and 1 April 2012 94 46 140Charged to the combined income

statement during the year (note 11) (94) (46) (140)

At 31 March 2013 and 1 April 2013 and30 June 2013 – – –

Deferred tax liabilities

Depreciationallowance

in excess ofrelated

depreciationHK$’000

At 1 April 2011 386Deferred tax credited to the combined income statement during

the year (note 11) (252)

At 31 March 2012 and 1 April 2012 134Deferred tax credited to the combined income statement during the year

(note 11) (134)

At 31 March 2013 and 1 April 2013 and 30 June 2013 –

Certain subsidiaries of the Group have tax losses arising in Hong Kong in total of approximatelyHK$1,614,000, HK$219,000 and Nil as at 31 March 2012 and 2013 and 30 June 2013, respectively, that areavailable indefinitely for offsetting against their future taxable profits of those companies in which the lossesarose. Deferred tax assets have not been recognised in respect of these losses as it is not considered probable thattaxable profits will be available against which the tax losses can be utilised.

There are no income tax consequences attaching to the payment of dividends by the Company to itsshareholders.


– I-37 –

25. ISSUED CAPITAL

For the purpose of the preparation of the combined statements of financial position, the balance of issuedcapital at 31 March 2012 and 2013 represents the aggregate of the paid up share capital of the subsidiariescomprising the Group held by Mr. Wu Kai Char, Mr. Zhang Fuzhu, Ms. Wong Wai Ling and Mr. Lui Hung Yen,the Controlling Shareholders, prior to the Corporate Reorganisation. The balance of issued capital at 30 June 2013represents the paid up share capital of Glory Kind, the holding company of the subsidiaries comprising the Group,prior to the Corporate Reorganisation.

The Company was incorporated in the Cayman Islands as an exempted company with limited liability underthe Companies Law of the Cayman Islands on 21 June 2013 with an initial authorised share capital ofHK$380,000 divided into 38,000,000 ordinary shares of HK$0.01 each and one nil-paid share was issuedthereafter. On 2 November 2013, the authorised share capital of the Company was increased from HK$380,000 toHK$20,000,000 by the creation of an additional of 1,962,000,000 ordinary shares of HK$0.01 each, each rankingpari passu with the shares then in issue in all respects.

26. RESERVES

(a) Group

The amounts of the Group’s reserves and the movements therein for each of the Relevant Periods arepresented in the combined statements of changes in equity of this report.

(b) Other reserves

The other reserves represent the reserve arising pursuant to the Group’s reorganisation.

27. RELATED PARTY TRANSACTIONS

(i) In addition to the transactions and balances detailed elsewhere in this report, the Group had thefollowing material transactions with related parties during the Relevant Periods:


30 June2012 2013 2012 2013


JC & Associates Limited– purchase of food 7,462 7,282 1,643 1,091

R & C Corporate Services Limited– corporate service fee 395 281 95 185

Rich Base Limited– franchise fees 621 640 146 171

W. L. Wong & Co– corporate service fee 240 240 60 60

Well-In Hotel Supplies Company Limited– management fee 701 – – –– purchase of property, plant and

equipment 1,208 127 – –– purchase of kitchen utensils 1,316 620 246 57– property rental & related expenses 811 920 230 233– administrative expenses 252 556 137 142


– I-38 –

The transactions were conducted at terms and conditions mutually agreed between the relevantparties. The Directors are of the opinion that those related party transactions were conducted in theordinary course of business of the Group.

Unless otherwise stated, all of the above related parties are controlled by the ControllingShareholders.

(ii) Compensation of key management personnel of the Group, including directors’ remuneration asdisclosed in note 9 to the Financial Information, is as follows:


30 June2012 2013 2012 2013


Short term employee benefits 4,956 4,518 976 807Post-employment benefits 36 44 8 11

4,992 4,562 984 818

28. MAJOR NON-CASH TRANSACTIONS

(i) On 22 May 2013, amounts due to related parties by the Group of approximately HK$26,462,000 werecapitalised by allotting and issuing a total of 9,106 shares in Victory Stand International Limited tothe Controlling Shareholders. Please refer to the section headed “History, Development andReorganisation – Loan Capitalisation Issue” to the Prospectus.

29. OPERATING LEASE COMMITMENTS

The Group leases certain of its restaurants, office premises and warehouses under operating leasearrangements. Leases for these properties are negotiated for terms ranging from one to three years.

As at the end of each of the Relevant Periods, the Group had total future minimum lease payments undernon-cancellable operating leases falling due as follows:


HK$’000 HK$’000 HK$’000

Within one year 32,469 30,161 32,309In the second to fifth years, inclusive 13,932 22,438 29,767Beyond five years – – –

46,401 52,599 62,076

In addition, the operating lease rentals for certain restaurants are based on the higher of a fixed rental andcontingent rent based on the revenue of the restaurants pursuant to the terms and conditions as set out in therespective tenancy agreements. As the future revenue of the restaurants could not be reliably determined, theminimum lease commitments are based on the fixed rental.


– I-39 –

30. COMMITMENTS

In addition to the operating lease commitments detailed in note 29 above, the Group had the followingcapital commitments at the end of each of the Relevant Periods.


HK$’000 HK$’000 HK$’000

Contracted, but not provided for leasehold improvement 215 35 35

31. FINANCIAL INSTRUMENTS BY CATEGORY

As at the end of each of the Relevant Periods, all the financial assets and liabilities of the Group wereloans and receivables and financial liabilities at amortised cost, respectively.

32. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group’s principal financial instruments comprise cash and cash equivalents and advances from relatedparties and non-controlling shareholders. The Group has various other financial assets and liabilities such as tradereceivables, deposits and other receivables, trade payables, other payables and accruals and balances withnon-controlling shareholders and related parties.

The main risks arising from the Group’s financial instruments are credit risk, interest rate risk, foreigncurrency risk and liquidity risk. The Directors review and agree policies for managing each of these risks and theyare summarised below.

Credit risk

The Group trades with a large number of diversified customers and trading terms are mainly on cash,credit card and smart card settlement, hence, there is no significant concentration of credit risk.

Interest rate risk

The Group did not have any interest-bearing liabilities and thus, the Directors believe the Group’sexposure to interest rate risk is minimal.

Foreign currency risk

The Group’s monetary assets, liabilities and transactions are principally denominated in Hong Kongdollars. The foreign currency risk is considered not material and the Group therefore does not have aforeign currency hedging policy. However, the management monitors the Group’s foreign exchangeexposure and will consider hedging significant foreign currency exposure when the need arises.

Liquidity risk

The Group’s objective is to maintain a balance between continuity of funding and flexibility throughthe use of advances from related parties and non-controlling shareholders, and internally generated funds.The Group regularly reviews its major funding positions to ensure that it has adequate financial resources inmeeting its financial obligations.


– I-40 –

The maturity profile of the Group’s financial liabilities as at the end of each of the Relevant Periods,based on the contractual undiscounted payments, was as follows:


1 yearHK$’000


51,497


1 yearHK$’000


48,269


1 yearHK$’000

30 June 2013Trade payables 5,204Financial liabilities included in other payables and accruals 8,274Due to related parties 4,467Due to non-controlling shareholders 1,108

19,053

Capital management

The primary objectives of the Group’s capital management are to safeguard the Group’s ability tocontinue as a going concern and to maintain healthy capital ratios in order to support its business andmaximise the shareholders’ value.

The Group manages its capital structure and makes adjustments to it in light of changes in economicconditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to theshareholders, return capital to the shareholders or issue new shares. The Group is not subject to anyexternally imposed capital requirements. No changes were made in the objectives, policies or processes formanaging capital during the Relevant Periods.


– I-41 –

The Group monitors capital using a gearing ratio, which is expressed as a percentage of total debtsover capital. The gearing ratios as at the end of each of the Relevant Periods were as follows:


HK$’000 HK$’000 HK$’000

Due to related parties 35,985 33,963 4,467Due to non-controlling shareholders 2,234 1,108 1,108

Total debts 38,219 35,071 5,575Total equity 25,519 24,600 60,477

Total capital 63,738 59,671 66,052

Gearing ratio 60% 59% 8%

B. EVENTS AFTER THE REPORTING PERIOD

(i) On 2 November 2013, the Company conditionally adopted a share option scheme,pursuant to which the Company may grant share options to any full-time andpart-time employee, director, consultant or adviser of the Group or any substantialshareholder of the Group, or any distributor, contractor, supplier, agent, customer;business partner or service provider of the Group. Further details of the shareoption scheme and the share options granted are set out in the section headed “D.Share Option Scheme” in Appendix IV to the Prospectus.

(ii) On 3 July 2013, the Group and the non-controlling shareholders of thesubsidiaries have entered into long-term loan agreements, pursuant to which allthe amounts due to non-controlling shareholders are due after one year from thedate of the long-term loan agreements.

(iii) On 23 October 2013, an interim dividend of HK$1,485,000 was appropriated toVictory Stand International Limited and Dragon Flame Holdings Limited, the thenshareholders of Glory Kind. The aforesaid interim dividend has been fully paidand settled prior to the Listing.

(iv) On 23 October 2013, certain companies now comprising the Group declaredinterim dividends of HK$515,000 to their then non-controlling shareholders. Theaforesaid interim dividend has been fully paid and settled prior to the Listing.


– I-42 –

C. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements of the Group have been prepared in respect of anyperiod subsequent to 30 June 2013.

Yours faithfully,HLB Hodgson Impey Cheng Limited

Certified Public AccountantsJonathan T. S. Lai

Practising Certificate Number: P04165Hong Kong


– I-43 –

The information set out in this appendix does not form part of the Accountants’ Reportprepared by HLB Hodgson Impey Cheng Limited, Certified Public Accountants, Hong Kong,as set out in Appendix I to this prospectus, and is included in this prospectus forinformation only.

The following unaudited pro forma financial information prepared in accordance withparagraph 7.31 of the GEM Listing Rules is for illustrative purposes only, and is set outhere to provide investors with further information about how the proposed listing might haveaffected the net tangible assets of the Group as if the Placing had occurred on 30 June2013. Although reasonable care has been exercised in preparing the said information,prospective investors who read the information should bear in mind that these figures areinherently subject to adjustments and may not give a complete picture of the Group’sfinancial results and positions of the financial periods concerned.

A. UNAUDITED PRO FORMA ADJUSTED NET TANGIBLE ASSETS

The unaudited pro forma adjusted combined net tangible assets of the Group has beenprepared, on the basis of the notes set forth below, for the purpose of illustrating the effectof the Placing as if it had taken place on 30 June 2013. It has been prepared for illustrativepurpose only and, because of its hypothetical nature, may not give a true picture of thefinancial position of the Group after the Placing or at any future dates.

Adjustedcombined net

tangible assetsof the Group

attributable toowners of the

Company asat 30 June

2013

Add:Estimated netproceeds from

the Placing

Unaudited proforma


Unaudited proforma


per ShareHK$’000 HK$’000 HK$’000 HK$(Note 1) (Note 2) (Note 3)



APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION

– II-1 –

Notes:

1. The adjusted combined net tangible assets of the Group attributable to owners of the Company as at30 June 2013 were determined as follows:

HK$’000

Audited combined net assets of the Group as at 30 June 2013 as shown in theAccountants’ Report as set out in Appendix I to this prospectus 58,137

Less: Intangible assets as at 30 June 2013 885

Adjusted combined net tangible assets of the Group attributable to owners of theCompany as at 30 June 2013 57,252

2. The estimated net proceeds from the Placing are based on the minimum and maximum Placing Priceof HK$0.4 and HK$0.5 per Share, respectively, after deduction of relevant estimated expenses for theListing.

3. The unaudited pro forma adjusted net tangible assets per Share are determined after the adjustmentsas described in notes 1 and 2 above and on the basis that 400,000,000 Shares are issued andoutstanding as set out in the section headed “Share Capital” to this prospectus.

4. On 23 October 2013, an interim dividend of HK$1,485,000 was appropriated to Victory StandInternational Limited and Dragon Flame Holdings Limited, the then shareholders of Glory KindDevelopment Limited (which is a direct wholly owned subsidiary of the Group). The unaudited proforma adjusted net tangible assets had not taken into account of the above transaction.

5. On 23 October 2013, certain companies now comprising the Group declared interim dividends ofHK$515,000 to their then non-controlling shareholders. The unaudited pro forma adjusted nettangible assets had not taken into account of the above transaction.

6. The unaudited pro forma financial information presented above does not take account of any tradingor other transactions subsequent to the date of the financial statements included in the unaudited proforma financial information (i.e. 30 June 2013).


– II-2 –

B. REPORT ON UNAUDITED PRO FORMA ADJUSTED NET TANGIBLE ASSETS

The following is the text of a report received from the reporting accountants, HLBHodgson Impey Cheng Limited, Certified Public Accountants, Hong Kong, prepared for thepurpose of incorporation in this prospectus.

Hodgson Impey Cheng Limited

國衛會計師事務所有限公司

31/F, Gloucester TowerThe Landmark11 Pedder StreetCentralHong Kong

14 November 2013

The DirectorsJC Group Holdings LimitedTC Capital Asia Limited

Dear Sirs,

Introduction

We have completed our assurance engagement to report on the compilation of proforma financial information of JC Group Holdings Limited (the “Company”) and itssubsidiaries (hereinafter collectively referred to as the “Group”) by the directors forillustrative purposes only. The pro forma financial information consists of the unaudited proforma adjusted net tangible assets (the “Unaudited Pro Forma Financial Information”) andrelated notes are set out in Section A of Appendix II to the prospectus issued by theCompany dated 14 November 2013 (the “Prospectus”). The applicable criteria on the basisof which the directors have compiled the Unaudited Pro Forma Financial Information aredescribed in Section A of Appendix II to the Prospectus.

The Unaudited Pro Forma Financial Information has been compiled by the directors toillustrate the impact of how the proposed placing might have affected the financialinformation presented on the Group’s unaudited pro forma adjusted net tangible assets as at30 June 2013 as if the event had taken place at 30 June 2013. As part of this process,information about the Group’s combined net tangible assets attributable to owners of theCompany has been extracted by the directors from the Group’s financial statements for thethree months ended 30 June 2013, on which an accountants’ report has been published.

Directors’ responsibility for the Unaudited Pro Forma Financial Information

The directors are responsible for compiling the Unaudited Pro Forma FinancialInformation in accordance with paragraph 7.31 of the Rules Governing the Listing ofSecurities on the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited(the “GEM Listing Rules”) and with reference to Accounting Guideline 7, “Preparation ofPro Forma Financial Information for Inclusion in Investment Circulars” (“AG7”) issued bythe Hong Kong Institute of Certified Public Accountants (“HKICPA”).


– II-3 –

Reporting accountants’ responsibility

Our responsibility is to express an opinion, as required by paragraph 7.31(7) of theGEM Listing Rules, on the Unaudited Pro Forma Financial Information and to report ouropinion to you. We do not accept any responsibility for any reports previously given by uson any financial information used in the compilation of the Unaudited Pro Forma FinancialInformation beyond that owed to those to whom those reports were addressed by us at thedates of their issue.

We conducted our engagement in accordance with Hong Kong Standard on AssuranceEngagements (HKSAE) 3420, “Assurance Engagements to Report on the Compilation of ProForma Financial Information Included in a Prospectus”, issued by the HKICPA. Thisstandard requires that the reporting accountants comply with ethical requirements and planand perform procedures to obtain reasonable assurance about whether the directors havecompiled the Unaudited Pro Forma Financial Information in accordance with paragraph 7.31of the GEM Listing Rules and with reference to AG 7 issued by the HKICPA.

For purposes of this engagement, we are not responsible for updating or reissuing anyreports or opinions on any historical financial information used in compiling the UnauditedPro Forma Financial Information, nor have we, in the course of this engagement, performedan audit or review of the financial information used in compiling the Unaudited Pro FormaFinancial Information.

The purpose of Unaudited Pro Forma Financial Information included in the Prospectusis solely to illustrate the impact of a significant event or transaction on unadjusted financialinformation of the Group as if the event had occurred or the transaction had been undertakenat an earlier date selected for purposes of the illustration. Accordingly, we do not provideany assurance that the actual outcome of the event or transaction at 30 June 2013 wouldhave been as presented.

A reasonable assurance engagement to report on whether the Unaudited Pro FormaFinancial Information has been properly compiled on the basis of the applicable criteriainvolves performing procedures to assess whether the applicable criteria used by thedirectors in the compilation of the Unaudited Pro Forma Financial Information provide areasonable basis for presenting the significant effects directly attributable to the event ortransaction, and to obtain sufficient appropriate evidence about whether:

� The related pro forma adjustments give appropriate effect to those criteria; and

� The Unaudited Pro Forma Financial Information reflects the proper application ofthose adjustments to the unadjusted financial information.

The procedures selected depend on the reporting accountants’ judgement, having regardto the reporting accountants’ understanding of the nature of the Group, the event ortransaction in respect of which the Unaudited Pro Forma Financial Information has beencompiled, and other relevant engagement circumstances.


– II-4 –

The engagement also involves evaluating the overall presentation of the Unaudited ProForma Financial Information.

We believe that the evidence we have obtained is sufficient and appropriate to providea basis for our opinion.

Opinion

In our opinion:

a. the Unaudited Pro Forma Financial Information has been properly compiled onthe 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 FormaFinancial Information as disclosed pursuant to paragraph 7.31(1) of the GEMListing Rules.

Yours faithfully,HLB Hodgson Impey Cheng Limited

Certified Public AccountantsJonathan T. S. Lai

Practising Certificate Number: P04165Hong Kong


– II-5 –

Set out below is a summary of certain provisions of the Memorandum and Articles ofAssociation of the Company and of certain aspects of Cayman Islands company law.

The Company was incorporated in the Cayman Islands as an exempted company withlimited liability on 21 June 2013 under the Companies Law. The Company’s constitutionaldocuments consist of its Amended and Restated Memorandum of Association (the“Memorandum”) and the Amended and Restated Articles of Association (the “Articles”).

1. MEMORANDUM OF ASSOCIATION

(a) The Memorandum provides, inter alia, that the liability of members of theCompany is limited and that the objects for which the Company is established areunrestricted (and therefore include acting as an investment company), and that theCompany shall have and be capable of exercising any and all of the powers at anytime or from time to time exercisable by a natural person or body corporatewhether as principal, agent, contractor or otherwise and since the Company is anexempted company that the Company will not trade in the Cayman Islands withany person, firm or corporation except in furtherance of the business of theCompany carried on outside the Cayman Islands.

(b) By special resolution the Company may alter the Memorandum with respect toany objects, powers or other matters specified therein.

2. ARTICLES OF ASSOCIATION

The Articles were adopted on 2 November 2013. The following is a summary of certainprovisions of the Articles:

(a) Shares

(i) Classes of shares

The share capital of the Company consists of ordinary shares.

(ii) Share certificates

Every person whose name is entered as a member in the register of membersshall be entitled to receive a certificate for his shares. No shares shall be issued tobearer.

Every certificate for shares, warrants or debentures or representing any otherform of securities of the Company shall be issued under the seal of the Company,and shall be signed autographically by one Director and the Secretary, or by 2Directors, or by some other person(s) appointed by the Board for the purpose. Asregards any certificates for shares or debentures or other securities of theCompany, the Board may by resolution determine that such signatures or either ofthem shall be dispensed with or affixed by some method or system of mechanical

APPENDIX III SUMMARY OF THE CONSTITUTION OF THE COMPANYAND THE CAYMAN ISLANDS COMPANY LAW

– III-1 –

signature other than autographic or may be printed thereon as specified in suchresolution or that such certificates need not be signed by any person. Every sharecertificate issued shall specify the number and class of shares in respect of whichit is issued and the amount paid thereon and may otherwise be in such form asthe Board may from time to time prescribe. A share certificate shall relate to onlyone class of shares, and where the capital of the Company includes shares withdifferent voting rights, the designation of each class of shares, other than thosewhich carry the general right to vote at general meetings, must include the words“restricted voting” or “limited voting” or “non-voting” or some other appropriatedesignation which is commensurate with the rights attaching to the relevant classof shares. The Company shall not be bound to register more than 4 persons asjoint holders of any share.

(b) Directors

(i) Power to allot and issue shares and warrants

Subject to the provisions of the Companies Law, the Memorandum andArticles and without prejudice to any special rights conferred on the holders ofany shares or class of shares, any share may be issued with or have attachedthereto such rights, or such restrictions, whether with regard to dividend, voting,return of capital, or otherwise, as the Company may by ordinary resolutiondetermine (or, in the absence of any such determination or so far as the same maynot make specific provision, as the Board may determine). Any share may beissued on terms that upon the happening of a specified event or upon a given dateand either at the option of the Company or the holder thereof, they are liable tobe redeemed.

The Board may issue warrants to subscribe for any class of shares or othersecurities of the Company on such terms as it may from time to time determine.

Where warrants are issued to bearer, no certificate thereof shall be issued toreplace one that has been lost unless the Board is satisfied beyond reasonabledoubt that the original certificate thereof has been destroyed and the Company hasreceived an indemnity in such form as the Board shall think fit with regard to theissue of any such replacement certificate.

Subject to the provisions of the Companies Law, the Articles and, whereapplicable, the rules of any stock exchange of the Relevant Territory (as definedin the Articles) and without prejudice to any special rights or restrictions for thetime being attached to any shares or any class of shares, all unissued shares in theCompany shall be at the disposal of the Board, which may offer, allot, grantoptions over or otherwise dispose of them to such persons, at such times, for suchconsideration and on such terms and conditions as it in its absolute discretionthinks fit, but so that no shares shall be issued at a discount.


– III-2 –

Neither the Company nor the Board shall be obliged, when making orgranting any allotment of, offer of, option over or disposal of shares, to make, ormake available, any such allotment, offer, option or shares to members or otherswhose registered addresses are in any particular territory or territories where, inthe absence of a registration statement or other special formalities, this is or may,in the opinion of the Board, be unlawful or impracticable. However, no memberaffected as a result of the foregoing shall be, or be deemed to be, a separate classof members for any purpose whatsoever.

(ii) Power to dispose of the assets of the Company or any subsidiary

While there are no specific provisions in the Articles relating to the disposalof the assets of the Company or any of its subsidiaries, the Board may exerciseall powers and do all acts and things which may be exercised or done or approvedby the Company and which are not required by the Articles or the CompaniesLaw to be exercised or done by the Company in general meeting, but if suchpower or act is regulated by the Company in general meeting, such regulationshall not invalidate any prior act of the Board which would have been valid ifsuch regulation had not been made.

(iii) Compensation or payments for loss of office

Payments to any present Director or past Director of any sum by way ofcompensation for loss of office or as consideration for or in connection with hisretirement from office (not being a payment to which the Director is contractuallyor statutorily entitled) must be approved by the Company in general meeting.

(iv) Loans and provision of security for loans to Directors

There are provisions in the Articles prohibiting the making of loans toDirectors and their associates which are equivalent to provisions of Hong Konglaw prevailing at the time of adoption of the Articles.

The Company shall not directly or indirectly make a loan to a Director or adirector of any holding company of the Company or any of their respectiveassociates, enter into any guarantee or provide any security in connection with aloan made by any person to a Director or a director of any holding company ofthe Company or any of their respective associates, or if any one or more of theDirectors hold (jointly or severally or directly or indirectly) a controlling interestin another company, make a loan to that other company or enter into anyguarantee or provide any security in connection with a loan made by any personto that other company.


– III-3 –

(v) Disclosure of interest in contracts with the Company or with any of itssubsidiaries

With the exception of the office of auditor of the Company, a Director mayhold any other office or place of profit with the Company in conjunction with hisoffice of Director for such period and, upon such terms as the Board maydetermine, and may be paid such extra remuneration therefor (whether by way ofsalary, commission, participation in profits or otherwise) in addition to anyremuneration provided for by or pursuant to any other Articles. A Director may beor become a director or other officer or member of any other company in whichthe Company may be interested, and shall not be liable to account to theCompany or the members for any remuneration or other benefits received by himas a director, officer or member of such other company. The Board may alsocause the voting power conferred by the shares in any other company held orowned by the Company to be exercised in such manner in all respects as it thinksfit, including the exercise thereof in favour of any resolution appointing theDirectors or any of them to be directors or officers of such other company.

No Director or intended Director shall be disqualified by his office fromcontracting with the Company, either as vendor, purchaser or otherwise, nor shallany such contract or any other contract or arrangement in which any Director is inany way interested be liable to be avoided, nor shall any Director so contractingor being so interested be liable to account to the Company for any profit realisedby any such contract or arrangement by reason only of such Director holding thatoffice or the fiduciary relationship thereby established. A Director who is, in anyway, materially interested in a contract or arrangement or proposed contract orarrangement with the Company shall declare the nature of his interest at theearliest meeting of the Board at which he may practically do so.

There is no power to freeze or otherwise impair any of the rights attachingto any Share by reason that the person or persons who are interested directly orindirectly therein have failed to disclose their interests to the Company.

A Director shall not vote (nor shall he be counted in the quorum) on anyresolution of the Board in respect of any contract or arrangement or otherproposal in which he or his associate(s) is/are materially interested, and if he shalldo so his vote shall not be counted nor shall he be counted in the quorum for thatresolution, but this prohibition shall not apply to any of the following mattersnamely:

(aa) the giving of any security or indemnity to the Director or hisassociate(s) in respect of money lent or obligations incurred orundertaken by him or any of them at the request of or for the benefit ofthe Company or any of its subsidiaries;


– III-4 –

(bb) the giving of any security or indemnity to a third party in respect of adebt or obligation of the Company or any of its subsidiaries for whichthe Director or his associate(s) has/have himself/themselves assumedresponsibility in whole or in part whether alone or jointly under aguarantee or indemnity or by the giving of security;

(cc) any proposal concerning an offer of shares or debentures or othersecurities of or by the Company or any other company which theCompany may promote or be interested in for subscription or purchase,where the Director or his associate(s) is/are or is/are to be interested asa participant in the underwriting or sub-underwriting of the offer;

(dd) any proposal or arrangement concerning the adoption, modification oroperation of a share option scheme, a pension fund or retirement, deathor disability benefits scheme or other arrangement which relates both toDirectors, his associate(s) and employees of the Company or of any ofits subsidiaries and does not provide in respect of any Director, or hisassociate(s), as such any privilege or advantage not generally accordedto the employees to which such scheme or fund relates; or

(ee) any contract or arrangement in which the Director or his associate(s) is/are interested in the same manner as other holders of shares ordebentures or other securities of the Company by virtue only of his/their interest in shares or debentures or other securities of theCompany.

(vi) Remuneration

The Directors shall be entitled to receive, as ordinary remuneration for theirservices, such sums as shall from time to time be determined by the Board, or theCompany in general meeting, as the case may be, such sum (unless otherwisedirected by the resolution by which it is determined) to be divided amongst theDirectors in such proportions and in such manner as they may agree or failingagreement, equally, except that in such event any Director holding office for onlya portion of the period in respect of which the remuneration is payable shall onlyrank in such division in proportion to the time during such period for which hehas held office. The Directors shall also be entitled to be repaid all travelling,hotel and other expenses reasonably incurred by them in attending any Boardmeetings, committee meetings or general meetings or otherwise in connectionwith the discharge of their duties as Directors. Such remuneration shall be inaddition to any other remuneration to which a Director who holds any salariedemployment or office in the Company may be entitled by reason of suchemployment or office.


– III-5 –

Any Director who, at the request of the Company performs services which inthe opinion of the Board go beyond the ordinary duties of a Director may be paidsuch special or extra remuneration (whether by way of salary, commission,participation in profits or otherwise) as the Board may determine and such extraremuneration shall be in addition to or in substitution for any ordinaryremuneration as a Director. An executive Director appointed to be a managingdirector, joint managing director, deputy managing director or other executiveofficer shall receive such remuneration (whether by way of salary, commission orparticipation in profits or otherwise or by all or any of those modes) and suchother benefits (including pension and/or gratuity and/or other benefits onretirement) and allowances as the Board may from time to time decide. Suchremuneration shall be in addition to his ordinary remuneration as a Director.

The Board may establish, either on its own or jointly in concurrence oragreement with other companies (being subsidiaries of the Company or withwhich the Company is associated in business), or may make contributions out ofthe Company’s monies to, such schemes or funds for providing pensions, sicknessor compassionate allowances, life assurance or other benefits for employees(which expression as used in this and the following paragraph shall include anyDirector or former Director who may hold or have held any executive office orany office of profit with the Company or any of its subsidiaries) and formeremployees of the Company and their dependents or any class or classes of suchpersons.

In addition, the Board may also pay, enter into agreements to pay or makegrants of revocable or irrevocable, whether or not subject to any terms orconditions, pensions or other benefits to employees and former employees andtheir dependents, or to any of such persons, including pensions or benefitsadditional to those, if any, to which such employees or former employees or theirdependents are or may become entitled under any such scheme or fund asmentioned 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 anytime after, his actual retirement.

(vii) Appointment, retirement and removal

At any time or from time to time, the Board shall have the power to appointany person as a Director either to fill a casual vacancy on the Board or as anadditional Director to the existing Board subject to any maximum number ofDirectors, if any, as may be determined by the members in general meeting. AnyDirector appointed by the Board to fill a casual vacancy shall hold office onlyuntil the first general meeting of the Company after his appointment and besubject to re-election at such meeting. Any Director appointed by the Board as anaddition to the existing Board shall hold office only until the next followingannual general meeting of the Company and shall then be eligible for re-election.


– III-6 –

At each annual general meeting, one third of the Directors for the time beingwill retire from office by rotation. However, if the number of Directors is not amultiple of three, then the number nearest to but not less than one third shall bethe number of retiring Directors. The Directors who shall retire in each year willbe those who have been longest in the office since their last re-election orappointment but as between persons who become or were last re-elected Directorson the same day those to retire will (unless they otherwise agree amongthemselves) be determined by lot.

No person, other than a retiring Director, shall, unless recommended by theBoard for election, be eligible for election to the office of Director at any generalmeeting, unless notice in writing of the intention to propose that person forelection as a Director and notice in writing by that person of his willingness to beelected shall have been lodged at the head office or at the registration office. Theperiod for lodgment of such notices will commence no earlier than the day afterthe despatch of the notice of the meeting appointed for such election and end nolater than 7 days prior to the date of such meeting and the minimum length of theperiod during which such notices to the Company may be given must be at least 7days.

A Director is not required to hold any shares in the Company by way ofqualification nor is there any specified upper or lower age limit for Directorseither for accession to the Board or retirement therefrom.

A Director may be removed by an ordinary resolution of the Companybefore the expiration of his term of office (but without prejudice to any claimwhich such Director may have for damages for any breach of any contractbetween him and the Company) and the Company may by ordinary resolutionappoint another in his place. The number of Directors shall not be less than two.


– III-7 –

In addition to the foregoing, the office of a Director shall be vacated:

(aa) if he resigns his office by notice in writing delivered to the Company atthe registered office or head office of the Company for the time beingor tendered at a meeting of the Board;

(bb) if he dies or becomes of unsound mind as determined pursuant to anorder made by any competent court or official on the grounds that he isor may be suffering from mental disorder or is otherwise incapable ofmanaging his affairs and the Board resolves that his office be vacated;

(cc) if, without special leave, he is absent from meetings of the Board forsix (6) consecutive months, and the Board resolves that his office isvacated;

(dd) if he becomes bankrupt or has a receiving order made against him orsuspends payment or compounds with his creditors generally;

(ee) if he is prohibited from being a director by law;

(ff) if he ceases to be a director by virtue of any provision of law or isremoved from office pursuant to the Articles;

(gg) if he has been validly required by the stock exchange of the RelevantTerritory (as defined in the Articles) to cease to be a Director and therelevant time period for application for review of or appeal against suchrequirement has lapsed and no application for review or appeal hasbeen filed or is underway against such requirement; or

(hh) if he is removed from office by notice in writing served upon himsigned by not less than three-fourths in number (or, if that is not around number, the nearest lower round number) of the Directors(including himself) then in office.

From time to time the Board may appoint one or more of its body to bemanaging director, joint managing director, or deputy managing director or tohold any other employment or executive office with the Company for such periodand upon such terms as the Board may determine and the Board may revoke orterminate any of such appointments. The Board may also delegate any of itspowers to committees consisting of such Director or Directors and other person(s)as the Board thinks fit, and from time to time it may also revoke such delegationor revoke the appointment of and discharge any such committees either wholly orin part, and either as to persons or purposes, but every committee so formed shall,in the exercise of the powers so delegated, conform to any regulations that mayfrom time to time be imposed upon it by the Board.


– III-8 –

(viii) Borrowing powers

Pursuant to the Articles, the Board may exercise all the powers of theCompany to raise or borrow money, to mortgage or charge all or any part of theundertaking, property and uncalled capital of the Company and, subject to theCompanies Law, to issue debentures, debenture stock, bonds and other securitiesof the Company, whether outright or as collateral security for any debt, liability orobligation of the Company or of any third party. The provisions summarizedabove, in common with the Articles of Association in general, may be varied withthe sanction of a special resolution of the Company.

(ix) Register of Directors and officers

Pursuant to the Companies Law, the Company is required to maintain at itsregistered office a register of directors, alternate directors and officers which isnot available for inspection by the public. A copy of such register must be filedwith the Registrar of Companies in the Cayman Islands and any change must benotified to the Registrar within 30 days of any change in such directors orofficers, including a change of the name of such directors or officers.

(x) Proceedings of the Board

Subject to the Articles, the Board may meet anywhere in the world for thedespatch of business and may adjourn and otherwise regulate its meetings as itthinks fit. Questions arising at any meeting shall be determined by a majority ofvotes. In the case of an equality of votes, the chairman of the meeting shall havea second or casting vote.

(c) Alterations to the constitutional documents

To the extent that the same is permissible under Cayman Islands law and subjectto the Articles, the Memorandum and Articles of the Company may only be altered oramended, and the name of the Company may only be changed by the Company byspecial resolution.

(d) Variation of rights of existing shares or classes of shares

Subject to the Companies Law, if at any time the share capital of the Company isdivided into different classes of shares, all or any of the special rights attached to anyclass of shares may (unless otherwise provided for by the terms of issue of the sharesof that class) be varied, modified or abrogated either with the consent in writing of theholders of not less than three-fourths in nominal value of the issued shares of that classor with the sanction of a special resolution passed at a separate general meeting of theholders of the shares of that class. To every such separate general meeting theprovisions of the Articles relating to general meetings shall mutatis mutandis apply, butso that the necessary quorum (other than at an adjourned meeting) shall be not lessthan two persons together holding (or in the case of a shareholder being a corporation,


– III-9 –

by its duly authorized representative) or representing by proxy not less than one-thirdin nominal value of the issued shares of that class. Every holder of shares of the classshall be entitled on a poll to one vote for every such share held by him, and any holderof 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 sharesshall not, unless otherwise expressly provided in the rights attaching to the terms ofissue of such shares, be deemed to be varied by the creation or issue of further sharesranking pari passu therewith.

(e) Alteration of capital

The Company may, by an ordinary resolution of its members, (a) increase itsshare capital by the creation of new shares of such amount as it thinks expedient; (b)consolidate or divide all or any of its share capital into shares of larger or smalleramount than its existing shares; (c) divide its unissued shares into several classes andattach thereto respectively any preferential, deferred, qualified or special rights,privileges or conditions; (d) subdivide its shares or any of them into shares of anamount smaller than that fixed by the Memorandum; and (e) cancel shares which, atthe date of the passing of the resolution, have not been taken or agreed to be taken byany person and diminish the amount of its share capital by the amount of the shares socancelled; (f) make provision for the allotment and issue of shares which do not carryany voting rights; (g) change the currency of denomination of its share capital; and (h)reduce its share premium account in any manner authorized and subject to anyconditions prescribed by law.

Reduction of share capital – subject to the Companies Law and to confirmation bythe court, a company limited by shares may, if so authorised by its Articles ofAssociation, by special resolution, reduce its share capital in any way.

(f) Special resolution – majority required

In accordance with the Articles, a special resolution of the Company must bepassed by a majority of not less than three-fourths of the votes cast by such membersas, being entitled so to do, vote in person or by proxy or, in the case of memberswhich are corporations, by their duly authorised representatives or, where proxies areallowed, by proxy at a general meeting of which not less than 21 clear days’ notice,specifying the intention to propose the resolution as a special resolution, has been dulygiven. However, except in the case of an annual general meeting, if it is so agreed by amajority in number of the members having a right to attend and vote at such meeting,being a majority together holding not less than 95% in nominal value of the sharesgiving that right and, in the case of an annual general meeting, if so agreed by allmembers entitled to attend and vote thereat, a resolution may be proposed and passedas a special resolution at a meeting of which less than 21 clear days’ notice has beengiven.


– III-10 –

Under Companies Law, a copy of any special resolution must be forwarded to theRegistrar of Companies in the Cayman Islands within 15 days of being passed.

An “ordinary resolution”, by contrast, is defined in the Articles to mean aresolution passed by a simple majority of the votes of such members of the Companyas, being entitled to do so, vote in person or, in the case of members which arecorporations, by their duly authorised representatives or, where proxies are allowed, byproxy at a general meeting of which not less than 14 clear days’ notice has been givenand held in accordance with the Articles. A resolution in writing signed by or on behalfof all members shall be treated as an ordinary resolution duly passed at a generalmeeting of the Company duly convened and held, and where relevant as a specialresolution so passed.

(g) Voting rights (generally and on a poll) and right to demand a poll

Subject to any special rights, restrictions or privileges as to voting for the timebeing attached to any class or classes of shares at any general meeting on a show ofhands, every member who is present in person or by proxy or being a corporation, ispresent by its duly authorised representative shall have one vote, and on a poll everymember 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 fullypaid or credited as fully paid registered in his name in the register of members of theCompany but so that no amount paid up or credited as paid up on a share in advanceof calls or instalments is treated for the foregoing purpose as paid up on the share.Notwithstanding anything contained in the Articles, where more than one proxy isappointed by a member which is a Clearing House (as defined in the Articles) (or itsnominee(s)), each such proxy shall have one vote on a show of hands. On a poll, amember entitled to more than one vote need not use all his votes or cast all the voteshe does use in the same way.

At any general meeting a resolution put to the vote of the meeting is to bedecided on a show of hands unless (before or on the declaration of the result of theshow of hands or on the withdrawal of any other demand for a poll) a poll isdemanded or otherwise required under the rules of the stock exchange of the RelevantTerritory (as defined in the Articles). A poll may be demanded by:

(i) the chairman of the meeting; or

(ii) at least two members present in person or, in the case of a member being acorporation, by its duly authorised representative or by proxy for the timebeing entitled to vote at the meeting; or

(iii) any member or members present in person or, in the case of a member beinga corporation, by its duly authorised representative or by proxy andrepresenting not less than one-tenth of the total voting rights of all themembers having the right to vote at the meeting; or


– III-11 –

(iv) a member or members present in person or, in the case of a member being acorporation, by its duly authorised representative or by proxy and holdingshares in the Company conferring a right to vote at the meeting being shareson which an aggregate sum has been paid equal to not less than one-tenth ofthe 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, suchperson or persons may be authorised as it thinks fit to act as its representative(s) at anymeeting of the Company or at any meeting of any class of members of the Companyprovided that, if more than one person is so authorised, the authorisation shall specifythe 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 beenduly authorized without further evidence of the facts and be entitled to exercise thesame rights and powers on behalf of the Clearing House or its nominee(s), as if suchperson were an individual member including the right to vote individually on a show ofhands.

Where the Company has knowledge that any member is, under the Listing Rules,required to abstain from voting on any particular resolution of the Company orrestricted to voting only for or only against any particular resolution of the Company,any votes cast by or on behalf of such member in contravention of such requirement orrestriction shall not be counted.

(h) Annual general meetings

The Company must hold an annual general meeting each year. Such meeting mustbe held not more than 15 months after the holding of the last preceding annual generalmeeting, or such longer period as may be authorised by the Stock Exchange at suchtime and place as may be determined by the Board.

(i) Accounts and audit

The Board shall cause proper books of account to be kept of the sums of moneyreceived and expended by the Company, and the matters in respect of which suchreceipt and expenditure take place, and of the assets and liabilities of the Company andof all other matters required by the Companies Law necessary to give a true and fairview 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 theCompany or at such other place or places as the Board decides and shall always beopen to inspection by any Director. No member (other than a Director) shall have anyright to inspect any account or book or document of the Company except as conferredby the Companies Law or ordered by a court of competent jurisdiction or authorised bythe Board or the Company in general meeting.


– III-12 –

The Board shall from time to time cause to be prepared and laid before theCompany at its annual general meeting balance sheets and profit and loss accounts(including every document required by law to be annexed thereto), together with acopy of the Directors’ report and a copy of the auditors’ report not less than 21 daysbefore the date of the annual general meeting. Copies of these documents shall be sentto every person entitled to receive notices of general meetings of the Company underthe provisions of the Articles together with the notice of annual general meeting, notless than 21 days before the date of the meeting.

Subject to the rules of the stock exchange of the Relevant Territory (as defined inthe Articles), the Company may send summarized financial statements to shareholderswho has, in accordance with the rules of the stock exchange of the Relevant Territory(as defined in the Articles), consented and elected to receive summarized financialstatements instead of the full financial statements. The summarized financial statementsmust be accompanied by any other documents as may be required under the rules ofthe stock exchange of the Relevant Territory (as defined in the Articles), and must besent to the shareholders not less than 21 days before the general meeting to thoseshareholders that have consented and elected to receive the summarized financialstatements.

The Company shall appoint auditor(s) to hold office until the conclusion of thenext annual general meeting on such terms and with such duties as may be agreed withthe Board. The auditors’ remuneration shall be fixed by the Company in generalmeeting or by the Board if authority is so delegated by the members.

The auditors shall audit the financial statements of the Company in accordancewith generally accepted accounting principles of Hong Kong, the InternationalAccounting Standards or such other standards as may be permitted by the StockExchange.

(j) Notices of meetings and business to be conducted thereat

An annual general meeting and any extraordinary general meeting at which it isproposed to pass a special resolution must be called by at least 21 days’ notice inwriting, and any other extraordinary general meeting shall be called by at least 14days’ notice in writing. The notice shall be exclusive of the day on which it is servedor 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 consideredat that meeting, and, in the case of special business, the general nature of that business.

Except where otherwise expressly stated, any notice or document (including ashare certificate) to be given or issued under the Articles shall be in writing, and maybe served by the Company on any member either personally or by sending it throughthe post in a prepaid envelope or wrapper addressed to such member at his registeredaddress as appearing in the Company’s register of members or by leaving it at suchregistered address as aforesaid or (in the case of a notice) by advertisement in thenewspapers. Any member whose registered address is outside Hong Kong may notify


– III-13 –

the Company in writing of an address in Hong Kong which for the purpose of serviceof notice shall be deemed to be his registered address. Where the registered address ofthe member is outside Hong Kong, notice, if given through the post, shall be sent byprepaid airmail letter where available. Subject to the Companies Law and the ListingRules, a notice or document may be served or delivered by the Company to anymember by electronic means to such address as may from time to time be authorisedby the member concerned or by publishing it on a website and notifying the memberconcerned that it has been so published.

Although a meeting of the Company may be called by shorter notice than asspecified above, such meeting may be deemed to have been duly called if it is soagreed:

(i) in the case of a meeting called as an annual general meeting, by all membersof the Company entitled to attend and vote thereat; and

(ii) in the case of any other meeting, by a majority in number of the membershaving a right to attend and vote at the meeting, being a majority togetherholding not less than 95% in nominal value of the issued shares giving thatright.

All business transacted at an extraordinary general meeting shall be deemedspecial business and all business shall also be deemed special business where it istransacted at an annual general meeting with the exception of the following, whichshall be deemed ordinary business:

(aa) the declaration and sanctioning of dividends;

(bb) the consideration and adoption of the accounts and balance sheet and thereports of the directors and the auditors;

(cc) the election of Directors in place of those retiring;

(dd) the appointment of auditors;

(ee) the fixing of the remuneration of the Directors and of the auditors;

(ff) the granting of any mandate or authority to the Board to offer, allot, grantoptions over, or otherwise dispose of the unissued shares of the Companyrepresenting not more than 20% in nominal value of its existing issued sharecapital (or such other percentage as may from time to time be specified inthe rules of the Stock Exchange) and the number of any securitiesrepurchased by the Company since the granting of such mandate; and

(gg) the granting of any mandate or authority to the Board to repurchasesecurities in the Company.


– III-14 –

(k) Transfer of shares

Subject to the Companies Law, all transfers of shares shall be effected by aninstrument of transfer in the usual or common form or in such other form as the Boardmay approve provided always that it shall be in such form prescribed by the StockExchange and may be under hand or, if the transferor or transferee is a Clearing Houseor its nominee(s), under hand or by machine imprinted signature or by such othermanner 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 transferorand the transferee provided that the Board may dispense with the execution of theinstrument of transfer by the transferor or transferee or accept mechanically executedtransfers in any case in which it in its discretion thinks fit to do so, and the transferorshall be deemed to remain the holder of the share until the name of the transferee isentered in the register of members of the Company in respect thereof.

The Board may, in its absolute discretion, at any time and from time to timeremove any share on the principal register to any branch register or any share on anybranch register to the principal register or any other branch register.

Unless the Board otherwise agrees, no shares on the principal register shall beremoved to any branch register nor shall shares on any branch register be removed tothe principal register or any other branch register. All removals and other documents oftitle shall be lodged for registration and registered, in the case of shares on any branchregister, at the relevant registration office and, in the case of shares on the principalregister, at the place at which the principal register is located.

The Board may, in its absolute discretion, decline to register a transfer of anyshare (not being a fully paid up share) to a person of whom it does not approve or anyshare issued under any share option scheme upon which a restriction on transferimposed thereby still subsists, and it may also refuse to register any transfer of anyshare to more than four joint holders or any transfer of any share (not being a fullypaid up share) on which the Company has a lien.

The Board may decline to recognize any instrument of transfer unless a fee ofsuch maximum sum as the Stock Exchange may determine to be payable or such lessersum as the Board may from time to time require is paid to the Company in respectthereof, the instrument of transfer is properly stamped (if applicable), is in respect ofonly one class of share and is lodged at the relevant registration office or the place atwhich the principal register is located accompanied by the relevant share certificate(s)and such other evidence as the Board may reasonably require to show the right of thetransferor to make the transfer (and if the instrument of transfer is executed by someother person on his behalf, the authority of that person so to do).

The register of members may, subject to the Listing Rules (as defined in theArticles), be closed at such time or for such period not exceeding in the whole 30 daysin each year as the Board may determine.


– III-15 –

Fully paid shares shall be free from any restriction with respect to the right of theholder thereof to transfer such shares (except when permitted by the Stock Exchange)and shall also be free from all liens.

(l) Power of the Company to purchase its own shares

The Company is empowered by the Companies Law and the Articles to purchaseits own shares subject to certain restrictions and the Board may only exercise thispower on behalf of the Company subject to any applicable requirement imposed fromtime to time by the Articles, code, rules or regulations issued from time to time by theStock Exchange and/or the Securities and Futures Commission of Hong Kong.

Where the Company purchases for redemption a redeemable Share, purchases notmade through the market or by tender shall be limited to a maximum price, and ifpurchases are by tender, tenders shall be available to all members alike.

(m) 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 theCompany by a subsidiary.

(n) Dividends and other methods of distribution

The Company in general meeting may declare dividends in any currency to bepaid to the members but no dividend shall be declared in excess of the amountrecommended by the Board.

Except in so far as the rights attaching to, or the terms of issue of, any share mayotherwise provide:

(i) all dividends shall be declared and paid according to the amounts paid up onthe shares in respect whereof the dividend is paid, although no amount paidup on a share in advance of calls shall for this purpose be treated as paid upon the share; and

(ii) all dividends shall be apportioned and paid pro rata in accordance with theamount paid up on the shares during any portion or portions of the period inrespect of which the dividend is paid. The Board may deduct from anydividend 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 orotherwise.


– III-16 –

Where the Board or the Company in general meeting has resolved that a dividendshould be paid or declared on the share capital of the Company, the Board mayresolve:

(aa) that such dividend be satisfied wholly or in part in the form of an allotmentof shares credited as fully paid up, provided that the members entitledthereto will be entitled to elect to receive such dividend (or part thereof) incash in lieu of such allotment; or

(bb) that the members entitled to such dividend will be entitled to elect to receivean allotment of shares credited as fully paid up in lieu of the whole or suchpart of the dividend as the Board may think fit.

Upon the recommendation of the Board the Company may by ordinary resolutionin respect of any one particular dividend of the Company determine that it may besatisfied wholly in the form of an allotment of shares credited as fully paid up withoutoffering any right to members to elect to receive such dividend in cash in lieu of suchallotment.

Any dividend, bonus or other sum payable in cash to the holder of shares may bepaid by cheque or warrant sent through the post addressed to the holder at hisregistered address, but in the case of joint holders, shall be addressed to the holderwhose name stands first in the register of members of the Company in respect of theshares at his address as appearing in the register, or addressed to such person and atsuch address as the holder or joint holders may in writing so direct. Every such chequeor warrant shall be made payable to the order of the person to whom it is sent andshall be sent at the holder’s or joint holders’ risk and payment of the cheque or warrantby 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 orother monies payable or property distributable in respect of the shares held by suchjoint holders.

Whenever the Board or the Company in general meeting has resolved that adividend be paid or declared, the Board may further resolve that such dividend besatisfied 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 thesame, and either in money or money’s worth, all or any part of the money uncalled andunpaid or instalments payable upon any shares held by him, and in respect of all orany 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 notentitle the member to receive any dividend or to exercise any other rights or privilegesas a member in respect of the share or the due portion of the shares upon whichpayment has been advanced by such member before it is called up.


– III-17 –

All dividends, bonuses or other distributions unclaimed for one year after havingbeen declared may be invested or otherwise made use of by the Board for the benefitof the Company until claimed and the Company shall not be constituted a trustee inrespect thereof. All dividends, bonuses or other distributions unclaimed for six yearsafter having been declared may be forfeited by the Board and, upon such forfeiture,shall revert to the Company.

No dividend or other monies payable by the Company on or in respect of anyshare shall bear interest against the Company.

The Company may exercise the power to cease sending cheques for dividendentitlements or dividend warrants by post if such cheques or warrants remain uncashedon two consecutive occasions or after the first occasion on which such a cheque orwarrant is returned undelivered.

(o) Proxies

Any member of the Company entitled to attend and vote at a meeting of theCompany is entitled to appoint another person as his proxy to attend and vote insteadof him. A member who is the holder of two or more shares may appoint more than oneproxy to represent him and vote on his behalf at a general meeting of the Company orat a class meeting. A proxy need not be a member of the Company and shall beentitled to exercise the same powers on behalf of a member who is an individual andfor whom he acts as proxy as such member could exercise. In addition, a proxy shallbe entitled to exercise the same powers on behalf of a member which is a corporationand for which he acts as proxy as such member could exercise if it were an individualmember. On a poll or on a show of hands, votes may be given either personally (or, inthe case of a member being a corporation, by its duly authorized representative) or byproxy.

The instrument appointing a proxy shall be in writing under the hand of theappointor or of his attorney duly authorised in writing, or if the appointor is acorporation, either under seal or under the hand of an officer or attorney dulyauthorised. Every instrument of proxy, whether for a specified meeting or otherwise,shall be in such form as the Board may from time to time approve, provided that itshall not preclude the use of the two-way form. Any form issued to a member for useby him for appointing a proxy to attend and vote at an extraordinary general meetingor at an annual general meeting at which any business is to be transacted shall be suchas to enable the member, according to his intentions, to instruct the proxy to vote infavour of or against (or, in default of instructions, to exercise his discretion in respectof) each resolution dealing with any such business.

(p) Calls on shares and forfeiture of shares

The Board may from time to time make such calls as it may think fit upon themembers 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


– III-18 –

by the conditions of allotment thereof made payable at fixed times. A call may be madepayable either in one sum or by instalments. If the sum payable in respect of any callor instalment is not paid on or before the day appointed for payment thereof, theperson or persons from whom the sum is due shall pay interest on the same at suchrate not exceeding 20% per annum as the Board shall fix from the day appointed forthe payment thereof to the time of actual payment, but the Board may waive paymentof such interest wholly or in part. The Board may, if it thinks fit, receive from anymember willing to advance the same, either in money or money’s worth, all or any partof 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 interestat 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 forpayment thereof, the Board may, at any time thereafter during such time as any part ofthe call or instalment remains unpaid, serve not less than 14 days’ notice on himrequiring payment of so much of the call or instalment as is unpaid, together with anyinterest which may have accrued and which may still accrue up to the date of actualpayment. The notice will name a further day (not earlier than the expiration of 14 daysfrom the date of the notice) on or before which the payment required by the notice isto be made, and it shall also name the place where payment is to be made. The noticeshall also state that, in the event of non-payment at or before the time appointed, theshares 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 respectof which the notice has been given may at any time thereafter, before the paymentrequired by the notice has been made, be forfeited by a resolution of the Board to thateffect. Such forfeiture will include all dividends and bonuses declared in respect of theforfeited share and not actually paid before the forfeiture.

A person whose shares have been forfeited shall cease to be a member in respectof the forfeited shares but shall, nevertheless, remain liable to pay to the Company allmonies which, at the date of forfeiture, were payable by him to the Company in respectof the shares together with (if the Board shall in its discretion so require) interestthereon from the date of forfeiture until payment at such rate not exceeding 20% perannum as the Board may prescribe.

(q) Inspection of corporate records

Members of the Company have no general right under the Companies Law toinspect or obtain copies of the register of members or corporate records of theCompany. However, the members of the Company will have such rights as may be setforth in the Articles. The Articles provide that for so long as any part of the sharecapital of the Company is listed on the Stock Exchange, any member may inspect anyregister of members of the Company maintained in Hong Kong (except when theregister of member is closed) without charge and require the provision to him of copiesor extracts thereof in all respects as if the Company were incorporated under and weresubject to the Hong Kong Companies Ordinance.


– III-19 –

An exempted company may, subject to the provisions of its articles of association,maintain its principal register of members and any branch registers at such locations,whether within or outside the Cayman Islands, as its directors may, from time to time,think fit.

(r) Quorum for meetings and separate class meetings

No business shall be transacted at any general meeting unless a quorum is presentwhen the meeting proceeds to business, and continues to be present until theconclusion of the meeting.

The quorum for a general meeting shall be two members present in person (or inthe case of a member being a corporation, by its duly authorised representative) or byproxy and entitled to vote. In respect of a separate class meeting (other than anadjourned meeting) convened to sanction the modification of class rights the necessaryquorum shall be two persons holding or representing by proxy not less than one-thirdin nominal value of the issued shares of that class.

(s) Rights of minorities in relation to fraud or oppression

There are no provisions in the Articles concerning the rights of minority membersin relation to fraud or oppression. However, certain remedies may be available tomembers of the Company under Cayman Islands law, as summarized in paragraph 3(f)of this Appendix.

(t) Procedures on liquidation

A resolution that the Company be wound up by the court or be wound upvoluntarily shall be a special resolution.

Subject to any special rights, privileges or restrictions as to the distribution ofavailable surplus assets on liquidation for the time being attached to any class orclasses of shares:

(i) if the Company shall be wound up and the assets available for distributionamongst the members of the Company shall be more than sufficient to repaythe whole of the capital paid up at the commencement of the winding up,then the excess shall be distributed pari passu amongst such members inproportion to the amount paid up on the shares held by them respectively;and

(ii) if the Company shall be wound up and the assets available for distributionamongst the members as such shall be insufficient to repay the whole of thepaid-up capital, such assets shall be distributed so that, as nearly as may be,the losses shall be borne by the members in proportion to the capital paidup, on the shares held by them respectively.


– III-20 –

In the event that the Company is wound up (whether the liquidation is voluntaryor compelled by the court) the liquidator may, with the sanction of a special resolutionand any other sanction required by the Companies Law divide among the members inspecie or kind the whole or any part of the assets of the Company whether the assetsshall consist of property of one kind or shall consist of properties of different kindsand the liquidator may, for such purpose, set such value as he deems fair upon any oneor more class or classes of property to be divided as aforesaid and may determine howsuch division shall be carried out as between the members or different classes ofmembers and the members within each class. The liquidator may, with the likesanction, vest any part of the assets in trustees upon such trusts for the benefit ofmembers as the liquidator shall think fit, but so that no member shall be compelled toaccept any shares or other property upon which there is a liability.

(u) Untraceable members

The Company may exercise the power to cease sending cheques for dividendentitlements or dividend warrants by post if such cheques or warrants remain uncashedon two consecutive occasions or after the first occasion on which such a cheque orwarrant is returned undelivered.

In accordance with the Articles, the Company is entitled to sell any of the sharesof a member who is untraceable if:

(i) all cheques or warrants, being not less than three in total number, for anysum payable in cash to the holder of such shares have remained uncashed fora period of 12 years;

(ii) upon the expiry of the 12 years and 3 months period (being the 3 monthsnotice period referred to in sub-paragraph (iii)), the Company has not duringthat time received any indication of the existence of the member; and

(iii) the Company has caused an advertisement to be published in accordancewith the rules of the stock exchange of the Relevant Territory (as defined inthe Articles) giving notice of its intention to sell such shares and a period ofthree months has elapsed since such advertisement and the stock exchange ofthe Relevant Territory (as defined in the Articles) has been notified of suchintention. The net proceeds of any such sale shall belong to the Companyand upon receipt by the Company of such net proceeds, it shall becomeindebted to the former member of the Company for an amount equal to suchnet proceeds.

(v) Subscription rights reserve

Pursuant to the Articles, provided that it is not prohibited by and is otherwise incompliance with the Companies Law, if warrants to subscribe for shares have beenissued by the Company and the Company does any act or engages in any transactionwhich would result in the subscription price of such warrants being reduced below the


– III-21 –

par value of the shares to be issued on the exercise of such warrants, a subscriptionrights reserve shall be established and applied in paying up the difference between thesubscription 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 21June 2013 subject to the Companies Law. Certain provisions of Cayman Islands companylaw are set out below but this section does not purport to contain all applicablequalifications and exceptions or to be a complete review of all matters of the CompaniesLaw and taxation, which may differ from equivalent provisions in jurisdictions with whichinterested parties may be more familiar.

(a) Company operations

As an exempted company, the Company must conduct its operations mainlyoutside the Cayman Islands. Moreover, the Company is required to file an annualreturn each year with the Registrar of Companies of the Cayman Islands and pay a feewhich is based on the amount of its authorized share capital.

(b) Share capital

In accordance with the Companies Law, a Cayman Islands company may issueordinary, preference or redeemable shares or any combination thereof. The CompaniesLaw provides that where a company issues shares at a premium, whether for cash orotherwise, a sum equal to the aggregate amount or value of the premiums on thoseshares shall be transferred to an account, to be called the “share premium account”. Atthe option of a company, these provisions may not apply to premiums on shares of thatcompany allotted pursuant to any arrangements in consideration of the acquisition orcancellation of shares in any other company and issued at a premium. The CompaniesLaw provides that the share premium account may be applied by the company subjectto the provisions, if any, of its memorandum and articles of association, in such manneras the company may from time to time determine including, but without limitation, thefollowing:

(i) paying distributions or dividends to members;

(ii) paying up unissued shares of the company to be issued to members as fullypaid bonus shares;

(iii) any manner provided in section 37 of the Companies Law;

(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.


– III-22 –

Notwithstanding the foregoing, the Companies Law provides that no distributionor dividend may be paid to members out of the share premium account unless,immediately following the date on which the distribution or dividend is proposed to bepaid, the company will be able to pay its debts as they fall due in the ordinary courseof business.

It is further provided by the Companies Law that, subject to confirmation by thecourt, a company limited by shares or a company limited by guarantee and having ashare capital may, if authorized to do so by its articles of association, by specialresolution reduce its share capital in any way.

The Articles include certain protections for holders of special classes of shares,requiring their consent to be obtained before their rights may be varied. The consent ofthe specified proportions of the holders of the issued shares of that class or thesanction of a resolution passed at a separate meeting of the holders of those shares isrequired.

(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 offinancial assistance by a company to another person for the purchase of, or subscriptionfor, its own, its holding company’s or a subsidiary’s shares. Therefore, a company mayprovide financial assistance provided the directors of the company when proposing togrant such financial assistance discharge their duties of care and acting in good faith,for a proper purpose and in the interests of the company. Such assistance should be onan 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 ashare capital may, if so authorized by its articles of association, issue shares which areto be redeemed or are liable to be redeemed at the option of the company or a memberand, for the avoidance of doubt, it shall be lawful for the rights attaching to any sharesto be varied, subject to the provisions of the company’s articles of association, so as toprovide that such shares are to be or are liable to be so redeemed. In addition, such acompany may, if authorized to do so by its articles of association, purchase its ownshares, including any redeemable shares. Nonetheless, if the articles of association donot authorize the manner and terms of purchase, a company cannot purchase any of itsown shares without the manner and terms of purchase first being authorized by anordinary resolution of the company. A company may not redeem or purchase its sharesunless they are fully paid. Furthermore, a company may not redeem or purchase any ofits shares if, as a result of the redemption or purchase, there would no longer be anyissued shares of the company other than shares held as treasury shares. In addition, apayment out of capital by a company for the redemption or purchase of its own sharesis not lawful unless immediately following the date on which the payment is proposedto be made, the company shall be able to pay its debts as they fall due in the ordinarycourse of business.


– III-23 –

Under section 37A(1) the Companies Law, shares that have been purchased orredeemed by a company or surrendered to the company shall not be treated ascancelled but shall be classified as treasury shares if (a) the memorandum and articlesof association of the company do not prohibit it from holding treasury shares; (b) therelevant provisions of the memorandum and articles of association (if any) arecomplied with; and (c) the company is authorized in accordance with the company’sarticles of association or by a resolution of the directors to hold such shares in thename of the company as treasury shares prior to the purchase, redemption or surrenderof such shares. Shares held by a company pursuant to section 37A(1) of the CompaniesLaw shall continue to be classified as treasury shares until such shares are eithercancelled or transferred pursuant to the Companies Law.

A Cayman Islands company may be able to purchase its own warrants subject toand in accordance with the terms and conditions of the relevant warrant instrument orcertificate. Thus there is no requirement under Cayman Islands law that a company’smemorandum or articles of association contain a specific provision enabling suchpurchases. The directors of a company may under the general power contained in itsmemorandum of association be able to buy and sell and deal in personal property of allkinds.

Under Cayman Islands law, a subsidiary may hold shares in its holding companyand, in certain circumstances, may acquire such shares.

(e) Dividends and distributions

With the exception of sections 34 and 37A(7) of the Companies Law, there are nostatutory provisions relating to the payment of dividends. Based upon English case lawwhich is likely to be persuasive in the Cayman Islands, dividends may be paid only outof profits. In addition, section 34 of the Companies Law permits, subject to a solvencytest and the provisions, if any, of the company’s memorandum and articles ofassociation, the payment of dividends and distributions out of the share premiumaccount (see sub-paragraph 2(n) of this Appendix for further details). Section 37A(7)(c)of the Companies Law provides that for so long as a company holds treasury shares, nodividend may be declared or paid, and no other distribution (whether in cash orotherwise) of the company’s assets (including any distribution of assets to members ona winding up) may be made to the company, in respect of a treasury share.

(f) Protection of minorities and shareholders’ suits

It can be expected that the Cayman Islands courts will ordinarily follow Englishcase law precedents (particularly the rule in the case of Foss v. Harbottle and theexceptions thereto) which permit a minority member to commence a representativeaction against or derivative actions in the name of the company to challenge:

(i) an act which is ultra vires the company or illegal;


– III-24 –

(ii) an act which constitutes a fraud against the minority and the wrongdoers arethemselves in control of the company; and

(iii) an irregularity in the passing of a resolution the passage of which requires aqualified (or special) majority which has not been obtained.

Where a company (not being a bank) is one which has a share capital divided intoshares, the court may, on the application of members thereof holding not less thanone-fifth of the shares of the company in issue, appoint an inspector to examine theaffairs of the company and, at the direction of the court, to report thereon.

Moreover, any member of a company may petition the court which may make awinding up order if the court is of the opinion that it is just and equitable that thecompany should be wound up.

In general, claims against a company by its members must be based on thegeneral laws of contract or tort applicable in the Cayman Islands or be based onpotential violation of their individual rights as members as established by a company’smemorandum and articles of association.

(g) Disposal of assets

There are no specific restrictions in the Companies Law on the power of directorsto dispose of assets of a company, although it specifically requires that every officer ofa company, which includes a director, managing director and secretary, in exercisinghis powers and discharging his duties must do so honestly and in good faith with aview to the best interest of the company and exercise the care, diligence and skill thata reasonably prudent person would exercise in comparable circumstances.

(h) Accounting and auditing requirements

Section 59 of the Companies Law provides that a company shall cause properrecords of accounts to be kept with respect to (i) all sums of money received andexpended by the company and the matters with respect to which the receipt andexpenditure takes place; (ii) all sales and purchases of goods by the company and (iii)the assets and liabilities of the company.

Section 59 of the Companies Law further states that proper books of account shallnot be deemed to be kept if there are not kept such books as are necessary to give atrue and fair view of the state of the company’s affairs and to explain its transactions.

If the Company keeps its books of account at any place other than at itsregistered office or at any other place within the Cayman Islands, it shall, upon serviceof an order or notice by the Tax Information Authority pursuant to the Tax InformationAuthority Law (2009 Revision) of the Cayman Islands, make available, in electronicform or any other medium, at its registered office copies of its books of account, orany part or parts thereof, as are specified in such order or notice.


– III-25 –

(i) Exchange control

There are no exchange control regulations or currency restrictions in effect in theCayman Islands.

(j) Taxation

Pursuant to section 6 of the Tax Concessions Law (2011 Revision) of the CaymanIslands, the Company has obtained an undertaking from the Governor-in-Cabinet:

(i) that no law which is enacted in the Cayman Islands imposing any tax to belevied on profits or income or gains or appreciation shall apply to theCompany or its operations; and

(ii) in addition, that no tax be levied on profits, income gains or appreciations orwhich is in the nature of estate duty or inheritance tax shall be payable bythe Company:

(aa) on or in respect of the shares, debentures or other obligations of theCompany; or

(bb) by way of withholding in whole or in part of any relevant payment asdefined in section 6(3) of the Tax Concessions Law (2011 Revision).

The undertaking for the Company is for a period of twenty years from 9 July2013.

The Cayman Islands currently levy no taxes on individuals or corporations basedupon profits, income, gains or appreciations and there is no taxation in the nature ofinheritance tax or estate duty. There are no other taxes likely to be material to theCompany levied by the Government of the Cayman Islands save certain stamp dutieswhich may be applicable, from time to time, on certain instruments.

(k) Stamp duty on transfers

There is no stamp duty payable in the Cayman Islands on transfers of shares ofCayman Islands companies save for those which hold interests in land in the CaymanIslands.

(l) Loans to directors

The Companies Law contains no express provision prohibiting the making ofloans by a company to any of its directors. However, the Articles provide for theprohibition of such loans under specific circumstances.


– III-26 –

(m) Inspection of corporate records

The members of the company have no general right under the Companies Law toinspect or obtain copies of the register of members or corporate records of thecompany. They will, however, have such rights as may be set out in the company’sarticles of association.

(n) Register of members

A Cayman Islands exempted company may maintain its principal register ofmembers and any branch registers in any country or territory, whether within or outsidethe Cayman Islands, as the company may determine from time to time. The CompaniesLaw contains no requirement for an exempted company to make any returns ofmembers to the Registrar of Companies in the Cayman Islands. The names andaddresses of the members are, accordingly, not a matter of public record and are notavailable for public inspection. However, an exempted company shall make available atits 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 anorder or notice by the Tax Information Authority pursuant to the Tax InformationAuthority Law (2009 Revision) of the Cayman Islands.

(o) Winding up

A Cayman Islands company may be wound up either 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 specifiedcircumstances including where, in the opinion of the court, it is just and equitable thatsuch company be so wound up.

A voluntary winding up of a company occurs where the Company so resolves byspecial resolution that it be wound up voluntarily, or, where the company in generalmeeting resolves that it be wound up voluntarily because it is unable to pay its debt asthey fall due; or, in the case of a limited duration company, when the period fixed forthe duration of the company by its memorandum or articles expires, or where the eventoccurs on the occurrence of which the memorandum or articles provides that thecompany is to be wound up. In the case of a voluntary winding up, such company isobliged to cease to carry on its business from the commencement of its winding upexcept so far as it may be beneficial for its winding up. Upon appointment of avoluntary liquidator, all the powers of the directors cease, except so far as the companyin general meeting or the liquidator sanctions their continuance.

In the case of a members’ voluntary winding up of a company, one or moreliquidators shall be appointed for the purpose of winding up the affairs of the companyand distributing its assets.


– III-27 –

As soon as the affairs of a company are fully wound up, the liquidator must makea report and an account of the winding up, showing how the winding up has beenconducted and the property of the company has been disposed of, and thereupon call ageneral meeting of the company for the purposes of laying before it the account andgiving an explanation thereof. When a resolution has been passed by a company towind up voluntarily, the liquidator or any contributory or creditor may apply to thecourt for an order for the continuation of the winding up under the supervision of thecourt, on the grounds that (i) the company is or is likely to become insolvent; or (ii)the supervision of the court will facilitate a more effective, economic or expeditiousliquidation of the company in the interests of the contributories and creditors. Asupervision order shall take effect for all purposes as if it was an order that thecompany be wound up by the court except that a commenced voluntary winding up andthe prior actions of the voluntary liquidator shall be valid and binding upon thecompany and its official liquidator.

For the purpose of conducting the proceedings in winding up a company andassisting the court, there may be appointed one or more persons to be called an officialliquidator or official liquidators; and the court may appoint to such office such personor persons, either provisionally or otherwise, as it thinks fit, and if more than onepersons are appointed to such office, the court shall declare whether any act required orauthorized to be done by the official liquidator is to be done by all or any one or moreof such persons. The court may also determine whether any and what security is to begiven 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 thecustody of the court.

(p) Reconstructions

Reconstructions and amalgamations are governed by specific statutory provisionsunder the Companies Law whereby such arrangements may be approved by a majorityin number representing 75% in value of members or creditors, depending on thecircumstances, as are present at a meeting called for such purpose and thereaftersanctioned by the courts. Whilst a dissenting member would have the right to expressto the court his view that the transaction for which approval is being sought would notprovide the members with a fair value for their shares, nonetheless the courts areunlikely to disapprove the transaction on that ground alone in the absence of evidenceof fraud or bad faith on behalf of management and if the transaction were approvedand consummated the dissenting member would have no rights comparable to theappraisal rights (i.e. the right to receive payment in cash for the judicially determinedvalue of their shares) ordinarily available, for example, to dissenting members of aUnited States corporation.

(q) Take-overs

Where an offer is made by a company for the shares of another company and,within four months of the offer, the holders of not less than 90% of the shares whichare the subject of the offer accept, the offeror may at any time within two months after


– III-28 –

the expiration of the said four months, by notice require the dissenting members totransfer their shares on the terms of the offer. A dissenting member may apply to thecourt of the Cayman Islands within one month of the notice objecting to the transfer.The burden is on the dissenting member to show that the court should exercise itsdiscretion, which it will be unlikely to do unless there is evidence of fraud or bad faithor collusion as between the offeror and the holders of the shares who have accepted theoffer as a means of unfairly forcing out minority members.

(r) Indemnification

Cayman Islands law does not limit the extent to which a company’s articles ofassociation may provide for indemnification of officers and directors, save to the extentany such provision may be held by the court to be contrary to public policy, forexample, where a provision purports to provide indemnification against theconsequences of committing a crime.

4. GENERAL

Appleby, the Company’s legal adviser on Cayman Islands law, has sent to the Companya letter of advice which summarises certain aspects of the Cayman Islands company law.This letter, together with a copy of the Companies Law, is available for inspection asreferred to in the paragraph headed “Documents Available for Inspection” in Appendix V.Any person wishing to have a detailed summary of Cayman Islands company law or adviceon the differences between it and the laws of any jurisdiction with which he is more familiaris recommended to seek independent legal advice.


– III-29 –

A. FURTHER INFORMATION ABOUT THE COMPANY

1. Incorporation of the Company

The Company was incorporated in the Cayman Islands under the Companies Law as anexempted company with limited liability on 21 June 2013. The Company has been registeredas a non-Hong Kong company under Part XI of the Companies Ordinance on 13 August2013 and the principal place of business in Hong Kong is at 14th Floor, TAL Building,45-53 Austin Road, Tsim Sha Tsui, Kowloon, Hong Kong. Loong & Yeung has beenappointed as the authorised representative of the Company for the acceptance of service ofprocess and notices on behalf of the Company in Hong Kong.

As the Company is incorporated in the Cayman Islands, it is subject to the relevantlaws of the Cayman Islands and the constitution which comprises the Memorandum ofAssociation and the Articles of Association. A summary of the relevant aspects of theCompanies Law and certain provisions of the Articles of Association is set out in AppendixIII to this prospectus.

2. Changes in share capital of the Company

(a) As at the date of incorporation, the Company has an authorised share capital ofHK$380,000 divided into 38,000,000 shares of HK$0.01 each. One Share wasallotted and issued nil paid to the subscriber on 21 June 2013, which wassubsequently transferred to Victory Stand on the same day.

(b) Pursuant to the Reorganisation and as consideration for the acquisition by theCompany of the entire issued share capital of Glory Kind from Victory Stand andDragon Flame, on 31 October 2013, (i) the 1 nil paid Share held by Victory Standwas credited as fully paid; and (ii) 749 and 250 Shares were allotted and issued toVictory Stand and Dragon Flame respectively, and were credited as fully paid.

(c) On 2 November 2013, the Shareholders resolved to increase the authorised sharecapital of the Company from HK$380,000 to HK$20,000,000 by the creation ofan additional of 1,962,000,000 Shares, each ranking pari passu with the Sharesthen in issue in all respects.

(d) Immediately following completion of the Placing and the Capitalisation Issue, andwithout taking into account of any Share which may be issued pursuant to theexercise of the options which may be granted under the Share Option Scheme,400,000,000 Shares will be issued fully paid or credited as fully paid, and1,600,000,000 Shares will remain unissued.

(e) Other than pursuant to the general mandate to issue Shares referred to in theparagraph headed “Written resolutions of the Shareholders passed on 2 November2013” in this appendix and pursuant to the Share Option Scheme, the Companydoes not have any present intention to issue any of the authorised but unissued

APPENDIX IV STATUTORY AND GENERAL INFORMATION

– IV-1 –

share capital of the Company and, without prior approval of the Shareholders ingeneral meeting, no issue of Shares will be made which would effectively alterthe control of the Company.

(f) Save as disclosed in this prospectus, there has been no alteration in theCompany’s share capital since its incorporation.

3. Written resolutions of the Shareholders passed on 2 November 2013

Pursuant to the written resolutions of the Shareholders passed on 2 November 2013:

(a) the Company approved and adopted the Memorandum and the Articles ofAssociation the terms of which are summarised in Appendix III to this prospectus;

(b) the authorised share capital of the Company was increased from HK$380,000divided into 38,000,000 Shares of HK$0.01 each to HK$20,000,000 divided into2,000,000,000 Shares of HK$0.01 each by the creation of an additional of1,962,000,000 Shares of HK$0.01 each, each ranking pari passu with the existingShares in all respects;

(c) conditional on the Listing Division granting listing of, and permission to deal in,the Shares in issue and Shares to be issued as mentioned in this prospectusincluding any Shares which may be issued pursuant to the exercise of the optionsgranted under the Share Option Scheme and on the obligations of theUnderwriters under the Underwriting Agreement becoming unconditional and notbeing terminated in accordance with the terms of the Underwriting Agreement orotherwise, in each case on or before the date falling 30 days after the date of theissue of this prospectus (or if such date is not a Business Day, the immediatepreceding Business Day):

(i) the Placing was approved and the Directors were authorised to allot andissue the New Shares pursuant to the Placing to rank pari passu with theexisting Shares in all respects;

(ii) the rules of the Share Option Scheme, the principal terms of which are setout in the paragraph headed “Share Option Scheme” in this appendix, wereapproved and adopted and the Directors were authorised, at their absolutediscretion, subject to the terms and conditions of the Share Option Scheme,to grant options to subscribe for Shares thereunder and to allot, issue anddeal with the Shares pursuant to the exercise of subscription rights attachingto any options which may be granted under the Share Option Scheme and totake all such actions as they consider necessary or desirable to implementthe Share Option Scheme; and

(iii) conditional further on the share premium account of the Company beingcredited as a result of the Placing, the Directors were authorised to capitalisean amount of HK$3,299,990 standing to the credit of the share premiumaccount of the Company and to appropriate such amount as to capital to pay


– IV-2 –

up in full at par 329,999,000 Shares for allotment and issue to the personswhose names appear on the register of members of the Company at the closeof business on 1 November 2013 in proportion (as nearly as possible withoutinvolving fractions) to their then existing shareholdings in the Company,each ranking pari passu in all respects with the then existing issued Shares,and the Directors were authorised to give effect to such capitalisation anddistributions and the Capitalisation Issue was approved;

(d) a general unconditional mandate was given to the Directors to exercise all powersof the Company to allot, issue and deal with, otherwise than by way of rightsissue or an issue of Shares pursuant to the exercise of any options which may begranted under the Share Option Scheme or any other share option scheme of theCompany or any Share allotted and issued in lieu of the whole or part of adividend on the Shares or similar arrangement in accordance with the Articles ofAssociation or pursuant to a specific authority granted by the Shareholders ingeneral meeting or pursuant to the Placing, Shares or securities convertible intoShares or options, warrants or similar rights to subscribe for Shares or suchsecurities convertible into Shares, and to make or grant offers, agreements andoptions which might require the exercise of such power, with an aggregatenominal value not exceeding 20% of the aggregate nominal value of the sharecapital of the Company in issue immediately following completion of the Placingand the Capitalisation Issue but excluding any Shares which may be issuedpursuant to the exercise of the options which may be granted under the ShareOption Scheme, and such mandate to remain in effect until the earliest of:

(i) the conclusion of the next annual general meeting of the Company;

(ii) the expiration of the period within which the next annual general meeting ofthe Company is required by the Articles of Association or the CompaniesLaw or any other applicable laws of the Cayman Islands to be held; or

(iii) the time when such mandate is revoked or varied by an ordinary resolutionof the Shareholders in general meeting;

(e) a general unconditional mandate was given to the Directors authorising them toexercise all powers of the Company to repurchase on the Stock Exchange or onany other stock exchange on which the securities of the Company may be listedand 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 nominalvalue of the share capital of the Company in issue immediately followingcompletion of the Placing and the Capitalisation Issue but excluding any Sharewhich may be issued pursuant to the exercise of the options which may begranted under the Share Option Scheme, and such mandate to remain in effectuntil the earliest of:

(i) the conclusion of the next annual general meeting of the Company;


– IV-3 –

(ii) the expiration of the period within which the next annual general meeting ofthe Company is required by the Articles of Association or the CompaniesLaw or any other applicable laws of the Cayman Islands to be held; or

(iii) the time when such mandate is revoked or varied by an ordinary resolutionof the Shareholders in general meeting; and

(f) the general unconditional mandate mentioned in sub-paragraph (d) above wasextended by the addition to the aggregate nominal value of the share capital ofthe Company which may be allotted or agreed to be allotted by the Directorspursuant to such general mandate of an amount representing the aggregatenominal value of the share capital of the Company repurchased by the Companypursuant to the mandate to repurchase Shares referred to in sub-paragraph (e)above, provided that such extended amount shall not exceed 10% of the aggregatenominal value of the share capital of the Company in issue immediately followingcompletion of the Placing and the Capitalisation Issue but excluding any Shareswhich may be issued pursuant to the exercise of the options which may begranted under the Share Option Scheme.

4. Corporate Reorganisation

The companies comprising the Group underwent the Reorganisation to rationalise theGroup’s structure in preparation for the Listing pursuant to which the Company became theholding company of the Group. Detailed steps of the Reorganisation are set out in theparagraph headed “History, Development and Reorganisation – Corporate Development –Reorganisation” in this prospectus.

5. Changes in share capital of subsidiaries

The subsidiaries of the Company are listed in the Accountants’ Report, the text ofwhich is set out in Appendix I to this prospectus. Apart from the alterations described insection headed “History, Development and Reorganisation – Corporate Development –Reorganisation” in this prospectus, no change in the share capital of the subsidiaries of theCompany has taken place within the two years immediately preceding the date of thisprospectus.

6. Repurchase of the Shares by the Company

This section includes information required by the Stock Exchange to be included in theprospectus concerning the repurchase of the Shares by the Company.

(a) Provisions of the GEM Listing Rules

The GEM Listing Rules permit companies with a primary listing on the StockExchange to repurchase their shares on the Stock Exchange subject to certainrestrictions.


– IV-4 –

(i) Shareholders’ approval

The GEM Listing Rules provide that all proposed repurchases of shares(which must be fully paid in the case of shares) by a company with a primarylisting on GEM must be approved in advance by an ordinary resolution of theshareholders, either by way of general mandate or by specific approval of aparticular transaction.

Note: Pursuant to the written resolutions of the Shareholders passed on 2 November 2013, ageneral unconditional mandate (the “Repurchase Mandate”) was given to the Directorsauthorising them to exercise all powers of the Company to repurchase on the StockExchange or on any other stock exchange on which the securities of the Company maybe 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 nominal value ofthe share capital of the Company in issue immediately following completion of thePlacing and the Capitalisation Issue but excluding any Share which may be issuedpursuant to the exercise of the options which may be granted under the Share OptionScheme, and the Repurchase Mandate shall remain in effect until the earliest of theconclusion of the next annual general meeting of the Company, the expiration of theperiod within which the next annual general meeting of the Company is required by theArticles of Association or the Companies Law or any other applicable laws of theCayman Islands to be held, or the time when the Repurchase Mandate is revoked orvaried by an ordinary resolution of the Shareholders in general meeting.

(ii) Sources of funds

Any repurchases by the Company must be funded out of funds legallyavailable for the purpose in accordance with the Articles of Association, theapplicable laws of the Cayman Islands and the GEM Listing Rules. The Companymay not repurchase its own shares on GEM for a consideration other than cash orfor settlement otherwise than in accordance with the trading rules of the StockExchange from time to time.

Any repurchases by the Company may be made out of profits or out of theproceeds of a fresh issue of Shares made for the purpose of the repurchase or, ifauthorised by the Articles of Association and subject to the Companies Law, outof capital and, in the case of any premium payable on the repurchase, out ofprofits of the Company or out of the Company’s share premium account before orat the time the Shares are repurchased or, if authorised by the Articles ofAssociation and subject to the Companies Law, out of capital.

(iii) Connected parties

The GEM Listing Rules prohibit the Company from knowingly repurchasingthe Shares on the Stock Exchange from a “connected person”, which includes aDirector, chief executive or substantial Shareholder of the Company or any of itssubsidiaries or an associate of any of them and a connected person shall notknowingly sell Shares to the Company on GEM.


– IV-5 –

(b) Reasons for repurchases

The Directors believe that it is in the best interests of the Company and itsShareholders for the Directors to have a general authority from the Shareholders toenable the Company to repurchase Shares in the market. Such repurchases may,depending on the market conditions and funding arrangements at the time, lead to anenhancement of the Company’s net asset value and/or earnings per Share and will onlybe made when the Directors believe that such repurchases will benefit the Companyand its Shareholders.

(c) Exercise of the Repurchase Mandate

On the basis of 400,000,000 Shares in issue immediately after completion of theCapitalisation Issue and the Placing, the Directors would be authorised under theRepurchase Mandate to repurchase up to 40,000,000 Shares during the period in whichthe Repurchase Mandate remains in force. Any Shares repurchased pursuant to theRepurchase Mandate must be fully paid up.

(d) Funding of repurchases

In repurchasing the Shares, the Company may only apply funds legally availablefor such purpose in accordance with the Articles of Association, the GEM Listing Rulesand the applicable laws and regulations of the Cayman Islands.

The Directors do not propose to exercise the Repurchase Mandate to such extentas would, in the circumstances, have a material adverse effect on the working capitalrequirements of the Company or the gearing levels which in the opinion of theDirectors are from time to time appropriate for the Company.

(e) General

None of the Directors or, to the best of their knowledge having made allreasonable enquiries, any of their respective associates (as defined in the GEM ListingRules), has any present intention to sell any Shares to the Company if the RepurchaseMandate is exercised.

The Directors have undertaken to the Stock Exchange that, so far as the samemay be applicable, they will exercise the Repurchase Mandate in accordance with theGEM Listing Rules, the Articles of Association, and the applicable laws and regulationsfrom time to time in force in the Cayman Islands.

If, as a result of a repurchase of Shares pursuant to the Repurchase Mandate, aShareholder’s proportionate interest in the voting rights of the Company increases, suchincrease will be treated as an acquisition for the purposes of the Takeovers Code. Incertain circumstances, a Shareholder or a group of Shareholders acting in concert (asdefined in the Takeovers Code), depending on the level of increase of the Shareholders’interest, could obtain or consolidate control of the Company and may become obligedto make a mandatory offer in accordance with Rule 26 of the Takeovers Code as a


– IV-6 –

result of any such increase. Save as disclosed above, the Directors are not aware of anyconsequences which may arise under the Takeovers Code as a consequence of anyrepurchase of Shares if made immediately after the listing of the Shares pursuant to theRepurchase Mandate. At present, so far as is known to the Directors, no Shareholdermay become obliged to make a mandatory offer in accordance with Rule 26 of theTakeovers Code in the event that the Directors exercise the power in full to repurchasethe Shares pursuant to the Repurchase Mandate.

The Directors will not exercise the Repurchase Mandate if the repurchase wouldresult 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 prescribedas the minimum public shareholding under the GEM Listing Rules).

No connected person (as defined in the GEM Listing Rules) of the Company hasnotified the Company that he/she/it has a present intention to sell Shares to theCompany, or has undertaken not to do so, if the Repurchase Mandate is exercised.

B. FURTHER INFORMATION ABOUT THE BUSINESS

1. Summary of material contracts

The following contracts (not being contracts in the ordinary course of business) havebeen entered into by members of the Group within the two years preceding the date of thisprospectus and are or may be material:

(a) a sale and purchase agreement dated 21 May 2013 entered into between StillProfit and Mr. Zhang pursuant to which Still Profit acquired 5,000 ordinary sharesof H-View, and as consideration for which Still Profit issued and allotted 1 sharein Still Profit, credited as fully paid, to Mr. Zhang;

(b) an instrument of transfer dated 21 May 2013 entered into between Top Aim andTide Rush for the transfer of 2,000 ordinary shares of Grand Century from TideRush to Top Aim in consideration of HK$2,000;

(c) a sale and purchase agreement dated 21 May 2013 entered into between Top Aimand Bumper World pursuant to which Top Aim acquired 1,500,000 ordinary sharesof Harlan’s Holding, and as consideration for which Top Aim issued and allotted1 share in Top Aim, credited as fully paid, to Mr. Wu (as directed by BumperWorld);

(d) a sale and purchase agreement dated 21 May 2013 entered into between StillProfit and Bumper World pursuant to which Still Profit acquired 13,500,000ordinary shares of Harlan’s Holding, and as consideration for which Still Profitissued and allotted 1 share in Still Profit, credited as fully paid, to Mr. Zhang (asdirected by Bumper World);


– IV-7 –

(e) a sale and purchase agreement dated 21 May 2013 entered into between Top Aimand Super Delights pursuant to which Top Aim acquired 4,000 and 5,000 ordinaryshares of Grand Century and JC Group respectively, in the total consideration ofHK$9,000;

(f) a sale and purchase agreement dated 21 May 2013 entered into between Top Aimand Mr. Wu pursuant to which Top Aim acquired 3,000, 3,500 and 5,000 ordinaryshares of PHO24 (NTP) Limited, PHO24 (TST) Limited and H-View respectively,and as consideration for which Top Aim issued and allotted a total of 3 shares inTop Aim, credited as fully paid, to Mr. Wu;

(g) a sale and purchase agreement dated 21 May 2013 entered into between TeamGlory and FLC Holdings pursuant to which Team Glory acquired 3,000, 1,900,1,000, 1,000, 1,000, 2,000 and 2,500 ordinary shares of H One F&B, J&H, TurboTrade, PHO24 (NTP) Limited, PHO24 (TST) Limited, Grand Century and JCGroup, and as consideration for which Team Glory issued and allotted a total of 7shares in Team Glory, credited as fully paid, to Ms. Wong (as directed by FLCHoldings);

(h) a sale and purchase agreement dated 21 May 2013 entered into between ProgressVantage and Holy Best pursuant to which Progress Vantage acquired 2,500,000,1,000, 2,000 and 2,500 ordinary shares of Harlan’s Holding, Inakaya (HK)Limited, Grand Century and JC Group respectively, and as consideration forwhich Progress Vantage issued and allotted a total of 4 shares in ProgressVantage, credited as fully paid, to Mr. Lui (as directed by Holy Best);

(i) a sale and purchase agreement dated 21 May 2013 entered into between Top Aimand Oriental Island pursuant to which Top Aim acquired 4,000, 3,700, 3,000,1,500,000 and 3,000 ordinary shares of H One F&B, J&H, Inakaya (HK) Limited,Harlan’s Holding and Turbo Trade respectively, and as consideration for whichTop Aim issued and allotted a total of 5 shares in Top Aim, credited as fully paid,to Mr. Wu (as directed by Oriental Island);

(j) a sale and purchase agreement dated 21 May 2013 entered into between StillProfit and Good View pursuant to which Still Profit acquired 2,600, 6,000, 6,000,2,000 and 2,000 ordinary shares of J&H, Inakaya (HK) Limited, Turbo Trade,PHO24 (NTP) Limited and PHO24 (TST) Limited respectively, and asconsideration for which Still Profit issued and allotted a total of 5 shares in StillProfit, credited as fully paid, to Mr. Zhang (as directed by Good View);

(k) a sale and purchase agreement dated 22 May 2013 entered into between VictoryStand, Glory Kind and Ms. Wong pursuant to which Glory Kind acquired theentire issued share capital of Team Glory, and as consideration for which VictoryStand issued and allotted a total of 8 shares in Victory Stand, credited as fullypaid, to Ms. Wong;


– IV-8 –

(l) a sale and purchase agreement dated 22 May 2013 entered into between VictoryStand, Glory Kind and Mr. Wu pursuant to which Glory Kind acquired the entireissued share capital of Top Aim, and as consideration for which Victory Standissued and allotted a total of 198 shares in Victory Stand, credited as fully paid,to Mr. Wu;

(m) a sale and purchase agreement dated 22 May 2013 entered into between VictoryStand, Glory Kind and Mr. Zhang pursuant to which Glory Kind acquired theentire issued share capital of Still Profit, and as consideration for which VictoryStand issued and allotted a total of 672 shares in Victory Stand, credited as fullypaid, to Mr. Zhang;

(n) a sale and purchase agreement dated 22 May 2013 entered into between VictoryStand, Glory Kind and Mr. Lui pursuant to which Glory Kind acquired the entireissued share capital of Progress Vantage, and as consideration for which VictoryStand issued and allotted a total of 12 shares in Victory Stand, credited as fullypaid, to Mr. Lui;

(o) a capitalisation of loan agreement dated 22 May 2013 entered into betweenVictory Stand, FLC Holdings, Ms. Wong, J&H, Turbo Trade, PHO24 (NTP)Limited, PHO24 (TST) Limited and JC Group, pursuant to which Victory Standissued and allotted 615 ordinary shares to Ms. Wong, in consideration ofcapitalising a loan in an amount of HK$2,988,552.98 provided by FLC Holdingsto the Group;

(p) a capitalisation of loan agreement dated 22 May 2013 entered into betweenVictory Stand, Oriental Island, Super Delights, Mr. Wu, Inakaya (HK) Limited, JCGroup, J&H, Turbo Trade, PHO24 (NTP) Limited and PHO24 (TST) Limited,pursuant to which Victory Stand issued and allotted 2,776 ordinary shares to Mr.Wu, in consideration of capitalising a loan in an aggregate amount ofHK$10,314,676.27 provided by Oriental Island, Super Delights and Mr. Wu to theGroup;

(q) a capitalisation of loan agreement dated 22 May 2013 entered into betweenVictory Stand, Good View, Mr. Zhang, Inakaya (HK) Limited, J&H, Turbo Trade,PHO24 (NTP) Limited and PHO24 (TST) Limited, pursuant to which VictoryStand issued and allotted 4,915 ordinary shares to Mr. Zhang, in consideration ofcapitalising a loan in an amount of HK$12,024,473.45 provided by Good View tothe Group;

(r) capitalisation of loan agreement dated 22 May 2013 entered into between VictoryStand, Holy Best, Mr. Lui, Inakaya (HK) Limited and JC Group, pursuant towhich Victory Stand issued and allotted 800 ordinary shares to Mr. Lui, inconsideration of capitalising a loan in an amount of HK$1,134,000 provided byHoly Best to the Group;


– IV-9 –

(s) a sale and purchase agreement dated 23 May 2013 entered into between VictoryStand and Dragon Flame pursuant to which Dragon Flame acquired 125 ordinaryshares of Glory Kind in consideration of HK$7,500,000;

(t) a subscription agreement dated 23 May 2013 entered into between Glory Kind andDragon Flame pursuant to which Glory Kind issued 125 ordinary shares of GloryKind at a subscription price of HK$7,500,000;

(u) a long term loan agreement dated 3 July 2013 entered into between PHO24 (TST)Limited and CK Development pursuant to which the parties agreed to extend therepayment date of the shareholder’s loan in the amount of HK$872,500 owed byPHO24 (TST) Limited to CK Development to a date falling after the 1stanniversary of the agreement;

(v) a long term loan agreement dated 3 July 2013 entered into between PHO24 (NTP)Limited and CK Development pursuant to which the parties agreed to extend therepayment date of the shareholder’s loan in the amount of HK$177,000 owed byPHO24 (NTP) Limited to CK Development to a date falling after the 1stanniversary of the agreement;

(w) a long term loan agreement dated 3 July 2013 entered into between PHO24 (NTP)Limited and 1957 & Co. (Hospitality) pursuant to which the parties agreed toextend the repayment date of the shareholder’s loan in the amount of HK$59,000owed by PHO24 (NTP) Limited to 1957 & Co. (Hospitality) to a date falling afterthe 1st anniversary of the agreement;

(x) a sale and purchase agreement dated 31 October 2013 entered into between theCompany, Victory Stand, Dragon Flame, Glory Kind, Ms. Wong, Mr. Wu, Mr.Zhang, Mr. Lui and Mr. Pan Chik pursuant to which the Company acquired theentire issued share capital of Glory Kind, and as consideration for which (i) the 1nil-paid Share held by Victory Stand was credited as fully paid; and (ii) 749 and250 Shares were allotted and issued to Victory Stand and Dragon Flame,respectively and credited as fully paid at par;

(y) a deed of non-competition dated 2 November 2013 executed by Ms. Wong, Mr.Wu, Mr. Zhang, Mr. Lui and Victory Stand in favour of the Company, details ofwhich are set out in the paragraph headed “Non-competition Undertaking” underthe section headed “Relationship with Controlling Shareholders” in thisprospectus;

(z) a deed of indemnity dated 2 November 2013 executed by Ms. Wong, Mr. Wu, Mr.Zhang, Mr. Lui and Victory Stand in favour of the Company (for the Companyand as trustee for its subsidiaries) containing the indemnities referred to in theparagraph headed “Tax and other indemnities” in this appendix; and

(aa) the Underwriting Agreement.


– IV-10 –

2. Intellectual property rights

(a) Trademark

As at the Latest Practicable Date, the Group has been assigned or licenced underfranchising agreements to use the following trademarks:

Trademark ClassTrademarkNumber

RegistrationDate

Place ofApplication

Name ofassignee/licencee

43 300459252 18 July 2005 Hong Kong Top Aim

43 301146843 24 June 2008 Hong Kong Inakaya (HK)Limited

43 301146852 24 June 2008 Hong Kong Inakaya (HK)Limited

(Note)

43 302662443 N/A Hong Kong Grand Century

(Note)


(Note)


(Note)


(Note)


Note: The trademark is in the process of application.


– IV-11 –

As at the Latest Practicable Date, the Group had registered the followingtrademark:

Trademark ClassTrademarkNumber

RegistrationDate

Place ofRegistration Owner’s name

43 302607886 15 May 2013 Hong Kong Inakaya (HK) Limited

As at the Latest Practicable Date, the Group had applied for registration of thefollowing trademarks:

Trademark ClassApplicationNumber

Place ofApplication Name of applicant

43 302607949 Hong Kong Top Aim


43 302607921 Hong Kong Turbo Trade


43 302607903 Hong Kong JC Group






– IV-12 –

Trademark ClassApplicationNumber

Place ofApplication Name of applicant

43 302712159 Hong Kong Harlan’s Holding

(b) Domain names

As at the Latest Practicable Date, the Group has registered the following domainnames:

Domain Name Owner Expiry Date

JCgroup.hk J & H 19 June 2016H-viewgroup.hk H-view 21 September 2014Inakaya.hk H One F & B 11 March 2016Harlans.com.hk J & H 20 March 2016Kaika.com.hk Harlan’s Holding 14 July 2015Hooray.hk J & H 15 October 2014h-one.com.hk J & H 20 March 2014Harlanscakeshop.com.hk Harlan’s Holding 29 June 2015

C. FURTHER INFORMATION ABOUT SUBSTANTIAL SHAREHOLDERS,DIRECTORS AND EXPERTS

1. Disclosure of interests

(a) Immediately following the completion of the Placing and the Capitalisation Issuebut taking no account of the Shares to be issued pursuant to options which maybe granted under the Share Option Scheme, the interests and short positions of theDirectors or chief executive of the Company in the shares, underlying shares anddebentures of the Company or any of the associated corporations (within themeaning of Part XV of the SFO) which, once the Shares are listed on the StockExchange, will have to be notified to the Company and the Stock Exchangepursuant to Divisions 7 and 8 of Part XV of the SFO (including any interestswhich they are taken or deemed to have under such provisions of the SFO) or willbe required, pursuant to section 352 of the SFO, to be entered in the registerreferred to therein, or will be required, pursuant to the Rules 5.46 to 5.67 of theGEM Listing Rules, to be notified to the Company and the Stock Exchange, ineach case once the Shares are listed on the Stock Exchange, will be as follows:


– IV-13 –

Long position in the Shares

Name of DirectorCapacity/Natureof interest

Number ofShares

interested

Approximatepercentage ofshareholding

Mr. Pan Chik(Note 1)

Interest in a controlledcorporation

82,500,000 20.625%

Notes:

1. These Shares are held by Dragon Flame, the entire issued share capital of which is owned byMr. Pan Chik. Mr. Pan Chik is deemed to be interested in all the Shares held by Dragon Flameunder the SFO. Mr. Pan Chik is a non-executive Director.

Long position in the shares of associated corporation

Name ofDirector

Name ofassociatedcorporation

Capacity/Nature ofinterest

Number ofshares

Percentageof

shareholding

Mr. Wu Victory Stand Beneficial owner 2,975 29.75%Ms. Wong Victory Stand Beneficial owner 1,624 16.24%Mr. Lui Victory Stand Beneficial owner 813 8.13%

(b) Interests of substantial and other Shareholders in the Shares and underlyingShares

So far as is known to the Directors and save as disclosed in this prospectus andtaking no account of any Shares which may be taken up under the Placing, and Sharesto be issued pursuant to options which may be granted under the Share Option Scheme,the following persons (not being a Director or chief executive of the Company) will,immediately following the completion of the Placing and the Capitalisation Issue, haveinterests or short positions in Shares or underlying Shares which would fall to bedisclosed to the Company and the Stock Exchange under the provisions of Divisions 2and 3 of Part XV of the SFO or, who are, directly or indirectly, interested in 10% ormore of the nominal value of any class of share capital carrying rights to vote in allcircumstances at general meetings of any other member of the Group:

The Company

Name Nature of interestNumber of

Shares


in theCompany

Victory Stand Beneficial owner 217,500,000 54.375%

Mr. Zhang Interest in a controlledcorporation (Note 1)

217,500,000 54.375%


– IV-14 –

Name Nature of interestNumber of

Shares


in theCompany

Dragon Flame Beneficial owner 82,500,000 20.625%

Ms. Liu Ming Lai,Lorna

Interest of spouse(Note 2)

82,500,000 20.625%

Notes:

1. These Shares are registered in the name of Victory Stand, the entire issued share capital ofwhich is legally and beneficially owned as to 45.88%, 29.75%, 16.24% and 8.13% by Mr.Zhang, Mr. Wu, Ms. Wong and Mr. Lui, respectively. Mr. Zhang is deemed to be interested inall the Shares held by Victory Stand under the SFO. Ms. Wong, Mr. Wu and Mr. Lui are theexecutive Directors of the Company. Each of Mr. Zhang, Mr. Wu, Ms. Wong and Mr. Lui is adirector of Victory Stand.

2. Ms. Liu Ming Lai, Lorna, is the spouse of Mr. Pan Chik. Under the SFO, Ms. Liu Ming Lai,Lorna is deemed to be interested in the same number of Shares in which Mr. Pan Chik isdeemed to be interested.

The subsidiaries of the Company

Name of the shareholder

Name of thesubsidiary inwhich theshareholder isinterested

Nature ofinterest

Numberof shares


in thesubsidiary

Jack Company H One F&B Beneficialowner

3,000 30%

Mega Chance InvestmentsLimited

J&H Beneficialowner

1,800 18%

1957 & Co. (Hospitality) PHO24 (NTP)Limited

Beneficialowner

1,000 10%

CK Development PHO24 (TST)Limited

Beneficialowner

3,500 35%

CK Development PHO24 (NTP)Limited

Beneficialowner

3,000 30%

2. Particulars of service agreements

No Director has entered into any service agreement with any member of the Group(excluding contracts expiring or determinable by the employer within one year withoutpayment of compensation (other than statutory compensation)).


– IV-15 –

3. Directors’ remuneration

(a) The aggregate amount of remuneration paid to the Directors by the Group inrespect of the two years ended 31 March 2012, 31 March 2013 and 30 June 2013were approximately HK$2.3 million, HK$2.1 million and HK$195,000,respectively.

(b) Under the arrangements currently in force, the aggregate emoluments (excludingpayment pursuant to any discretionary benefits or bonus or other fringe benefits)payable by the Group to the Directors for the year ending 31 March 2014 will beapproximately HK$1.7 million.

(c) Under the arrangements currently proposed, conditional upon the Listing, thebasic annual remuneration (excluding payment pursuant to any discretionarybenefits or bonus or other fringe benefits) payable by the Group to each of theDirectors will be as follows:

HK$Executive Directors

Mr. Wu 1,200,000Ms. Wong 1,200,000Mr. Lui 600,000

Non-executive Director

Mr. Pan Chik 0

Independent non-executive Directors

Mr. Chan Wai Hung Clarence 100,000Mr. Law Yiu Sing 100,000Ms. Yue Chung Sze Joyce 100,000

4. Fees or commission received

As at the Latest Practicable Date, Mr. Pan Chik owned indirectly approximately82.69% of the issued share capital in Astrum, which is one of the Joint Lead Managers,Joint Bookrunners and Underwriters and will receive an underwriting commission under thePlacing, further information on which is set out in the paragraph headed “Total commission,fee and expenses” in the section headed “Underwriting” in this prospectus.

Save as disclosed in the paragraph headed “Total commission, fee and expenses” in thesection headed “Underwriting” of this prospectus, none of the Directors or the expertsnamed in the paragraph headed “Consents of experts” in this appendix had received anyagency fee or commissions from the Group within the two years preceding the date of thisprospectus.


– IV-16 –

5. Related party transactions

Details of the material related party transactions are set out under Note 27 to theAccountants’ Report set out in Appendix I to this prospectus.

6. Disclaimers

Save as disclosed in this prospectus:

(a) there are no existing or proposed service contracts (excluding contracts expiringor determinable by the employer within one year without payment ofcompensation (other than statutory compensation)) between the Directors and anymember of the Group;

(b) none of the Directors or the experts named in the paragraph headed “Consents ofexperts” in this appendix has any direct or indirect interest in the promotion of, orin any assets which have been, within the two years immediately preceding thedate of this prospectus, acquired or disposed of by or leased to, any member ofthe Group, or are proposed to be acquired or disposed of by or leased to anymember of the Group;

(c) none of the Directors or the experts named in the paragraph headed “Consents ofexperts” in this appendix is materially interested in any contract or arrangementsubsisting at the date of this prospectus which is significant in relation to thebusiness of the Group taken as a whole;

(d) taking no account of Shares which may be issued pursuant to options which maybe granted under the Share Option Scheme, none of the Directors knows of anyperson (not being a Director or chief executive of the Company) who will,immediately following completion of the Placing, have any interest in Shares orunderlying Shares which would fall to be disclosed to the Company under theprovisions of Divisions 2 and 3 of Part XV of the SFO, or who will be interested,directly or indirectly, in 10% or more of the nominal value of any class of sharecapital carrying rights to vote in all circumstances at general meetings of anyother member of the Group;

(e) none of the Directors or chief executive of the Company has any interest or shortposition in the shares, underlying Shares or debentures of the Company or any ofthe associated corporations (within the meaning of the SFO) which, once theShares are listed on the Stock Exchange, will have to be notified to the Companyand the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO(including any interests and short positions which he will be taken or deemed tohave under such provisions of the SFO) or which will be required, pursuant tosection 352 of the SFO, to be entered in the register referred to therein, or whichwill be required, pursuant to Rule 5.46 to 5.67 of the GEM Listing Rules, to benotified to the Company and the Stock Exchange; and


– IV-17 –

(f) so far as is known to the Directors, none of the Directors, their respectiveassociates or Shareholders who are interested in more than 5% of the issued sharecapital of the Company has any interests in the five largest customers or the fivelargest suppliers of the Group.

D. SHARE OPTION SCHEME

(a) Definitions

For the purpose of this section, the following expressions have the meanings setout below unless the context requires otherwise:

“Adoption Date” 2 November 2013, the date on which theShare Option Scheme is conditionallyadopted by the Shareholders by way ofwritten resolution

“Board” the board of Directors or a duly authorisedcommittee of the board of Directors

“business day” any day on which the Stock Exchange isopen for the business of dealing in securities

“Group” the Company and any entity in which theCompany, directly or indirectly, holds anyequity interest

(b) Summary of terms

The following is a summary of the principal terms of the rules of the ShareOption Scheme conditionally adopted by the written resolutions of the Shareholderspassed on 2 November 2013:

(i) Purpose of the Share Option Scheme

The purpose of the Share Option Scheme is to attract and retain the bestavailable personnel, to provide additional incentive to employees (full-time andpart-time), directors, consultants, advisers, distributors, contractors, suppliers,agents, customers, business partners or service providers of the Group and topromote the success of the business of the Group.

(ii) Who may join and basis of eligibility

The Board may, at its absolute discretion and on such terms as it may thinkfit, grant any employee (full-time or part-time), director, consultant or adviser ofthe Group, or any substantial shareholder of the Group, or any distributor,contractor, supplier, agent, customer, business partner or service provider of the


– IV-18 –

Group, options to subscribe at a price calculated in accordance with paragraph(iii) below for such number of Shares as it may determine in accordance with theterms of the Share Option Scheme.

The basis of eligibility of any participant to the grant of any option shall bedetermined by the Board (or as the case may be, including, where required underthe GEM Listing Rules, the independent non-executive Directors) from time totime on the basis of the participant’s contribution or potential contribution to thedevelopment and growth of the Group.

(iii) Price of Shares

The subscription price of a Share in respect of any particular option grantedunder the Share Option Scheme shall be a price solely determined by the Boardand notified to a participant and shall be at least the higher of: (i) the closingprice of the Shares as stated in the Stock Exchange’s daily quotations sheet on thedate of grant of the option, which must be a business day; (ii) the average of theclosing prices of the Shares as stated in the Stock Exchange’s daily quotationssheets for the five business days immediately preceding the date of grant of theoption; and (iii) the nominal value of a Share on the date of grant of the option,provided that in the event of fractional prices, the subscription price per Shareshall be rounded upwards to the nearest whole cent; and for the purpose ofcalculating the subscription price, where the Company has been listed on theStock Exchange for less than five business days, the new issue price shall be usedas the closing price for any business day falling within the period before listing.

(iv) Grant of options and acceptance of offers

An offer for the grant of options must be accepted within seven daysinclusive of the day on which such offer was made. The amount payable by thegrantee of an option to the Company on acceptance of the offer for the grant ofan option is HK$1.

(v) Maximum number of Shares

(aa) Subject to sub-paragraphs (bb) and (cc) below, the maximum number ofShares issuable upon exercise of all options to be granted under theShare Option Scheme and any other share option schemes of theCompany as from the Adoption Date (excluding, for this purpose,Shares issuable upon exercise of options which have been granted butwhich have lapsed in accordance with the terms of the Share OptionScheme or any other share option schemes of the Company) must notin aggregate exceed 10% of all the Shares in issue as at the ListingDate. Therefore, it is expected that the Company may grant options inrespect of up to 40,000,000 Shares (or such numbers of Shares as shallresult from a subdivision or a consolidation of such 40,000,000 Sharesfrom time to time) to the participants under the Share Option Scheme.


– IV-19 –

(bb) The 10% limit as mentioned above may be refreshed at any time byobtaining approval of the Shareholders in general meeting provided thatthe total number of Shares which may be issued upon exercise of alloptions to be granted under the Share Option Scheme and any othershare option schemes of the Company must not exceed 10% of theShares in issue as at the date of approval of the refreshed limit. Optionspreviously granted under the Share Option Scheme and any other shareoption schemes of the Company (including those outstanding, cancelledor lapsed in accordance with the terms of the Share Option Scheme andany other share option schemes of the Company) will not be countedfor the purpose of calculating the refreshed 10% limit. A circular mustbe sent to the Shareholders containing the information as requiredunder the GEM Listing Rules in this regard.

(cc) Subject to sub-paragraph (dd) below, the Company may seek separateapproval by the Shareholders in general meeting for granting optionsbeyond the 10% limit provided the options in excess of the 10% limitare granted only to grantees specifically identified by the Companybefore such approval is sought. In such event, the Company must senda circular to the Shareholders containing a generic description of suchgrantees, the number and terms of such options to be granted and thepurpose of granting options to them with an explanation as to how theterms of the options will serve such purpose and all other informationrequired under the GEM Listing Rules.

(dd) The aggregate number of Shares which may be issued upon exercise ofall outstanding options granted and yet to be exercised under the ShareOption Scheme and any other share option schemes of the Companymust not exceed 30% of the Shares in issue from time to time. Nooptions may be granted under the Share Option Scheme or any othershare option schemes of the Company, if this will result in the limitbeing exceeded.

(vi) Maximum entitlement of each participant

The total number of Shares issued and to be issued upon exercise of optionsgranted to each participant (including both exercised and outstanding options)under the Share Option Scheme or any other share option schemes of theCompany, in any 12-month period up to the date of grant shall not exceed 1% ofthe Shares in issue. Any further grant of options in excess of such limit must beseparately approved by Shareholders in general meeting with such grantee and hisassociates abstaining from voting. In such event, the Company must send acircular to the Shareholders containing the identity of the grantee, the number andterms of the options to be granted (and options previously granted to suchgrantee), and all other information required under the GEM Listing Rules. Thenumber and terms (including the subscription price) of the options to be granted


– IV-20 –

to such grantee must be fixed before the approval of the Shareholders and thedate of the Board meeting proposing such further grant should be taken as thedate of grant for the purpose of calculating the subscription price.

(vii) Grant of options to certain connected persons

(aa) Any grant of options to a Director, chief executive or substantialshareholder of the Company or any of their respective associates mustbe approved by the independent non-executive Directors (excluding anyindependent non-executive Director who is the grantee of the option).

(bb) Where any grant of options to a substantial Shareholder or anindependent non-executive Director or any of their respective associateswill result in the total number of Shares issued and to be issued uponexercise of all options already granted and to be granted to such personunder the Share Option Scheme (including options exercised, cancelledand outstanding) and any other share option schemes of the Companyto such person in any 12-month period up to and including the date ofgrant:

(i) representing in aggregate over 0.1% of the Shares in issue; and

(ii) having an aggregate value, based on the closing price of theShares at the date of each grant, in excess of HK$5 million,

such further grant of options is required to be approved byShareholders at a general meeting of the Company, with voting to betaken by way of poll. The Company shall send a circular to theShareholders containing all information as required under the GEMListing Rules in this regard. All connected persons of the Companyshall abstain from voting (except where any connected person intendsto vote against the proposed grant and his/her intention to do so hasbeen stated in the aforesaid circular). Any change in the terms of anoption granted to a substantial shareholder or an independentnon-executive Director or any of their respective associates is alsorequired to be approved by Shareholders in the aforesaid manner.

(viii) Restrictions on the times of grant of options

(aa) No offer for the grant of options may be made after any insideinformation has come to the knowledge of the Group until such insideinformation has been announced pursuant to the requirements of theGEM Listing Rules and the SFO. No option may be granted during theperiod commencing one month immediately preceding the earlier of:


– IV-21 –

(i) the date of the Board meeting (such date to first be notified to theStock Exchange in accordance with the GEM Listing Rules) forthe approval of the Company’s results for any year, half-year,quarterly or other interim period (whether or not required underthe GEM Listing Rules); and

(ii) the last day on which the Company shall publish an announcementof the results for any year, half-year or quarterly under the GEMListing Rules, or other interim period (whether or not requiredunder the GEM Listing Rules) and ending on the date of theresults announcement.

(bb) Further to the restrictions in paragraph (aa) above, no option may begranted to a Director on any day on which financial results of theCompany are published and:

(i) during the period of 60 days immediately preceding thepublication date of the annual results or, if shorter, the periodfrom the end of the relevant financial year up to the publicationdate of the results; and

(ii) during the period of 30 days immediately preceding thepublication date of the quarterly results and half-year results or, ifshorter, the period from the end of the relevant quarterly orhalf-year period up to the publication date of the results.

(ix) Time of exercise of option

An option may be exercised in accordance with the terms of the ShareOption Scheme at any time during a period as the Board may determine whichshall not exceed ten years from the date of grant subject to the provisions of earlytermination thereof.

(x) Performance targets

Save as determined by the Board and provided in the offer of the grant ofthe relevant options, there is no performance target which must be achievedbefore any of the options can be exercised.

(xi) Ranking of Shares

The Shares to be allotted upon the exercise of an option will be subject toall the provisions of the Articles of Association for the time being in force andwill rank pari passu in all respects with the fully paid Shares in issue on the dateof allotment and accordingly will entitle the holders to participate in all dividendsor other distributions paid or made after the date of allotment other than anydividend or other distribution previously declared or recommended or resolved tobe paid or made with respect to a record date which shall be on or before the date


– IV-22 –

of allotment, save that the Shares allotted upon the exercise of any option shallnot carry any voting rights until the name of the grantee has been duly entered onthe register of members of the Company as the holder thereof.

(xii) Rights are personal to grantee

An option shall not be transferable or assignable and shall be personal to thegrantee of the option. No grantee shall in any way sell, transfer, charge, mortgage,encumber or create any interest (legal or beneficial) in favour of any third partyover or in relation to any option (where the grantee is a company, any change ofits major shareholder or any substantial change in its management as determinedby the Board at its sole discretion will be deemed to be a sale or transfer ofinterest as aforesaid, if so determined by the Board at its sole discretion).

(xiii) Rights on cessation of employment by death

In the event of the death of the grantee (provided that none of the eventswhich would be a ground for termination of employment referred to in (xiv)below arises within a period of three years prior to the death, in the case thegrantee is an employee at the date of grant), the legal personal representative(s) ofthe grantee may exercise the option up to the grantee’s entitlement (to the extentwhich has become exercisable and not already exercised) within a period of 12months following his/her death provided that where any of the events referred toin (xvii), (xviii) and (xix) occurs prior to his/her death or within such period of12 months following his/her death, then his/her legal personal representative(s)may so exercise the option within such of the various periods respectively set outtherein.

(xiv) Rights on cessation of employment by dismissal

In the event that the grantee is an employee of the Group at the date ofgrant and he/she subsequently ceases to be an employee of the Group by reasonof a termination of his/her employment on any one or more of the grounds thathe/she has been guilty of serious misconduct, or has committed an act ofbankruptcy or has become insolvent or has made any arrangement or compositionwith his/her creditors generally, or has been convicted of any criminal offenceinvolving his/her integrity or honesty or (if so determined by the Board) on anyother ground on which an employer would be entitled to terminate his/heremployment at common law or pursuant to any applicable laws or under thegrantee’s service contract with the Group, his/her option shall lapse automatically(to the extent not already exercised) on the date of cessation of his/heremployment with the Group.

(xv) Rights on cessation of employment for other reasons

In the event that the grantee is an employee of the Group at the date ofgrant and he/she subsequently ceases to be an employee of the Group for anyreason other than his/her death or the termination of his/her employment on oneor more of the grounds specified in (xiv) above, the option (to the extent notalready lapsed or exercised) shall lapse on the expiry of three months after the


– IV-23 –

date of cessation of such employment (which date will be the last actual workingday on which the grantee was physically at work with the Company or therelevant member of the Group whether salary is paid in lieu of notice or not).

(xvi) Effects of alterations to share capital

In the event of any alteration in the capital structure of the Company whilstany option remains exercisable, whether by way of capitalisation of profits orreserves, rights issue, open offer, consolidation, subdivision or reduction of theshare capital of the Company (other than an issue of Shares as consideration inrespect of a transaction to which any member of the Group is a party), suchcorresponding adjustments (if any) shall be made in the number of Shares subjectto the option so far as unexercised, and/or the subscription prices of anyunexercised option, as the auditors of or independent financial adviser to theCompany shall certify or confirm in writing (as the case may be) to the Board tobe in their opinion fair and reasonable and in compliance with the relevantprovisions of the GEM Listing Rules, or any guideline or supplemental guidelineissued by the Stock Exchange from time to time (no such certification orconfirmation is required in case of adjustment made on a capitalisation issue),provided that any alteration shall give a grantee, as near as possible, the sameproportion of the issued share capital of the Company as that to which he/she/itwas previously entitled, but no adjustment shall be made to the effect of whichwould be to enable a Share to be issued at less than its nominal value.

(xvii)Rights on a general offer

In the event of a general offer (whether by way of takeover offer or schemeof arrangement or otherwise in like manner) being made to all the Shareholders(or all such holders other than the offeror and/or any persons controlled by theofferor and/or any person acting in association or concert with the offeror) andsuch offer becoming or being declared unconditional, the grantee (or, as the casemay be, his/her legal personal representative(s)) shall be entitled to exercise theoption in full (to the extent not already lapsed or exercised) at any time withinone month after the date on which the offer becomes or is declared unconditional.

(xviii) Rights on winding-up

In the event a notice is given by the Company to the members to convene ageneral meeting for the purposes of considering, and if thought fit, approving aresolution to voluntarily wind-up the Company, the Company shall on the samedate as or soon after it despatches such notice to each member of the Companygive notice thereof to all grantees and thereupon, each grantee (or, as the casemay be, his legal personal representative(s)) shall be entitled to exercise all or anyof his/her options at any time not later than two business days prior to theproposed general meeting of the Company by giving notice in writing to theCompany, accompanied by a remittance for the full amount of the aggregatesubscription price for the Shares in respect of which the notice is given


– IV-24 –

whereupon the Company shall as soon as possible and, in any event, no later thanthe business day immediately prior to the date of the proposed general meetingreferred to above, allot the relevant Shares to the grantee credited as fully paid.

(xix) Rights on compromise or arrangement

In the event of a compromise or arrangement between the Company and theShareholders or the creditors of the Company being proposed in connection with ascheme for the reconstruction of the Company or its amalgamation with any othercompany or companies pursuant to the Companies Law, the Company shall givenotice thereof to all the grantees (or, as the case may be, their legal personalrepresentatives) on the same day as it gives notice of the meeting to theShareholders or the creditors of the Company to consider such a compromise orarrangement and the options (to the extent not already lapsed or exercised) shallbecome exercisable in whole or in part on such date not later than two businessdays prior to the date of the general meeting directed to be convened by the courtfor the purposes of considering such compromise or arrangement (the “SuspensionDate”), by giving notice in writing to the Company accompanied by a remittancefor the full amount of the aggregate subscription price for the Shares in respect ofwhich the notice is given whereupon the Company shall as soon as practicableand, in any event, no later than 3:00 p.m. on the business day immediately priorto the date of the proposed general meeting, allot and issue the relevant Shares tothe grantee credited as fully paid. With effect from the Suspension Date, therights of all grantees to exercise their respective options shall forthwith besuspended. Upon such compromise or arrangement becoming effective, all optionsshall, to the extent that they have not been exercised, lapse and determine. TheBoard shall endeavor to procure that the Shares issued as a result of the exerciseof options hereunder shall for the purposes of such compromise or arrangementform part of the issued share capital of the Company on the effective date thereofand that such Shares shall in all respects be subject to such compromise orarrangement. If for any reason such compromise or arrangement is not approvedby the court (whether upon the terms presented to the court or upon any otherterms as may be approved by such court), the rights of grantees to exercise theirrespective options shall with effect from the date of the making of the order bythe court be restored in full but only up to the extent not already exercised andshall thereupon become exercisable (but subject to the other terms of the ShareOption Scheme) as if such compromise or arrangement had not been proposed bythe Company and no claim shall lie against the Company or any of its officers forany loss or damage sustained by any grantee as a result of such proposal, unlessany such loss or damage shall have been caused by the act, neglect, fraud orwillful default on the part of the Company or any of its officers.

(xx) Lapse of options

Subject to paragraph (xiv) above, an option shall lapse automatically on theearliest of:

(aa) the expiry of the period referred to in paragraph (ix) above;


– IV-25 –

(bb) the date on which the Board exercises the Company’s right to cancel,revoke or terminate the option on the ground that the grantee commitsa breach of paragraph (xii);

(cc) the expiry of the relevant period or the occurrence of the relevant eventreferred to in paragraphs (xiii), (xv), (xvii), (xviii) or (xix) above;

(dd) subject to paragraph (xviii) above, the date of the commencement ofthe winding-up of the Company;

(ee) the occurrence of any act of bankruptcy, insolvency or entering into ofany arrangements or compositions with his creditors generally by thegrantee, or conviction of the grantee of any criminal offence involvinghis integrity or honesty;

(ff) where the grantee is only a substantial shareholder of any member ofthe Group, the date on which the grantee ceases to be a substantialshareholder of such member of the Group; or

(gg) subject to the compromise or arrangement as referred to in paragraph(xix) become effective, the date on which such compromise orarrangement becomes effective.

(xxi) Cancellation of options granted but not yet exercised

Any cancellation of options granted but not exercised may be effected onsuch terms as may be agreed with the relevant grantee, as the Board may in itsabsolute discretion sees fit and in manner that complies with all applicable legalrequirements for such cancellation.

(xxii)Period of the Share Option Scheme

The Share Option Scheme will remain in force for a period of ten yearscommencing on the Adoption Date and shall expire at the close of business on thebusiness day immediately preceding the tenth anniversary thereof unlessterminated earlier by the Shareholders in general meeting.

(xxiii) Alteration to the Share Option Scheme

(aa) The Share Option Scheme may be altered in any respect by resolutionof the Board except that alterations of the provisions of the ShareOption Scheme which alters to the advantage of the grantees of theoptions and the prospective grantees of the options relating to mattersgoverned by Rule 23.03 of the GEM Listing Rules shall not be madeexcept with the prior approval of the Shareholders in general meeting.


– IV-26 –

(bb) Any alternations to the terms and conditions of the Share OptionScheme which are of a material nature or any change to the terms ofoptions granted, or any change to the authority of the Board in respectof alteration of the Share Option Scheme must be approved by theShareholders in general meeting except where the alterations take effectautomatically under the existing terms of the Share Option Scheme.

(cc) Any amendment to any terms of the Share Option Scheme or theoptions granted shall comply with the relevant requirements of Chapter23 of the GEM Listing Rules.

(xxiv) Termination of the Share Option Scheme

The Company by resolution in general meeting or the Board may at any timeterminate the operation of the Share Option Scheme and in such event no furtheroptions will be offered but options granted prior to such termination shallcontinue to be valid and exercisable in accordance with provisions of the ShareOption Scheme.

(xxv) Conditions of the Share Option Scheme

The Share Option Scheme is conditional upon the Listing Division grantingthe listing of and permission to deal in the Shares to be issued pursuant to theexercise of any options which may be granted under the Share Option Scheme andcommencement of dealings in the Shares on the Stock Exchange.

(c) Present status of the Share Option Scheme

Application has been made to the Listing Division for the listing of andpermission to deal in 40,000,000 Shares which fall to be issued pursuant to theexercise of the options granted under the Share Option Scheme.

As at the date of this prospectus, no option has been granted or agreed to begranted under the Share Option Scheme.

E. OTHER INFORMATION

1. Tax and other indemnities

Ms. Wong, Mr. Wu, Mr. Zhang, Mr. Lui and Victory Stand, (collectively, the“Indemnifiers”) have, under a deed of indemnity referred to in paragraph (z) of thesub-section headed “Summary of material contracts” in this appendix, given joint andseveral indemnities to the Company (for the Company and as trustee for itssubsidiaries) in connection with, among other things,

(a) any taxation (including estate duty) falling on any member of the Group


– IV-27 –

(i) in respect of or by reference to any income, profits or gains earned,accrued or received or deemed or alleged to have been earned, accruedor received on or before the date on which the Placing becomesunconditional; or

(ii) in respect of or by reference to any transaction, act, omission or evententered into or occurring or deemed to enter into or occur on or beforethe date on which the Placing becomes unconditional;

(b) all claims, proceedings, judgments, losses, liabilities, fines, payments,damages and any associated costs suffered by or incurred by any member ofthe Group as a result of

(i) any litigation, arbitrations, claims (including counter-claims) and/orlegal proceedings instituted by or against any member of the Groupwhich was arising from any act, non-performance, omission orotherwise of any member of the Group on or before the date on whichthe Placing becomes unconditional;

(ii) any breach or alleged breach of any terms of the FranchisingAgreements and the Master Franchise Agreement (as referred to in theparagraphs headed “Franchising Agreements” and “Franchisingarrangements on PHO24” in the section headed “Business” of thisprospectus) arising from any act, non-performance, omission orotherwise of any party on or before the date on which the Placingbecomes unconditional;

(iii) any relocation due to any irregularities in relation to any of the tenancyagreements or licence agreements of any member of the Group enteredinto on or before the date on which the Placing becomes unconditional,including but not limited to all relocation costs, loss of profit andbusiness, penalties and fines and all losses and damages which may besuffered by any member of the Group as a result thereof;

(iv) any business disruptions, claims, legal proceedings arising from anyinfringement of intellectual property of others caused by anynon-registration or non-filing on or before the date on which thePlacing becomes unconditional of any of the trademarks or intellectualproperty rights owned or used by any member of the Group;

(v) any non-compliance with the applicable laws, rules or regulations,including but not limited to the Companies Ordinance (Chapter 32 ofthe Laws of Hong Kong) and the Water Pollution Control Ordinance(Chapter 358 of the Laws of Hong Kong), by any member of the Groupon or before the date on which the Placing becomes unconditional;

(vi) any irregularities in relation to any corporate documents of any memberof the Group;


– IV-28 –

(vii) the Reorganisation for any losses or liabilities payable by the Company;and

(viii) any unlawful use of real properties leased by any member of the Groupof any relevant land, construction or user regulations applicable to theproperties leased by the relevant member of the Group prior to the dateon which the Placing becomes unconditional.

The Indemnifiers will, however, not be liable under the deed of indemnity to theextent that, among others:

(I) in relation to items (a) and (b) above, specific provision, reserve orallowance has been made for such liability in the audited combined accountsof the Company or any member of the Group for the Track Record Period;

(II) in relation to item (a) above, the taxation liability arises or is incurred as aresult of a retrospective change in law or a retrospective increase in tax ratescoming into force after the date on which the Placing becomesunconditional; or

(III) in relation to item (a) above, the taxation liability arises in the ordinarycourse of business of any members of the Group after 30 June 2013 up toand including the date on which the Placing becomes unconditional.

The Directors have been advised that no material liability for estate duty underthe laws of the Cayman Islands is likely to fall on the Group.

2. Litigation

As at the Latest Practicable Date, save as disclosed in this prospectus, no memberof the Group was engaged in any litigation or arbitration of material importance and nolitigation or claim of material importance is known to the Directors to be pending orthreatened against any member of the Group.

3. Sponsor

The Sponsor has, on behalf of the Company, made an application to the StockExchange for the Listing of, and permission to deal in, the Shares in issue and to beissued as mentioned herein and the Shares falling to be issued pursuant to the exerciseof any options which may be granted under the Share Option Scheme.

4. Preliminary expenses

The preliminary expenses of the Company are approximately HK$38,000 and arepayable by the Company.


– IV-29 –

5. Promoter

The Company has no promoter for the purpose of the GEM Listing Rules.

6. Qualifications of experts

The following are the qualifications of the experts who have given opinion oradvice which are contained in this prospectus:

Name Qualifications

TC Capital A licensed corporation under the SFO toengage in type 1 (dealing in securities) andtype 6 (advising on corporate finance) of theregulated activities

HLB Hodgson Impey ChengLimited

Certified Public Accountants

Appleby Cayman Islands legal adviser to theCompany

Loong & Yeung Legal advisers as to Hong Kong laws

Chan Chung Barrister-at-law of Hong Kong, the LegalCounsel of the Company

7. Consents of experts

Each of TC Capital, HLB Hodgson Impey Cheng Limited, Appleby, Loong &Yeung and Chan Chung has given and has not withdrawn its written consent to theissue of this prospectus with the inclusion of its reports and/or letter and/or opinionand/or summary thereof (as the case may be) and/or reference to its name includedherein in the form and context in which it is respectively included.

8. Binding effect

This prospectus shall have the effect, if an application is made in pursuancehereof, of rendering all persons concerned bound by all of the provisions (other thanthe penal provisions) of sections 44A and 44B of the Companies Ordinance so far asapplicable.

9. Taxation of holders of Shares

(a) Hong Kong

Dealings in Shares registered on the Company’s Hong Kong branch registerof members will be subject to Hong Kong stamp duty.


– IV-30 –

(b) Cayman Islands

No stamp duty is payable in the Cayman Islands on transfers of shares ofCayman Islands companies except those which hold interests in land in theCayman Islands.

(c) Consultation with professional advisors

Intending holders of the Shares are recommended to consult theirprofessional advisors if they are in any doubt as to the taxation implications ofsubscribing for, purchasing, holding or disposing of or dealing in the Shares. It isemphasised that none of the Company, its Directors or other parties involved inthe Placing accepts responsibility for any tax effect on, or liabilities of holders ofShares resulting from their subscription for, purchase, holding or disposal of ordealing in the Shares.

10. Material adverse change

Save as disclosed in this prospectus, the Directors confirm that there has not beenany material adverse change in the financial trading position or prospects of the Groupsince 30 June 2013 (being the date to which the latest audited combined financialstatements of the Group were made up).

11. Particulars of the Vendor

The following are particulars of the Vendor:

Name Description Address

Numberof SaleShares

Victory Stand a companyincorporated inBVI

Portcullis TrustNet Chambers,P.O. Box 3444, Road Town,Tortola, British Virgin Islands

30,000,000

Victory Stand is owned as to 45.88% by Mr. Zhang, 29.75% by Mr. Wu, 16.24%by Ms. Wong and 8.13% by Mr. Lui.

12. Miscellaneous

(a) Save as disclosed in this prospectus, within the two years immediatelypreceding the date of this prospectus:

(i) no share or loan capital of the Company or any of its subsidiaries hasbeen issued or agreed to be issued fully or partly paid either for cash orfor a consideration other than cash;


– IV-31 –

(ii) no commissions, discounts, brokerages or other special terms have beengranted in connection with the issue or sale of any capital of theCompany or any of its subsidiaries and no commission has been paid oris payable in connection with the issue or sale of any capital of theCompany or any of its subsidiaries;

(iii) no commission has been paid or is payable for subscribing or agreeingto subscribe, or procuring or agreeing to procure the subscriptions, forany of the Shares or shares of any of the subsidiaries; and

(iv) no share or loan capital of the Company or any of its subsidiaries isunder option or is agreed conditionally or unconditionally to be putunder option.

(b) Save as disclosed in this prospectus, neither the Company nor any of itssubsidiaries has issued or agreed to issue any founders shares, managementshares, deferred shares or any debentures.

(c) Save in connection with the Underwriting Agreement, none of the partieslisted in the paragraph headed “Consents of experts” in this appendix:

(i) is interested legally or beneficially in any securities in the Company orany of its subsidiaries; or

(ii) has any right or option (whether legally enforceable or not) tosubscribe for or to nominate persons to subscribe for securities in theCompany or any of its subsidiaries.

(d) The branch register of members of the Company will be maintained in HongKong by Union Registrars Limited. Unless the Directors otherwise agree, alltransfer and other documents of title of Shares must be lodged forregistration with and registered by the Company’s branch share registrar inHong Kong and may not be lodged in the Cayman Islands. All necessaryarrangements have been made to ensure the Shares to be admitted intoCCASS for clearing and settlement.

(e) There has not been any interruption in the business of the Group which mayhave or have had a significant effect on the financial position of the Groupin the 12 months immediately preceding the date of this prospectus.

(f) No company within the Group is presently listed on any stock exchange ortraded on any trading system.

(g) The Group has no outstanding convertible debt securities.

(h) The English text of this prospectus shall prevail over the Chinese text.


– IV-32 –

DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES IN HONGKONG

The documents attached to a copy of this prospectus delivered to the Registrar ofCompanies in Hong Kong for registration were copies of the written consents referred to inthe paragraph headed “Consents of experts” in Appendix IV to this prospectus, copies of thematerial contracts referred to in the paragraph headed “Summary of material contracts” inAppendix IV to this prospectus and a list containing particulars of the Vendor referred to inthe paragraph headed “Particulars of the Vendor” in Appendix IV to this prospectus.

DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the office ofLoong & Yeung of Suites 2001-2005, 20th Floor, Jardine House, 1 Connaught Place,Central, Hong Kong during normal business hours up to and including the date which is 14days from the date of this prospectus:

(a) the Memorandum of Association and the Articles of Association;

(b) the accountants’ report prepared by HLB Hodgson Impey Cheng Limited,Certified Public Accountants, the text of which is set out in Appendix I to thisprospectus;

(c) the report on the unaudited pro forma financial information of the Group preparedby HLB Hodgson Impey Cheng Limited, Certified Public Accountants, the text ofwhich is set out in Appendix II to this prospectus;

(d) the audited statutory financial statements of the companies comprising the Groupfor each of the two financial years ended 31 March 2013 or for the period fromtheir respective dates of incorporation to 31 March 2013 where there is a shorterperiod;

(e) the material contracts referred to in the paragraph headed “Summary of materialcontracts” in Appendix IV to this prospectus;

(f) the service agreements referred to in the paragraph headed “Particulars of serviceagreements” in Appendix IV to this prospectus;

(g) the rules of the Share Option Scheme referred to in the paragraph headed “ShareOption Scheme” in Appendix IV to this prospectus;

(h) the written consents referred to in the paragraph headed “Consents of experts” inAppendix IV to this prospectus;

(i) the list containing the particulars of the Vendor as set out in the paragraph headed“Particulars of the Vendor” in Appendix IV to this prospectus;

APPENDIX V DOCUMENTS DELIVERED TO THE REGISTRAROF COMPANIES IN HONG KONG

AND AVAILABLE FOR INSPECTION

– V-1 –

(j) the Companies Law;

(k) the letter prepared by Appleby summarising certain aspects of the Cayman Islandscompany law referred to in Appendix III to this prospectus;

(l) the letters of advice prepared by Loong & Yeung, the legal advisers as to HongKong Laws of the Company dated the date of this prospectus as to certainnon-compliance with the Companies Ordinance by the Group; and

(m) the letters of advice prepared by Mr. Chan Chung, the Legal Counsel of theCompany dated the date of this prospectus as to certain non-compliance with theWPCO by the Group, as to certain matters in relation to the Master FranchiseAgreement and as to certain matters in relation to the trademarks of the Group.

APPENDIX V DOCUMENTS DELIVERED TO THE REGISTRAROF COMPANIES IN HONG KONG

AND AVAILABLE FOR INSPECTION

– V-2 –