Luen Wong Group Prospectus

LUEN WONG GROUP HOLDINGS LIMITED
(Incorporated in the Cayman Islands with limited liability)

Stock Code: 8217
PLACING
Sponsor
Joint Bookrunners and Joint Lead Managers
IMPORTANT
If you are in any doubt about any of the contents of this prospectus, you should obtain independent
professional advice.
LISTING ON THE GROWTH ENTERPRISE MARKET OF

THE STOCK EXCHANGE OF HONG KONG LIMITED
BY WAY OF PLACING
Number of Placing Shares : 312,000,000 Shares (comprising
208,000,000 New Shares to be offered
by our Company and 104,000,000 Sale
Shares to be offered by the Selling
Shareholder)
Placing Price : HK$0.26 per Placing Share, plus
brokerage of 1%, SFC transaction levy
of 0.0027% and Stock Exchange
trading fee of 0.005% (payable in full
on application in Hong Kong dollars)
Nominal value : HK$0.01 per Share
Stock code : 8217
Sponsor
TC Capital Asia Limited

Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong
Securities Clearing Company Limited take no responsibility for the contents of this prospectus, make no
representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss
howsoever arising from or in reliance upon the whole or any part of the contents of this prospectus.
A copy of this prospectus, having attached thereto the documents specified in the section headed Documents
Delivered to the Registrar of Companies and Available for Inspection in Appendix VI to this prospectus, has been
registered with the Registrar of Companies as required by Section 342C of the Companies (Winding Up and
Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong). The Registrar of Companies in
Hong Kong and the Securities and Futures Commission of Hong Kong take no responsibility as to the contents of
this prospectus or any of the other documents referred to above.
Prior to making an investment decision, prospective investors should consider carefully all of the information set
out in this prospectus, including but not limited to the risk factors set out in the section headed Risk Factors in
this prospectus.
Prospective investors of the Placing Shares should note that the Sponsor and/or the Joint Bookrunners (for
themselves and on behalf of the Underwriters) are entitled to terminate the obligations of the Underwriters under
the Underwriting Agreement by means of a notice in writing to our Company (for itself and on behalf of the
Selling Shareholder) given by the Sponsor and/or the Joint Bookrunners (for themselves and on behalf of the
Underwriters) upon the occurrence of any of the events set out in the section headed Underwriting
Underwriting Arrangements and Expenses Grounds for termination in this prospectus, at any time prior to 8:00
a.m. (Hong Kong time) on the Listing Date. Should the Sponsor and/or the Joint Bookrunners (for themselves and
on behalf of the Underwriters) terminate the Underwriting Agreement, the Placing will not proceed and will lapse.
31 March 2016
CHARACTERISTICS OF GEM
GEM has been positioned as a market designed to accommodate companies to
which a higher investment risk may be attached than other companies listed on the Stock
Exchange. Prospective investors should be aware of the potential risks of investing in
such companies and should make the decision to invest only after due and careful
consideration. The greater risk profile and other characteristics of GEM mean that it is a
market more suited to professional and other sophisticated investors.
Given the emerging nature of companies listed on GEM, there is a risk that
securities traded on GEM may be more susceptible to high market volatility than
securities traded on the Main Board and no assurance is given that there will be a liquid
market in the securities traded on GEM.
EXPECTED TIMETABLE
2016
(Note 1)
Announcement of the level of indication of interest

in the Placing to be published on
(i)
the Stock Exchanges website at www.hkexnews.hk; and
(ii) our Companys website at www.luenwong.hk

on or before . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 11 April
Allotment of Placing Shares to placees on or about
Deposit of share certificates for
the Placing Shares into CCASS on or about
Dealings in the Shares on GEM to
commence at 9:00 a.m. on (Notes 3
& 4)
. . . . . . . . . . . . . . . . Monday, 11 April
(Note 2)
. . . . . . . . . . . . . . Monday, 11 April
. . . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 12 April
Notes:
1.
All times and dates refer to Hong Kong local times and dates.
2.
Share certificates for the Placing Shares allotted and issued to the placees are expected to be deposited
directly into CCASS on or about Monday, 11 April 2016 for credit to the respective CCASS participants or
the CCASS investor participants stock accounts designated by the Underwriter), the placees or their agents
(as the case may be). No temporary documents or evidence of title will be issued by our Company.
3.
If there is any change to the above expected timetable, we will make an appropriate announcement on the
Stock Exchanges website at www.hkexnews.hk and on our Companys website at www.luenwong.hk to
inform investors accordingly.
4.
All share certificates for the Placing Shares will only become valid certificates of title when the Placing has
become unconditional in all respects and the Underwriting Agreement has not been terminated in
accordance with its terms at any time prior to 8:00 a.m. on the Listing Date. If the Placing does not become
unconditional or the Underwriting Agreement is terminated in accordance with its terms, we will make an
announcement on the Stock Exchanges website at www.hkexnews.hk and on our Companys website at
www.luenwong.hk as soon as possible.
ii
CONTENTS
You should rely only on the information contained in this prospectus to make your
investment decision. Our Company has not authorised anyone to provide you with
information that is different from what is contained in this prospectus. Any information or
representation not contained or made in this prospectus must not be relied on by you as
having been authorised by our Company, the Selling Shareholder, the Sponsor, the Joint
Bookrunners, the Joint Lead Managers, any of the Underwriters, any of their respective
directors, affiliates, employees or representatives or any other person or party involved in
the Placing.
Page
CHARACTERISTICS OF GEM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EXPECTED TIMETABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ii
CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
iii
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11
GLOSSARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19
FORWARD-LOOKING STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24
INFORMATION ABOUT THIS PROSPECTUS AND THE PLACING . . . . . . . . . .
41
DIRECTORS AND PARTIES INVOLVED IN THE PLACING . . . . . . . . . . . . . . . .
45
CORPORATE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
49
INDUSTRY OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
51
REGULATORY OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
62
HISTORY AND DEVELOPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
80
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
88
DIRECTORS AND SENIOR MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . .
183
RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS . . . . . . . . . . .
193
iii
CONTENTS
Page
SUBSTANTIAL SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
202
SHARE CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
204
FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
208
STATEMENT OF BUSINESS OBJECTIVE AND USE OF PROCEEDS . . . . . . . .
260
UNDERWRITING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
267
STRUCTURE AND CONDITIONS OF THE PLACING . . . . . . . . . . . . . . . . . . . . .
276
APPENDIX I
ACCOUNTANTS REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . .
I-1
APPENDIX II
UNAUDITED PRO FORMA FINANCIAL INFORMATION . .
II-1
APPENDIX III PROPERTY VALUATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-1

APPENDIX IV SUMMARY OF THE CONSTITUTION OF
OUR COMPANY AND
CAYMAN ISLANDS COMPANY LAW . . . . . . . . . . . . . . . . .
APPENDIX V
STATUTORY AND GENERAL INFORMATION . . . . . . . . . . .
IV-1
V-1
APPENDIX VI DOCUMENTS DELIVERED TO

THE REGISTRAR OF COMPANIES AND
AVAILABLE FOR INSPECTION . . . . . . . . . . . . . . . . . . . . . VI-1
iv
SUMMARY
This summary aims to give you an overview of the information contained in this
prospectus. As this is a summary, it does not contain all the information that may be
important to you. You should read the whole prospectus before you decide to invest in the
Placing Shares. There are risks associated with any investment. Some of the particular
risks in investing in the Placing Shares are set forth in the section headed Risk factors
in this prospectus. You should read that section carefully before you decide to invest in
the Placing Shares.
Various expressions used in this summary are defined in the sections headed
Definitions and Glossary in this prospectus.
OUR BUSINESS
We are an established subcontractor engaged in civil engineering works. We have over
16 years of experience in providing civil engineering works as a subcontractor and are
flexible in deploying resources to meet our customers demand.
The civil engineering works undertaken by us are mainly related to (i) roads and
drainage works (including construction and improvement of local road, carriageway with
junction improvement and the associated footpaths, planting areas, drains, sewers, water
mains and utilities diversion); (ii) structural works (including construction of reinforced
concrete structures for bridges and retaining walls); and (iii) site formation works (including
excavation and/or filling works for forming a new site or achieving designed formation level
for later development). During the Track Record Period, the average duration of completed
projects (from the date of engagement to the date of completion) was approximately 2.2
years. Depending on the nature and complexity of a project as well as the existence of any
unforeseen circumstances (such as bad weather conditions, industrial accidents, variation
orders requested by customers, etc., if any), the duration of a contract generally ranges from
approximately 2 years to 4 years.
Our direct customers are primarily main contractors of various different types of civil
engineering projects in Hong Kong. During the Track Record Period, the majority of our
revenue was derived from public sector projects, i.e. projects which the main contractors are
employed by the Government or statutory bodies, representing approximately 93.3%, 93.9%
and 87.8% of our revenue for the two years ended 31 March 2015 and the eight months
ended 30 November 2015, respectively. Our civil engineering projects are non-recurring in
nature. As a subcontractor, we secure our projects from main contractors after a competitive
tendering process whereby we are invited to submit our tender.
We possess our own site equipment for carrying out our projects and therefore are not
materially reliant on third parties for site equipment rental. We believe that our investment
in site equipment has placed us in a position to cater to civil engineering projects of
different scales and complexity and to meet the expected growing demand of our customers.
For further information regarding our site equipment, please refer to the section headed
Business Site equipment in this prospectus.
During the Track Record Period and up to the Latest Practicable Date, we had
undertaken 51 civil engineering contracts, of which 31 contracts had been completed. As at
the Latest Practicable Date, we had 20 contracts on hand with an aggregate contract sum of
approximately HK$1,384,140,000, of which (i) approximately HK$234,304,000 of revenue
has been recognised as at 30 November 2015 (with approximately HK$6,241,000 of revenue
recognised exceeding the original contract sum); and (ii) approximately HK$191,737,000 is
expected to be recognised as revenue for the period from 1 December 2015 to 31 March
2016 (with approximately HK$3,547,000 of revenue expected to be recognised exceeding the
original contract sum) and HK$824,469,000, HK$109,706,000 and HK$33,713,000 are
expected to be recognised as revenue during the three years ending 31 March 2019,
respectively. The amount of revenue expected to be recognised is subject to change due to
the actual progress and commencement and completion dates of our projects. Further details
of our contracts are set out in the section headed Business Our civil engineering contracts
Contracts on hand in this prospectus.
SUMMARY
Customers
During the Track Record Period, our customers primarily include main contractors of
various types of civil engineering projects in Hong Kong. For the two years ended 31 March
2015 and the eight months ended 30 November 2015, the percentage of our total revenue
attributable to our largest customer amounted to approximately 63.2%, 53.1% and 36.7%,
respectively, while the percentage of our total revenue attributable to our five largest
customers combined amounted to approximately 94.1%, 96.0% and 97.5%, respectively.
Among our five largest customers (in terms of revenue) during the Track Record Period, we
have been providing services to them for a period ranging from 2 to 16 years. Our Directors
consider that due to the nature of the civil engineering construction industry in which our
Group is engaged in, our customer base is relatively concentrated to reputable main
contractors which dominate the civil engineering construction industry in Hong Kong. As a
result, the potential customer base of our Group is limited. Please refer to the section headed
Business Customers Customer concentration in this prospectus for further details.
During the Track Record Period, all of our civil engineering construction contracts
were obtained through tendering. The following table sets out the number of contracts
tendered, number of successfully tendered contracts and our success rate during the Track
Record Period and from 1 December 2015 up to the Latest Practicable Date:
For the year ended

31 March
2014
2015
Number of tenders submitted
Number of tenders won
Success rate (%)
44
5
11.36
41
8
19.51
For the
eight
months
ended 30
November
2015
From
1 December
2015 to the
Latest
Practicable Date
33
5
15.15
18
Note: For the eight months ended 30 November 2015, there were 33 tender applications submitted by our
Group. Out of the said 33 tender applications, we received 25 rejected tender results and the tender
results of the remaining 3 tender applications are yet to be known. For the period from 1 December
2015 to the Latest Practicable Date, there were 18 tender applications submitted by our Group. Out
of the said 18 tender applications, we received 8 rejected tender results and the tender results of the
remaining 10 tender applications are yet to be known.
Suppliers
During the Track Record Period, our suppliers primarily include (i) suppliers of
construction materials such as concrete, steel, precast concrete units, timbers and diesel fuel;
(ii) site equipment rental service providers; and (iii) suppliers of other miscellaneous goods.
For the two years ended 31 March 2015 and the eight months ended 30 November 2015, the
percentage of our total purchases incurred (excluding subcontracting charges incurred) from
our largest supplier amounted to approximately 29.2%, 50.6% and 19.1% of our total
purchases incurred (excluding subcontracting charges incurred), respectively, while the
percentage of our total purchases incurred (excluding subcontracting charges incurred) from
our five largest suppliers combined amounted to approximately 55.7%, 67.5% and 54.0% of
our total purchases incurred (excluding subcontracting charges incurred), respectively. We
generally order the relevant construction materials and services on a project-by-project basis
and do not enter into any long-term supply agreements with our suppliers. Some major
customers also supply construction materials on our behalf pursuant to the contra-charge
arrangement, details of which are set out in the section headed Business Suppliers
Contra-charge arrangement with our customers in this prospectus. Among our five largest
suppliers (in terms of total purchased amounts excluding subcontracting charges) during the
Track Record Period, we have developed business relationship with them for a period
ranging from less than 1 year to 16 years.
SUMMARY
Subcontractors
Subject to our capacity, resources level, types of civil engineering works, cost
effectiveness, complexity of the projects and customers requirements, we may subcontract
our works to other subcontractors in a project. During the Track Record Period, our
subcontracted works primarily included steel fixing, formwork erection and drainage works.
For each of the two years ended 31 March 2015 and the eight months ended 30 November
2015, the percentage of our Groups total subcontracting charges incurred to our Groups
largest subcontractor amounted to approximately 17.3%, 17.7% and 15.0% of our Groups
total subcontracting charges incurred, respectively, while the percentage of our Groups total
subcontracting charges incurred attributable to our Groups five largest subcontractors
combined amounted to approximately 61.8%, 53.3% and 55.7% of our Groups total
subcontracting charges incurred, respectively, for the same periods. Among our five largest
subcontractors (in terms of subcontracting charges incurred) during the Track Record Period,
we have developed business relationship with them for a period ranging from 2 to 10 years.
COMPETITIVE LANDSCAPE
According to the Ipsos Report, the top five civil engineering contractors act as main
contractors in the overall civil engineering construction industry, and they accounted for
about 54.6% of the total revenue of the civil engineering construction industry in 2014.
Meanwhile, the civil engineering subcontracting industry in Hong Kong is fragmented. As at
the Latest Practicable Date, there were over 700 structural and civil engineering
subcontractors registered under the Construction Industry Council. In 2014, our Group
accounted for approximately 1.8% (or HK$254 million) of the total revenue in the civil
engineering construction industry generated by civil engineering subcontractors (HK$14.1
billion) in Hong Kong. Our Directors consider that technical expertise, quality of work,
relationship with customers, suppliers and subcontractors, site equipment capability, project
pricing and safety records are the determinants of competitiveness of a civil engineering
subcontractor in Hong Kong, and our Group is well-positioned to capture the growing
demand for civil engineering construction services in Hong Kong.
COMPETITIVE STRENGTHS
We believe the following competitive strengths, details of which are set out in the
section headed Business Competitive strengths in this prospectus, contribute to our
success and differentiate us from our competitors:
Well-established presence in the civil engineering construction industry in Hong

Kong
Experienced project management team
Possession of a variety of site equipment for performing different types of civil

engineering works
Stable relationship with our major customers, suppliers and subcontractors
Our commitment to maintaining safety standard, quality control and environmental

protection
BUSINESS OBJECTIVES AND STRATEGIES
Our principal business objective is to further strengthen our position as an established
subcontractor for roads and drainage works, structural works and site formation works in
Hong Kong and to create long-term shareholders value. We intend to achieve our business
objective by competing for sizeable and profitable civil engineering projects through
expanding our scale of operation through pursuing the following key strategies, details of
which are set out in the sections headed Business Business strategies and Statement of
business objective and use of proceeds of this prospectus:
Acquisition of additional site equipment
Further strengthening our manpower
Adherence to prudent financial management to ensure sustainable growth and

capital efficiency.
SUMMARY
SUMMARY OF FINANCIAL INFORMATION
The following tables present a summary of our financial information during the Track
Record Period and should be read in conjunction with our financial information included in
the Accountants Report set forth in Appendix I to this prospectus, including the notes
thereto.
Highlights of combined statements of comprehensive income
Year ended 31 March Percentage
2014
2015
change
HK$000
HK$000
%
Revenue
Gross profit
Profit for the year/period
159,963
15,020
9,430
271,949
25,600
18,079
70.0
70.4
91.7
Eight months ended

Percentage
30 November
2014
2015
change
HK$000
HK$000
%
(unaudited)
186,325
15,421
11,647
154,641
17,286
6,392
(17.0)
12.1
(45.1)
Our Groups revenue decreased for the eight months ended 30 November 2015 as
compared to the eight months ended 30 November 2014 due to the completion of 16
projects with an aggregate contract sum of approximately HK$137,700,000 during the year
ended 31 March 2015. A new project with contract sum of approximately HK$455,319,000
was awarded in late August and had only commenced in September 2015 and is expected to
bring an increase in revenue for the year ending 31 March 2016. Revenue increased for the
year ended 31 March 2015 as compared to the year ended 31 March 2014 due to the
increase in construction works to speed up the progress of two projects with an aggregate
contract sum of approximately HK$195,541,000 to meet completion deadlines during the
year ended 31 March 2015.
Our Groups gross profit increased for the eight months ended 30 November 2015 as
compared to the eight months ended 30 November 2014 despite a decrease in revenue due to
an increase in gross profit margin, which is determined on a project-by-project basis, mainly
as a result of a variation order received with a relatively higher gross profit margin. Gross
profit increased for the year ended 31 March 2015 as compared to the year ended 31 March
2014, in line with our revenue. Our Groups profit for the eight months ended 30 November
2015 decreased as compared to the eight months ended 30 November 2014 primarily due to
the Listing expenses incurred of approximately HK$7,883,000 for the eight months ended 30
November 2015. Profit for the year ended 31 March 2015 increased as compared to the year
ended 31 March 2014 primarily due to the increase in gross profit and scale.
Highlights of combined statements of financial position
As at 31 March
2014
2015
HK$000
HK$000
Current assets
Current liabilities
Net current (liabilities)/assets
Net (liabilities)/assets
Total assets
46,250
82,446
(36,196)
(9,775)
74,949
70,112
82,525
(12,413)
8,304
93,085
Percentage
change
%
51.6
0.1
(65.7)
(185.0)
24.2
As at 30
November
2015
HK$000
79,890
74,650
5,240
14,696
93,164
Percentage
change
%
13.9
(9.5)
(142.2)
77.0
0.1
We had a net current liabilities position of approximately HK$36,196,000 and

HK$12,413,000 as at 31 March 2014 and 2015, respectively, which are primarily attributable
to (i) the amounts due to customers for contract work of approximately HK$39,891,000 and
HK$39,980,000 as at 31 March 2014 and 2015, respectively. Such amounts represent
temporary differences mainly arising from progress billings exceeding costs incurred plus
(less) recognised profit (loss), which will cease to exist at completion of the relevant
project; and (ii) the mortgage loan, which is a current liability, drawn to fund the acquisition
of the investment property, located at Festival City, Tai Wai, a non-current asset as at 31
March 2014 and 2015, which was disposed of in October 2015. We recorded a net current
assets of approximately HK$5,240,000 as at 30 November 2015. The improvement in our net
current liabilities/assets position is mainly attributable to (i) an increase in our construction
4
SUMMARY
activities during the year ended 31 March 2015 which in turn lead to an increase in our
trade and other receivables and amounts due from customers for contract work; and (ii) the
disposal of the aforesaid investment property in October 2015.
We had a net liabilities position of approximately HK$9,775,000 as at 31 March 2014
due to the accumulated losses incurred prior to the Track Record Period. The accumulated
losses incurred are mainly attributable to the thin gross profit margins recognised and losses
incurred on several projects due to unforeseen circumstances and/or errors or inaccurate
estimations of project duration and costs. During the construction industry downturn in Hong
Kong prior to 2010, such risks were not fully priced into the markups when submitting
tenders for several projects in order to remain competitive and increase our revenue stream
to pay for our staff costs and fixed overheads and service our debts. Upon the recovery of
the construction industry construction industry in Hong Kong and during the Track Record
Period, we were able to gradually set higher tender prices to take into consideration the
likelihood of uncertainties and material deviations in estimated and actual duration and
costs. As it took several years to gradually set higher tender prices and to complete projects
that we were awarded during the construction industry downturn, we recorded an
accumulated loss as at 31 March 2014. In addition, to improve our profitability, we had also
established an estimating department since 2013 to review and assess new projects to
minimise likelihood of unforeseen circumstances and improve inaccurate estimations on
project duration and costs. Furthermore, we focused on tendering for contracts of the same
infrastructural projects as our experience with the relevant project and familiarity with the
conditions of the relevant site would allow us to make better estimations of project duration
and costs and reduce the likelihood of unforeseen circumstances.
Highlights of combined statements of cash flows
Year ended 31 March
2014
2015
HK$000
HK$000
Operating cash flow before working
capital changes
Net cash generated from/(used in)
operating activities
Net cash (used in)/generated from
investing activities
financing activities
Net increase/(decrease) in cash and cash
equivalents
Eight months ended

30 November
2014
2015
HK$000
HK$000
(unaudited)
15,394
25,744
16,194
9,497
7,402
(3,687)
(1,169)
5,228
11,495
(4,478)
209
(383)
(894)
477
(1,998)
(9,332)
(3,550)
7,391
2,030
(3,001)
Major financial ratios

Year ended or as at
31 March
2014
2015
Gross profit margin (%)
Net profit margin (%)
Return on assets (%)
Return on equity (%)
Current ratio (times)
Quick ratio (times)
Debtors turnover days (days)
Creditors turnover days (days)
Gearing ratio (%)
Net debt to equity ratio (%)
Interest coverage (times)
9.4
5.9
12.6
N/A
0.6
0.6
39.6
33.6
N/A
N/A
26.2
9.4
6.6
19.4
217.7
0.8
0.8
33.2
20.4
265.5
194.5
47.1
Period ended
or as at
30 November
2015
11.2
4.1
6.9
43.5
1.1
1.1
50.2
24.5
65.6
11.3
27.8
SUMMARY
Our gross profit margin remained at similar levels of approximately 9.4% for each of
the years ended 31 March 2014 and 2015 and increased to approximately 11.2% for the
eight months ended 30 November 2015. Our Directors consider that our gross profit margin
is a result of a combination of our pricing of each project and cost control. Our gross profit
margin was determined on a project-by-project basis and is generally (i) lower for contracts
with a larger contract value due to scale as we set our tender prices based on lower expected
profit margins due to the larger absolute amounts of revenue and gross profit expected to be
derived from a project with a larger contract value; and (ii) higher for projects which require
more project management, greater level of highly skilled construction works and/or a higher
standard of quality and safety. Our other profitability ratios generally increased during the
year ended 31 March 2015 as compared to the year ended 31 March 2014 due to the
increase in revenue and the resulting scale and decreased during the eight months ended 30
November 2015 due to the incurring of Listing expenses.
Our current ratio and quick ratio improved during the Track Record Period due to an
increase in construction activities and the disposal of an investment property as further
discussed in the paragraph headed Financial information Summary of key financial
ratios in this prospectus. The changes in our debtors turnover days during the Track
Record Period is mainly attributable to the amount and timing of revenue recognised during
the year/period. The changes in our creditors turnover days is attributable to the
non-recurring and project-by-project basis of our civil engineering works.
SHAREHOLDER INFORMATION
Immediately following completion of the Placing and the Capitalisation Issue,
Blooming Union, which is beneficially owned as to 50% and 50% by Mr. CK Wong and Mr.
WW Wong respectively, will hold 75% of the issued Shares of our Company. Mr. CK Wong
and Mr. WW Wong have had a mutual understanding all along to actively cooperate with
each other to jointly control our Group and thus Mr. CK Wong and Mr. WW Wong are
presumed to be acting in concert (within the meaning of the Takeovers Code). Given the
aforesaid and for the purpose of the GEM Listing Rules, Mr. CK Wong, Mr. WW Wong and
Blooming Union are our Controlling Shareholders. Please refer to the section headed
Relationship with our Controlling Shareholders in this prospectus for further details.
PLACING STATISTICS
Market capitalisation
upon Listing (note 1)
Offer size
Placing Price per Placing
Share
Number of Placing Shares
Board lot
Unaudited pro forma net
tangible assets per
Share (note 2)
HK$324,480,000
25% of the enlarged issued share capital of the Company
HK$0.26
312,000,000 Shares (comprising 208,000,000 New Shares
and 104,000,000 Sale Shares)
10,000 Shares
HK$0.06 based on a Placing Price of HK$0.26 per
Placing Share
Notes:
1.
The calculation of the market capitalisation of the Shares is based on 1,248,000,000 Shares in issue
and to be issued immediately after completion of the Placing and the Capitalisation Issue and the
Placing Price of HK$0.26 per Placing Share.
2.
For the calculation of the unaudited pro forma adjusted combined net tangible asset value per Share
attributable to the Shareholders, please refer to the section headed Unaudited pro forma financial
information in Appendix II to this prospectus.
REASONS FOR THE LISTING AND USE OF PROCEEDS

Our Directors believe that the listing of the Shares on GEM will facilitate the
implementation of our business strategies. As stated in the section headed Business
Business strategies in this prospectus, we plan to expand our market share in the civil
engineering construction industry in Hong Kong by competing for sizeable civil engineering
SUMMARY
projects in Hong Kong through acquisition of additional site equipment and further
strengthening our manpower. The net proceeds of the Placing will provide financial
resources to our Group to achieve such business strategies which will further strengthen our
market position and expand our market share. A public listing status will also enhance our
corporate profile and recognition and assist us in reinforcing our brand awareness and
image. We believe that a public listing status on GEM could attract potential customers,
suppliers and subcontractors who are more willing to establish business relationship with
listed companies. It will also generate reassurance among our Groups existing customers,
suppliers and subcontractors and strengthen our competitiveness in the market. The Listing
will also enable our Group to have access to capital market for raising funds both at the
time of Listing and at later stages, which would in turn assist us in future business
development of our Group. A public listing status on GEM may offer our Company a
broader shareholder base which could potentially lead to a more liquid market in the trading
of the Shares. We also believe that our internal control and corporate governance practices
could be further enhanced following the Listing.
We will not receive any of the proceeds from the sale of the Sale Shares by the Selling
Shareholder in the Placing. We estimate that the aggregate net proceeds to be received by us
from the Placing, after deducting related underwriting fees and estimated expenses in
connection with the Placing, based on the Placing Price of HK$0.26 per Placing Share will
be approximately HK$35.7 million. Our Directors presently intend that the net proceeds will
be applied as follows:
approximately HK$18.0 million (or approximately 50.4% of the net proceeds) will
be used for acquisition of additional site equipment;
approximately HK$7.6 million (or approximately 21.2% of the net proceeds), will
be used for further strengthening our manpower;
be used for the repayment of bank borrowings and a finance lease to reduce our
finance cost. Specifically, (i) approximately HK$3.1 million will be used to
wholly prepay the bank loan to be drawn in April 2016 for settlement of the
outstanding indebtedness under the SME Financing Guarantee Scheme for
financing our Groups working capital bearing interest at 1% below the Hong
Kong dollar prime rate per annum and an effective interest rate of 3.99% and is
repayable on a monthly basis over the loan term of 50 months up to April 2020;
(ii) approximately HK$1.6 million will be used to wholly prepay the bank loan
drawn in March 2014 for acquisition of a site equipment bearing interest at 3%
over the Hong Kong Interbank Offered Rate per annum and an effective interest
rate of 3.23% per annum and is repayable on a monthly basis over the loan term
of 5 years up to January 2019; (iii) approximately HK$1.0 million will be used to
wholly prepay the finance lease incurred since September 2013 which will
become mature in 5 years from the date of occurrence bearing interest rate at a
fixed rate of 2.50% per annum and an effective interest rate of 6.05% per annum,
which were incurred to fund our purchase of motor vehicle; and (iv)
approximately HK$1.0 million will be used to wholly prepay the finance lease
incurred since September 2015 which will become mature in 4 years from the
date of occurrence bearing interest rate at a fixed rate of 2.25% per annum and
effective interest rate of 5.5% per annum, which were incurred to fund our
purchase of motor vehicle; and (v) approximately HK$0.1 million will be used to
wholly prepay the finance lease incurred since January 2015 which will become
mature in 3 years from the date of occurrence bearing interest rate at a fixed rate
of 2.25% per annum and effective interest rate of 5.58% per annum, which were
incurred to fund our purchase of motor vehicle; and
be used as general working capital of our Group.
The following table sets forth a breakdown of how the net proceeds to be received by
us from the Placing are intended to be applied and the timing of application:
SUMMARY
From the Latest
Practicable
Date to
30 September
2016
HK$ million
Acquisition of additional
site equipment
Further strengthening our
manpower
Repayment of bank loans
and finance lease
General working capital of
our Group
From
From
1 October
1 April
2016 to
2017 to
31 March 30 September
2017
2017
HK$ million HK$ million
From
1 October
2017 to
31 March
2018
HK$ million
Total
HK$ million
17.3
0.7
18.0
6.8
0.8
7.6
6.7
0.1
6.8
3.3
3.3
LISTING EXPENSES
Our Directors estimate that the total amount of expenses in relation to the Listing is
approximately HK$20.9 million, which will be borne by the Selling Shareholder and our
Group as to approximately HK$2.5 million and HK$18.4 million, respectively. The listing
expenses are non-recurring in nature and are mainly consisted of professional fees paid to
the Sponsor, the legal advisers, the reporting accountants and other professional parties for
the provision of their services in connection with the Placing. No significant listing expense
was incurred by our Group during the two years ended 31 March 2015. Of the aggregate
listing expenses of approximately HK$18.4 million, approximately HK$7.9 million was
charged to profit or loss for the eight months ended 30 November 2015 and approximately
HK1.7 million is expected to be charged to profit or loss for the four months ending 31
March 2016. Our Group expects to further charge approximately HK$3.9 million to profit or
loss, while approximately HK$4.9 million is expected to be directly attributable to the issue
of Shares and accounted for as a deduction from equity upon successful listing under the
relevant accounting standards. The amount of listing expenses is a current estimate for
reference only and the final amount to be recognised to the consolidated statement of
comprehensive income of our Group for the years ending 31 March 2017 is subject to audit
and the actual changes in variables and assumptions.
DIVIDENDS
No member of our Group had declared any dividend during the Track Record Period
and up to the Latest Practicable Date.
There is no expected dividend payout ratio after the Listing. The payment and the
amount of any future dividends will be at the discretion of our Directors and will depend
upon our Groups future operations and earnings, capital requirements and surplus, general
financial condition, contractual restrictions and other factors which our Directors deem
relevant. Any final dividend for a financial year will be subject to Shareholders approval.
Holders of the Shares will be entitled to receive such dividends pro rata according to the
amounts paid up or credited as paid up on the Shares. Dividends may be paid only out of
our Companys distributable profits as permitted under the relevant laws. There can be no
assurance that our Company will be able to declare or distribute in the amount set out in
any plan of our Board or at all. The past dividend distribution record may not be used as a
reference or basis to determine the level of dividends that may be declared or paid by our
Company in the future.
PRINCIPAL RISK FACTORS
There are certain risks involved in our operations which are beyond our control. They
can be broadly categorised into risks relating to our business and risks relating to the
industry in which we operate. Potential investors are advised to read the section headed
Risk factors in this prospectus carefully before making any investment decision in the
Placing. Some of the more particular risk factors include:
We rely on the availability of public sector civil engineering projects in Hong

Kong and any failure of our Group to secure public sector projects would
adversely affect our operations and financial results.
We have concentrated customer base and any decrease in the number of projects
with our five largest customers would adversely affect our operations and
financial results.
8
SUMMARY
Our business relies on successful tenders and any failure of our Group to secure
tender contracts would affect our operations and financial results.
Error or inaccurate estimation of project duration and costs when determining the
tender price increase in construction costs may adversely affect our profitability or
result in substantial loss incurred by us.
Our performance depends on market conditions and trends in the civil engineering
construction industry and any deterioration in the prevailing market conditions in
the civil engineering construction industry may adversely affect our performance
and financial conditions.
We operate in a relatively competitive environment.
RECENT DEVELOPMENTS
Subsequent to the Track Record Period and up to the Latest Practicable Date, we have
continued to focus on developing our business of undertaking civil engineering works in
Hong Kong. As at the Latest Practicable Date, we had a total of 20 contracts on hand.
Please refer to the section headed Business Our civil engineering contracts Contracts on
hand in this prospectus for a full list of our contracts on hand as at the Latest Practicable
Date.
The aggregate contract sum of all contracts on hand is approximately
HK$1,384,140,000 and approximately HK$234,304,000 of revenue has been recognised for
the contracts on hand (with approximately HK$6,241,000 of revenue recognised exceeding
the original contract sum), representing approximately 16.9% of the aggregate contract sum,
as at 30 November 2015. As at the Latest Practicable Date, all existing projects have
continued to contribute revenue to our Group and none of them have had any material
interruption. We expect to recognise revenue of approximately HK$285,367,000 for the year
ending 31 March 2016 based only on our contracts on hand, which is higher than our
revenue of approximately HK$159,963,000 and HK$271,949,000 for the years ended 31
March 2014 and 2015, respectively. The amount of revenue expected to be recognised is
subject to change due to the actual progress and commencement and completion dates of our
projects. Based on the budget costs of each project, our Directors expect that our gross
profit margin for the year ending 31 March 2016 to be at similar levels to that recorded
during the Track Record Period. Accordingly, our Directors currently expect an increase in
our revenue and gross profit for the year ending 31 March 2016. Our Directors also expect
that our financial performance will be affected by the Listing expenses to be recognised for
the year ending 31 March 2016.
been awarded with two additional contracts with an aggregate contract sum of approximately
HK$301,317,000. Our Directors consider that our Group is well-positioned to take on new
civil engineering projects and believe that the Governments increasing public expenditure
on infrastructure would favour the growth of our Group and the demand of our services.
To further strengthen our working capital position and enhance our financial resources
for our contracts on hand and newly awarded projects, we obtained a credit facility from a
bank in March 2016 of up to HK$20,000,000 which consists of: (i) a factoring facility of up
to HK$10,000,000 by factoring of certain accounts receivable from our major customer(s) to
the bank; and (ii) a banking facility of HK$10,000,000. Our Directors considered that this
arrangement can provide a flexible alternative to increase our working capital and finance
our liquidity requirement.
In addition, we expect that annual premium of approximately HK$1,060,000 for the
purposes of obtaining surety bonds for the due performance of our Groups obligations under
certain contracts will be recognised as expenses commencing from April 2016 until the
expiry of the defects liability period of the relevant contracts. For further details of the
guarantees of sureties, please refer to the section headed Relationship with our Controlling
Shareholders Independence of our Group (i) Financial Independence in this prospectus.
Save and except for the Listing expenses as disclosed above, our Group did not have
any significant non-recurrent items in our combined statements of comprehensive income
subsequent to the Track Record Period. Our results of operations for the year ending 31
March 2016 are expected to be significantly affected by the non-recurring Listing expenses
as discussed in the paragraph headed Listing expenses in this section.
SUMMARY
MATERIAL ADVERSE CHANGE
The impact of the Listing expenses on the profit and loss accounts has posted a
material adverse change in the financial or trading position or prospect of our Group since
30 November 2015 (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 on
the financial performance of our Group for the year ending 31 March 2016.
Save as disclosed above, our Directors have confirmed that, up to the date of this
prospectus, there had been no material adverse change in the financial or trading positions
or prospect of our Company or its subsidiaries since 30 November 2015 (being the date of
which our Groups latest audited combined financial statements were made up as set out in
the Accountants Report in Appendix I to this prospectus) and there had been no event since
30 November 2015 which would materially affect the information shown in the Accountants
Report in Appendix I to this prospectus.
LITIGATION AND REGULATORY COMPLIANCE
During the Track Record Period and up to the Latest Practicable Date, there were
on-going litigation cases against our Group including employees compensation claims,
personal injury claims and certain immaterial non-compliance incidents with the Predecessor
Companies Ordinance, the Companies Ordinance and the Employment Ordinance (Chapter
57 of the Laws of Hong Kong). During the Track Record Period, we recorded one fatal
accident at the construction site where a worker employed by a subcontractor of our Group
was fatally injured and certified dead in the course of unloading the water pipes. For details
of the litigation claims, instances of non-compliance and the fatal accident, please refer to
the sections headed Business Litigation and potential claims, Business
Non-compliance and Business Occupational health and safety System of recording and
handling accidents and our safety compliance record in this prospectus.
Air Pollution Control (Non-road Mobile Machinery) (Emission) Regulation (Chapter
311Z of the Laws of Hong Kong)
The Air Pollution Control (Non-road Mobile Machinery) (Emission) Regulation (the
NRMM Regulation) came into effect on 1 June 2015 to introduce regulatory control on
the emissions of non-road mobile machinery (the NRMMs), including non-road vehicles
and regulated machines such as crawler cranes, excavators and air compressor. Our Directors
confirmed that such regulated machines also include site equipment such as generators,
hydraulic truck crane, vibrating rollers and aerial working platforms which are subject to the
Air Pollution Control (Non-road Mobile Machinery) (Emission) Regulation. For further
details of the NRMM requirements, please refer to the section headed Regulatory Overview
B. Environmental Protection Air Pollution Control (Non-road Mobile Machinery)
(Emission) Regulation (Chapter 311Z of the Laws of Hong Kong) in this prospectus. As at
the Latest Practicable Date, our Group has obtained approval or exemption for all of our
machines that are subject to the NRMM Regulation.
On 8 February 2015, the Works Branch of Development Bureau issued the Technical
Circular (Works) No. 1/2015 (the Technical Circular), pursuant to which the Government
has promulgated an implementation plan to phase out progressively the use of exempted
NRMM for four types of exempted NRMM, namely generators, air compressors, excavators
and crawler cranes in new capital works contracts of public, including design and build
contracts, with an estimated contract value exceeding HK$200 million and tenders invited on
or after 1 June 2015. For further details of the Technical Circular, please refer to the section
headed Regulatory Overview B. Environmental Protection Air Pollution Control
(Non-road Mobile Machinery) (Emission) Regulation (Chapter 311Z of the Laws of Hong
Kong) in this prospectus.
Our Directors confirm that none of the public projects which we participate in as at the
Latest Practicable Date are subject to the phase out plan detailed in the Technical Circular.
In addition, our Directors consider that we will remain able to participate in or tender for
public contract with an estimated contract value exceeding HK$200 million by leasing
sufficient approved NRMMs and factoring such additional costs in our tender applications.
Thus, our Directors are of the view that the implementation of the Air Pollution Control
(Non-road Mobile Machinery) (Emission) Regulation and the exempted NRMM phase out
plan as detailed in the Technical Circular has no significant impact or adverse effect on our
Groups operation and financial results.
10
DEFINITIONS
In this prospectus, unless the context otherwise requires, the following expressions have
the following meanings.
Accountants Report
the accountants report prepared by Grant Thornton

Hong Kong Limited, the text of which is set out in
Appendix I to this prospectus
Articles or Articles of
Association
the amended and restated articles of association of our

Company as amended from time to time, a summary of
which is set out in Appendix IV to this prospectus
associate(s)
has the meaning ascribed to it under the GEM Listing

Rules
Blooming Union
Blooming Union Investments Limited

, one of our Controlling Shareholders, the Selling
Shareholder and a company incorporated in the BVI
with limited liability on 1 July 2015 and owned as to
50% by Mr. CK Wong and as to 50% by Mr. WW
Wong
Board
the board of Directors
business day
any day (other than a Saturday, Sunday or public

holiday) on which banks in Hong Kong are generally
open for normal banking business to the public
BVI
the British Virgin Islands
CAGR
compound annual growth rate
Capitalisation Issue
the issue of 1,039,990,000 Shares to be made upon

capitalisation of certain sums standing to the credit of
the share premium account of our Company referred to
in the paragraph headed A. Further information about
the Company and its subsidiaries 3. Written
resolutions of our sole Shareholder passed on 24 March
2016 in Appendix V to this prospectus
CCASS
the Central Clearing and Settlement System established

and operated by HKSCC
11
DEFINITIONS
CCASS Clearing Participant
a person permitted to participate in CCASS as a direct

clearing participant or general clearing participant
CCASS Custodian Participant
a person permitted to participate in CCASS as a

custodian participant
CCASS Investor Participant
a person admitted to participate in CCASS as an

investor participant who may be an individual or joint
individuals or a corporation
CCASS Participants
a CCASS Clearing Participant, a CCASS Custodian

Participant or a CCASS Investor Participant
China Harbour
China Harbour Engineering Company Limited, a

subsidiary of China Communications Construction
Company Limited (which has been listed on the Main
Board of the Stock Exchange)
China State Construction
China State Construction Engineering (Hong Kong)

Limited, a subsidiary of China State Construction
International Holdings Limited (which has been listed
on the Main Board of the Stock Exchange)
close associate(s)

Rules
Companies Law
the Companies Law (as revised) of the Cayman Islands,

as amended, supplemented and/or otherwise modified
from time to time
Companies Ordinance
the Companies Ordinance (Chapter 622 of the Laws of

Hong Kong), which came into effect on 3 March 2014,
as amended, modified and supplemented from time to
time
Companies (Exemption of
Companies and Prospectuses
from Compliance with
Provisions) Notice
the Companies (Exemption of Companies and

Prospectuses from Compliance with Provisions) Notice
(Chapter 32L of the Laws of Hong Kong), as amended,
supplemented or otherwise modified from time to time
Companies (Winding Up and

Miscellaneous Provisions)
Ordinance
the Companies (Winding Up and Miscellaneous

Provisions) Ordinance (Chapter 32 of the Laws of
Hong Kong), as amended, supplemented or otherwise
modified from time to time
12
DEFINITIONS
Company, our, our
Company, we or us
Luen Wong Group Holdings Limited
, a company incorporated in the Cayman Islands

as an exempted company with limited liability on 16
October 2015
connected person(s)

Rules
connected transaction

Rules
Controlling Shareholders

Rules and in the context of this prospectus refers to
Blooming Union, Mr. CK Wong and Mr. WW Wong
core connected person

Rules
Corporate Governance Code
the Corporate Governance Code as set out in Appendix

15 to the GEM Listing Rules
CT Partners
CT Partners Consultants Limited, an independent

internal control adviser
Deed of Indemnity
the deed of indemnity dated 24 March 2016 entered

into by our Controlling Shareholders in favour of our
Group as further detailed in the section headed E.
Other information 1. Tax and other indemnities in
Appendix V to this prospectus
Deed of Non-Competition
the deed of non-competition undertaking dated 24

March 2016 entered into by our Controlling
Shareholders in favour of our Company (for itself and
as trustee for and on behalf of our subsidiaries) as
further detailed in the section headed Relationship
with our Controlling Shareholders Non-Competition
Undertakings in this prospectus
Director(s)
the director(s) of our Company
GEM
the Growth Enterprise Market of the Stock Exchange
GEM Listing Rules
the Rules Governing the Listing of Securities on the

Growth Enterprise Market of the Stock Exchange, as
amended, modified and supplemented from time to time
Government
the government of Hong Kong
13
DEFINITIONS
Gransing Securities
Gransing Securities Co., Limited, a corporation

licensed under the SFO to engage in Type 1 (dealing in
securities), Type 4 (advising on securities), Type 6
(advising on corporate finance) and Type 9 (asset
management) regulated activities under the SFO, acting
as the joint bookrunner and the joint lead manager for
the Placing and an independent third party
Group, we, us or our
our Company and its subsidiaries at the relevant time

or, where the context otherwise requires, in respect of
the period prior to our Company becoming the holding
company of its present subsidiaries pursuant to the
Reorganisation, its present subsidiaries and the
businesses operated by such subsidiaries
HKSCC
Hong Kong Securities Clearing Company Limited, a

wholly-owned subsidiary of Hong Kong Exchanges and
Clearing Limited
HKSCC Nominees
HKSCC Nominees Limited
HK$ or HKD and cents
Hong Kong dollars and cents respectively, the lawful

currency of Hong Kong
Hong Kong or HK
the Hong Kong Special Administrative Region of the

Peoples Republic of China
Hong Kong Branch Share

Registrar
Union Registrars Limited, the branch share registrar

and transfer office of our Company in Hong Kong
Hop Fung
Hop Fung Construction & Engineering Company

Limited
,
a
company
incorporated in Hong Kong on 31 July 2002 with
limited liability and an indirect wholly-owned
subsidiary of our Company upon completion of the
Reorganisation
independent third party(ies)
individual(s) or company(ies) who or which, to the best

of our Directors knowledge, information and belief,
having made all reasonable enquiries, is/are
independent of and not connected with (within the
meaning of the GEM Listing Rules) our Company or
its connected persons
Inland Revenue Ordinance
the Inland Revenue Ordinance (Chapter 112 of the

Laws of Hong Kong)
Ipsos
Ipsos Limited, an independent market research agency
14
DEFINITIONS
Ipsos Report
a market research report commissioned by us and

prepared by Ipsos on the overview of the civil
engineering construction industry in Hong Kong in
which our Group operates
Joint Bookrunners or Joint

Lead Managers
Gransing Securities and Suncorp Securities
Latest Practicable Date
21 March 2016, being the latest practicable date prior

to the printing of this prospectus for the purpose of
ascertaining certain information in this prospectus prior
to its publication
Legal Counsel
Mr. Chan Chung, barrister-at-law of Hong Kong, who

is an independent third party
Listing
listing of the Shares on GEM
Listing Date
the date, expected to be on or about Tuesday, 12 April

2016, on which dealings in the Shares first commence
on GEM
Luen Hing
Luen Hing Construction & Eng. Limited

, a company incorporated in Hong Kong on
11 November 1998 with limited liability and an
indirect wholly-owned subsidiary of our Company upon
completion of the Reorganisation
Memorandum of Association or
Memorandum
the memorandum of association of our Company as

amended from time to time
Mr. CK Wong
Mr. WONG Che Kwo , an executive

Director, the chairman of our Board and one of our
Mr. WW Wong
Mr. WONG Wing Wah , an executive

Director, our chief executive officer and one of our
New Shares
208,000,000 new Shares to be offered by our Company

for subscription at the Placing Price under the Placing
Placing
the conditional placing of the Placing Shares by the

Underwriters on behalf of our Company and the Selling
Shareholder for cash at the Placing Price as described
in the section headed Structure and conditions of the
Placing in this prospectus
15
DEFINITIONS
Placing Price
the final price of HK$0.26 per Placing Share in HK

dollars (exclusive of brokerage of 1%, SFC transaction
levy of 0.0027% and Stock Exchange trading fee of
0.005%) at which the Placing Shares are to be offered
under the Placing
Placing Shares
the 312,000,000 Shares (comprising 208,000,000 New

Shares to be offered by our Company and 104,000,000
Sale Shares to be offered by the Selling Shareholder)
being offered for subscription or purchase at the
Placing Price pursuant to the Placing
Predecessor Companies
Ordinance
the predecessor Companies Ordinance (Chapter 32 of

the Laws of Hong Kong) as in force before 3 March
2014
Reorganisation
the corporate reorganisation arrangements implemented

by our Group in preparation for the Listing which is
more particularly described in the section headed
History and development Reorganisation in this
prospectus
Sale Shares
104,000,000 existing Shares to be offered by the

Selling Shareholder for purchase at the Placing Price
under the Placing
Selling Shareholder
Blooming Union, one of the Controlling Shareholders

which is expected to offer to sell the Sale Shares
pursuant to the Placing
SFC
the Securities and Futures Commission of Hong Kong
SFO
the Securities and Futures Ordinance (Chapter 571 of

the Laws of Hong Kong), as amended, modified and
supplemented from time to time
Share(s)
ordinary share(s) with nominal value of HK$0.01 each

in the share capital of our Company, which are to be
traded in Hong Kong dollars and listed on GEM
Shareholder(s)
holder(s) of the Share(s)
Share Option Scheme
the share option scheme conditionally adopted by our

Company on 24 March 2016, the principal terms of
which are summarised in the section headed D. Share
Option Scheme in Appendix V to this prospectus
16
DEFINITIONS
Sponsor or TC Capital
TC Capital Asia Limited, a licensed corporation for

carrying on Type 1 (dealing in securities) and Type 6
(advising on corporate finance) regulated activities
under the SFO, acting as the sponsor of the Listing and
an independent third party
Stock Exchange
The Stock Exchange of Hong Kong Limited
subsidiary(ies)
has the meaning ascribed thereto in section 15 of the

Companies Ordinance
Substantial Shareholder(s)
has the meaning ascribed thereto in the GEM Listing

Rules and details of our Substantial Shareholders are
set out in the section headed Substantial Shareholders
in this prospectus
Suncorp Securities
Suncorp Securities Limited, a corporation licensed

under the SFO to engage in Type 1 (dealing in
securities) regulated activity under the SFO, acting as
the joint bookrunner and the joint lead manager for the
Placing and an independent third party
Super Pioneer
Super Pioneer Trading Limited , a

company incorporated in the BVI with limited liability
on 1 July 2015 which will become a direct
wholly-owned subsidiary of our Company upon
completion of the Reorganisation
Takeovers Code
the Codes on Takeovers and Mergers issued by the

SFC, as amended, modified and supplemented from
time to time
Track Record Period
comprises the two financial years ended 31 March 2014

and 2015 and the eight months ended 30 November
2015
Underwriters
the underwriters of the Placing whose names are set

out in the section headed Underwriting
Underwriters in this prospectus
Underwriting Agreement
the conditional underwriting agreement relating to the

Placing entered into on 31 March 2016 among our
Company, the Selling Shareholder, the executive
Directors, our Controlling Shareholders, the Sponsor,
the Joint Bookrunners, the Joint Lead Managers and the
Underwriters relating to the Placing, particulars of
which are summarised in the section headed
Underwriting in this prospectus
17
DEFINITIONS
US$ or U.S. dollars
United States dollars, the lawful currency of the United

States
sq.ft.
square foot
sq.m.
square metre(s)
per cent
18
GLOSSARY
This glossary contains explanations of certain terms used in this prospectus in
connection with the business of our Group. The terms and their meanings may not
correspond to the standard industry meanings or usage of these terms.
bills of quantities
a list of items included in the civil engineering contract

providing description, quantity and the unit price of the
work to be performed to provide a means of valuing
the civil engineering work performed
Building Authority
has the meaning ascribed to it under the Buildings

Ordinance and, as at the Latest Practicable Date, means
the Director of Buildings of the Government
Buildings Department
the Buildings Department of the Government
Buildings Ordinance
the Buildings Ordinance (Chapter 123 of the Laws of

Hong Kong)
Census and Statistics

Department
Census and Statistics Department of the Government
Construction Industry Council
the Construction Industry Council in Hong Kong, a

statutory body established on 1 February 2007 pursuant
to the Construction Industry Council Ordinance
(Chapter 587 of the Laws of Hong Kong)
Employees Compensation
Ordinance
the Employees Compensation Ordinance (Chapter 282

of the Laws of Hong Kong)
ISO
an acronym for a series of quality management and

quality assurance standards published by International
Organisation for Standardisation, a non-government
organisation based in Geneva, Switzerland, for
assessing the quality systems of business organisations
ISO 9001
ISO 9001 is an internationally recognised standard for

a quality management system. It aims at the
effectiveness of the quality management system in
meeting
customer
requirements.
It
prescribes
requirements for ongoing improvement of quality
assurance in design, development, production,
installation and servicing
19
GLOSSARY
ISO 14001
ISO 14001 is an internationally recognised standard for

the environmental management of businesses. It aims at
recognising the desirable behavior of businesses
concerning the environment. It prescribes controls for
an encompassing range of corporate activities which
include the use of natural resources, handling and
treatment of waste and energy consumption
Labour Development
the Labour Department of the Government
OHSAS 18001
OHSAS 18001 is an internationally recognised

specification for Occupational Health and Safety
Management Systems. It specifies requirements for an
occupational health and safety management system to
enable an organisation to develop and implement a
policy and objectives which take into account legal
requirements and information about occupational risks
and to improve their occupational safety and health
performance
private sector projects
works contracts that are not public sector projects
public sector projects
works contracts that originate from the Government or

statutory bodies
quotation
the type of contracts with our suppliers and/or

subcontractors secured by request for quotation from
the relevant suppliers and/or subcontractors
roads and drainage works
in respect of our business, generally refer to

construction of transport interchange, carriageway and
walkway, road improvement and widening works, flood
prevention or improvement works and sewage
improvement works comprising construction of
drainage channel, outfall pipe, box culvert and pumping
station and drainage related infrastructures
schedule of rates
a set of general regulations and special conditions

governing the execution of work and payment for
works performed
site formation works
in respect of our business, generally refer to excavation

and/or filling works for forming a new site or
achieving designed formation level for later
development
structural works
in respect of our business, generally refer to the

construction of reinforced concrete structures for
bridges, retaining walls, etc.
20
GLOSSARY
subcontractor
in respect of a construction project, a contractor who is

appointed by the main contractor or by another
subcontractor involved in the construction and who
generally carries out specific work tasks of the
construction
tender contract
the type of contracts with customers obtained by

tendering which usually require construction services
for a specific period and details of which are set out in
the section headed Business Customers Major
terms of engagement in this prospectus
21
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that are, by their nature, subject to
significant risks and uncertainties. In some cases the words such as aim, anticipate,
believe, could, estimate, expect, going forward, intend, may, plan,
potential, predict, propose, seek, should, will, would and other similar
expressions or the negative use of such words are used to identify forward-looking
statements. These forward-looking statements include, without limitation, statements relating
to:
our Groups business and operating strategies and plans of operation;
the amount and nature of, and potential for, future development of our Groups
business;
our Companys dividend distribution plans;
the regulatory environment as well as the general industry outlook for the industry
in which our Group operate;
future developments in the industry in which our Group operate;
the trend of the economy of Hong Kong in general; and
other factors beyond our Groups control.
These statements are based on several assumptions, including those regarding our
Groups present and future business strategy and the environment in which our Group will
operate in the future.
Our Groups future results could differ materially from those expressed or implied by
such forward-looking statements. In addition, our Groups future performance may be
affected by various factors including, without limitation, those discussed in the sections
headed Risk factors, Business, Financial information and Statement of business
objective and use of proceeds in this prospectus.
Subject to the requirements of the applicable laws, rules and regulations, our Company
does not have any obligation to update or otherwise revise the forward-looking statements in
this prospectus, whether as a result of new information, future events or otherwise. As a
result of these and other risks, uncertainties and assumptions, the forward-looking events and
circumstances discussed in this prospectus might not occur in the way our Company expects,
or at all. Should one or more risks or uncertainties stated in the aforesaid sections
materialise, or should any underlying assumptions to prove incorrect, actual outcomes may
vary materially from those indicated. Prospective investors should therefore not place undue
reliance on any of the forward-looking statements. All forward-looking statements contained
in this prospectus are qualified by reference to the cautionary statements as set out in this
section.
22
FORWARD-LOOKING STATEMENTS
In this prospectus, statements of, or references to, our Groups intentions or those of
any of our Directors are made as at the date of this prospectus. Any such intentions may
change in light of future developments.
23
RISK FACTORS
You should carefully consider all of the information in this prospectus including the
risks and uncertainties described below before making an investment in the Placing
Shares. You should pay particular attention to the fact that the legal and regulatory
environment in Hong Kong may differ in some respects from that which prevails in other
countries. The business, financial condition or results of operations of our Group could
be materially and adversely affected by any of these risks and uncertainties. The trading
price of our Shares could decline due to any of these risks and uncertainties, and you
may lose all or part of your investment.
We believe that there are certain risks involved in our business and operations. They
can be classified into (i) risks relating to our business; (ii) risk relating to the industry in
which we operate; (iii) risks relating to Hong Kong; (iv) risks relating to the Placing; and
(v) risks relating to this prospectus. You should consider our business and prospectus in light
of the challenges we face, including the ones discussed in this section.
RISKS RELATING TO OUR BUSINESS
We rely on the availability of public sector civil engineering projects in Hong Kong and
any failure of our Group to secure public sector projects would adversely affect our
operations and financial results
We have relied and will continue to focus on public sector civil engineering projects
which by their nature are only procured by our customers from a limited number of project
employers who are normally Government departments. For the two years ended 31 March
2015 and the eight months ended 30 November 2015, our revenue attributable to public
sector projects amounted to approximately HK$149,234,000, HK$255,484,000 and
HK$135,834,000 respectively, representing approximately 93.3%, 93.9% and 87.8% of our
total revenue respectively.
Our results of operations in relation to our civil engineering business will continue to
rely on the following: (i) our ability to continue to secure public sector projects from our
customers; (ii) the public policy in relation to infrastructure and civil engineering projects;
and (iii) other factors that generally affect the Hong Kong construction industry. Any
material delay, suspension, termination or reduction of number or contract value of public
sector projects may adversely affect our revenue, hence our results of operations.
Our civil engineering projects are non-recurrent in nature. There is no guarantee that
our existing customers will provide us with new business opportunities or that we will
secure new customers. During the Track Record Period, most of our revenue was derived
from civil engineering projects with Government departments in Hong Kong, and the main
contractors (i.e. our customers) of such projects do not have any long-term business
commitment with us. Our relationships with our major customers are non-exclusive and at
arms length. We may not be able to diversify the composition of our customer base due to
the nature of civil engineering works which are normally funded by the Government. If the
Government substantially reduces its expenditures on civil engineering works, we may not
be able to secure projects on similar terms from main contractors. If any such event occurs,
there may be a material adverse effect on our business, financial condition and/or results of
operations.
24
RISK FACTORS
We have concentrated customer base and any decrease in the number of projects with
our five largest customers would adversely affect our operations and financial results
A significant portion of our revenue was derived from a small number of customers
during the Track Record Period. Our five largest customers revenue contribution for the two
years ended 31 March 2015 and the eight months ended 30 November 2015 accounted for
approximately 94.1%, 96.0% and 97.5% of our revenue of the same period, respectively. For
the same period, our largest customer accounted for approximately 63.2%, 53.1% and 36.7%
of our revenue, respectively.
During the Track Record Period and up to the Latest Practicable Date, we did not enter
into any long-term service agreement or master service agreement with our customers.
Furthermore, our service contracts for all civil engineering construction works are entered
into on a project-by-project basis. As such, there is no assurance that we will be able to
retain our customers upon expiry of the contract period or that they will maintain their
current level of business with us in the future. If there is a significant decrease in the
number of projects or size of projects in terms of contract sums awarded by our five largest
customers to us for whatever reasons, and if we are unable to obtain suitable projects of a
comparable size and quantity as replacement, our financial conditions and operating results
will be materially and adversely affected. Besides, if any of our five largest customers
experiences any liquidity problem, it may result in delay or default in settling progress
payments to us, which in turn will have an adverse impact on our cash-flows and financial
conditions. We cannot guarantee that we will be able to diversify our customer base by
obtaining significant number of new projects from our existing and potential customers.
Our business relies on successful tenders and any failure of our Group to secure tender
contracts would affect our operations and financial results
Most of our revenue is derived from contracts awarded through competitive tendering
and is not recurring in nature. During the two years ended 31 March 2015 and the eight
months ended 30 November 2015, all of our revenue were derived from tendered contracts.
We generally submit new tenders or to bid for new contracts from time to time upon expiry
of existing contracts. The contract period for our civil engineering projects generally ranges
from 2 years to 4 years. There is no right of first refusal upon expiry of such contracts and
therefore, there is a risk that we may not succeed in tendering for the same customers
projects upon the expiry of our contract. Moreover, there is no assurance that (i) we would
be invited to or are made aware of the tendering process; or (ii) the terms and conditions of
the new contracts would be comparable to the existing contracts; or (iii) our tenders would
be selected by customers. In the competitive tendering process, we may have to lower our
service charges or offer more favourable terms to our customers in order to increase the
competitiveness of our tenders. If we are unable to reduce our costs accordingly and
maintain our competitiveness, our results of operations would be adversely affected.
Furthermore, so far as our Directors are aware, most of our customers have maintained an
evaluation system to ensure that the service providers meet certain standards of management,
industrial expertise, financial capability, reputation and regulatory compliance which may
change from time to time. There is no assurance that we will meet our customers tendering
requirements in which case we may not be granted the tender and our reputation, business
operations, financial condition and results of operations may be adversely affected.
25
RISK FACTORS
Error or inaccurate estimation of project duration and costs when determining the
tender price or increase in construction costs may adversely affect our profitability or
result in substantial loss incurred by us
Construction contracts and in particular public projects are normally awarded through a
competitive tendering process. We determine a tender price by estimating the construction
costs under the contract duration as specified in the tender invitation documents. There is no
assurance that tenders submitted by us contain no mistake and error. Such mistakes and
errors may be in the form of inaccurate estimation, oversight of important tender terms,
inadvertent typographical errors, errors in calculations, etc. Further, construction costs may
increase due to inflation of raw materials and labour costs. In case of contracts awarded to
us with mistakes or errors in the submitted tender or if there is a substantial increase in
construction costs, our profitability in a project might be adversely affected or we may be
bound by the contract to undertake the project at a substantial loss.
Inaccurate estimation on project schedule, project costs and technical difficulties in the
tendering process may result in cost overruns when we actually execute the awarded project.
Many factors affect the time taken and the costs actually involved in completing
construction projects undertaken by us. Examples of such factors include shortage and cost
escalation of labour and materials, difficult geological conditions, adverse weather
conditions, variations to the construction plans instructed by customers, stringent technical
construction requirements, threatened claims and material disputes with main contractors,
subcontractors and suppliers, accidents, and changes in the Governments policies. Other
unforeseen problems or circumstances may also occur during project implementation. If any
of such factors arises and remains unresolved, completion of construction works may be
delayed or we may be subject to cost overruns or our customers may even be entitled to
unilaterally terminate the contract.
Some of our contracts contain specific completion schedule requirements and liquidated
damages provisions (i.e. we may be liable to pay the customer liquidated damages if we do
not meet the schedules). Any failure to meet the schedule requirements of our contracts
could cause us to pay significant liquidated damages, which would reduce or eliminate our
profit expected from the relevant contracts.
A project may be delayed or its costs may be increased because of delays during the
process of obtaining any specific permits, approvals from relevant agencies or authorities of
the Government. Failure to complete construction according to specifications and quality
standards may result in disputes, contract termination, liabilities and/or lower returns than
anticipated on the construction project concerned. Such delays or failure to complete and/or
unilateral termination of a contract by customers may cause our revenue or profitability to
be lower than we originally expected. We cannot guarantee that we will not encounter cost
overruns or delays on our current and future construction projects. If such cost overruns or
delays occur, we may experience increases in costs exceeding our budget or be required to
pay liquidated damages, hence reduction in or elimination of the profits on our contracts.
26
RISK FACTORS
Our past revenue and profit margin may not be indicative of our future revenue and
profit margin
For the two years ended 31 March 2015 and the eight months ended 30 November
2015, our revenue amounted to approximately HK$159,963,000, HK$271,949,000 and
HK$154,641,000, respectively; our gross profit amounted to approximately HK$15,020,000,
HK$25,600,000 and HK$17,286,000, respectively (representing gross profit margin of
approximately 9.4%, 9.4% and 11.2%, respectively); while our net profit amounted to
approximately HK$9,430,000, HK$18,079,000 and HK$6,392,000, respectively (representing
net profit margin of approximately 5.9%, 6.6% and 4.1%, respectively).
However, such trend of historical financial information of our Group is a mere analysis
of our past performance only and does not have any positive implication or may not
necessarily reflect our financial performance in the future which will depend on our
capability to secure new business opportunities and to control our costs. Profit margins for
our civil engineering works may fluctuate from project to project due to factors such as the
type of construction techniques and site equipment employed and the amount of labour
resources required. There is no assurance that our profit margins in the future will remain at
a level comparable to those recorded during the Track Record Period. Our financial
condition may be adversely affected by any decrease in our profit margins.
It is not uncommon in our industry to have numerous construction disputes and
litigation. Our performance may be adversely affected by such construction disputes
and litigation
It is not uncommon in our industry to have construction disputes and litigation. We
may be in disputes with our customers, subcontractors, suppliers, workers and other parties
in connection with our projects for various reasons. Such disputes may be in connection
with late completion of works, delivery of substandard works, personal injuries or labour
compensation in relation to the works. Please refer to the section headed Business
Litigation and potential claims in this prospectus for further information on material
disputes or litigation we encountered during the Track Record Period.
The handling of contractual disputes, litigation and other legal proceedings may
sometimes involve a high degree of our managements attention and input. Handling of legal
proceedings and disputes can be both costly and time-consuming, and may significantly
divert the efforts and resources of our management.
In addition, the outcomes of legal proceedings or disputes are influenced by, among
others, negotiation skills, knowledge and judgment of our management. Our Group, to a
large extent, relies on the relevant expertise and qualification of our management (including
our executive Directors) in dealing with contractual disputes, litigation and arbitration.
Should any claims against us fall outside the scope and/or limit of our insurance coverage or
monies retained from subcontractors, our financial position may be adversely affected.
27
RISK FACTORS
If progress payment or retention money is not paid to us in full as a result of disputes
over our work done, our liquidity position may be adversely affected
We normally receive progress payment from our customers. Progress payment is
generally made monthly by reference to the value of works done in that month. A portion of
contract value (which generally is subject to a maximum of 5% of the total contract value)
is usually withheld by our customers as retention money. Please refer to the section headed
Business Customers Major terms of engagement in this prospectus for further details.
As at 31 March 2014 and 2015 and 30 November 2015, retention monies receivables of
approximately HK$17,957,000, HK$19,217,000 and HK$23,815,000, respectively, were
retained by our customers.
There is no assurance that progress payment will always be certified and paid to us in
full, or the retention money will be paid by our customers to us in full. Partial payment or
failure by our customers to make remittance at all as a result of disputes over our works
done may have an adverse effect on our liquidity position.
Any failure, damage or loss of our site equipment may adversely affect our operations
and financial performance
Our civil engineering services rely on site equipment. Market developments in and
demand for different construction techniques and different types of site equipment may
change continuously. If we fail to remain attentive to and invest in suitable site equipment to
cope with any latest development in such market trends or demands and to cater to different
needs and requirements of different customers, our overall competitiveness and thus our
financial performance and operation results may be adversely affected.
In addition, there is no assurance that our site equipment will not be damaged or lost
as a result of, among others, improper operation, accidents, fire, adverse weather conditions,
theft or robbery. In addition, site equipment may break down or fail to function normally
due to wear and tear or mechanical or other issues. If any failed, damaged or lost site
equipment cannot be repaired and/or replaced in a timely manner, our operations and
financial performance could be adversely affected.
Furthermore, we plan to acquire additional site equipment by utilising a portion of the
net proceeds from the Placing so as to enhance our technical ability and to strengthen our
capability to cater to different needs and requirements of different customers. Please refer to
the section headed Statement of business objective and use of proceeds in this prospectus
for details of the types of site equipment to be purchased and the intended timing of
deployment of the net proceeds in this regard. As a result of the purchase of additional site
equipment, it is expected that additional depreciation will be charged to our profit or loss
and may therefore affect our financial performance and operating results.
28
RISK FACTORS
There is no assurance that the Technical Circular (Works) No. 1/2015 issued by the
Works Branch of Development Bureau (the Technical Circular) or other similar
administrative promulgations issued by the Government will not have any negative
impact on our Group
The Air Pollution Control (Non-road Mobile Machinery) (Emission) Regulation was
gazetted on 23 January 2015 and came into effect on 1 June 2015 to introduce regulatory
control on the emissions of non-road mobile machinery. On 8 February 2015, the Works
Branch of Development Bureau issued the Technical Circular, pursuant to which the
Government has promulgated an implementation plan to phase out progressively the use of
exempted NRMM for four types of exempted NRMM, namely generators, air compressors,
excavators and crawler cranes in new capital works contracts of public, including design and
build contracts, with an estimated contract value exceeding HK$200 million and tenders
invited on or after 1 June 2015. For details of the Air Pollution Control (Non-road Mobile
Machinery) (Emission) Regulation and the Technical Circular, please refer to the paragraph
headed Regulatory overview Air Pollution Control (Non-road Mobile Machinery)
(Emission) Regulation (Chapter 311Z of the Laws of Hong Kong) in this prospectus.
As at the Latest Practicable Date, our Group has 35 regulated machines and out of
which 31 machines were exempted and 4 machines were approved with a proper label in a
prescribed format issued by the Hong Kong Environmental Protection Department under the
Air Pollution Control (Non-road Mobile Machinery) (Emission) Regulation. Of the 31
exempted machines, there are 20 exempted machines (4 generators, 4 air compressors and 12
excavators) to be phased out under the phase out plan as detailed in the Technical Circular.
The Technical Circular aims to require the relevant departments of the Government to
include specific terms of limiting the quantity of exempted NRMMs to certain percentage in
the contract made with the main contractors in the construction industry. It is neither binding
nor regulatory to our Groups business operations and any breach of such terms shall only
amount to a breach of contract by the respective main contractor under the contract made
with the relevant department of the Government to which our Group is not a party.
Nevertheless, we cannot assure that the Government will not extend the scope of the said
implementation plan or issue other similar administrative promulgations which may cause
any potential negative impact to our Groups business operation and the construction
industry as a whole. If there is such extension of the scope and promulgations, our business
operation, financial status, results and prospect in the future may be materially and adversely
affected.
Cash inflows and outflows in connection with construction projects may be irregular,
thus may affect our net cash flow position
Cash flows from operating activities primarily consisted of our Groups revenues from
civil engineering projects undertaken by us. For each of the two years ended 31 March 2015
and the eight months ended 30 November 2014 and 2015, we recorded a net operating cash
inflow of approximately HK$7,402,000, a net operating cash outflow of approximately
HK$3,687,000, a net operating cash outflow of approximately HK$1,169,000 and a net
operating cash inflow of approximately HK$5,228,000, respectively.
29
RISK FACTORS
In a construction project, net cash outflows to pay certain operating expenditures may
not align with progress payments to be received at the relevant periods. Progress payments
will be paid after our construction works commence and are certified by our customers (or
authorised persons employed by them). Accordingly, the cash inflow and outflow for a
particular project may fluctuate as the construction works proceed. If during any particular
period of time, there exists too many projects which require substantial cash outflow while
we have significantly less cash inflows during that period, our cash flow position may be
adversely affected.
We recorded net current liabilities as at 31 March 2014 and 2015 and net liabilities as
at 31 March 2014 and we may expose ourselves to liquidity risk if we experience net
current liabilities in the future
We recorded net current liabilities of approximately HK$36,196,000 and
HK$12,413,000 as at 31 March 2014 and 2015, respectively. The net current liabilities
position was primarily attributable to (i) the amounts due to customers for contract work of
approximately HK$39,981,000 and HK$39,980,000 as at 31 March 2014 and 2015,
respectively; and (ii) the mortgage loan drawn to fund the acquisition of an investment
property, a non-current asset. As at 30 November 2015, we recorded net current assets of
approximately HK$5,240,000. We recorded net liabilities of approximately HK$9,775,000 as
at 31 March 2014. There is no assurance that we will not record net current liabilities and
net liabilities in the future. We may not have sufficient working capital to meet our current
liabilities or expand our operations as anticipated. In such circumstances, our liquidity,
business operations, financial condition and prospects may be materially and adversely
affected.
Unsatisfactory performance by our subcontractors or unavailability of subcontractors
may adversely affect our operations and profitability
Depending on the availability of our labour resources and the opportunity cost of
performing the work with our own resources, we may subcontract part of our works to other
subcontractors. Please refer to the section headed Business Subcontractors in this
prospectus for further details. For the two years ended 31 March 2015 and the eight months
ended 30 November 2015, subcontracting charges incurred by us amounted to approximately
HK$34,422,000, HK$54,817,000 and HK$50,913,000, respectively. There is no assurance
that we are able to monitor the performance of these subcontractors as directly and
efficiently as with our own staff. In addition, our inability to hire qualified subcontractors
could hinder our ability to complete a project within the prescribed deadline.
Outsourcing exposes us to risks associated with non-performance, delayed performance
or substandard performance by subcontractors or third parties. Accordingly, we may
experience deterioration in the quality or delay in completion of our civil engineering
projects. We may also incur additional costs due to the delays or a higher price in sourcing
the services, equipment or supplies in default. We are usually liable for our subcontractors
default. These events may have impact upon our profitability, financial performance and
reputation, as well as result in litigation or damages claims.
30
RISK FACTORS
Our subcontractors may be exposed to charges in relation to violation of safety,
environmental and/or employment laws and regulations which may affect their renewal of
relevant licences or may even lead to revocation of their licences. If this happens in our
projects, we will have to appoint another subcontractor(s) for replacement and thus
additional costs may be incurred.
If our subcontractors violate any laws, rules or regulations in relation to health and
safety matters, we may sometimes be subject to prosecutions as primary defendant by
relevant authorities. For instance, under the Immigration Ordinance (Chapter 115 of the
Laws of Hong Kong), if a subcontractor employs an illegal immigrant on a construction site,
the construction site controller (including but not limited to the principal or main contractor
and the subcontractor) may be found to have committed an offence and liable to a fine. In
addition, we may be liable to claims for losses and damages, if such violations cause any
personal injuries/death or damage to properties. Moreover, pursuant to the Employment
Ordinance (Chapter 57 of the Laws of Hong Kong), a principal contractor or a main
contractor and every tier of subcontractors shall be jointly and severally liable to pay any
wages that become due to an employee who is employed by a subcontractor on any work
which the subcontractor has contracted to perform, and such wages are not paid within the
period specified in the Employment Ordinance (Chapter 57 of the Laws of Hong Kong). Our
operations and hence our financial position may thereby be adversely affected if any of our
subcontractors violate their obligations to pay their employees.
We may damage various underground services utilities and are exposed to such
inherent project risks
Services utilities, such as fresh and flush water mains, low or high voltage electric
cables, optical fibre telephone lines, cable television fibre and high pressure gas mains, are
laid underground in Hong Kong. There is no assurance that damage to those utilities will not
occur during our excavation works. Accordingly, we may be liable to the costs for the repair
of such damaged services utilities.
It is not unusual to find difficult conditions at the underground level which may not
have been anticipated at the preliminary stage. Such ground conditions may make our civil
engineering works difficult and may incur higher project expenses. In the event that we have
committed to a fixed sum or rate contract and that no adjustment to the contract sum could
be agreed with our customers, we may have to bear such increased expenses ourselves and
our profitability would be adversely affected.
Shortage of labour may affect our projects and our performance
Generally, our construction works are labour intensive. For any given project, a large
number of workers from various trades with different skills may be required. There is no
assurance that the supply of labour (especially experienced and skilled labour) will be
sufficient during the forthcoming years when the peak load of construction activities is
ongoing. All labour intensive projects are more susceptible to labour shortage, and our
subcontracting costs including labour costs of our subcontractors may escalate. If there is a
significant increase in the costs of labour and demand for experienced and skilled labour and
we have to retain our labour (likewise our subcontractors retain their labour) by increasing
31
RISK FACTORS
their wages, our staff cost and/or subcontracting cost will increase and thus lower our
profitability. On the other hand, if we or our subcontractors fail to retain our existing labour
and/or recruit sufficient labour (especially experienced and skilled labour) in a timely
manner to cope with our existing or future projects, we may not be able to timely complete
our projects, resulting in liquidated damages and/or financial losses. For sensitively analyses
illustrating the impact of fluctuations in staff costs and subcontracting charges, please refer
to the section headed Financial information Description of selected components of our
income statement Cost of sales Sensitivity analyses in this prospectus.
If we are unable to retain our key management personnel, our business, operational
results and financial condition may suffer
Our success and growth depends on our ability to identify, hire, train and retain
suitable, skilled and qualified employees, including management personnel with the requisite
industry expertise. Our Directors and members of senior management, in particular, our
executive Directors are important to us. Details of their expertise and experience are set out
in the section headed Directors and senior management in this prospectus. If any of our
executive Directors ceases to be involved in the management of our Group in the future and
our Group is unable to find a suitable replacement in a timely manner, there could be an
adverse impact on our business, results of operation and profitability of our Group.
We may be affected by possible increases in insurance costs and reduction of insurance
coverage by our insurers and certain risks involved in our business operation are
generally not insured
For the two financial years ended 31 March 2015 and the eight months ended 30
November 2015, the aggregate expenses of our insurances were approximately HK$246,000,
HK$262,000 and HK$409,000, respectively. Our insurance policies may not cover all of our
risks or payments and our insurers may not fully compensate us for all potential losses,
damages or liabilities relating to our properties or our business operations. We cannot
control if there is a reduction or limitation of insurance coverage by insurers upon the
expiry of our current policies. Any further increase in insurance costs (such as an increase in
insurance premiums) or reduction in coverage may materially and adversely affect our
business operations and financial results. Further, there are certain types of losses for which
insurance coverage is not generally available (such as risks in relation to collectability of
our trade and retention receivables and liabilities arising from events such as epidemics,
natural disasters, adverse weather conditions, political unrest and terrorist attacks, etc.) on
commercial terms acceptable to us, or at all. If we suffer any losses, damages or liabilities
in the course of our business operations arising from events for which we do not have any
or adequate insurance cover, we have to bear such losses, damages or liabilities by
ourselves. In such a case, our business operations, financial condition and results of
operations may be adversely affected.
32
RISK FACTORS
We are exposed to claims arising from latent defects liability
We do not maintain any defects liability insurance and we may face claims arising
from latent defects that are existing but not yet active, developed or visible, found in the
works which are constructed by us. If there is any significant claim against us for defects
liability of any default or failure of our services by our customers or other party, our
profitability may be adversely affected.
We engage third parties for transporting certain of our site equipment which we are
not able to transport and may not be able to claim for loss or damage to our site
equipment during the transportation process
During the Track Record Period, we engaged third parties to transport certain of our
site equipment between sites. Our transportation expenses amounted to approximately
HK$205,000, HK$541,000 and HK$558,000 for the two years ended 31 March 2015 and the
eight months ended 30 November 2015, respectively. We do not purchase any insurance on
transportation of the site equipment by third party logistics service providers and we cannot
assure that our logistics service providers have sufficient insurance coverage for loss or
damage to our site equipment. As such, we may not be able to claim for any loss or damage
to our site equipment during the transportation process, which could materially and
adversely affect our business, financial conditions and results of operation.
We plan to expand our capacity by acquiring site equipment, which may result in an
increase in depreciation expenses and cashflow used in investing activities and may
adversely affect our operating results and financial position
We rely heavily on the use of site equipment, including excavators, vibrating rollers,
generators, air compressors, a hydraulic truck crane, hydraulic breakers and aerial working
platforms. As at the Latest Practicable Date, we had 56 units of site equipment with an
aggregate net book value of approximately HK$6,797,000. For the two years ended 31
March 2015 and the eight months ended 30 November 2015, we acquired new site
equipment in the amount of approximately HK$4,310,000, HK$410,000 and HK$812,000 at
cost, respectively. To further enhance and optimise our overall efficiency and capacity as
well as technical capability in performing civil engineering construction works, we intend to
acquire three hydraulic truck cranes, one excavator, three generators and one air compressor
as well as three motor vehicles. The expected total capital expenditure for the acquisition of
the aforesaid site equipment and motor vehicles will be approximately HK$18.0 million,
which will be acquired using the net proceeds from the Placing.
As a result of the acquisition of site equipment and motor vehicles using the net
proceeds from the Placing, our cash flow used in investing activities is expected to increase
by approximately HK$17,324,000 and HK$643,000 during the years ending 31 March 2017
and 2018, respectively. Our Directors further estimate that assuming all other things remain
unchanged, our depreciation expenses will increase and our gross profit will decrease by
approximately HK$1,814,000 and HK$1,958,000 during the years ending 31 March 2017 and
2018, respectively. Accordingly, our operating results and financial position may be
adversely affected.
33
RISK FACTORS
Changes in existing environmental regulations and guidelines may impose additional
cost and burden to us
Our business is subject to the environmental regulations and guidelines issued by the
Government, which apply to the operation of all construction projects in Hong Kong. Such
regulations and guidelines may be amended by the Government from time to time to reflect
the latest environmental needs. Any changes to such regulations and guidelines could impose
additional cost and burden to us.
Industrial actions or strikes may affect our business
Typical construction works are divided into various disciplines, and each requires
highly specialised labour. Industrial action of any one discipline may disrupt the progress of
our construction works. During the Track Record Period, our civil engineering projects did
not encounter any strike action. However, there is no assurance that industrial actions or
strikes will not be launched in the future. Such industrial actions or strikes may adversely
impact our business performance and hence profitability and results of operation. Any delays
in completing our civil engineering works caused by such action may affect our business,
financial conditions and results of operations.
Personal injuries, property damages or fatal accidents may occur if safety measures are
not followed at the construction sites
In the course of our operations, we require our employees and subcontractors to adhere
to and implement all the safety measures and procedures as stipulated in our work and
safety policy. We monitor and supervise closely our employees and subcontractors in the
implementation of all such safety measures and procedures during execution of works.
However, we cannot guarantee that our employees or subcontractors will not violate the
applicable laws, rules or regulations. If any such employees or subcontractors fails to
comply with our safety measures at the construction sites, personal injuries, property damage
or fatal accidents may occur in greater numbers and/or to a serious extent. Please refer to
the section headed Business Occupational health and safety System of recording and
handling accidents and our safety compliance record in this prospectus for further
information on the material accidents we encountered during the Track Record Period. These
may adversely affect the financial position of our Group to the extent not fully recoverable
from our insurance policies. They may also cause our relevant licence and/or certifications
to be suspended or not renewed.
Furthermore, public project tenders are generally evaluated by taking into account a
number of factors, which include without limitation the subcontractors compliance records
with the relevant laws and regulations. We may also be subject to inspections by the
relevant Government departments (e.g. Labour Department) from time to time and these
inspections may lead to formal charge(s) against our Group. Non-compliance and conviction
records may affect our chance of winning future bids.
34
RISK FACTORS
Our Group has records of certain immaterial non-compliance of Hong Kong regulatory
requirements which could lead to the imposition of fines
There have been instances of immaterial non-compliance with certain Hong Kong
regulatory requirements by our Group. These include, among others, non-compliance of the
Predecessor Companies Ordinance, the Companies Ordinance and the Employment
Ordinance (Chapter 57 of the Laws of Hong Kong), details of which are set out in the
section headed Business Non-compliance in this prospectus. If the relevant Government
authorities take enforcement actions against the relevant subsidiary of our Group and/or our
Controlling Shareholders fail to indemnify us to a sufficient extent or at all, we may be
required to pay penalty or incur other liabilities, and our reputation, financial condition and
results of operations may be adversely affected.
We are exposed to interest rate risks which is unhedged and may affect our cash flows
As at 30 November 2015, our Group had bank loans and overdrafts and obligations
under finance leases amounting to approximately HK$5,688,000 and HK$3,948,000,
respectively, which bore interest at 3.23% to 5.50% and 5.44% to 6.21% per annum
respectively. Our Group has not hedged against interest rate risks. Should there be an
increase in interest rate, our interest expenses may increase and our cash flows and
profitability may be adversely affected.
Our business plans and strategies may not be successful or achieved within the
expected time frame or within the estimated budget
We intend to further enhance our site equipment and our manpower in order to cope
with the expected increase in demand for our services. However, our plans and strategies
may be hindered by risks including but not limited to those mentioned elsewhere in this
section. There is no assurance that we will be able to successfully maintain or increase our
market share or grow our business successfully after deploying our management and
financial resources. Any failure in maintaining our current market position or implementing
our plans could materially and adversely affect our business, financial condition and results
of operations.
Our Groups operations may be affected by inclement weather conditions and are
subject to other construction risks
Our business operations are mostly conducted outdoors and are affected by weather
conditions. If inclement weather conditions persist or a natural disaster occurs, we may be
prevented from performing works at our construction sites, and we may fail to meet
specified time schedule. If we have to halt operations during inclement weather conditions
or a natural disaster, we may continue to incur operating expenses while we experience
reduced revenues and profitability. Besides, our business is subject to outbreak of severe
communicable diseases (such as swine flu, avian flu, severe respiratory syndrome and Ebola
virus disease), natural disasters or other acts of God which are beyond our control. These
incidents may also adversely affect the economy, infrastructure, livelihood and society in
Hong Kong. Acts of wars and terrorism may also injure our employees, cause loss of lives,
damage our facilities, disrupt our operations and destroy our works performed. If any such
35
RISK FACTORS
incident occurs, our revenue, costs, financial conditions and growth potentials will be
adversely affected. It is also difficult to predict the potential effect of these incidents and
their materiality to our business as well as those of our customers, suppliers and
subcontractors.
Our financial performance and results of operations will be affected by our Listing
expenses, which are non-recurring in nature
Group as to approximately HK$2.5 million and HK$18.4 million, respectively. Of such
amount to be borne by us, approximately HK$4.9 million is directly attributable to the issue
of the New Shares and is expected to be accounted for as a deduction from equity upon
Listing. The remaining amount of approximately HK$13.5 million, which cannot be so
deducted, will be charged to profit or loss. Of the approximately HK$13.5 million which
will be charged to profit or loss, approximately HK$Nil, HK$Nil and HK$7.9 million has
been charged during the two years ended 31 March 2015 and the eight months ended 30
November 2015, respectively and approximately HK$1.7 million is expected to be charged
to profit or loss for the four months ending 31 March 2016. Our Group expects to further
charge approximately HK$3.9 million to profit or loss for the year ending 31 March 2017.
Expenses in relation to the Listing are non-recurring in nature. Our Board wishes to inform
the Shareholders and potential investors that our Groups financial performance and results
of operations for the two years ending 31 March 2017 will be significantly affected by the
estimated expenses in relation to the Listing.
Our Groups liquidity and financial position may be affected by our debt financing and
our Groups gearing ratio and finance costs are expected to increase after Listing
We have obtained a credit facility of up to HK$20,000,000 from a bank in Hong Kong
in order to provide for a flexible alternative to increase our working capital and finance our
liquidity requirement for our contracts on hand and newly awarded projects. Such credit
facility consists of: (i) a factoring facility of up to HK$10,000,000 by factoring of certain
accounts receivable from our major customer(s) to the bank; and (ii) a banking facility of
HK$10,000,000. Hence, our Companys gearing ratio and finance costs are expected to
increase after Listing. In the event that we fail to repay the bank loans on time, or we
cannot factor our accounts receivables to obtain funds or if we are unable to generate
sufficient cash flow for our operations or otherwise unable to obtain sufficient funds to
finance our business in the future, our liquidity and financial condition may be materially
and adversely affected.
36
RISK FACTORS
RISKS RELATING TO THE INDUSTRY IN WHICH WE OPERATE
Our performance depends on market conditions and trends in the civil engineering
construction industry and any deterioration in the prevailing market conditions in the
civil engineering construction industry may adversely affect our performance and
financial conditions
All our businesses and operations have been and will continue to be located in Hong
Kong. The future growth and level of profitability of the civil engineering construction
industry in Hong Kong depend primarily upon the continued availability of large civil
engineering construction projects. The nature, extent and timing of such projects will,
however, be determined by the interplay of a variety of factors. These factors include, in
particular, the Governments policy and spending patterns on the civil engineering
construction industry in Hong Kong such as the on-going plan of the Ten Major
Infrastructure Projects, speed of approval of the relevant budgets and/or projects and the
general conditions and prospects of the Hong Kong economy. They may affect the
availability of civil engineering construction projects from the public sector or private sector.
Apart from the public spending of the Government, other factors also affect the civil
engineering construction industry. These other factors include cyclical trends in the economy
as a whole, fluctuations in interest rates and the availability of new projects in the private
sector. If there is any recurrence of a recession in Hong Kong, deflation or any changes in
Hong Kongs currency policy, or if the demand for civil engineering works in Hong Kong
deteriorates, our operations and profitability could be adversely affected.
We operate in a relatively competitive environment
The civil engineering construction industry in Hong Kong has many participants and is
competitive. As at the Latest Practicable Date, there were over 700 structural and civil
engineering subcontractors being registered under the Construction Industry Council in Hong
Kong. Some of the major market players have significantly more resources and are better
positioned than our Group, including but not limited to having a long operating history,
better financing capabilities and well developed, technical expertise. New participants may
wish to enter the industry provided that they have the appropriate skills, local experience,
necessary site equipment, capital and they are granted the requisite licences or approvals by
the relevant regulatory bodies. Increased competition may result in lower operating margins
and loss of market share, which may adversely affect our profitability and operating results.
37
RISK FACTORS
RISKS RELATING TO HONG KONG
The state of economy in Hong Kong may adversely affect our performance and
financial condition
Our performance and financial conditions depend on the state of economy in Hong
Kong. Our revenue attributable to the Hong Kong market accounted for all of our Groups
total revenue during the Track Record Period. If there is a downturn in the economy of
Hong Kong, our results of operations and financial position may be adversely affected. In
addition to economic factors, social unrest or civil movements such as occupation activities
may also affect the state of economy in Hong Kong and in such case, our Groups
operations and financial position may also be adversely affected.
The state of political environment in Hong Kong may adversely affect our performance
and financial condition
Hong Kong is a special administrative region of the PRC. It enjoys a high degree of
autonomy under the principle of one country, two systems in accordance with the Basic
Law of Hong Kong. However, we are not in any position to guarantee the one country, two
systems principle and the level of autonomy would be maintained as currently in place.
Since our operations are located in Hong Kong, any change of Hong Kongs existing
political environment may affect the stability of the economy in Hong Kong, thereby
affecting our results of operations and financial positions. Recently, thousands of residents
of Hong Kong engaged in civil disobedience protests. Activists protested outside key
government buildings and occupied several major intersections, causing major disruption to
traffic and trade in the affected areas. Any political and social instability in Hong Kong, if
significant and prolonged, could have a material adverse effect on our business, financial
condition, results of operations and prospects.
RISKS RELATING TO THE PLACING
There has been no prior public market for the Shares and an active trading market
may not develop after the Listing
Prior to the Listing, there has been no public market for the Shares. There is no
guarantee that an active trading market for the Shares will develop or be sustained upon
completion of the Listing. A listing on the GEM does not guarantee that an active and liquid
trading market for the Shares will develop, or if it does develop, that it will be sustained
following the Listing, or that the market price of the Shares will not decline following the
Listing.
The trading volume and market price of our Shares may be volatile, which could result
in substantial losses for Shareholders
The market price and trading volume of the Shares may be highly volatile. There are a
number of factors which may affect the market price of the Shares, and these factors include
without limitation changes in our income or cash flows, new investments and strategic
alliances. Any such developments may result in large and sudden changes in the volume and
38
RISK FACTORS
market price at which the Shares will be trading. There is no guarantee that these
developments will or will not occur in the future and it is difficult to quantify the impact on
our Group and on the trading volume and market price of the Shares. Further, changes in the
market price of the Shares may also be due to factors which may not be directly related to
our financial or business performance.
Shareholders equity interests may be diluted as a result of additional equity
fund-raising
In the future, we may need to raise additional funds to finance acquisitions, expansion
or new developments of our business. If funds are raised through the issue of new equity
and equity-linked securities of our Company other than on a pro-rata basis to the existing
Shareholders, the percentage ownership of the Shareholders in our Company may be reduced
accordingly as a result of which Shareholders may experience dilution in their percentage
shareholdings in our Company. Furthermore, it is also possible that such new securities may
have preferred rights, options or pre-emptive rights that render them more valuable than or
senior to the Shares.
The exercise of options granted under the Share Option Scheme may result in dilution
to the Shareholders
Our Company has conditionally adopted the Share Option Scheme although no options
had been granted thereunder as at the Latest Practicable Date. Any exercise of the options to
be granted under the Share Option Scheme in the future and issue of Shares thereunder
would result in the reduction in the percentage ownership of the Shareholders and may result
in a dilution in the earnings per Share and the net asset value per Share, as a result of the
increase in the number of Shares outstanding after such issue.
Future sale of a substantial amount of Shares by existing Shareholders may adversely
affect the market price of our Shares and our ability to raise equity capital
Any future sale of a substantial amount of the Shares by the existing Shareholders, or
the possibility of such sale, could negatively impact the market price of the Shares in Hong
Kong and our ability to raise equity capital in the future at a time and price that we deem
appropriate.
There is no guarantee that the Substantial Shareholders or Controlling Shareholders
will not dispose of the Shares held by them after the lock-up period, and the effect of
which, if any, on the market price of the Shares cannot be predicted. The Shares held by
Controlling Shareholders are subject to certain lock-up periods beginning on the Listing
Date, details of which are set out in the section headed Underwriting Underwriting
arrangements and expenses Undertakings in this prospectus.
It is also possible that there may be a sale of a substantial amount of Shares by any of
the Substantial Shareholders or Controlling Shareholders or the perception that such sale
may occur, which may materially and adversely affect the prevailing market price of the
Shares
39
RISK FACTORS
RISKS RELATING TO THIS PROSPECTUS
There can be no guarantee as to the accuracy of facts and other statistics contained in
this prospectus with respect to the economies and the industry in which we operate
Certain facts and other statistics in this prospectus are derived from various sources
including the Ipsos Report and various official government publications that we believe to
be reliable and appropriate for such information. However, we cannot guarantee the quality
or reliability of such source materials. We have no reason to believe that such information is
false or misleading or that any fact has been omitted that would render such information
false or misleading. Whilst our Directors have taken all reasonable care in the reproduction
of the information, they have not been prepared or independently verified by us, the Selling
Shareholder, the Sponsor, the Joint Bookrunners, the Joint Lead Managers, the Underwriters
or any of their respective directors, affiliates or advisers. Therefore, we make no
representation as to the accuracy of such facts and statistics. Due to possibly flawed or
ineffective collection methods or discrepancies between published information, market
practice and other problems, the statistics referred to or contained in this prospectus may be
inaccurate or may not be comparable to statistics produced for other publications or
purposes and should not be unduly relied upon. Furthermore, there is no assurance that they
are stated or compiled on the same basis or with the same degree of accuracy as may be the
case elsewhere. In all cases, investors should give consideration as to how much weight or
importance they should attach to, or place on, such information or statistics.
Investors should read this entire prospectus carefully and we strongly caution you not
to place any reliance on any information (if any) contained in press articles or other
media regarding us and the Placing including, in particular, any financial projections,
valuations or other forward-looking statement
Prior to the publication of this prospectus, there may be press or other media, which
contains certain information referring to us and the Placing that is not set out in this
prospectus. We wish to emphasise to potential investors that neither we nor any of the
Selling Shareholder, the Sponsor, the Joint Bookrunners, the Joint Lead Managers, the
Underwriters, our Directors, officers, employees, advisers, agents or representatives of any
of them, or any other parties (collectively, the Professional Parties) involved in the
Placing has authorised the disclosure of such information in any press or media, and neither
the press reports, any future press reports nor any repetition, elaboration or derivative work
were prepared by, sourced from, or authorised by us or any of the Professional Parties.
Neither we, the Selling Shareholder, nor any Professional Parties accept any responsibility
for any such press or media coverage or the accuracy or completeness of any such
information. We make no representation as to the appropriateness, accuracy, completeness or
reliability of any such information or publication. To the extent that any such information is
not contained in this prospectus or is inconsistent or conflicts with the information contained
in this prospectus, we disclaim any responsibility, liability whatsoever in connection
therewith or resulting therefrom. Accordingly, you should rely solely upon the information in
this prospectus in making your investment decisions regarding the Shares but note that
undue reliance should not be placed on any forward looking statements contained in this
prospectus which may not occur in the way we expect or may not materialise at all as set
out in the section headed Forward-looking statements in this prospectus.
40
INFORMATION ABOUT THIS PROSPECTUS AND THE PLACING

DIRECTORS RESPONSIBILITY FOR THE CONTENTS OF THIS PROSPECTUS
This prospectus, for which our Directors collectively and individually accept full
responsibility, includes particulars given in compliance with the Companies (Winding Up
and Miscellaneous Provisions) Ordinance, the Securities and Futures (Stock Market Listing)
Rules (Chapter 571V of the Laws of Hong Kong) and the GEM Listing Rules for the
purpose of giving information with regard to our Company. Our Directors, having made all
reasonable enquiries, confirm that to the best of their knowledge and belief, the information
contained in this prospectus is accurate and complete in all material respects and not
misleading or deceptive and there are no other matters the omission of which would make
any statement in this prospectus misleading.
FULLY UNDERWRITTEN
This prospectus is published solely in connection with the Placing and the listing of the
Shares on GEM, which is sponsored by the Sponsor and is managed by the Joint Lead
Managers. The Placing Shares are fully underwritten by the Underwriters pursuant to the
Underwriting Agreement. For further information about the Underwriters and the Placing and
underwriting arrangements, please refer to the section headed Underwriting Underwriters
in this prospectus.
RESTRICTIONS ON OFFER AND SALE OF THE PLACING SHARES
Each person acquiring the Placing Shares will be required to confirm, or be deemed by
his/her acquisition of Placing Shares to confirm, that he/she is aware of the restrictions on
offers and sales of the Placing Shares described in this prospectus.
No action has been taken in any jurisdiction other than Hong Kong to permit the
offering of the Placing Shares or the distribution of this prospectus. This prospectus is not
an offer or invitation in any jurisdiction in which it is not authorised, and is not an offer or
invitation to any person to whom it is unlawful to make an unauthorised offer or invitation.
The distribution of this prospectus and the offering of the Placing Shares in other
jurisdictions are subject to restrictions and may not be made except as permitted under the
applicable laws or any applicable rules and regulations of such jurisdictions pursuant to
registration with or authorisation by the relevant regulatory authorities as an exemption
therefrom.
Prospective investors for the Placing Shares should consult their financial advisors and
take legal advice, as appropriate, to inform themselves of, and to observe, all applicable
laws and regulations of any relevant jurisdiction. Prospective investors for the Placing
Shares should inform themselves as to the relevant legal requirements of applying for the
Placing Shares and any applicable exchange control regulations and applicable taxes in the
countries of their respective citizenship, residence or domicile.
The Placing Shares are offered solely on the basis of the information contained and
representations made in this prospectus. No person is authorised in connection with the
Placing to give any information or to make any representation not contained in this
41

prospectus, and any information or representation not contained herein must not be relied
upon as having been authorised by our Company, the Selling Shareholder, the Sponsor, the
Joint Bookrunners, the Joint Lead Managers, the Underwriters, and any of their respective
directors or any other persons involved in the Placing. It is expected that, pursuant to the
Placing, the Underwriters will, on behalf of our Company and the Selling Shareholder,
conditionally place the Placing Shares with investors.
STRUCTURE AND CONDITIONS OF THE PLACING
The structure and conditions of the Placing is set forth in the section headed Structure
and conditions of the Placing in this prospectus.
APPLICATION FOR LISTING ON GEM
Our Company satisfies the requirements relating to continuity of ownership and control
throughout the full financial year immediately preceding the Latest Practicable Date and up
until the Listing Date under Rule 11.12A(2) of the GEM Listing Rules.
Our Company has applied to the Stock Exchange for the listing of, and permission to
deal in, the Shares in issue and to be issued on GEM as mentioned in this prospectus. No
part of the share or loan capital of our Company is listed, traded or dealt in on any other
stock exchange.
A total of 312,000,000 Shares, representing 25% of the enlarged issued share capital of
our Company immediately following completion of the Placing and the Capitalisation Issue
(without taking into account any Shares which may be allotted and issued pursuant to the
exercise of any options which may be granted under the Share Option Scheme), will be
made available under the Placing.
Under section 44B(1) of the Companies (Winding Up and Miscellaneous Provisions)
Ordinance, if the permission for the Shares offered under this prospectus to be listed on
GEM has been refused before the expiration of three weeks from the date of the closing of
the Placing or such longer period not exceeding six weeks as may, within the said three
weeks, be notified to our Company for permission by or on behalf of the Stock Exchange,
then any allotment made on an application in pursuance of this prospectus shall, whenever
made, be void.
Pursuant to Rule 11.23(7) of the GEM Listing Rules, the minimum prescribed
percentage of at least 25% of the issued share capital of our Company must at all times be
held by the public. A total of 312,000,000 Placing Shares, representing 25% of the enlarged
issued share capital of our Company, will be in the hands of the public immediately
following completion of the Placing and the Capitalisation Issue and upon Listing.
42

PROFESSIONAL TAX ADVICE RECOMMENDED
Potential applicants for the Placing Shares are recommended to consult their
professional advisers if they are in doubt as to the taxation implications of the subscription
for, holding, purchase, disposal of or dealing in the Shares or exercising their rights
thereunder. It is emphasised that none of our Company, the Selling Shareholder, our
Directors, the Sponsor, the Joint Lead Managers, the Joint Bookrunners, the Underwriters,
their respective directors or any other person involved in the Placing accepts responsibility
for any tax effects on, or liabilities of, holders of Shares resulting from the subscription for,
holding, purchase, disposal of or dealing in the Shares or the exercise of their rights
thereunder.
SHARE REGISTRAR, REGISTRATION AND STAMP DUTY
All the Placing Shares will be registered on the Hong Kong branch register of members
of our Company in Hong Kong by the Hong Kong Branch Share Registrar. Dealings in the
Shares registered on our Companys branch register of members maintained in Hong Kong
will be subject to Hong Kong stamp duty. Dealings in the Shares registered on the principal
register of members of our Company maintained in the Cayman Islands will not be subject
to Cayman Islands stamp duty.
The Shares are freely transferable. Only securities registered on the branch register of
members of our Company kept in Hong Kong may be traded on GEM unless the Stock
Exchange otherwise agrees.
SHARES WILL BE ELIGIBLE FOR ADMISSION INTO CCASS
Subject to the approval of the listing of, and permission to deal in, the Shares on GEM
and our Companys compliance with the stock admission requirements of HKSCC, the
Shares will be accepted as eligible securities by HKSCC for deposit, clearance and
settlement in CCASS with effect from the Listing Date or, under contingent situation, any
other date as determined by HKSCC. Settlement of transactions between participants of the
Stock Exchange is required to take place in CCASS on the second business day after any
trading day.
All activities under CCASS are subject to the General Rules of CCASS and CCASS
Operational 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 such
arrangements will affect their rights and interests, they should seek the advice of their
stockbroker or other professional adviser.
COMMENCEMENT OF DEALINGS IN THE SHARES
Dealings in the Shares on GEM are expected to commence at 9:00 a.m. on Tuesday, 12
April 2016. The Shares will be traded in board lots of 10,000 Shares each. The stock code
for our Shares is 8217. We will not issue temporary documents of title.
43

LANGUAGE
If there is any inconsistency between this prospectus and the Chinese translation of this
prospectus, this prospectus shall prevail. If there is any inconsistency between the Chinese
names of the Chinese entities mentioned in this prospectus and their English translation, the
Chinese names shall prevail.
CURRENCY TRANSLATIONS
Unless otherwise specified, translations of US$ into HK$ in this prospectus are based
on the exchange rate set out below (for the purpose of illustration only):
US$1.00 = HK$7.80
No representation is made that any amounts in US$ and HK$ can be or could have
been converted at the relevant dates at the above exchange rate or any other rates or at all.
ROUNDING
Certain amounts and percentage figures included in this prospectus have been subject
to rounding adjustments. Accordingly, totals of rows or columns of numbers in tables may
not be equal to the apparent total of individual items. Where information is presented in
thousands or millions of units, amounts may have been rounded up or down. Any
discrepancies in any table between totals and sums of amounts listed therein are due to
rounding.
44
DIRECTORS AND PARTIES INVOLVED IN THE PLACING

DIRECTORS
Name
Residential address
Nationality
Room B, 10/F, Block 1

The Great Hill
8 Tung Lo Wan Hill Road
Shatin
New Territories
Hong Kong
Chinese
Flat D, 6/F, Block 3

Vista Paradiso
Ma On Shan
New Territories
Hong Kong
Chinese
1/F, Block 19
Wai Ha Tsuen
No. 100 Tai Po
New Territories
Hong Kong
Chinese
Flat E, 13/F, Block 4

Harbour Place
8 Oi King Street
Hung Hom
Kowloon
Hong Kong
Chinese
Executive Directors
Mr. Wong Che Kwo
Mr. Wong Wing Wah
Mr. Wong Tak Ming
Mr. Chiu Chi Wang
Independent non-executive Directors

Mr. Wong Chi Kan
Mr. Liu Yan Chee James
Flat F, 12/F, Block 1

Tsuen Wan Plaza
Tsuen Wan
New Territories
Hong Kong
Chinese
Flat E, 42/F, Tower 5

The Long Beach
8 Hoi Fai Road
Kowloon
Hong Kong
Chinese
45

Name
Residential address
Nationality
Mr. Tai Hin Henry
Flat 56D, Block 7

Le Point
8 King Ling Road
Tseung Kwan O
New Territories
Hong Kong
Chinese
For further information on the profile and background of our Directors, please refer to
the section headed Directors and senior management in this prospectus.
PARTIES INVOLVED
Sponsor

Suites 1903-4, 19th Floor, Tower 6
The Gateway, Harbour City
9 Canton Road, Tsim Sha Tsui
Kowloon, Hong Kong
(A licensed corporation carrying on Type 1 (dealing in
securities) and Type 6 (advising on corporate finance)
regulated activities under the SFO)
Joint Bookrunners, Joint Lead

Managers and the
Underwriters
Gransing Securities Co., Limited

Rooms 805-806 Far East Consortium Building
121 Des Voeux Road Central
Hong Kong
securities), Type 4 (advising on securities), Type 6
(advising on corporate finance) and Type 9 (asset
management) regulated activities under the SFO)
Suncorp Securities Limited
Room 3616, 36/F., Cosco Tower
183 Queens Road Central
Hong Kong
securities) regulated activity under the SFO)
46

Legal adviser to our Company
As to Hong Kong law

D. S. Cheung & Co.
29/F., Bank of East Asia
Harbour View Centre
56 Gloucester Road
Wanchai, Hong Kong
(Solicitors of Hong Kong)
As to Cayman Islands law
Appleby
2206-19 Jardine House
1 Connaught Place
Central
Hong Kong
(Cayman Islands attorneys-at-law)
Legal advisers to the Sponsor

and the Underwriters
As to Hong Kong law

Li, Wong, Lam & W. I. Cheung
22nd Floor, Infinitus Plaza
199 Des Voeux Road Central
Hong Kong
(Solicitors of Hong Kong)
Reporting accountants
Grant Thornton Hong Kong Limited

Level 12, 28 Hennessy Road
Wanchai, Hong Kong
(Certified Public Accountants)
Internal control consultant
CT Partners Consultants Limited

Unit 1601A, 16th Floor, China Hong Kong City
33 Canton Road
Tsim Sha Tsui, Kowloon
Hong Kong
Property valuer
Ascent Partners Valuation Service Limited

Suite 2102, Hong Kong Trade Centre
161-167 Des Voeux Road Central
Hong Kong
Compliance adviser

Suites 1903-4, 19th Floor, Tower 6
The Gateway, Harbour City
9 Canton Road, Tsim Sha Tsui
Kowloon, Hong Kong
securities) and Type 6 (advising on corporate finance)
regulated activities under the SFO)
47

Selling Shareholder
Blooming Union Investments Limited

NovaSage Chambers
P.O. Box 4389
Road Town
Tortola
British Virgin Islands
48
CORPORATE INFORMATION
Registered office in the Cayman
Islands
P.O. Box 1350

Clifton House
75 Fort Street
Grand Cayman KY1-1108
Cayman Islands
Headquarter and principal

place of business in Hong
Kong registered under Part
16 of the Companies
Ordinance
Unit 1505, 15/F

Delta House
3 On Yiu Street
Shatin
New Territories
Hong Kong
Company secretary
Mr. Woo Yuen Fai

Certified Public Accountant
Flat C, 7/F Kwong Wah Centre
36 Fau Tsoi Street
Yuen Long
New Territories
Hong Kong
Compliance officer
Mr. Wong Wing Wah

Flat D, 6/F, Block 3
Vista Paradiso
Ma On Shan
New Territories
Hong Kong
Authorised representatives
Mr. Woo Yuen Fai

Certified Public Accountant
Flat C, 7/F, Kwong Wah Centre
36 Fau Tsoi Street
Yuen Long
New Territories
Hong Kong
Mr. Wong Che Kwo
Room B, 10/F, Block 1
The Great Hill
8 Tung Lo Wan Hill Road
Shatin
New Territories
Hong Kong
Members of Audit Committee
Mr. Liu Yan Chee James (Chairman)

Mr. Wong Chi Kan
Mr. Tai Hin Henry
49
CORPORATE INFORMATION
Members of Remuneration
Committee
Mr. Wong Chi Kan (Chairman)

Mr. Wong Wing Wah
Members of Nomination
Committee
Mr. Wong Che Kwo (Chairman)

Mr. Wong Chi Kan
Mr. Tai Hin Henry
Cayman Islands principal share

registrar and transfer office
Appleby Trust (Cayman) Ltd.

Clifton House
75 Fort Street
PO Box 1350
Grand Cayman KY1-1108
Cayman Islands
Hong Kong branch share

registrar and transfer office
Union Registrars Limited

A18/F., Asia Orient Tower
Town Place
33 Lockhart Road
Wanchai
Hong Kong
(which will be relocated to Suites 3301-04, 33/F., Two
Chinachem Exchange Square, 338 Kings Road, North
Point, Hong Kong with effect from 5 April 2016)
Principal banker
Bank of China (Hong Kong) Limited

1 Garden Road
Hong Kong
Company website
www.luenwong.hk
(information contained in this website does not form
part of this prospectus)
50
INDUSTRY OVERVIEW
The information set forth in this section has been derived from the Ipsos Report. We
believe that the sources of the information are appropriate sources for such information,
and we have taken reasonable care in extracting and reproducing such information. We
have no reason to believe that such information is materially false or misleading, and no
fact has been omitted that would render such information materially false or misleading.
However, the information has not been independently verified by us, the Selling
Shareholder, the Sponsor, the Joint Bookrunners, the Joint Lead Managers, the
Underwriters, any of the respective directors, officers, employees, advisers, agents or
representatives or any other party involved in the Placing and no representation is given
as to its accuracy. Except as otherwise stated, all the data and forecast in this section
are derived from the Ipsos Report.
SOURCE OF INFORMATION
We commissioned an independent professional market research company, Ipsos, to
assess the industry development trends, market demand and competitive landscape of civil
engineering construction industry in Hong Kong, at a fee of HK$350,000 and our Directors
consider that such fee reflects market rates. Ipsos is an independent market research and
consulting company which conducts research on market profiles, market size, share and
segmentation analyses, distribution and value analyses, competitor tracking and corporate
intelligence and which has been engaged in a number of market assessment projects in
connection with initial public offerings in Hong Kong. Founded in Paris, France in 1975 and
publicly-listed on the NYSE Euronext Paris since 1999, Ipsos SA acquired Synovate Ltd. in
October 2011. After the acquisition, Ipsos became one of the largest market research and
consulting companies in the world which employs approximately 16,000 personnel
worldwide across 87 countries.
The information contained in the Ipsos Report is derived by means of data and
intelligence gathering such as: (i) desk research; (ii) consultation with the Company to
understand the background information about the business of our Group; and (iii) primary
research by interviewing key stakeholders and industry experts including but not limited to
companies engaged in civil engineering works, government officials and related associations.
Information gathered by Ipsos has been analysed, assessed and validated using Ipsos
in-house analysis models and techniques. According to Ipsos, information gathered can be
cross-referenced to ensure accuracy. Nevertheless, we cannot assure you regarding the
accuracy or completeness of the factors, forecasts and statistics in this prospectus obtained
from sources such as government publications, market data providers and the Ipsos Report.
Our Directors confirm that, after taking reasonable care, there is no adverse change in
the market information since the date of the Ipsos Report which may qualify, contradict or
have an impact on the information in this section.
51
INDUSTRY OVERVIEW
MACRO-ECONOMIC ENVIRONMENT IN HONG KONG
GDP value in Hong Kong increased from approximately HK$1,846.1 billion in 2010 to
approximately HK$2,070.8 billion in 2014, at a CAGR of approximately 2.9%.
It is expected that GDP in Hong Kong will grow consistently from 2015 onwards,
reaching about HK$2,440.1 billion in 2019. It can be attributed to the expected increase in
export value given the global economic recovery, and the expected increase in investment
inflow from China to Hong Kong in the next five years as 60% of Chinese outbound
investments was directed to or channeled through Hong Kong. Consumption contributed
50.2% of growth of gross domestic product in 2014 and account for 60% of the GDP in the
first half of 2015, even as the country grew at its slowest in 25 years. These factors are
likely to stimulate the development of the property market, leading to the growth of
construction and civil engineering industries.
MARKET OVERVIEW OF THE CONSTRUCTION INDUSTRY IN HONG KONG
The total investment value in construction projects in Hong Kong increased from about
HK$174.8 billion in 2010 to about HK$330.6 billion in 2014, at a CAGR of about 17.3% as
a result of factors such as the Ten Major Infrastructure Projects proposed by the
Government in 2007 and the growing cost of raw materials and labour, as well as the
increasing contract fees to subcontractors. From 2010 to 2014, the value of construction
projects commissioned by the public sector increased from approximately HK$31.2 billion to
approximately HK$68.8 billion, at a CAGR of about 21.9%, while that of the private sector
increased from approximately HK$30.3 billion to approximately HK$53.9 billion, at a
CAGR of about 15.5%.
According to the 2016-17 Budget Speech, the Government planned to increase its total
public expenditure on infrastructure to about HK$85.8 billion in 2016-17 from about
HK$79.3 billion in 2015-16, representing about 8.2% growth. These infrastructure projects
include the construction of a three-runway system for the Hong Kong International Airport,
the Guangzhou-Shenzhen-Hong Kong Express Rail Link and the Hong Kong-Zhuhai-Macao
Bridge. Meanwhile, land covering approximately 1.3 million sq.m. of floor area is expected
to be provided for commercial buildings in stages in the coming years. The construction of
the runway, rail link, bridges, roads and buildings will continue to drive the growth of the
construction industry, and in particular the civil engineering industry.
Major participants in the construction industry in Hong Kong
Customers
Construction projects originate from the customers, which include the Government
departments, land owners and property developers. In the public sector, the Government is
the key customer, and infrastructure projects are mainly commissioned by Government
departments. In the private sector, land owners or property developers obtain land ownership
through winning auctions of public land sites. Construction works on these land sites mainly
involve the construction of residential, commercial and industrial buildings. Moreover, it is
common for construction companies to rely on a few customers. Their customers can be the
Government, public and private utility companies, property developers and main contractors
and subcontractors, etc.
52
INDUSTRY OVERVIEW
Main contractors
The main contractors obtain construction projects from the customers. These projects
include civil engineering construction, site formation, piling, demolition, erection of
architectural superstructure, structural alteration, etc.
Subcontractors
Given the scope of the project or the skillset required, the main contractors may
consider outsourcing part(s) of the construction works to subcontractors depending on their
expertise and experience in the field.
Suppliers
The suppliers, such as steel distributors, concrete suppliers and site equipment rental
companies, provide the necessary materials and equipment for the projects. Sometimes the
construction cost would be settled by contra-charge arrangement between the main
contractors and subcontractors.
Gross output value of construction works performed by main contractors and
subcontractors in Hong Kong
The gross output value of the construction works performed by subcontractors
increased from about HK$9.0 billion in 2010 to about HK$32.5 billion in 2014, at a CAGR
of about 37.8%. The value is expected to further increase from about HK$43.0 billion to
about HK$149.9 billion between 2015 and 2019, at a CAGR of approximately 36.6%. The
weight of subcontractors in the overall gross output value of construction works increased
significantly from 12.8% in 2010 to 20.9% in 2014. With the growing size and complexity
of the construction projects, it has been a growing trend to award large and complex works
as a single contract package to main contractors who possess multi-disciplinary
qualifications, and are on the list of approved contractors of the relevant Government
department(s) to carry out both civil engineering works and building works. These main
contractors will then subcontract some parts of construction works to different
subcontractors. Normally, the subcontractors will then outsource part of their works to some
other smaller subcontractors. With such kind of multi-level outsourcing and subcontracting,
the gross output value as a percentage of total subcontractors has been increasing from 2010
to 2014. Moreover, this is expected to grow from 22.2% in 2015 to 33.4% in 2019 with the
Governments initiatives to increase housing supply and the upcoming infrastructure
projects.
53
INDUSTRY OVERVIEW
MARKET OVERVIEW OF
INDUSTRY IN HONG KONG
THE
CIVIL
ENGINEERING
CONSTRUCTION
The chart below shows the gross output value (or revenue) of civil engineering
construction industry in Hong Kong and the contribution of the main contractors and
subcontractors on the civil engineering construction industry in Hong Kong between 2010
and 2014 and its forecast from 2015 to 2019:
HK$ billion
186.5
200.0
158.4
150.0
109.3
86.6
100.0
49.4
50.0
0.0
57.4
134.3
20.1
2.6
17.6
31.7
4.1
27.5
2010
2011
8.1
61.7
67.6
10.8
14.1
41.3
50.8
53.5
2012
2013
2014
Main Contractor
45.5
35.9
26.6
19.3
82.7
67.3
2015E
2016F
98.4
2017F
112.9
2018F
129.1
2019F
Subcontractor
Source: Ipsos Report
The market size of the civil engineering construction industry in Hong Kong is around
HK$67.6 billion in terms of revenue, which accounted for around 43.6% of the construction
industry in Hong Kong in 2014. The revenue of the civil engineering sector in Hong Kong
rose at a CAGR of around 35.4%, from around HK$20.1 billion in 2010 to around HK$67.6
billion in 2014. The rising number of projects for civil engineering works as well as the
increase in the contract value of projects in recent years were the major reasons for the
growth. It is expected that the revenue of the civil engineering construction industry in Hong
Kong will grow substantially from around HK$86.6 billion in 2015 to around HK$186.5
billion in 2019, equivalent to a CAGR of around 21.1%. The increment is mainly due to the
ongoing and upcoming Ten Major Infrastructure Projects which included the construction of
new development areas (NDAs), urban renewal projects and the Governments plan to
increase the public housing.
The revenue of civil engineering works performed by subcontractors at construction
sites grew from about HK$2.6 billion in 2010 to about HK$14.1 billion in 2014, at a CAGR
of about 52.6%. The weight of subcontractors in the overall revenue of civil engineering
construction works increased 8.0%, from around 12.9% in 2010 to around 20.9% in 2014.
With large complex projects and a need for a multitude of specialised skills, many main
contractors in Hong Kong rely heavily on subcontractors for the execution of civil
engineering works. Therefore the growth of the number of these projects and the increasing
reliance on subcontractors for execution resulted in the increment of the weight of
subcontractors in the overall revenue of civil engineering construction works in Hong Kong.
Sustained growth of the demand for civil engineering subcontracting works is expected
with the weight of subcontractors in the overall revenue of civil engineering construction
works in Hong Kong expected to grow from about 22.3% in 2015 to about 30.8% in 2019
due to the increase in the number of large and complex construction works, such as the Kai
54
INDUSTRY OVERVIEW
Tak development reconstruction and upgrading of Kai Tak Nullah, Expansion of Tai Po
water treatment works and ancillary raw water and fresh water transfer facilities part 2
works and the ongoing and upcoming Ten Major Infrastructure Projects.
Sub-segments of civil engineering works in Hong Kong
Based on the licenses in the Development Bureau, the sub-segments of the civil
engineering works in Hong Kong are ports works, roads and drainage, site formation and
waterworks. Some iconic civil engineering works in Hong Kong include the Tsing Ma
Bridge and Hong Kong International Airport.
Roads and drainage works
Roads and drainage works refer to the construction and widening of roads, construction
of footbridge and other drainage related infrastructures such as the sewage pipes, storm
drains, water mains and other maintenance works. In line with the trend that the
Governments plan to develop the NDAs in North East New Territories and Hung Shui Kiu,
it is expected that the demand for residential and commercial buildings in these areas will
increase, and infrastructure and facilities such as highways, roads and drainages are
necessary for the development.
Structural works
Civil engineering structural works refer to the construction of major frameworks of the
infrastructures which provide them with the supportive structures and allow them to
withstand various extreme forces, such as large variations in temperature, dynamic loads
such as waves or traffic, or high pressures from water or compressed gases. Some of them
are being constructed in corrosive environments, such as at sea, in industrial facilities or
below ground. Many types of civil engineering works require structural works including port
works, site formation, waterworks as well as road and drainage. Major civil engineering
structural works in recent years include the Hong Kong-Zhuhai-Macao bridge and the Tuen
Mun Western bypass as well as the Railway Network Extension Five Railway Projects are
currently at different stages of implementation and are expected to be completed between
2015 and 2021. These projects include the West Island Line, the South Island Line (East),
the Kwun Tong Line Extension, the Guangzhou-Shenzhen-Hong Kong Express Rail Link
(Hong Kong Section), and the Shatin to Central Link. Apart from these five railway
extension projects, several railway projects are planned to commence in 2018 and are
expected to be completed between 2023 and 2031. These projects include Northern Link and
Kwun Tong Station, Hung Shui Kiu Station, Tung Chung West Extension, Tuen Mun South
Extension, East Kowloon Line, South Island Line (West), and North Island Line. Therefore,
continuous demand for structural works are envisaged.
Site formation works
Site formation works required at construction sites refer to the demolition of an
existing building, excavation to the design formation level and reduction and stabilisation of
construction sites. Major site formation projects in recent years included the Liantang/Heung
Yuen Wai Boundary Control Point and the Kai Tak Cruise Terminal Development. Site
formation works are crucial to every construction projects, including general buildings and
civil engineering projects. Whether it is a redevelopment project or a new project, site
55
INDUSTRY OVERVIEW
formation works are imperative to stabilise the construction site before any construction
works take place. With increasing construction activities taking place in Hong Kong, it is
expected that site formation works will continue its growth momentum.
Wage trend for workers in the civil engineering construction industry in Hong Kong
The chart below shows the salary index of civil engineering construction workers in
Hong Kong between 2010 and 2015:
180
145.6
150
132.6
120.8
120
95.5
100.0
107.8
90
60
30
0
2010
2011
2012
2013
2014
2015
Salary index for workers in the civil engineering construction industry

Notes: Index series with April 2003 as base period (i.e. April 2003 = 100)
The salary index for workers in the civil engineering construction industry rose from
95.5 to 145.6 between 2010 and 2015, which can be translated to an increase of around
52.5% and a CAGR of around 8.8%. The aging and shrinking construction industry
workforce has been a long existing challenge for the civil engineering construction industry
in Hong Kong. As of 2014, approximately 40.0% of the registered construction workers in
Hong Kong are seniors, with an average age of over 50 years old. Given the labour
intensive job nature of the civil engineering construction, the aging population together with
the limited number of skilled workers have made the situation even worse and as a result,
workers salaries have been driven up over the past 5 years. According to the Hong Kong
Construction Industry Employees General Union, it is expected that the daily wages for
construction workers will increase by about 10.3% from 2014/15 to 2015/16. Amongst
different types of construction workers, the daily wage for carpenter (formwork), concretor
and bar bender and fixer will experience a significant growth at about 17.1%, 15.0% and
12.9%, respectively from 2014/15 to 2015/16. As the salaries of the workers increase, the
costs and hence final fees of civil engineering construction projects are set to increase.
56
INDUSTRY OVERVIEW
Price trend of key raw materials used in the civil engineering construction industry in
Hong Kong
The charts below show the wholesale price trend of steel reinforcements, cements and
diesel fuel in Hong Kong from January 2010 to November 2015:
HK$
HK$
7,000
750
6,000
700
5,000
4,000
650
3,000
600
2,000
550
1,000
0
2010
2011
2012
2013
2014
2015
Nov 2015
Steel reinforcements high tensile steel bars,

10mm to 40mm, per tonne
500
2010
2011
2012
2013
2014
2015
Nov 2015
Portland cement (ordinary), per tonne
Diesel fuel for industrial use (light), per

200-litre drum
Steel reinforcements
The average wholesale price of steel reinforcements decreased from an annual average
price of about HK$5,733.8 per tonne in 2010 to about HK$3,767.4 per tonne for the 11
months ended 30 November 2015, which translated to a CAGR of about -8.1%. Monthly
average price of steel reinforcements reached its peak at about HK$6,595.0 per tonne in
September 2011. The rising trend was mainly attributed to the strong construction demand in
Hong Kong.
However, the price of steel reinforcements experienced a downtrend since September
2011. The decreasing price for crude steel, together with the downsizing of the construction
industry in China are the major reasons which led to an overproduction of steel in China. As
over 90% of structural steel consumed in Hong Kong came from China, monthly average
price of steel reinforcements in Hong Kong started to fall continually from HK$6,595.0 per
tonne in September 2011 to about HK$3,333.0 per tonne in November 2015, down by about
49.5%.
Cement
Hong Kongs annual average wholesale price of cement showed a substantial growth
from around HK$612.7 per tonne in 2010 to approximately HK$739.3 per tonne for the 11
months ended 30 November 2015, representing a CAGR of about 3.8%. The annual growth
rate was most significant in 2011, a change of about 8.2%, this can be attributed to the
correction of the oversupply of cement in the market. Other support of the rising price trend
came from the appreciation of the RMB which resulted in high commodity prices, as well as
the accelerated pace of inflation in Hong Kong.
57
INDUSTRY OVERVIEW
Diesel fuel
The average wholesale price of diesel fuel in Hong Kong dropped slightly at a CAGR
of about -0.9%, from an annual average price of about HK$2,187.6 per 200-litre drum in
2010 to an annual average price of about HK$1,882.7 per 200-litre drum for the 11 months
ended 30 November 2015. The monthly average wholesale price of diesel fuel rose sharply
from around HK$2,257.0 per 200-litre drum in November 2010 to about HK$2,916.0 per
200-litre drum in May 2011, up by about 29.2%. Such increase was mainly attributed to the
instability in Libya and the appreciation of the US dollar.
However, in view of the European debt crisis, the monthly average wholesale price of
diesel fuel in Hong Kong slumped to about HK$1,931.0 per 200-litre drum in October 2011
from about HK$2,875.0 per 200-litre drum in September 2011. Since Libya has restored its
diesel fuel output to pre-war levels, the monthly average wholesale price of diesel fuel in
Hong Kong has become more stable since 2012 and the situation is expected to persist in
the coming years.
COMPETITIVE LANDSCAPE OF THE CIVIL ENGINEERING CONSTRUCTION
INDUSTRY IN HONG KONG
The top five civil engineering contractors act as main contractors in the overall civil
engineering construction industry, and they accounted for about 54.6% of the total revenue
of the civil engineering construction industry in 2014.
Meanwhile, the civil engineering subcontracting industry in Hong Kong is fragmented.
As at the Latest Practicable Date, there were over 700 structural and civil engineering
subcontractors being registered under the Construction Industry Council. As a significant
number of civil engineering projects are originated from the Government and generally, a
main contractor is responsible for overseeing the entire project from a broader perspective,
in most cases subcontractors are principally responsible for project execution. Thus, during
the post tendering process, main contractors tend to work with subcontractors with assured
quality and capability in order to reduce the risk of project delay. As such, subcontractors
with a solid track record is more welcomed by main contractors when they are considering a
partner to cooperate with.
The ranking for civil engineering subcontractors is not available due to the scattered
information. Civil engineering works can be broadly classified into port works, roads and
drainage, site formation, waterworks, and structural works. Amongst these, civil engineering
works can be further categorised into finer sub-segments, such as demolition, excavation,
land leveling, slope stabilisation etc.. Furthermore, as mentioned above, there is a large
number of civil engineering subcontractors (over 700 as at the Latest Practicable Date)
specialising in different civil engineering works, and most of these civil engineering
subcontractors are private companies with a lack of publicly available information.
In 2014, our Group accounted for around 1.8% (or HK$254 million) of the total
revenue in the civil engineering construction industry generated by subcontractors (HK$14.1
billion) in Hong Kong.
58
INDUSTRY OVERVIEW
Future trends and development of the civil engineering industry in Hong Kong
Civil engineering companies in Hong Kong have been increasingly exporting civil
engineering consulting services overseas.
The quality of civil engineering works in Hong Kong enjoy a good reputation around
the world. Civil engineering companies in Hong Kong have been exporting project
management and engineering consulting services to emerging markets in Asia, especially
China. There has been a substantial need for infrastructure development in China,
demanding a certain level of civil engineering sub-contractors, as well as professionals.
Transportation link construction will be the major projects that sustain the growth of the
civil engineering industry in Hong Kong.
The transportation sector will remain the largest end-user group of Hong Kongs civil
engineering construction industry. Announced in 1997, the Ten Major Infrastructure
Projects are mainly transportation projects. In the coming years, the infrastructure projects
will still revolve around the transportation sector, such as the ongoing construction of Hong
Kong-Zhuhai-Macao Bridge, MTR Shatin-Central Line as well as the Hong Kong-Shenzhen
Express Link. The transportation sector is expected to act as one of the key drivers for the
civil engineering construction industry in Hong Kong in the near future.
Factors of competition
Qualifications
Civil engineering subcontractors who registered under the Subcontractor Registration
Scheme (SRS) launched by the Construction Industry Council will enjoy enhanced
recognition and visibility in the civil engineering construction industry in Hong Kong.
Subcontractors may apply for registration in one or more of 52 trades covering common
structural, civil, finishing, electrical and mechanical works and supporting services. As at the
Latest Practicable Date, there are over 700 structural and civil engineering subcontractors
registered under the Construction Industry Council. Main contractors may consider
qualifications as an important factor when choosing subcontractors. Subcontractors who
possess sufficient project experience, high quality construction works with proven track
records have higher chance to win project tenders.
Technical expertise
Civil engineering contractors are expected to possess related expertise to carry out
different types of civil engineering works. It is also an important factor to meet project
timeline, quality and budget. With good technical understanding of civil engineering works
by an experienced project management team, the contractor is able to address different
issues that may arise during project execution, and foresee potential problems during the
project. Thus, civil engineering contractors with specialised expertise appeared to have a
higher chance to get the tender and be involved in high value projects.
Quality of works
Quality of works is one of the most important factors of competition in civil
engineering construction industry in Hong Kong. Lower quality civil engineering works may
cause some serious problem, including bursting pipes, difficulties in foundation works,
especially for shallow foundations. In general, customers assess civil engineering contractors
in different aspects, which include the timeliness of project delivery, the quality of works
59
INDUSTRY OVERVIEW
and the capability of meeting safety and environmental requirements. In addition, civil
engineering contractors who maintain a good safety record are also more competitive than
their competitors.
Market drivers
Ten Major Infrastructure Projects such as the Hong Kong-Zhuhai-Macao Bridge, the
Railway Network Extension project and the Tuen Mun Western bypass have driven the
growth of the construction industry especially in the civil engineering sector. As most of
these Ten Major Infrastructure Projects are mega size and take several years to complete,
due to the complexity and scope, it is expected that several subcontractors are needed for
any one of these projects, which will then boost up the demand for civil engineering
subcontractors in the coming years. Moreover, in the 2016-17 Budget Speech, the
Government reiterated its commitment to infrastructure. With the occupational trainings
initiated by the Government in recent years which aimed to provide more skilled labor to the
construction industry, in order to create enough job opportunities for these trained
construction workers, it is expected that the Government will continue their support on the
construction industry by executing the remaining major infrastructure projects in the
pipeline, such as the Hong Kong-Shenzhen airport cooperation and the Hong Kong-Shenzhen
joint development of the Lok Ma Chau Loop.
Entry barriers
Knowledge of civil engineering, structural, geology and technical expertise is one of
the entry barriers for the civil engineering subcontracting industry as a subcontractor is
principally responsible for execution and problem solving at the construction site. Industry
knowledge and technical expertise can only be accumulated through years of education,
on-site practical experience as well as trial and error. Potential players that lack industry
knowledge and technical expertise would encounter difficulties when entering the industry.
Moreover, subcontracting works usually involve highly specialised site equipment
during operation. Therefore sufficient capital is required for site equipment investment when
entering the industry. If a subcontractor solely relies on site equipment rental service
providers, it is difficult for them to provide enough flexibility for various construction
projects.
Opportunities
Infrastructure development plans
Infrastructure development plans, in particular the Ten Major Infrastructure Projects
initiated by the Government in 2007, drove the demand in construction industry in recent
years with a focus on the civil engineering sector. Given that the Government has announced
to spend an estimated HK$85.8 billion on public infrastructure in its 2016-17 Budget
Speech, it is expected that existing and new infrastructure projects will continue to provide
opportunities to the subcontractors in the civil engineering industry.
Government support on labour training
Shortage of skilled labour has been a long existing problem in the civil engineering
construction industry which is labour intensive. In order to attract new entrants to the
construction industry, the Development Bureau has cooperated with the Construction
Industry Council to launch the Build Up Training Programme since 2010. One of the
initiatives is implementing the Enhanced Construction Manpower Training Scheme (ECMTS)
60
INDUSTRY OVERVIEW
with enhanced training allowance in selected trades. Successful graduate trainees will
receive reasonable allowance during the training period and also a stable income from
participating employers after graduation. The support and subsidies from the Government is
anticipated to increase the supply of labour in the long run and hence further stabilising the
civil engineering construction industry.
Threats
Increasing construction costs will hinder the profitability of the civil engineering
subcontractors in Hong Kong
Similar to the construction industry in Hong Kong, civil engineering subcontractors
also face the problem of increasing construction costs due to the inflation of raw materials
and labour costs. The average wage of construction workers in Hong Kong increased by
about 57.5% between 2010 and 2015, reaching about HK$91.2 per hour in 2015, while the
average wholesale price of cement in Hong Kong increased substantially at a CAGR of
about 3.8% between 2010 to 2015, from an average of about HK$612.7 per tonne to an
average of about HK$739.3 per tonne.
Insufficient experienced and skilled labour may threaten the development of civil engineering
industry in Hong Kong
According to the Report on manpower research for the construction industry in Hong
Kong published in 2014, it was projected that over 30,000 to 40,000 additional construction
workers, in which over 15,000 to 20,000 skilled workers would be needed in 2018. A large
number of civil engineering workers will be in a great demand due to the strong growth of
the civil engineering industry in Hong Kong. The problem of insufficient experienced and
skilled labour may threaten the development of Hong Kongs civil engineering industry.
61
REGULATORY OVERVIEW
This section sets forth a summary of the major laws and regulations applicable to our
business in Hong Kong.
A.
LABOUR, HEALTH AND SAFETY

Factories and Industrial Undertakings Ordinance (Chapter 59 of the Laws of
Hong Kong)
The Factories and Industrial Undertakings Ordinance provides for the safety and
health protection to workers in an industrial undertaking. Under the Factories and
Industrial Undertakings Ordinance, every proprietor shall, as far as is reasonably
practicable take care of the safety and health at work of all persons employed by him
at the industrial undertaking by:
providing and maintaining plant and work systems that are safe and without
risks to health;
making arrangements for ensuring safety and health in connection with the
use, handling, storage and transport of articles and substances;
providing all necessary information, instruction, training, and supervision for

ensuring safety and health;
providing and maintaining safe access to and egress from the workplaces;
and
providing and maintaining a work environment that is safe and without risks
to health.
A proprietor who contravenes these duties commits an offence and is liable to a

fine of HK$500,000. A proprietor who contravenes these duties wilfully and without
reasonable excuse commits an offence and is liable to a fine of HK$500,000 and to
imprisonment for 6 months.
Section 6BA(5) of the Factories and Industrial Undertakings Ordinance also
provides that on and after the appointed day (as defined in the Factories and Industrial
Undertakings Ordinance) every proprietor shall not employ at the undertaking a
relevant person who has not been issued a relevant safety training certificate or whose
relevant certificate has expired. A proprietor who contravenes this section commits an
offence and is liable to a fine of HK$50,000 (level 5).
Occupational Safety and Health Ordinance (Chapter 509 of the Laws of Hong
Kong)
The Occupational Safety and Health Ordinance provides for the safety and health
protection to employees in workplaces, both industrial and non-industrial.
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REGULATORY OVERVIEW
Employers must, as far as reasonably practicable, ensure the safety and health of
their employees at work by attending to the following:
providing and maintaining plant and work systems that are safe and without
risks to health;
making arrangement for ensuring safety and absence of risks to health in

connection with the use, handling, storage or transport of plant or
substances;
providing all necessary information, instruction, training, and supervision for

ensuring safety and health;
maintaining the workspace in a condition that is safe and without risks to

health;
providing and maintaining safe access to and egress from the workplaces;
and
providing and maintaining a working environment that is safe and without

risks to health.
Failure to comply with the above provisions constitutes an offence and the
employer is liable on conviction to a fine of HK$200,000. An employer who fails to do
so intentionally, knowingly or recklessly commits an offence and is liable on
conviction to a fine of HK$200,000 and to imprisonment for 6 months.
The Commissioner for Labour may also issue improvement notice against
non-compliance of the Occupational Safety and Health Ordinance or the Factories and
Industrial Undertakings Ordinance, or suspension notice against activity of workplace
which may create imminent hazard to the employees. Failure to comply with such
notices constitutes an offence punishable by a fine of HK$200,000 and HK$500,000
respectively and imprisonment of up to 12 months.
Employees Compensation Ordinance (Chapter 282 of the Laws of Hong Kong)
The Employees Compensation Ordinance establishes a no-fault and
non-contributory employee compensation system for work injuries and lays down the
rights and obligations of employers and employees in respect of injuries or death
caused by accidents arising out of and in the course of employment, or by prescribed
occupational diseases.
Under the Employees Compensation Ordinance, if an employee sustains an injury
or dies as a result of an accident arising out of and in the course of his employment,
his employer is in general liable to pay compensation even if the employee might have
committed acts of faults or negligence when the accident occurred. Similarly, an
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REGULATORY OVERVIEW
employee who suffers incapacity or dies arising from an occupational disease is entitled
to receive the same compensation as that payable to employees injured in occupational
accidents.
According to section 15 of the Employees Compensation Ordinance, an employer
must notify the Commissioner for Labour of any work accident by submitting Form 2
(within 14 days for general work accidents and within 7 days for fatal accidents),
irrespective of whether the accident gives rise to any liability to pay compensation. If
the happening of such accident was not brought to the notice of the employer or did
not otherwise come to his knowledge within such periods of 7 or 14 days (as the case
may be) then such notice shall be given not later than 7 days or, as may be
appropriate, 14 days after the happening of the accident was first brought to the notice
of the employer or otherwise came to his knowledge.
Pursuant to section 24 of the Employees Compensation Ordinance, a principal
contractor shall be liable to pay compensation to subcontractors employees who are
injured in the course of their employment to the subcontractor. The principal contractor
is, nonetheless, entitled to be indemnified by any person who would have been liable to
pay compensation to the injured employee.
According to section 40 of the Employees Compensation Ordinance, all
employers (including contractors and subcontractors) are required to take out insurance
policies to cover their liabilities for injuries at work in respect of all their employees
(including full-time and part-time employees). Where a principal contractor has
undertaken to perform any construction work, it may take out an insurance policy for
an amount not less than HK$200 million per event to cover its liability and that of its
subcontractor(s) under the Employees Compensation Ordinance and at common law.
An employer who fails to comply with the Employees Compensation Ordinance to
secure an insurance cover is liable on conviction to a fine at level 6 (currently at
HK$100,000) and imprisonment for 2 years.
Employment Ordinance (Chapter 57 of the Laws of Hong Kong)
A principal contractor is subject to the provisions on subcontractors employees
wages in the Employment Ordinance. Section 43C of the Employment Ordinance
provides that if any wages become due to an employee who is employed by a
subcontractor on any work which the subcontractor has contracted to perform, and such
wages are not paid within the period specified in the Employment Ordinance, such
wages shall be payable by the principal contractor and/or every superior subcontractor
jointly and severally. A principal contractors liability shall be limited (a) to the wages
of an employee whose employment relates wholly to the work which the principal
contractor has contracted to perform and whose place of employment is wholly on the
site of the building work; and (b) to the wages due to such an employee for 2 months
without any deductions (such months shall be the first 2 months of the period in
respect of which the wages are due).
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REGULATORY OVERVIEW
An employee who has outstanding wage payments from a subcontractor must
serve a notice in writing on the principal contractor within 60 days after the wage due
date or another 90 days if permissible. A principal contractor and superior
subcontractor (where applicable) shall not be liable to pay any wages to the employee
of the subcontractor if that employee fails to serve a notice on the principal contractor.
Upon receipt of such notice from the relevant employee, a principal contractor
shall, within 14 days after receipt of the notice, serve a copy of the notice on every
superior subcontractor to that subcontractor (where applicable) of whom he is aware.
A principal contractor who without reasonable excuse fails to serve notice on the
superior subcontractor(s) shall be guilty of an offence and shall be liable on conviction
to a fine at level 5 (currently at HK$50,000).
Pursuant to section 43F of the Employment Ordinance, if a principal contractor or
superior subcontractor pays to an employee any wages under section 43C of the
Employment Ordinance, the wages so paid shall be a debt due by the employer of that
employee to the principal contractor or superior subcontractor having made such
payment, as the case may be. The principal contractor or superior subcontractor may
either (1) claim contribution from every superior subcontractor to the employees
employer or from the principal contractor and every other such superior subcontractor
as the case may be; or (2) deduct by way of set-off the amount paid by him from any
sum due or may become due to the subcontractor in respect of the work that he has
subcontracted.
Occupiers Liability Ordinance (Chapter 314 of the Laws of Hong Kong)
The Occupiers Liability Ordinance regulates the obligations of a person occupying
or having control of premises on injury resulting to persons or damage caused to goods
or other property lawfully on the land.
The Occupiers Liability Ordinance imposes a common duty of care on an occupier
of premises to take such care as in all the circumstances of the case is reasonable to
see that the visitor will be reasonably safe in using the premises for the purposes for
which he is invited or permitted by the occupier to be there.
Immigration Ordinance (Chapter 115 of the Laws of Hong Kong)
Pursuant to section 38A of the Immigration Ordinance, a construction site
controller (i.e. the principal or main contractor, and includes a subcontractor, owner,
occupier or other person who has control over or is in charge of a construction site)
should take all practicable steps to (i) prevent having illegal immigrants from being on
site or (ii) prevent illegal workers who are not lawfully employable from taking
employment on site.
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REGULATORY OVERVIEW
Where it is proved that (i) an illegal immigrant was on a construction site; or (ii)
such illegal worker who is not lawfully employable took employment on a construction
site, the construction site controller commits an offence and is liable to a fine of
HK$350,000.
Minimum Wage Ordinance (Chapter 608 of the Laws of Hong Kong)
The Minimum Wage Ordinance provides for a prescribed minimum hourly wage
rate (currently set at HK$32.5 per hour) during the wage period for every employee
engaged under a contract of employment under the Employment Ordinance.
Any provision of the employment contract which purports to extinguish or reduce
the right, benefit or protection conferred on the employee by the Minimum Wage
Ordinance is void.
Construction Workers Registration Ordinance (Chapter 583 of the Laws of Hong
Kong)
The Construction Workers Registration Ordinance (CWRO) was enacted on 2
July 2004 to provide, among others, for registration and regulation of construction
workers. The principal object of the CWRO is to establish a system for registration of
construction workers and to regulate construction workers who personally carry out
construction work on construction sites.
Employment of registered construction workers
Under sections 3(1) and 5 of the CWRO, the principal contractors/subcontractors/
employers/controllers of construction sites are required to employ only registered
construction workers to personally carry out construction work on construction sites.
Keeping and submission of site daily attendance report
Under the CWRO, a principal contractor/controller of a construction site is
required to:
1.
establish and maintain a daily record in the specified form that contains
information on registered construction workers employed by him and, in the
case of a controller being the principal contractor, by a subcontractor of the
controller (section 58(7)(a) of the CWRO); and
2.
furnish the Registrar of Construction Workers in such manner as directed by

the Registrar of Construction Workers with a copy of the record:
i.
for the period of 7 days after any construction work begins on the site;
and
ii.
for each successive period of 7 days, within 2 working days following

the last day of the period concerned (section 58(7)(b) of the CWRO).
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REGULATORY OVERVIEW
Mandatory Provident Fund Schemes Ordinance (Chapter 485 of the Laws of Hong
Kong)
Employers are required to enroll their regular employees (except for certain
exempt persons) who are at least 18 but under 65 years of age and employed for 60
days or more in a Mandatory Provident Fund (MPF) scheme within the first 60 days
of employment.
For both employees and employers, it is mandatory to make regular contributions
into a MPF scheme. For an employee, subject to the maximum and minimum levels of
income (HK$25,000 and HK$7,100 per month, respectively before 1 June 2014 or
HK$30,000 and HK$7,100 per month, respectively on or after 1 June 2014), an
employer will deduct 5% of the relevant income on behalf of an employee as
mandatory contributions to a registered MPF scheme with a ceiling of HK$1,250
before 1 June 2014 or HK$1,500 on or after 1 June 2014. Employer will also be
required to contribute an amount equivalent to 5% of an employees relevant income to
the MPF scheme, subject only to the maximum level of income (HK$25,000 per month
before 1 June 2014 or HK$30,000 on or after 1 June 2014).
Industry scheme
Industry Schemes were established under the MPF system for employers in the
construction and catering industries in view of the high labour mobility in these two
industries, and the fact that most employees in these industries are casual employees
whose employment is on a day-to-day basis or for a fixed period of less than 60 days.
For the purpose of the Industry Schemes, the construction industry covers the
following eight major categories:
(1)
foundation and associated works;
(2)
civil engineering and associated works;
(3)
demolition and structural alteration works;
(4)
refurbishment and maintenance works;
(5)
general building construction works;
(6)
fire services, mechanical, electrical and associated works;
(7)
gas, plumbing, drainage and associated works; and
(8)
interior fitting-out works.
The Mandatory Provident Fund Schemes Ordinance does not stipulate that
employers in these two industries must join the Industry Schemes. The Industry
Schemes provide convenience to the employers and employees in the construction and
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REGULATORY OVERVIEW
catering industries. Casual employees do not have to switch schemes when they change
jobs within the same industry, so long as their previous and new employers are
registered with the same Industry Scheme. This is convenient for scheme members and
saves administrative costs.
Dangerous Goods Ordinance (Chapter 295 of the Laws of Hong Kong)
Pursuant to the Dangerous Goods Ordinance (Chapter 295 of the Laws of Hong
Kong), storage of any dangerous goods in excess of the prescribed exempted quantity
shall require a dangerous goods licence.
Under the Dangerous Goods Ordinance, dangerous goods include all explosives,
compressed gases, petroleum and other substances giving off inflammable vapours,
substances giving off poisonous gas or vapour, corrosive substances, substances which
become dangerous by interaction with water or air, substances liable to spontaneous
combustion or of a readily combustible nature.
Under section 6 of the Dangerous Goods Ordinance, no person shall store any
dangerous goods in excess of exempted quantity in any premises or places without a
licence issued by the director of the Fire Services Department. Pursuant to Regulation
77 of the Dangerous Goods (General) Regulations, every application for any licence to
manufacture or store in bulk any permanent gas or liquefied gas shall be made in
writing addressed to the director of the Fire Services Department.
Under section 14 of the Dangerous Goods Ordinance, any person who contravenes
section 6 of the Dangerous Goods Ordinance shall be guilty of an offence and shall be
liable to a fine of HK$25,000 and to imprisonment for 6 months.
B.
ENVIRONMENTAL PROTECTION
Air Pollution Control Ordinance (Chapter 311 of the Laws of Hong Kong)
The Air Pollution Control Ordinance is the principal legislation in Hong Kong for
controlling emission of air pollutants and noxious odour from construction, industrial
and commercial activities and other polluting sources. Subsidiary regulations of the Air
Pollution Control Ordinance impose control on air pollutant emissions from certain
operations through the issue of licences and permits.
A contractor shall observe and comply with the Air Pollution Control Ordinance
and its subsidiary regulations, particularly the Air Pollution Control (Open Burning)
Regulation, the Air Pollution Control (Construction Dust) Regulation and the Air
Pollution Control (Smoke) Regulation. The contractor responsible for a construction
site shall devise, arrange methods of working and carrying out the works in such a
manner so as to minimise dust impacts on the surrounding environment, and shall
provide experienced personnel with suitable training to ensure that these methods are
implemented. Asbestos control provisions in the Air Pollution Control Ordinance
require that building works involving asbestos must be conducted only by registered
qualified personnel and under the supervision of a registered consultant.
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REGULATORY OVERVIEW
Air Pollution Control (Construction Dust) Regulation (Chapter 311R of the Laws
of Hong Kong)
Under the Air Pollution Control (Construction Dust) Regulation, construction
work includes but not limited to the construction, demolition and reconstruction of the
whole or any part of any building or other structure and site formation. Under section 3
of the Air Pollution Control (Construction Dust) Regulation, the contractor responsible
for a construction site where any notifiable work is proposed to be carried out shall
give notice to the public officer appointed under the Air Pollution Control Ordinance of
the proposal to carry out the work. Such notifiable work includes site formation,
reclamation, demolition of a building, work carried out in any part of a tunnel that is
within 100 metres of any exit to the open air, construction of the foundation of a
building, construction of the superstructure of a building or road construction work.
Under section 4 of the Air Pollution Control (Construction Dust) Regulation, the
contractor responsible for a construction site where a notifiable work is being carried
out shall ensure that the work is carried out in accordance with the Schedule of the Air
Pollution Control (Construction Dust) Regulation.
Air Pollution Control (Non-road Mobile Machinery) (Emission) Regulation
(Chapter 311Z of the Laws of Hong Kong)
The Air Pollution Control (Non-road Mobile Machinery) (Emission) Regulation
came into effect on 1 June 2015 to introduce regulatory control on the emissions of
non-road mobile machinery (the NRMMs), including non-road vehicles and regulated
machines such as crawler cranes, excavators and air compressors. Our Directors
confirmed that such regulated machines also include site equipment such as generators,
hydraulic truck crane, vibrating rollers and aerial working platforms which are subject
to the Air Pollution Control (Non-road Mobile Machinery) (Emission) Regulation.
Unless exempted, NRMMs which are regulated under this provision are required
to comply with the emission standards prescribed under this regulation. From 1
September 2015, all regulated machines sold or leased for use in Hong Kong must be
approved or exempted with a proper label in a prescribed format issued by the
Environmental Protection Department pursuant to section 4 of the Air Pollution Control
(Non-road Mobile Machinery) (Emission) Regulation. Under section 5 of the Air
Pollution Control (Non-road Mobile Machinery) (Emission) Regulation, starting from 1
December 2015, only approved or exempted NRMMs with a proper label are allowed
to be used in specified activities and locations including construction sites. However,
existing NRMMs which are already in Hong Kong on or before 30 November 2015
will be exempted from complying with the emission requirements pursuant to section
11 of the Air Pollution Control (Non-road Mobile Machinery) (Emission) Regulation. A
period of six months (from 1 June 2015 to 30 November 2015, both dates inclusive) is
allowed for existing NRMMs to apply for exemption.
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REGULATORY OVERVIEW
Any person who sells or leases a regulated machine for use in Hong Kong,
uses a regulated machine in specified activities or locations without (i) exemption
the Environmental Protection Departments approval is liable to a fine of up
HK$200,000 and imprisonment for up to six months, and (ii) a proper label is liable
a fine of up to HK$50,000 and imprisonment for up to three months.
or
or
to
to
On 8 February 2015, the Works Branch of Development Bureau issued the

Technical Circular (Works) No. 1/2015 (the Technical Circular), pursuant to which
the Government has promulgated an implementation plan to phase out progressively the
use of exempted NRMM for four types of exempted NRMM, namely generators, air
compressors, excavators and crawler cranes in new capital works contracts of public,
including design and build contracts, with an estimated contract value exceeding
HK$200 million and tenders invited on or after 1 June 2015. Notwithstanding the
aforesaid phase out plan, exempted NRMM may still be permitted at the discretion of
the architect or engineer of public contracts if there is no feasible alternative. Pursuant
to the phase out plan detailed in the Technical Circular, the contractors being invited to
tender or to participate in all new capital works contracts of public works (including
design and build contracts) with an estimated contract value exceeding HK$200 million
on or after 1 June 2015 shall allow no exempted generator and air compressor to be
used on site after 1 June 2015 and the quantity of exempted excavators and crawler
cranes used on site not to exceed 50%, 20% and 0% of the total number of exempted
NRMMs being used on site since 1 June 2015, 1 June 2017 and 1 June 2019,
respectively.
As at the Latest Practicable Date, our Group has 35 regulated machines, out of
which 31 machines were exempted and 4 machines were approved with a proper label
in a prescribed format issued by the Hong Kong Environmental Protection Department
under the Air Pollution Control (Non-road Mobile Machinery) (Emission) Regulation.
Set out below is the table showing the details of the exempted and approved NRMMs
owned by our Group as at the Latest Practicable Date:
Quantity
Approved
Exempted
Mobile generator
Air Compressor
Excavator
Road works machine(Note
Lifting platform
Mobile crane
3)
70
Carrying
value as at
30
November
2015
HK$000
3
1
4
4
12
7
2
2
1,094(Note 1)
3(Note 2)
2,272
241
316
2,185
31
6,111
REGULATORY OVERVIEW
Notes:
1.
Carrying value of approved and exempted generators amounted to approximately HK$355,000

and HK$739,000, respectively.
2.
Carrying value of approved and exempted air compressors amounted to approximately HK$Nil
and HK$3,000, respectively, and one approved air compressor was acquired after the Track
Record Period for approximately HK$260,000.
3.
Road works machine consist of vibrating rollers.
Of the 31 exempted machines, there are 20 exempted machines (4 generators, 4

air compressors and 12 excavators) to be phased out under the phase out plan detailed
in the Technical Circular. Our Directors confirm that none of the public projects which
we participate in as at the Latest Practicable Date are subject to the phase out plan
detailed in the Technical Circular. In addition, our Directors consider that we will
remain able to participate in or tender for public contract with an estimated contract
value exceeding HK$200 million by leasing sufficient approved NRMMs and factoring
such additional costs in our tender applications. Thus, our Directors are of the view
that the implementation of the Air Pollution Control (Non-road Mobile Machinery)
(Emission) Regulation and the exempted NRMM phase out plan as detailed in the
Technical Circular has no significant impact or adverse effect on our Groups operation
and financial results.
Noise Control Ordinance (Chapter 400 of the Laws of Hong Kong)
The Noise Control Ordinance controls the noise from construction, industrial and
commercial activities. A contractor shall comply with the Noise Control Ordinance and
its subsidiary regulations in carrying out general construction works. For construction
activities that are to be carried out during the restricted hours and for percussive piling
at all times, construction noise permits are required from the Environmental Protection
Department in advance.
Under the Noise Control Ordinance, noisy construction work and the use of
powered mechanical equipment in populated areas are not allowed between 7 p.m. and
7 a.m. on normal weekdays and any time on general holidays, unless prior approval has
been granted by the Environmental Protection Department through the Construction
Noise Permit System. Certain equipment is also subject to restrictions when its use is
allowed. Hand-held percussive breakers and air compressors must comply with noise
emissions standards and be issued with a noise emission label from the Environmental
Protection Department. Percussive pile-driving is allowed on weekdays only with prior
approval, in the form of a Construction Noise Permit from the Environmental
Protection Department. Any person who is in contravention of the aforesaid provisions,
according to the Noise Control Ordinance, shall be liable (a) on first conviction to a
fine of HK$100,000; (b) on second or subsequent conviction, to a fine of HK$200,000,
and in any case to a fine of HK$20,000 for each day during which the offence
continues.
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REGULATORY OVERVIEW
Water Pollution Control Ordinance (Chapter 358 of the Laws of Hong Kong)
The Water Pollution Control Ordinance controls the effluent discharged from all
types of industrial, commercial, institutional and construction activities into public
sewers, rainwater drains, river courses or water bodies. For any industry/trade
generating wastewater discharge (except domestic sewage that is discharged into
communal foul sewers or unpolluted water to storm drains), they are subject to
licensing control by the Environmental Protection Department.
All discharges, other than domestic sewage to a foul sewer or unpolluted water to
a storm drain, must be covered by an effluent discharge licence. The licence specifies
the permitted physical, chemical and microbial quality of the effluent and the general
guidelines are that the effluent does not damage sewers or pollute inland or inshore
marine waters.
According to the Water Pollution Control Ordinance, unless being licensed under
the Water Pollution Control Ordinance, a person who discharges any waste or polluting
matter into the waters or discharges any matter into a communal sewer or communal
drain in a water control zone commits an offence and is liable to imprisonment for 6
months and (a) for a first offence, a fine of HK$200,000; (b) for a second or
subsequent offence, a fine of HK$400,000, and in addition, if the offence is a
continuing offence, to a fine of HK$10,000 for each day during which it is proved to
the satisfaction of the court that the offence has continued.
Waste Disposal Ordinance (Chapter 354 of the Laws of Hong Kong)
The Waste Disposal Ordinance controls the production, storage, collection,
treatment, recycling and disposal of wastes. At present, livestock waste and chemical
waste are subject to specific controls whilst unlawful deposition of waste is prohibited.
Import and export of waste is generally controlled through a permit system.
A contractor shall observe and comply with the Waste Disposal Ordinance and its
subsidiary regulations, particularly the Waste Disposal (Charges for Disposal of
Construction Waste) Regulation and the Waste Disposal (Chemical Waste) (General)
Regulation.
Under the Waste Disposal (Charges for Disposal of Construction Waste)
Regulation, a main contractor who undertakes construction work with a value of
HK$1,000,000 or above will be required to establish a billing account with the
Environmental Protection Department to pay any disposal charges payable in respect of
the construction waste generated from construction work undertaken under that
contract, within 21 days after the contract is awarded.
Under the Waste Disposal (Chemical Waste) (General) Regulation, anyone who
produces chemical waste or causes it to be produced has to register as a chemical
waste producer. The waste must be packaged, labelled and stored properly before
disposal. Only a licensed collector can transport the waste to a licensed chemical waste
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REGULATORY OVERVIEW
disposal site for disposal. Chemical waste producers also need to keep records of their
chemical waste disposal for inspection by the staff of the Environmental Protection
Department.
Under the Waste Disposal Ordinance, a person shall not use, or permit to be used,
any land or premises for the disposal of waste unless he has a licence from the
Director of Environmental Protection. A person who except under and in accordance
with a permit or authorisation, does, causes or allows another person to do anything for
which such a permit or authorisation is required commits an offence and is liable to a
fine of HK$200,000 and to imprisonment for 6 months for the first offence,
HK$500,000 and to imprisonment for 6 months for a second or subsequent offence.
Dumping at Sea Ordinance (Chapter 466 of the Laws of Hong Kong)
Under the Dumping at Sea Ordinance, any waste producers involved in marine
dumping and related loading operations are required to obtain permits from the
Director of Environmental Protection.
Under the Dumping at Sea Ordinance, a person who except under and in
accordance with a permit, does anything or causes or allows another person to do
anything for which a permit is needed commits an offence and is liable on conviction
to a fine of HK$200,000 and to imprisonment for 6 months on a first conviction; and
HK$500,000 and to imprisonment for 2 years on a second or subsequent conviction;
and in addition, to a further fine of HK$10,000 for each day that the court is satisfied
that the operation has continued.
Environmental Impact Assessment Ordinance (Chapter 499 of the Laws of Hong
Kong)
The Environmental Impact Assessment Ordinance is to avoid, minimise and
control the adverse environmental impacts from designated projects as specified in
Schedule 2 of the Environmental Impact Assessment Ordinance (for example, public
utility facilities, certain large-scale industrial activities, community facilities, etc.)
through the application of the environmental impact assessment process and the
environmental permit system prior to their construction and operation (and
decommissioning, if applicable), unless exempted.
According to the Environmental Impact Assessment Ordinance, a person commits
an offence if he constructs or operates a designated project listed in Part I of Schedule
2 of the Environmental Impact Assessment Ordinance (which includes roads, railways
and depots, residential and other developments, etc.) without an environmental permit
for the project; or contrary to the conditions, if any, set out in the permit. The offender
is liable (a) on a first conviction on indictment to a fine of HK$2,000,000 and to
imprisonment for 6 months; (b) on a second or subsequent conviction on indictment to
a fine of HK$5,000,000 and to imprisonment for 2 years; (c) on a first summary
conviction to a fine at level 6 (currently at HK$100,000) and to imprisonment for 6
months; (d) on a second or subsequent summary conviction to a fine of HK$1,000,000
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REGULATORY OVERVIEW
and to imprisonment for one year, and in any case where the offence is of a continuing
nature, the court or magistrate may impose a fine of HK$10,000 for each day on which
he is satisfied the offence continued.
Public Health and Municipal Services Ordinance (Chapter 132 of the Laws of
Hong Kong)
Emission of dust from any building under construction or demolition in such
manner as to be a nuisance is actionable under the Public Health and Municipal
Services Ordinance. Maximum penalty is HK$10,000 (level 3) upon conviction with a
daily fine of HK$200.
Discharge of muddy water from a construction site is actionable under the Public
Health and Municipal Services Ordinance. Maximum fine is HK$50,000 (level 5) upon
conviction.
Any accumulation of water on any premises found to contain mosquito larvae or
pupae is actionable under the Public Health and Municipal Services Ordinance.
Maximum penalty is HK$25,000 (level 4) upon conviction and a daily fine of HK$450.
Any accumulation of refuse which is a nuisance or injurious to health is
actionable under the Public Health and Municipal Services Ordinance. Maximum
penalty is HK$10,000 (level 3) upon conviction and a daily fine of HK$200.
Any premises in such a state as to be a nuisance or injurious to health is
actionable under the Public Health and Municipal Services Ordinance. Maximum
penalty is HK$10,000 (level 3) upon conviction and a daily fine of HK$200.
C.
CONTRACTOR LICENSING REGIME AND OPERATION

Contractor Licensing Regime and the Subcontractor Registration Scheme
Under the current contractors registration system in Hong Kong, the Building
Authority shall keep a register of general building contractors who are qualified to
perform the duties of a general building contractor and a register of specialist
contractors who are qualified to carry out specialised works (such as foundation
works and site formation works) specified in the category in the sub-register in
which they are entered. Registered general building contractors may carry out general
building works and street works which do not include any specialised works designated
for registered specialist contractors.
The main contractors carrying out private sector site formation works and
ancillary services are required to register or work together with contractors who are
registered on either the list of register of general building contractors or the list of
register of specialist contractors (sub-register of site formation works category) with
the Buildings Department in Hong Kong.
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REGULATORY OVERVIEW
For any site formation works and ancillary services where an entity is involved as
a subcontractor, if there is a registered specialist contractor who is registered with the
Buildings Department under the appropriate category to supervise the works and liaise
with the Building Authority, the entity itself is not required to be such registered
specialist contractor or to obtain any requisite licenses, permits and approval for its
operation and business except the business registration.
Subcontractors in Hong Kong may apply for registration under the Subcontractor
Registration Scheme managed by the Construction Industry Council, a body corporate
established under the Construction Industry Council Ordinance (Chapter 587 of the
Laws of Hong Kong) in February 2007.
The Subcontractor Registration Scheme was formerly known as the Voluntary
Subcontractor Registration Scheme (the VSRS), which was introduced by the
Provisional Construction Industry Co-ordination Board (the PCICB). The PCICB was
formed in September 2001 to spearhead industry reform and to pave way for the early
formation of the statutory industry coordinating body.
A technical circular issued by the Works Branch of the Development Bureau (then
the Environment, Transport and Works Bureau) (WBDB) on 14 June 2004 (now
subsumed into the Project Administration Handbook for Civil Engineering Works by
the CEDD) requires that all public works contractors with tenders to be invited on or
after 15 August 2004 to employ all sub-contractors (whether nominated, specialist or
domestic) registered from the respective trades available under the VSRS.
After the Construction Industry Council took over the work of the PCICB in
February 2007 and the VSRS in January 2010, the Construction Industry Council
launched stage 2 of the VSRS in January 2013. VSRS was also then renamed
Subcontractor Registration Scheme. All subcontractors registered under the VSRS have
automatically become registered subcontractors under the Subcontractor Registration
Scheme.
Subcontractors may apply for registration on the Subcontractor Registration
Scheme in one or more of 52 trades covering common structural, civil, finishing,
electrical and mechanical works and supporting services. The 52 trades further branch
into around 94 specialties, including sheet piles, driven piles, earthwork, geotechnical
works, and ground investigation etc.
Where a contractor is to sub-contract/sub-let part of the public works involving
trades available under the Primary Register (a list of companies registered in
accordance with the Rules and Procedures for the Primary Register of the
Subcontractor Registration Scheme) of the Subcontractor Registration Scheme, he shall
engage all subcontractors (whether nominated, specialist or domestic) who are
registered under the relevant trades in the Primary Register of the Subcontractor
Registration Scheme. Should the sub-contractors further sub-contract (irrespective of
any tier) any part of the part of the public works sub-contracted to them involving
trades available under the Primary Register of the Subcontractor Registration Scheme,
75
REGULATORY OVERVIEW
the contractor shall ensure that all sub-contractors (irrespective of any tier) are
registered under the relevant trades in the Primary Register of the Subcontractor
Registration Scheme.
Applications for registration under the Primary Register of the Subcontractor
Registration Scheme are subject to the following entry requirements:
(a)
completion of at least one job within five years as a main contractor/

subcontractor in the areas which it applies or to have acquired comparable
experience by itself/its proprietors, partners or directors within the last five
years;
(b)
listings on one or more government registration schemes operated by policy

bureaus or departments of the Government relevant to the trades and
specialties for which registration is sought;
(c)
the applicant or its proprietor, partner or director having been employed by a

registered subcontractor for at least five years with experience in the trade/
specialty applying for and having completed all the modules of the Project
Management Training Series for Sub-contractors (or equivalent) conducted
by the Construction Industry Council; or
(d)
the applicant or its proprietor, partner or director having registered as

Registered Skilled Worker under the Construction Workers Registration
Ordinance (Chapter 583 of the Laws of Hong Kong) for the relevant trade/
specialty with at least five years experience in the trade/specialty applying
for and having completed the Senior Construction Workers Trade
Management Course (or equivalent) conducted by the Construction Industry
Council.
A registered subcontractor shall apply for renewal within three months before the
expiry date of its registration by submitting an application to the Construction Industry
Council in a specified format providing information and supporting documents as
required to show compliance with the entry requirements. An application for renewal
shall be subject to approval by the management committee which oversees the
Subcontractor Registration Scheme (the Management Committee). If some of the
entry requirements covered in an application can no longer be satisfied, the
Management Committee of the Construction Industry Council may give approval for
renewal based on those trades and specialties where the requirements are met. An
approved renewal shall be valid for two years from the expiry of the current
registration.
A registered subcontractor shall observe the Codes of Conduct for Registered
Subcontractor (Schedule 8 of the Rules and Procedures for the Primary Register of the
Subcontractor Registration Scheme) (the Codes of Conduct). Failing to comply with
the Codes of Conduct may result in regulatory actions taken by the Management
Committee.
76
REGULATORY OVERVIEW
The circumstances pertaining to a registered subcontractor that may call for
regulatory actions include, but are not limited to:
1.
supply of false information when making an application for registration,

renewal of registration or inclusion of additional trades;
2.
failure to give timely notification of changes to the registration particulars;
3.
serious violations of the registration rules and procedures;
4.
convictions of senior management staff (including but not limited to

proprietors, partners or directors) for bribery or corruption under the
Prevention of Bribery Ordinance (Chapter 201 of the Laws of Hong Kong);
5.
convictions for failure to pay wages on time to workers in accordance with

the relevant provisions contained in the Employment Ordinance;
6.
wilful misconducts that may bring the Subcontractor Registration Scheme

into serious disrepute;
7.
civil awards/judgments in connection with the violation of or convictions

under the relevant sections of the Mandatory Provident Fund Schemes
Ordinance;
8.
convictions under the Factories and Industrial Undertakings Ordinance or

Occupational Safety and Health Ordinance in relation to serious construction
site safety incidents resulting in one or more of the following consequence:
9.
i.
loss of life; or
ii.
serious bodily injury resulting in loss or amputation of a limb or had

caused or was likely to cause permanent total disability;
conviction of five or more offences under the Factories and Industrial

Undertakings Ordinance and/or Occupational Safety and Health Ordinance
each arising out of separate incidents in any six months period (according to
the date of committing the offence but not the date of conviction),
committed by the Registered Subcontractor at each of a construction site
under a contract;
10. convictions for employment of illegal worker under the Immigration

Ordinance; or
11.
late payment of workers wages and/or late payment of contribution under

the Mandatory Provident Fund Schemes Ordinance over 10 days with solid
proof of such late payment of wages and/or contribution.
The Management Committee may instigate regulatory actions by directing that:
77
REGULATORY OVERVIEW
D.
A.
written strong
subcontractor;
direction
and/or
warning
be
given
to
registered
B.
a registered subcontractor to submit an improvement plan with the contents

as specified and within a specified period;
C.
a registered subcontractor be suspended from registration for a specified

duration; or
D.
the registration of a registered subcontractor be revoked.
OTHERS
Competition Ordinance (Chapter 619 of the Laws of Hong Kong)
The Competition Ordinance prohibits and deters undertakings in all sectors from
adopting anti-competitive conduct which has the object or effect of preventing,
restricting or distorting competition in Hong Kong. It provides for general prohibitions
in three major areas of anti-competitive conduct described as the first conduct rule, the
second conduct rule and the merger rule.
The first conduct rule prohibits undertakings from making or giving effect to
agreements or decisions or engaging in concerted practices that have as their object or
effect the prevention, restriction or distortion of competition in Hong Kong. The second
conduct rule prohibits undertakings that have a substantial degree of market power in a
market from engaging in conduct that has as its object or effect the prevention,
restriction or distortion of competition in Hong Kong. The merger rule prohibits
mergers that have or are likely to have the effect of substantially lessening competition
in Hong Kong. The scope of application of the merger rule is limited to carrier licences
issued under the Telecommunications Ordinance (Chapter 106 of the Laws of Hong
Kong).
Pursuant to section 82 of the Competition Ordinance, if the Competition
Commission has reasonable cause to believe that (a) a contravention of the first
conduct rule has occurred; and (b) the contravention does not involve serious
anti-competitive conduct, it must, before bringing proceedings in the Competition
Tribunal against the undertaking whose conduct is alleged to constitute the
contravention, issue a notice (a warning notice) to the undertaking.
However, under section 67 of the Competition Ordinance, where a contravention
of the first conduct rule has occurred and the contravention involves serious
anti-competitive conduct or a contravention of the second conduct rule has occurred,
the Competition Commission may, instead of bringing proceedings in the Tribunal in
the first instance, issue a notice (an infringement notice) to the person against whom
it proposes to bring proceedings, offering not to bring those proceedings on condition
that the person makes a commitment to comply with requirements of the infringement
notice. Serious anti-competitive conduct means any conduct that consists of any of
the following or any combination of the following (a) fixing, maintaining, increasing
78
REGULATORY OVERVIEW
or controlling the price for the supply of goods or services; (b) allocating sales,
territories, customers or markets for the production or supply of goods or services; (c)
fixing, maintaining, controlling, preventing, limiting or eliminating the production or
supply of goods or services; (d) bid-rigging.
In the event of the breaches of the Competition Ordinance, the Competition
Tribunal may make orders including: imposing a pecuniary penalty if satisfied that an
entity has contravened a competition rule; disqualifying a person from acting as a
director of a company or taking part in the management of a company; prohibiting an
entity from making or giving effect to an agreement; modifying or terminating an
agreement; and requiring the payment of damages to a person who has suffered loss or
damage.
Compliance with the relevant requirements
Our Directors confirmed that our Group has obtained all relevant permits/
registrations/licenses for its existing operations during the Track Record Period and up
to the Latest Practicable Date.
79
HISTORY AND DEVELOPMENT

OUR CORPORATE HISTORY
Overview
The history of our Group can be traced back to 1998 when Mr. CK Wong (an executive
Director, the chairman of our Board and a Controlling Shareholder), together with Mr. WW
Wong (an executive Director, the chief executive officer and a Controlling Shareholder),
incorporated Luen Hing in Hong Kong, one of our principal operating subsidiaries, which is
principally engaged in civil engineering works in Hong Kong.
Mr. CK Wong has over 30 years of experience in the civil engineering industry in
Hong Kong. Mr. CK Wong acquainted Mr. WW Wong, who has over 19 years of experience
in civil engineering industry in Hong Kong. In 1998, Mr. CK Wong and Mr. WW Wong,
being confident in the prospect of civil engineering construction industry in Hong Kong,
decided to explore business opportunities in undertaking civil engineering business in Hong
Kong with their own capital accumulated from previous business ventures. Please refer to
the section headed Directors and senior management in this prospectus for details relating
to the background and industry experience of Mr. CK Wong and Mr. WW Wong.
Details of the members of our Group and their respective corporate history are set out
below:
OUR COMPANY
Our Company was incorporated in the Cayman Islands with limited liability on 16
October 2015. Our Company completed the Reorganisation on 22 February 2016 in
preparation for the Listing pursuant to which our Company became the holding company of
our Group. Details of the Reorganisation are set out in the paragraph headed
Reorganisation in this section.
OUR PRINCIPAL OPERATING SUBSIDIARIES
Luen Hing
Luen Hing was incorporated in Hong Kong with limited liability on 11 November
1998, and 10,000 shares and 10,000 shares were respectively allotted and issued to Mr. CK
Wong and Mr. WW Wong credited as fully paid at the then par value of the shares and at
the consideration of HK$10,000 and HK$10,000, respectively. After the allotments, Luen
Hing was owned as to 50% and 50% by Mr. CK Wong and Mr. WW Wong, respectively.
Following the incorporation of Luen Hing in 1998, and in order to raise working
capital, on 25 February 2003, the shareholders resolved to increase the then authorised share
capital of Luen Hing from HK$20,000 to HK$5,000,000. On the same date, 1,890,000 and
1,890,000 ordinary shares of HK$1.00 each in Luen Hing were respectively allotted and
issued to Mr. CK Wong and Mr. WW Wong credited as fully paid at the then par value and
the consideration of HK$3,780,000 was settled via the current account of Luen Hing Civil
80

Eng Co, a sole proprietorship of Mr. CK Wong which has ceased business activities in or
around 2006. After the allotments, Luen Hing remained owned as to 50% and 50% by Mr.
CK Wong and Mr. WW Wong, respectively.
As part of the Reorganisation, on 29 October 2015, Mr. CK Wong and Mr. WW Wong,
as vendors, and Super Pioneer, as purchaser, entered into a sale and purchase agreement
pursuant to which Super Pioneer acquired 1,900,000 shares and 1,900,000 shares of Luen
Hing, representing all its issued shares in aggregate, from Mr. CK Wong and Mr. WW
Wong, respectively, and in consideration thereof, Super Pioneer in aggregate issued and
allotted 2 shares in Super Pioneer, credited as fully paid, to Blooming Union.
On 21 March 2016, Luen Hing applied HK$280,000 and HK$5,200,000 owed by Luen
Hing to Mr. CK Wong and Mr. WW Wong, respectively, toward the satisfaction of the issue
and allotment of 5,480,000 new shares of Luen Hing at a subscription price of HK$1 per
share to Super Pioneer (as directed by Mr. CK Wong and Mr. WW Wong, respectively).
After the aforesaid loans capitalisation and issue and allotment of shares, Luen Hing remains
a wholly owned subsidiary of Super Pioneer.
After the aforesaid share transfer and loans capitalisation, Super Pioneer held all the
issued shares of Luen Hing, and Luen Hing became a wholly-owned subsidiary of Super
Pioneer.
Hop Fung
Hop Fung was incorporated in Hong Kong with limited liability on 31 July 2002, and
10,000 shares and 10,000 shares were respectively allotted and issued to Mr. CK Wong and
Mr. WW Wong at the then par value of the shares and at the consideration of HK$10,000
and HK$10,000, respectively. After the allotments, Hop Fung was owned as to 50% and
50% by Mr. CK Wong and Mr. WW Wong, respectively.
As part of the Reorganisation, on 29 October 2015, Mr. CK Wong and Mr. WW Wong,
as vendors, and Super Pioneer, as purchaser, entered into a sale and purchase agreement
pursuant to which Super Pioneer acquired 10,000 shares and 10,000 shares of Hop Fung,
representing all its issued shares in aggregate, from Mr. CK Wong and Mr. WW Wong,
respectively, and in consideration thereof, Super Pioneer in aggregate issued and allotted 2
shares in Super Pioneer, credited as fully paid, to Blooming Union.
On 21 March 2016, Hop Fung applied HK$4,920,000 owed by Hop Fung to Mr. CK
Wong toward the satisfaction of the issue and allotment of 4,920,000 new shares of Hop
Fung at a subscription price of HK$1 each to Super Pioneer (as directed by Mr. CK Wong).
After the aforesaid loan capitalisation, issue and allotment of shares of Hop Fung remain a
wholly owned subsidiary of Super Pioneer.
After the aforesaid share transfer and loan capitalisation, Super Pioneer held all the
issued shares of Hop Fung, and Hop Fung became a wholly-owned subsidiary of Super
Pioneer.
81

BUSINESS DEVELOPMENT AND MILESTONES
The following table sets out the major developments and milestones of our Group since
establishment:
Year
Event
1998
Luen Hing was incorporated in Hong Kong on 11 November

1998
1999
In order to capture the growing business opportunities for

civil engineering works in Hong Kong, we strategically
positioned ourselves as a subcontractor in the civil
engineering construction industry principally engaged in
civil engineering works including roads and drainage works,
structural works and site formation works in Hong Kong. In
April 1999, we commenced our first civil engineering
project with a major customer for roads and drainage works
and structural works at Lot No. 55, Haul Road, Tseung
Kwan O.
2000
During the period between 2000 and 2001, we were

awarded tender contracts with an aggregate contract
value of approximately HK$84 million for roads and
drainage works, structural works and site formation
works relating to construction of the West Rail Line
Viaduct (Tin Shui Wai to Tuen Mun North).
We won a subcontractor safety award in a safety award

competition organised by our customer in recognition
of our occupational health and safety management for
our work performance in the Tseung Kwan O Road
project.
2001
During the period between 2001 and 2004, we were awarded

tender contracts by a major customer with an aggregate
contract value of approximately HK$117 million for roads
and drainage works and structural works relating to Castle
Peak Road improvement between Tsuen Wan and Ting Kau.
82

2002
2005
2008
Hop Fung was incorporated in Hong Kong on 31 July

2002

awarded tender contracts by a major customer with an
aggregate contract value of approximately HK$153
million for roads and drainage works, structural works
and site formation works relating to construction of
Route 9 Ngong Shuen Chau Viaduct.
In January 2005, Luen Hing was registered with the

Subcontractor Registration Scheme of the Construction
Industry Council.

drainage works and structural works relating to Central
Reclamation Phase III.
From 2005-2006, we won the bronze award under the

Construction Industry Safety Award Scheme organised
by the Labour Department in recognition of our effort
in occupational health and safety management and
compliance.

drainage works and structural works relating to
reconstruction and improvement of Tuen Mun Road.
In 2008 and during the period between 2014 and 2015,

we were awarded tender contracts with an aggregate
contract value of approximately HK$174 million for
structural works and site formation works at Anderson
Road.
2009
We were awarded certificates and recognised as an

environmental subcontractor and the safest subcontractor
by our customer for our effort in environmental and safety
management and compliance in the Central Reclamation
Phase III project.
2010
We won the Excellent Site Safety Award granted by our

customer for our excellent safety record and our effort in
site safety management and compliance in the Central
Reclamation Phase III project.
83

2013
2014
2015
2016

value of approximately HK$87 million relating to
construction of portal beams for the Hong
Kong-Zhuhai-Macao Bridge construction project.
We were awarded as the winner of safe

sub-contractor by our customer for our effort in safety
management and compliance in South Island Line
(East) project.

awarded tender contracts by a major customer with an
aggregate contract value of approximately HK$187
million for roads and drainage works and structural
works relating to widening of Fanling Highway.
We were recognised as the best subcontractor/joint

venture working team of June 2014 safety &
environmental incentive scheme for our effort in
safety and environmental management in the Hong
Kong-Zhuhai-Macao Bridge (Hong Kong Link Road
section) project.
We were awarded tender contracts by a major customer

with an aggregate contract value of approximately
HK$633 million for structural works relating to the
Hong Kong-Zhuhai-Macao Bridge construction project
and associated infrastructure works.
In August 2015, we have received certificates of

approval from DW Certification Limited for our
integrated management systems current compliance
with ISO 9001:2008 (quality management), ISO
14001:2004 (environmental management) and OHSAS
18001:2007
(occupational
health
and
safety
management).
Our Company was incorporated on 16 October 2015 as

part of the Reorganisation for the purpose of the
Listing.
We were further awarded a tender contract by a major

customer with a contract value of approximately HK$296.9
million for structural works relating to the Hong
Kong-Zhuhai-Macao Bridge construction project.
84

REORGANISATION
Our Company completed the Reorganisation on 22 February 2016 in preparation for the
Listing, pursuant to which our Company became the ultimate holding company of our
Group. Details of the Reorganisation are set out in the section headed A. Further
information about the Company 4. Corporate reorganisation in Appendix V to this
prospectus.
As confirmed by our Directors, the change of shareholdings in Luen Hing and Hop
Fung, being the subsidiaries of our Company incorporated in Hong Kong, under the
Reorganisation would not require any approval or permit from any relevant Government
authorities in Hong Kong.
Our Group structure
The following chart sets forth the corporate and shareholding structure of our Group
immediately prior to the Reorganisation:
Luen Hing
Mr. CK Wong
Mr. WW Wong
50%
50%
Luen Hing
(Note 1)
Hop Fung
Mr. CK Wong
Mr. WW Wong
50%
50%
Hop Fung
(Note 2)
Notes:
1.
Luen Hing is principally engaged in civil engineering works in Hong Kong.
2.
Hop Fung was an investment holding company holding an investment property in Tai Wai, Hong Kong prior
to the disposal of such property, details of which are set out in the section headed Business Properties
in this prospectus. Hop Fung is currently a subcontractor of Luen Hing in respect of one of our existing
civil engineering projects.
85

The following chart sets forth our corporate and shareholding structure immediately
after completion of the Reorganisation but before completion of the Placing and the
Capitalisation Issue:
Mr. CK Wong
Mr. WW Wong
50%
50%
Blooming Union
100%
Our Company
100%
Super Pioneer
(Note 1)
100%
100%
Luen Hing
(Note 2)
Hop Fung
(Note 3)
Notes:
1.
Super Pioneer is an investment holding company incorporated in the BVI.
2.
3.
86

The following chart sets forth our corporate shareholding structure immediately after
completion of the Placing and the Capitalisation Issue:
Mr. CK Wong
Mr. WW Wong
50%
50%
Blooming Union
Public
75%
25%
Our Company
100%
Super Pioneer
(Note 1)
100%
100%
Luen Hing
(Note 2)
Hop Fung
(Note 3)
Notes:
1.
Super Pioneer is an investment holding company incorporated in the BVI.
2.
3.
87
BUSINESS
OVERVIEW
We are an established subcontractor engaged in civil engineering works. We have over
16 years of experience in providing civil engineering works as a subcontractor and are
flexible in deploying resources to meet our customers demand.
The civil engineering works undertaken by us are mainly related to (i) roads and
drainage works (including construction and improvement of local road, carriageway with
junction improvement and the associated footpaths, planting areas, drains, sewers, water
mains and utilities diversion); (ii) structural works (including construction of reinforced
concrete structures for bridges and retaining walls); and (iii) site formation works (including
excavation and/or filling works for forming a new site or achieving designed formation level
for later development).
During the Track Record Period and up to the Latest Practicable Date, we had
undertaken 51 civil engineering contracts, of which 31 contracts were completed. As at the
Latest Practicable Date, we had 20 contracts on hand with a total estimated outstanding
contract sum attributable to our Group in the amount of approximately HK$1,384,140,000,
of which approximately HK$234,304,000 of revenue has been recognised as at 30 November
2015 (with approximately HK$6,241,000 of revenue recognised exceeding the original
contract sum); and approximately HK$191,737,000 are expected to be recognised as revenue
for the period from 1 December 2015 to 31 March 2016 (with approximately HK$3,547,000
of revenue expected to be recognised exceeding the original contract sum) and
HK$824,469,000, HK$109,706,000 and HK$33,713,000 are expected to be recognised as
revenue during the three years ending 31 March 2019, respectively. The amount of revenue
expected to be recognised is subject to change due to the actual progress and
commencement and completion dates of our projects. Further details of our contracts are set
out in the paragraph headed Our civil engineering contracts Contracts on hand in this
section.
Our direct customers are primarily main contractors of various different types of civil
engineering projects in Hong Kong. Such projects can generally be categorised into public
sector projects and private sector projects. Public sector projects refer to projects which the
main contractors are employed by the Government or statutory bodies while private sector
projects refer to those that are not public sector projects. The majority of our revenue during
the Track Record Period was derived from public sector projects. The following table sets
out a breakdown of our revenue during the Track Record Period attributable to public and
private sector projects:
For the year ended 31 March

2014
2015
HK$000
% HK$000
Public sector projects
Private sector projects
For the eight months ended 30

November
2014
2015
% HK$000
% HK$000
%
149,234
10,729
93.3
6.7
255,484
16,465
93.9
6.1
180,479
5,846
96.9
3.1
135,834
18,807
87.8
12.2
159,963
100.0
271,949
100.0
186,325
100.0
154,641
100.0
88
BUSINESS
As a subcontractor, we secure our contracts from main contractors after a competitive
tendering process whereby we are invited to submit our tender. For the two years ended 31
March 2015 and the eight months ended 30 November 2015, revenue derived from our five
largest customers amounted to approximately 94.1%, 96.0% and 97.5%, respectively, of our
total revenue. We have maintained a stable relationship with our major customers who award
civil engineering contracts to us based on our expertise. Our five largest customers, by
revenue, during the Track Record Period have maintained business relationship with us for a
period ranging from 2 to 16 years.
While we have our own direct labours for carrying out our projects, depending on the
availability of our labour resources and the nature of works involved, we may subcontract
some of our construction works such as works in relation to steel fixing, formwork erection
and drainage works to our subcontractors for purposes of better allocation of our Groups
resources. For the two years ended 31 March 2015 and the eight months ended 30
November 2015, subcontracting charges incurred by us attributable to our five largest
subcontractors accounted for approximately 61.8%, 53.3% and 55.7%, respectively, of our
total subcontracting charges incurred. Our five largest subcontractors, by cost of sales,
during the Track Record Period have maintained business relationship with us for a period
ranging from 2 to 10 years.
Our suppliers primarily provide us with construction materials such as concrete and
steel reinforcement bars, precast concrete units, timbers and diesel fuel, and site equipment
for rental such as dump trucks, crane lorries, hydraulic truck cranes and excavators. For the
two years ended 31 March 2015 and the eight months ended 30 November 2015, our five
largest suppliers accounted for approximately 55.7%, 67.5% and 54.0%, respectively, of our
total purchases incurred (excluding subcontracting charges incurred). Our five largest
suppliers, by cost of sales, during the Track Record Period have maintained business
relationship with us for a period ranging from less than 1 year to 16 years.
We possess our own site equipment for carrying out our projects and therefore are not
materially reliant on our suppliers for site equipment rental. Our owned site equipment include,
among others, excavators, vibrating rollers, hydraulic breakers, air compressors, generators, aerial
working platforms and a hydraulic truck crane with net book value of approximately
HK$6,898,000 in aggregate as at 30 November 2015. We believe that our investment in site
equipment has placed us in a position to cater to civil engineering projects of different scales and
complexity and to meet the expected growing demand of our customers. For the two years ended
31 March 2015 and the eight months ended 30 November 2015, we acquired new site equipment
in the amount of approximately HK$4,310,000, HK$410,000 and HK$812,000 at cost,
respectively. For further information regarding our site equipment, please refer to the paragraph
headed Site equipment in this section. Depending on availability of our site equipment, project
schedule and the nature of works involved, we may rent site equipment such as dump trucks,
crane lorries, hydraulic truck cranes and excavators from suppliers on our approved list at rental
charges determined with reference to duration and rate of usage of the site equipment. For the
two years ended 31 March 2015 and the eight months ended 30 November 2015, our site
equipment rental cost incurred amounted to approximately HK$21,441,000, HK$31,874,000 and
HK$21,988,000, respectively.
89
BUSINESS
According to the Ipsos Report, there is substantial growth potential in the civil
engineering construction industry in Hong Kong. Various infrastructure development plans,
notably the Ten Major Infrastructure Projects, such as the construction of the Hong
Kong-Zhuhai-Macao Bridge and the increasing public expenditure by the Government on
infrastructure will continue to be the growth drivers in the civil engineering construction
industry in Hong Kong. Riding on our operational resources and experience, our Directors
believe that we are well-positioned to capture the growing demand for civil engineering
services in Hong Kong. For details on the market drivers relating to our Group, please refer
to the paragraph headed Industry overview Competitive landscape of the civil engineering
construction industry in Hong Kong Market drivers in this prospectus.
COMPETITIVE STRENGTHS
We believe the following competitive strengths contribute to our success and
differentiate us from our competitors:
Well-established presence in the civil engineering construction industry in Hong Kong
We have been operating in the civil engineering construction industry in Hong Kong
for 16 years. Since 1999, we have undertaken various civil engineering construction projects
in Hong Kong, some of which are related to the major public infrastructures in Hong Kong
such as the West Rail Line Viaduct, Route 9 Ngong Shuen Chau Viaduct, Central
Reclamation Phase III project, Tuen Mun Road, Fanling Highway, the Liantang/Heung Yuen
Wai Boundary Control Point and the Hong Kong-Zhuhai-Macao Bridge. Luen Hing, our
principal operating subsidiary, has been registered in the Subcontractor Registration Scheme
of the Construction Industry Council since 2005. We have established ourselves as a
dedicated subcontractor with high service quality in the civil engineering construction
industry achieving customer satisfaction, quality of work and cost control which in turn
enables our Group to gain confidence from our customers and therefore increase our
opportunities of winning new projects from customers. In addition, we are also able to carry
out a variety of civil engineering construction projects such as roads and drainage works,
structural works and site formation works. We believe that our proven track record, our
diverse experience and capabilities and our ability to deliver our jobs on time and to the
satisfaction of our customers are the crucial factors to our success in the industry.
Furthermore, our Group has also received a number of awards from our customers in
recognition of our safety management. For details in relation to the awards granted to our
Group, please refer to the paragraph headed Awards and recognitions in this section. As
we normally receive tender invitations directly from customers, we consider that our
well-established presence in the civil engineering construction industry in Hong Kong and
our long-standing business relationship with our customers give us an advantage in terms of
securing new business opportunities. Throughout our operating history, we believe we have
established good reputation and a well-established presence in the civil engineering
construction industry in Hong Kong which are crucial to our business operations and future
business development of our Group.
90
BUSINESS
Experienced project management team
Our management team has extensive industry knowledge and project experience in the
civil engineering construction industry. Mr. CK Wong and Mr. WW Wong, who are our
executive Directors, our Controlling Shareholders and our co-founders, have over 30 years
and 19 years of experience, respectively, in providing civil engineering services for both
public and private sector projects in Hong Kong. Mr. Lo Shek Kwong, the quantity surveyor
manager of our Group, has over 25 years of experience in quantity surveying, contractual
administration and construction project management. Furthermore, we have our in-house
surveying team comprising 10 land surveyors as at the Latest Practicable Date, which
enables us to speed up the setting out process and enhance our efficiency and overall service
quality. For details of the qualification and experience of our Directors and senior
management, please refer to the section headed Directors and senior management in this
prospectus. Their qualifications and experience facilitate the formulation of competitive
tenders, which are essential in securing new business opportunities, and in deciding the best
suitable construction methodology in order to carry out our project works in an efficient and
timely manner. Our Directors believe that the combination of our management and technical
teams expertise and knowledge of the industry have been and will continue to be our
Groups valuable assets and strive our Group towards greater success.
Possession of a variety of site equipment for performing different types of civil
engineering works
We possess our own site equipment for performing different types of civil engineering
works and therefore we are not materially reliant on our suppliers for site equipment rental.
We have made substantial investment in purchasing our own site equipment for performing
different types of works. For the two years ended 31 March 2015 and the eight months
ended 30 November 2015, we acquired new site equipment in the amount of approximately
HK$4,310,000, HK$410,000 and HK$812,000 at cost, respectively. As at 30 November
2015, our site equipment had a total net book value of approximately HK$6,898,000.
Our owned site equipment include, among others, excavators, vibrating rollers,
hydraulic breakers, air compressors, generators, aerial working platforms and a hydraulic
truck crane. We believe that our investment in different types of site equipment has placed
us in a position to cater to civil engineering projects of different scales and complexity. Our
Directors also consider that possession of our own site equipment allows us to devise
suitable works schedules and methods tailored to different needs and requirements from
different customers and enables us to efficiently and effectively schedule our projects and
deploy our manpower.
Stable relationship with our major customers, suppliers and subcontractors
We have established stable business relationship with our major customers who are
mostly reputable main contractors and the longest time with which is approximately 16
years. Among our five largest customers (in terms of revenue) during the Track Record
Period, we have been providing services to them for a period ranging from 2 to 16 years.
Furthermore, we have also established stable business relationship with our major suppliers
and subcontractors and the longest time with which is approximately 16 years and 10 years,
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BUSINESS
respectively. Our Directors are of the view that our operating history, together with the
long-term relationships with our major customers, suppliers and subcontractors, would
increase our recognition and visibility in the market and enable us to attract potential
business opportunities.
Our commitment to maintaining safety standard, quality control and environmental
protection
We place considerable emphasis to maintain safety standard and quality control as they
can directly affect our reputation, our service quality and our profitability. Our management
system was certified to be in accordance with the standard required under ISO 9001:2008
(quality management), ISO 14001:2004 (environmental management) and OHSAS
18001:2007 (occupational health and safety management). In addition, our major customers
have recognised our efforts in upkeeping a safe working environment that our Group has
been granted performance awards in safety and environmental management in respect of the
projects undertaken by us. Our Directors believe that since workplace safety and
environmental compliance are some of the key assessment criteria for our customers, our
effective occupational health and safety management and environment management systems
and good compliance track record would help reduce our exposure to these claims and
improve our overall service quality and profitability.
BUSINESS STRATEGIES
Our principal business objective is to further strengthen our position as an established
subcontractor for civil engineering works in Hong Kong and to create long-term
Shareholders value. We intend to achieve our business objective by competing for sizeable
and profitable civil engineering projects through expanding our scale of operation by means
of (i) acquisition of additional site equipment; (ii) further strengthening our manpower; and
(iii) adherence to prudent financial management to ensure sustainable growth and capital
sufficiency.
According to the 2016-2017 Budget Speech, the Government has planned to raise the
total public expenditure on various ongoing infrastructure projects to around HK$85.8
billion, representing a growth of about 8.2% compared to the 2015-2016 spending on
infrastructure. Various ongoing infrastructure projects include the Ten Major Infrastructure
Projects such as Hong Kong-Macau-Zhuhai Bridge Project, Guangzhou-Shenzhen-Hong
Kong Express Rail Link and North East New Territories New Development Areas and Hung
Shui Kiu Project. These infrastructure projects are mega size and characterised by their large
contract sum, large scale, high degree of complexity and long duration of projects which
may take several years to complete. In view of the increasing spending committed by the
Government on infrastructure works, our Directors believe that the gross output value of the
civil engineering industry in Hong Kong will continue to rise. Having considered our solid
experience in the civil engineering industry, our proven track record and good reputation, we
plan to expand our market share in the civil engineering construction industry in Hong Kong
by deploying our resources towards competing for sizeable and profitable civil engineering
projects in Hong Kong.
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BUSINESS
To manage our contracts on hand and newly awarded projects, we plan to expand our
scale of operation by the following business strategies:
(i)
To further enhance and optimise our overall efficiency and capacity as well as
technical capability in performing sizeable civil engineering construction works, we
intend to acquire additional site equipment with higher efficiency and technical
capability. It will also allow us to cope with our business development plan to
undertake larger scale projects in the future and minimise site equipment rental costs.
During the Track Record Period, in addition to our owned site equipment, we needed
to lease additional hydraulic truck cranes and excavators from site equipment providers
to cope with our project needs. For the two years ended 31 March 2015 and the eight
months ended 30 November 2015, the site equipment rental cost of our Group incurred
was approximately HK$21,441,000, HK$31,874,000 and HK$21,988,000, respectively.
To cope with our needs for the projects on hand and newly awarded projects, starting
from September 2015 and up to the Latest Practicable Date, we have purchased 3
generators, 1 hydraulic breaker, 1 air compressor, 1 welding machine and 11 motor
vehicles (consist of 10 vans and 1 crane lorry). Furthermore, to further optimise our
construction efficiency and technical capability for newly awarded projects, we plan to
acquire 3 hydraulic truck cranes, 1 excavator, 3 generators and 1 air compressor as
well as 3 motor vehicles. The expected total capital expenditure for the acquisition of
the aforesaid site equipment and motor vehicles will be approximately HK$18.0 million
and such acquisition will be financed by the proceeds from the Placing. Our Directors
believe that acquisition of additional site equipment will allow us to: (i) increase our
tender success rate due to the immediate availability of relevant site equipment
according to tender requirements; (ii) enhance our construction efficiency and technical
capability; (iii) increase our flexibility to deploy our resources more efficiently; and
(iv) reduce our site equipment rental costs. Our Directors believe that our investments
in site equipment will enable us to cater to projects of larger scale and higher
complexity in the future. Our Group will also continue to evaluate the operating
condition, effectiveness and efficiency of our site equipment and assess our need for
additional site equipment in view of our business development.
(ii) Further strengthening our manpower
We consider that a team of strong workforce equipped with diversified knowledge
and experience in operating different types of site equipment and performing different
types of civil engineering works is crucial to our continuing success. To ensure that we
have sufficient manpower for our contracts on hand and newly awarded projects, from
August 2015 to the Latest Practicable Date, 1 project manager has been recruited to
strengthen our project management capability, 3 engineers, 3 land surveyors, 4 quantity
surveyors, 4 safety officers, 1 safety supervisor, 2 foremen and more than 70 site
workers were recruited to carry out site works. As at the Latest Practicable Date, we
had a total of 238 employees, details of which are set out in the section headed
Business Employees in this prospectus. To further enhance our manpower for our
projects on hand and newly awarded projects, we plan to utilise approximately HK$7.6
million from the proceeds of the Placing to hire 3 crane operators for operation of our
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BUSINESS
hydraulic truck cranes in construction site, 2 engineers for strengthening our
engineering team and 1 project manager, 3 foremen, 1 quantity surveyor and 1
administrative staff for strengthening our project implementation capability to cope
with our contracts on hand and newly awarded projects. In addition, taking into
account the expected completion schedules of our projects on hand, it is envisaged that
an aggregate of approximately 50 employees and 3 existing subcontractors involving
approximately 40 site workers provided by the aforesaid subcontractors will be
re-allocated from 3 contracts, with an aggregate contract value of approximately
HK$199,437,000 which will be completed by May 2016, to our other projects,
including our newly awarded contracts. Furthermore, apart from our own labour
resources, we will continue to identify and collaborate with more competent
subcontractors who meet our quality standards and selection criteria to cope with our
business needs in view of the augmenting scale and complexity of our projects.
Recently, we have expanded our internal approved list of subcontractors and engaged 3
new subcontractors to provide further manpower resources of about 30 site workers for
execution of steel fixing works and formwork erection works for our contracts on hand
and newly awarded contracts.
In addition, we also intend to provide more training to our existing and newly
recruited staff on occupational health and safety, site equipment operation and civil
engineering works techniques. Such training courses would include internal training as
well as courses organised by external parties and training institutions.
It is our tendering strategy to focus on submitting tenders for contracts which are
related to the same infrastructural project in which we had participated in the past. For
instance, for the year ended 31 March 2015 and the eight months ended 30 November
2015, we won 13 tenders of which, 6 of the tenders won were related to infrastructural
projects which we were involved in the past. Accordingly, a number of our contracts on
hand are related to construction of the same infrastructure which shares the same
workforce and the same worksite or worksite in the vicinity. Our experience with the
relevant infrastructural project and familiarity with the conditions of the relevant site
allow us to deploy our manpower resources and allocate site equipment more flexibly
and efficiently. We are therefore able to execute several projects concurrently relating
to construction of the same infrastructure in a cost-effective manner.
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BUSINESS
(iii) Adherence to prudent financial management to ensure sustainable growth and
capital sufficiency
We will continue to maintain a prudent financial management strategy in our
business operations. Our Directors believe that a prudent financial management in
capital commitment could provide reasonable return for shareholders steadily while
ensuring our continued growth in the long term. Our Directors consider that taking into
account the cash flow expected to be generated from our operations, bank borrowings
we currently have in place, unutilised credit facilities currently available to us and
proceeds from the Placing, we have sufficient working capital and financial resources
to perform our contracts on hand and newly awarded contracts as illustrated below:
We have the following financial resources in place:
bank balances and cash as at 31 January 2016 amounting to

approximately HK$14,367,000;
expected cash generated from our operations for the year ending 31
March 2017;
estimated net proceeds from the Placing of approximately HK$35.7

million, based on the Placing Price of HK$0.26 per Placing Share; and
unrestricted unutilised bank overdraft facilities of approximately

HK$6,000,000 as at 31 January 2016.
To further strengthen our working capital position and enhance our financial
resources for our contracts on hand and newly awarded projects, we obtained
a credit facility from a bank in March 2016 of up to HK$20,000,000 which
consists of: (i) a factoring facility of up to HK$10,000,000 by factoring of
certain accounts receivable from our major customer(s) to the bank; and (ii)
a banking facility of HK$10,000,000. Our Directors considered that this
arrangement can provide a flexible alternative to increase our working
capital and finance our liquidity requirement.
Pursuant to the terms of the one of the contracts with China Harbour in
respect of the Hong Kong-Zhuhai-Macao Bridge Project, the contract sum of
this contract is HK$455,319,000, of which HK$50 million is earmarked for
payment of our project expenses including site set-up cost, site running cost,
cost for design of formwork mould, supply and fabrication of formwork
mould and scaffolding and cost for safety and environmental management,
etc. to be incurred at the beginning of this project. We are entitled to receive
such payment from China Harbour by way of progress payment. Based on
the preliminary project expenses incurred as aforesaid, we submit to China
Harbour our progress payment application on a monthly basis. Once it is
approved, a payment certificate will be issued to us. We generally receive
such progress payment from China Harbour within 40 days of our payment
application with 1% of such progress payment retained by China Harbour as
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BUSINESS
retention money. The said sum of HK$50 million is arrived at after arms
length negotiations between our Group and China Harbour with reference to
our preliminary working capital needs for this project. Our Directors
consider that such arrangement will relieve our cashflow and financial
pressure at the start of the project. On the basis of the foregoing, our
Directors consider that the abovementioned arrangement with China Harbour
is on normal commercial terms, fair and reasonable and in the interest of our
Company and its Shareholders as a whole.
We will continue to adopt a prudent treasury management policy to (i)

ensure that our funds are properly and efficiently collected and deployed
such that there is no material shortfall in cash which may interrupt our
Groups daily business obligations; (ii) maintain sufficient level of funds to
settle our liabilities when they fall due; (iii) maintain adequate liquidity to
cover our operation cash flow, project expenditures and administrative
expenses; and (iv) streamline our operational processes to achieve savings in
construction-related costs, maintenance and other operating costs.
Our Directors believe that by expanding our scale of operation as mentioned above, we
will be able to (i) efficiently manage our contracts on hand and newly awarded projects; (ii)
participate in larger scale civil engineering projects; and (iii) have additional manpower to
further strengthen our workforce and quality of our service which is of utmost importance to
our Groups competiveness and ongoing development in the Hong Kong civil engineering
construction industry. For further details regarding the proposed use of proceeds from the
Placing in pursuit of these business strategies, please refer to the section headed Statement
of business objective and use of proceeds Use of proceeds in this prospectus. Leveraging
our proven track record, our reputation, solid experience in public sector projects over the
Track Record Period and our prudent financial management, our Directors are of the view
that we possess the necessary resources and technical ability and are well positioned to
capture the emerging business opportunities for sizeable projects in the future.
Implementation of business strategies
As at the Latest Practicable Date, we have not identified any target for acquisition and
do not have any acquisition plan.
For further details on the implementation of the above-mentioned business strategies,
please refer to the section headed Statement of business objective and use of proceeds in
this prospectus.
OUR SERVICES
Type of works undertaken
We are a subcontractor in the civil engineering construction industry principally
engaged in undertaking roads and drainage works, structural works and site formation works
in Hong Kong.
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BUSINESS
Roads and drainage works generally refer to construction of transport interchange,
carriageway and walkway, road improvement and widening works, while drainage works
generally include flood prevention or improvement works and sewage improvement works
comprising construction of drainage channel, outfall pipe, box culvert and pumping station
and drainage related and infrastructures. Both roads and drainage constructions also include
associated building works and landscaping works.
During the Track Record Period, the principal types of roads and drainage works
performed by us include extension of concrete structure at highways, modification of
junction, construction of underground drainage, manholes, cable trenches, supply and
installation of fire fighting system and water mains, diversion of sewerage pipes and
construction of temporary traffic arrangement.
Structural works
Structural works generally refer to construction of major frameworks of the
infrastructures which provide them with supportive structures and allow them to withstand
various extreme forces.
During the Track Record Period, the principal types of structural works performed by
us include construction of reinforced concrete structures in relation to construction of
vehicular bridge, widening of bridge and installation and construction of portal beams for
land viaduct, construction of elevator shafts, construction of concrete footing for noise
barrier foundation and construction of retaining walls.
Site formation works generally refer to works performed to prepare a construction site
for subsequent works for foundation and superstructure. They generally involve the
clearance of construction site, demolition of existing structures, forming the site (including
excavation and filing) to the design formation and/or basement level, reduction and
stabilisation of existing slopes, and associated infrastructure works.
During the Track Record Period, the principal types of site formation works performed
by us include slope formation and installation of temporary works structures including sheet
piling, shoring, ground treatment, concrete block placing and access deck.
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BUSINESS
OUR CIVIL ENGINEERING CONTRACTS
The following table sets out the number of contracts that we have been awarded during
the Track Record Period and up to the Latest Practicable Date and the corresponding
aggregate amount of original contract sum in respect of such contracts:
For the year ended

31 March
2014
2015
Number of contracts awarded
(Note 1)
Corresponding aggregate amount of

original contract sum in respect of
such contracts (Note 2)
For the
eight
months
ended
30
November
2015
From
1 December
2015 to the
Latest
Practicable
Date
16
HK$000
HK$000
HK$000
HK$000
319,704
125,214
644,681
301,317
Notes:
1.
Number of contracts awarded for each financial year includes all contracts with respect to which our
engagement was confirmed during the financial year.
2.
Such amount excludes any subsequent changes due to variation orders. Please refer to the paragraph
headed Operation flow Variation orders of this section for details.
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BUSINESS
Set out below is the table showing the number of contracts completed and awarded to
us and the aggregate contract sum during the Track Record Period and as at the Latest
Practicable Date:
Number of
contracts
Contract
sum(Note)
HK$000
As at 1 April 2013
Existing contracts
20
476,985
During the financial year ended 31 March 2014

Contracts completed
New contracts awarded
12
16
142,120
319,704
As at 31 March 2014
Existing contracts
24
654,569
During the financial year ended 31 March 2015

Contracts completed
16
7
137,700
125,214
As at 31 March 2015
Existing contracts
15
642,083
1
6
8,400
644,681
20
1,278,364
2
2
195,541
301,317
20
1,384,140
During the eight months ended 30 November 2015

Contracts completed
As at 30 November 2015
Existing contracts
For the period between 1 December 2015 and before the
Latest Practicable Date
Contracts completed
As at the Latest Practicable Date
Existing contracts
Note:
The contract sum is based on the initial agreement between our customer and us and may not
include additions, modifications due to subsequent variation orders, such as final revenue recognised
from a contract may differ from the contract sum.
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BUSINESS
Subsequent to the Track Record Period, we were awarded with two contracts. As at the
Latest Practicable Date, there were 20 contracts on hand, all of which were in progress.
The number of contracts awarded for the year ended 31 March 2015 was considerably
lower than the number of contracts awarded for the year ended 31 March 2014 because we
were occupied with various civil engineering projects close to our full service capacity prior
to commencement of the Track Record Period and during the year ended 31 March 2014. As
such, considering our availability of manpower resources, our servicing capacity, the number
of projects we were working on at that time, expected increase in costs of materials, labour
costs as well as complexity and length of contracts we tendered for, we had taken a
relatively prudent approach in costs estimation by factoring a higher profit margin which
may cause our tender price submitted during the year ended 31 March 2014 to be less
competitive, which therefore directly affected the number of contracts awarded to our Group
for the year ended 31 March 2015. For the period starting from 1 April 2015 to the Latest
Practicable Date, the number of contracts awarded was slightly higher than the number of
contracts awarded during the financial year ended 31 March 2015 but was less than the
number of contracts awarded during the financial year ended 31 March 2014. Nevertheless,
the aggregate contract value of those six contracts awarded during the eight months ended
30 November 2015 were much greater than the aggregate contract value of the contracts
awarded for each of the two years ended 31 March 2015. It was mainly attributable to the
award of the various new mega-sized contracts including the Hong Kong-Zhuhai-Macao
Bridge construction project and associated infrastructure works. This is in line with our
business strategy to focus on competing for sizeable projects in terms of complexity,
duration and contract sum. Please refer to the paragraph headed Business strategies of this
section for further details of our business strategies.
Depending on the nature and complexity of a project as well as the existence of any
unforeseen circumstances (such as bad weather conditions, industrial accidents, variation
orders requested by customers, etc., if any), the duration of a contract (from the date of
engagement to the date of completion) could generally range from approximately 2 years to
4 years. During the Track Record Period, the average duration of completed projects was
approximately 2.2 years.
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BUSINESS
Our customers primarily include main contractors of various different types of civil
engineering projects in Hong Kong. Such projects can generally be categorised into public
sector projects and private sector projects. Public sector projects refer to projects which the
main contractors are employed by the Government or statutory bodies while private sector
projects refer to those that are not public sector projects. The majority of our revenue during
the Track Record Period was derived from public sector projects. The following table sets
out a breakdown of the number of contracts with revenue contribution to us during the Track
Record Period by public and private sector projects:
For the year ended

31 March
2014
2015
For the
eight
months
ended 30
November
2015
Number of contracts with revenue

contribution to us
26
25
14
29
30
19
The following table sets out a breakdown of our revenue during the Track Record
Period attributable to public and private sector projects:

2014
2015
HK$000
% HK$000
For the eight months ended 30

November
2014
2015
% HK$000
% HK$000
%
149,234
10,729
93.3
6.7
255,484
16,465
93.9
6.1
180,479
5,846
96.9
3.1
135,834
18,807
87.8
12.2
159,963
100.0
271,949
100.0
186,325
100.0
154,641
100.0
Completed contracts
During the Track Record Period and up to the Latest Practicable Date, we completed
31 civil engineering contracts.
101
Date:
(b)
(a)
Road improvements in Tuen

Mun Road Town Centre
section
Public
Public
Public
Public
Public
Public
Public
5.
6.
7.
8.
9.
10.
11.
Public
3.
Public
Public
2.
4.
Public
Public or
private sector
project
Reconstruction and improvement 1.

of Tuen Mun Road Sam
Shing Hui section
Civil engineering project involved
Contract
No.
102
China Harbour
China Harbour
China Harbour
China Harbour
China Harbour
China Harbour
China Harbour
China Harbour
China Harbour
China Harbour
China Harbour
Customer (Note 1)
Structural works
Roads and drainage and

structural works
Structural works
Structural works
Structural works
Structural works

structural works
Reconstruction of carriageway
Construction of vehicular
bridge (excluding the pile
caps and abutment)
Roads and drainage works for

traffic control surveillance
system; and installation and
construction of portal beams
for land viaduct
Supply and installation of fire

fighting system
Widening of bridge
Construction of retaining walls
Construction of concrete
footing for noise barrier
foundation
Concrete structure and

miscellaneous works
Extension of concrete structure

and miscellaneous works
Type(s) of works involved Principal works done by us
October 2013
May 2014
August 2014
November 2013
April 2012
June 2012
August 2014
December 2015
June 2010
December 2010
January 2015
December 2014
December 2012
November 2010
July 2014
October 2013
February 2012
March 2011
December 2013
April 2014
To
December 2009
January 2010
From
Approximate contract
period (Note 2)
(HK$000)
561
8,258
26,561
3,518
116,797
18,338
3,401
14,056
13,127
13,104
216
(Note 5)
3,297
(Note 4)
13,733
(Note 4)
466
(Note 4)
174,022
(Note 6)
17,275
(Note 5)
13,153
(Note 6)
6,272
(Note 4)
5,700
(Note 4)
3,149
(Note 4)
2,195
(Note 4)
(HK$000)
Contract
sum (Note 3)
14,785
Accumulated
revenue
recognised
during the
Track Record
Period
The following table sets out a full list of all of our contracts completed during the Track Record Period and up to the Latest Practicable
BUSINESS
Improvement works in Fanling

Highway
Infrastructure works at Town

Centre South and Tiu Keng
Leng, Tseung Kwan O
(f)
Hong Kong-ZhuhaiMacao Bridge Project
(d)
(e)
Hong Kong-Zhuhai-Macao
Bridge project
(c)
Public
13.
Public
Public
Public
Public
Public
Public
Public
Public
17.
18.
19.
20.
21.
22.
23.
Public
16.
15.
Public
Public
12.
14.
Public or
private sector
project
Contract
No.
103
Structural works
Structural works
Structural works

site formation works
Chun Wo Construction Roads and drainage and

structural works
Chun Wo Construction Roads and drainage works
Construction of reinforced
concrete structures
Earthworks and road works
Earthworks and road works
Construction of water mains
Drainage works
Earthworks and construction of

concrete footing for erection
of noise barriers
Earthworks and sheet piling

works
Construction of portal beam
Construction of portal beams

for land viaduct
Diversion of sewage pipe
Landscaping and site formation

for slope works

& Engineering
Company Limited
(Chun Wo
Construction)
China State
Construction
China State
Construction
Dragages China
Harbour VSL J.V.
Dragages China
Harbour VSL J.V.
China Harbour
China Harbour
Customer (Note 1)
September 2013
October 2013
October 2011
October 2010
October 2010
February 2014
December 2013
November 2013
March 2014
December 2013
November 2013
June 2013
January 2012
May 2010
July 2014
July 2015
March 2016
January 2015
January 2015
To
May 2010
December 2014
November 2013
March 2014
July 2013
From
period (Note 2)
(HK$000)
1,400
750
14,622
13,647
10,430
12,924
27,500
15,548
8,400
78,744
1,388
1,829
(Note 6)
634
(Note 5)
1,193
(Note 4)
2,788
(Note 4)
759
(Note 4)
680
(Note 4)
1,114
(Note 4)
409
(Note 4)
8,714
(Note 6)
87,535
(Note 6)
1,721
(Note 6)
10,122
(Note 6)
(HK$000)
Contract
sum (Note 3)
5,790
Accumulated
revenue
recognised
during the
Track Record
Period
BUSINESS
Public
Public
26.
27.
104
Road and drainage works

adjacent to railway line

adjacent to railway line
(h)
(i)
Private
Private
31.
Private
30.
29.
Public
Public
25.
(g)
28.
Public
24.
Wan Chai Development Phase II

Central Wan Chai Bypass
at Wan Chai West
Public or
private sector
project
Contract
No.
Customer H
Customer H
Customer D
China State Leader

Joint Venture
China State Leader

Joint Venture
China State Leader

Joint Venture
China State Leader

Joint Venture
Leighton China
State Van Oord
Joint Venture
Customer (Note 1)
Roadworks
Underground drainage works
September 2014
August 2011
Total
October 2014
December 2013
November 2014
April 2014
December 2014
December 2013
February 2014
February 2015
December 2013
August 2014
To
July 2014
February 2013
Construction of underground
drainage, manholes, conduits,
cable trenches, paving, kerbs
and surface drains
Modification of road junction
Installation of temporary
structures including sheet
piling, shoring, ground
treatment, concrete block
placing, access deck and
subsequent removal for the
construction of box culvert
Construction of box culvert
Construction of temporary
traffic arrangement
September 2013
December 2010
From
period (Note 2)
(HK$000)
483,760
1,839
7,184
10,385
576
2,133
2,323
871
386,420
1,403
(Note 5)
666
(Note 4)
11,040
(Note 6)
304
(Note 5)
3,735
(Note 6)
2,701
(Note 6)
854
(Note 5)
8,741
(Note 4)
(HK$000)
Contract
sum (Note 3)
34,800
Accumulated
revenue
recognised
during the
Track Record
Period
BUSINESS
The above customers are our major customers during the Track Record Period. Details of our five largest customers are set out in the paragraph headed Customers
Major customers in this section.
Contract period for a particular contract refers to the period from the date of actual commencement of the works to the actual date of completion of our works in such
contract. Such period does not include the relevant defects liability period.
The contract sum is based on the initial agreement between our customer and us and may not include additions, modifications due to subsequent variation orders, and
therefore final revenue recognised from a contract may differ from the contract sum.
The contract sum is greater than the amount of revenue recognised during the Track Record Period because a portion of the revenue has been recognised before the
Track Record Period.
The contract sum is greater than the amount of revenue recognised during the Track Record Period because the actual amount of work done under the contract was lower
than initially envisaged under the contract.
The contract sum is lower than the amount of revenue recognised during the Track Record Period because of the additional variation orders placed by the our customer,
or the actual amount of work done under the contract is higher than initially envisaged under the contract.
1.
2.
3.
4.
5.
6.
Notes:
BUSINESS
105
106
6.
Public
Public
5.
Widening of Fanling
Highway
Public
4.
(c)
Public
Development at Anderson
Road
(b)
Public
3.
Provision of barrier-free
access facilities for
highway structures
(a)
Public
1.
Public or
private sector
project
2.
Contract
No.
China State
Construction
China State
Construction
China State
Construction
China State
Construction
China State
Construction
China Harbour
Customer (Note 1)
Roads and
drainage and
structural works
Roads and
drainage works
Site formation
works
Roads and
drainage and
site formation
works
Structural works
Structural and site

formation
works
Type(s) of works
involved
Road and drainage and

construction of
retaining wall
Construction of transition
barrier, planter box,
concrete slab and
associated works
122,770
3,500
August 2016
December 2018
4,731
17,077
98,000
27,570
Contract
sum (Note 3)
(HK$000)
August 2016
August 2016
Earthworks and drainage

works
Site formation works for

slope formation
May 2016
June 2017
Expected
completion
date (Note 2)
Construction of bridges
Demolition works and

construction of
reinforced concrete
structures
Principal works done/to

be done by us
The following table sets out a full list of all of our contracts on hand as at the Latest Practicable Date:
As at the Latest Practicable Date, we had a total of 20 contracts on hand.
Contracts on hand
30,880
2,255
5,422
24,046
15,217
6,072
Accumulated
revenue
recognised
during the
Track Record
Period
(HK$000)
BUSINESS
(d)
Liantang/Heung Yuen Wai

Boundary Control Point
site formation and
infrastructure works
Public
Public
8.
9.
Public
Public
7.
10.
Public or
private sector
project
Contract
No.
Chun Wo
Construction
Chun Wo
Construction
China State
Construction
China State
Construction
Customer (Note 1)
Roads and
drainage and
structural works
Structural works
Structural works
Structural works
Type(s) of works
involved
Excavation and
construction of box
culvert
Construction of
reinforced concrete
structure of bridge
(including decking)
Construction of
reinforced concrete
structure of foot bridge
bridge

be done by us
11,011
22,693
April 2016
December 2016
4,753
59,000
Contract
sum (Note 3)
(HK$000)
November 2017
May 2017
Expected
completion
date (Note 2)
15,165
21,452
24,995
Accumulated
revenue
recognised
during the
Track Record
Period
(HK$000)
BUSINESS
107
Private
13.

adjacent to railway lines
Development at Hong Kong

Boundary Crossing
Facilities
(f)
(g)
108
Public
Public
18.
Private
16.
17.
Private
15.
Private
Private
12.

adjacent to railway lines
(e)
14.
Private
11.
Public or
private sector
project
Contract
No.
China Harbour
China Harbour
Customer D
Customer D
Customer D
Customer H
Customer H
Customer H
Customer (Note 1)
Structural works
Structural works
Roads and
drainage works
Roads and
drainage works
Roads and
drainage works
Roads and
drainage works
Roads and
drainage works
Roads and
drainage works
Type(s) of works
involved
Construction of
reinforced concrete
structure for pier
Construction of bridge
decks
Cable draw-pits and

cable ducting
Drainage work
Drainage work
Roadworks
External drainage work

be done by us
January 2017
January 2017
July 2016
July 2016
April 2018
May 2016
May 2016
December 2016
Expected
completion
date (Note 2)
58,064
119,268
4,415
35,804
36,299
3,799
958
2,207
Contract
sum (Note 3)
(HK$000)
1,446
4,286
649
24,021
1,860
3,408
2,954
Accumulated
revenue
recognised
during the
Track Record
Period
(HK$000)
BUSINESS
Public
Public
19.
20.
(h)
109
The contract sum is based on the initial agreement between our customer and us and may not include additions, modifications due to subsequent variation orders,
and therefore final revenue recognised from a contract may differ from the contract sum.
200,133
16,005
3.
1,384,140
296,902
May 2017
Total
455,319
March 2017
Contract
sum (Note 3)
(HK$000)
The expected completion date for a particular contract is provided based on our managements best estimation. In making the estimation, our management takes
into account factors including the expected completion date specified in the relevant contract (if any), the extension period granted by our customers (if any) and
the actual work schedule.
Construction of
sub-structure for
bridge, abutments and
retaining walls
Construction of boundary
crossing facilities,
vehicle plazas and
ancillary buildings and
facilities
Expected
completion
date (Note 2)
2.
Structural works
Structural works

be done by us
The above customers are our major customers during the Track Record Period. Details of our five largest customers are set out in the paragraph headed
Customers Major customers in this section.
China Harbour
China Harbour
Customer (Note 1)
Type(s) of works
involved
1.
Notes:
Hong Kong-Zhuhai-Macao
Bridge project
Public or
private sector
project
Contract
No.
Accumulated
revenue
recognised
during the
Track Record
Period
(HK$000)
BUSINESS
BUSINESS
OPERATION FLOW
The following diagram summarises the principal steps of our operation flow:
Securing new business opportunity by invitation
Customer acceptance assessment for potential customers
Within 2 days
On-site inspection
Within 2 days
Preparation and submission of tender

to customer
Review of tender and engagement

or tender interview
From approximately 7 to 21 days

depending on the complexity of the
project
From approximately 1 to 3
months depending on the complexity of
the project
Procurement of necessary site equipment and construction materials

and/or engagement of subcontractors
From approximately 3 to 31 days
Execution
Generally from approximately 2

to 4 years depending on the
complexity of the project
Actual
commencement
of work on site
In-house quality inspection and supervision
Ongoing throughout the execution of the

project
Inspection and approval by customer
Ongoing throughout the execution of the

project
Issue of invoice/interim payment
Invoices of interim payment are issued

on a monthly basis in accordance with
the contract
Review and payment by customer
Approximately 4 weeks to
3 months
Practical
completion
Defects liability period (if required)
110
During the defects liability period which

typically lasts for 12 months, we may
be requested to repair or make good of
any defect or imperfection. We will
receive the remaining retention money
after completion of the defects liability
period.
BUSINESS
Note:
The time frame may vary for different contracts depending on various factors such as the terms of
contract, the nature of works to be performed, presence of variation orders and/or our agreement with the
customer on the timeframe for the principal steps to be undertaken as well as other unforeseeable
circumstances.
Invitation for tendering, preparation and submission

We are usually invited by our customer to submit a tender for a potential project as a
subcontractor. Our customers are main contractors of different types of civil engineering
projects and we are provided with the specifications and drawings along with the invitations.
For further information of our marketing activities, please refer to the paragraph headed
Marketing activities in this section.
Our estimating department, which is led by our estimating manager who has over 20
years of experience in quantity surveying, is responsible for assisting our executive Directors
on the preliminary review and assessment of a potential project. In the preliminary review
and assessment process, we consider (i) the technical specifications of a potential project;
(ii) the commencement date and duration of a potential project; (iii) the location and the
conditions of the site; (iv) our resources availability; and (v) our previous experience in
relevant projects.
Once our executive Directors consider a potential project to be acceptable based on our
review and assessment, we will prepare and submit a tender proposal to our customer
accordingly. In the course of preparation of a tender, we mainly consider (i) the complexity
of a potential project; (ii) the manpower needed; (iii) the availability of site equipment
required; and (iv) the tender price (details of our pricing strategy is set out in the paragraph
headed Customers Pricing strategy in this section). On-site visit may be conducted to
have a better understanding on the conditions of the site, if necessary. We then prepare
tender documents including bills of quantities and terms of the contract.
Tenders submitted during the Track Record Period
During the Track Record Period, all of our civil engineering construction contracts
were obtained through tendering. The following table sets out the number of contracts
tendered, number of successfully tendered contracts and our success rate during the Track
Record Period and from 1 December 2015 up to the Latest Practicable Date:
For the year ended

31 March
2014
2015
Number of tenders submitted
Number of tenders won
Success rate (%)
44
5
11.36
111
41
8
19.51
For the
eight
months
ended 30
November
2015
From
1 December
2015 to the
Latest
Practicable
Date
33
5
15.15
18
BUSINESS
Note: For the eight months ended 30 November 2015, there were 33 tender applications submitted by our
Group. Out of the said 33 tender applications, we received 25 rejected tender results and the tender
results of the remaining 3 tender applications are yet to be known. For the period from 1 December
2015 to the Latest Practicable Date, there were 18 tender applications submitted by our Group. Out
of the said 18 tender applications, we received 8 rejected tender results and the tender results of the
remaining 10 tender applications are yet to be known.
Our tender success rate for the year ended 31 March 2014 was lower than the tender
success rate for the year ended 31 March 2015 and for the eight months ended 30 November
2015 principally because we were occupied with various civil engineering projects close to
our full service capacity prior to commencement of the Track Record Period and during the
year ended 31 March 2014. Nevertheless, it was our strategy to be responsive to our
customers tender invitations and submit tenders to our existing customers in order to
maintain business relationship with our existing customers and maintain our presence in the
market. Under such circumstances, taking account of our availability of manpower resources,
our servicing capacity, the number of projects we were working on at that time, expected
increase in costs of materials, labour costs as well as complexity and length of contracts we
tendered for, we had taken a relatively prudent approach in costs estimation by factoring a
higher profit margin which may cause our tender price to be less competitive than the
tenders submitted by our competitors during the year ended 31 March 2014.
On the other hand, higher tender success rates were achieved for the year ended 31
March 2015 and for the eight months ended 30 November 2015 since most of our
large-scale contracts (in terms of complexity, scale, duration and contract value) awarded
before the Track Record Period were substantially completed during such periods. As our
Group has more capacity to engage in new projects, we focused on submitting tenders for
contracts which are related to the same infrastructural project in which we had participated
in the past. Our Directors consider that we have a higher chance of winning those contracts
in view of our past experience and involvement in the relevant infrastructural project. For
instance, for the year ended 31 March 2015 and for the eight months ended 30 November
2015, we won 13 tenders of which, 6 of the tenders won were related to infrastructural
projects which we were involved in the past. Therefore, we achieved higher tender success
rates for the year ended 31 March 2015 and for the eight months ended 30 November 2015.
Project acceptance
Upon receipt of our tender, our customer may, by way of interview or enquiries, clarify
with us the particulars of our submitted tender. Once our customer decides to engage us, we
will be informed of its acceptance of our tenders by a letter of award or letter of intent
issued to us by our customer. We may then enter into a formal engagement agreement with
the customer. For the principal terms of our engagement in a typical contract, please refer to
the paragraph headed Customers Major terms of engagement of this section.
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Project execution and customer acceptance
Once our engagement is confirmed, we commence the implementation of the project
by: (i) forming a project team; (ii) planning and arranging the required site equipment to be
delivered to the construction site; (iii) procuring and arranging with suppliers for the
required materials for the project; and (iv) negotiating on finalising the subcontracting
arrangement if necessary.
Forming a project team
Depending on the scale and complexity of the project, our project team generally
comprises the following key personnel: project manager, construction manager, site agent,
engineer, quantity surveyor, land surveyor, safety officer, foreman and other site workers
chosen by the project manager and construction manager.
Our executive Directors also closely monitor the progress of the project on a
continuous basis to ensure that our works meet our customers requirements, within budget
and in compliance with all applicable laws and regulations. Our project team will oversee
the project on site and report to the executive Directors on project status and identify any
issues that need to be resolved from time to time. Set out below are some general duties
performed by our key personnel in a project team:
Project manager
Our project manager is mainly responsible for communicating with our customers,
subcontractors and other members of the project team on the project status, allocation of
resources in a project, reviewing the progress reports, safety reports and site daily records.
Our project manager directly reports to our executive Directors on contract management,
project status and issues, and attend progress meetings to report the project progress to our
customers.
Construction manager
Our construction manager is responsible for supervising our overall workforce on site,
monitoring work efficiency and performance of site workers and liaising with the
representatives of our customers and subcontractors on site with the assistance from the
project team. Our construction manager directly reports to our executive Directors on any
major issues happening on the construction site.
Site agent
Our site agent is responsible for inspecting fieldworks, assisting our project manager
and construction manager to supervise and monitor work progress on site, supervising
workmanship and quality and preparing site daily records setting out the works performed
by our workers and subcontractors.
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Engineer
Our engineer is responsible for overseeing the engineering and technical aspects of the
project such as designing the whole site operation and suitable methodology and procedures
for customers approval. Our engineer is also responsible for assisting the project manager
and construction manager in liaising with our customers and their representative consultants
on site.
Quantity surveyor
Our quantity surveyor is responsible for inspecting the work progress on site and
preparing payment application. Our quantity surveyor is also required to update our project
manager with the latest certified progress from our customers.
Land surveyor
Our land surveyor is responsible for providing professional and technical support on
measurement and calculation of the location, distance, elevation or dimension of land
features or structures relevant to project implementation. Our land surveyors enable us to
speed up the setting out process and enhance our efficiency and overall service quality.
Safety officer
Our safety officer is responsible for supervising implementation of site safety measures
and monitoring on the day-to-day occupational health and safety compliance.
Foreman
Our foreman is responsible for assisting our site agent to supervise and provide
guidance to site workers, carrying out in-process and final inspection and coordinating
day-to-day site operations.
Planning and arranging site equipment
Most of our works involve usage of site equipment. When site equipment is required
for a project, we either make use of our own site equipment or rent from external site
equipment rental service providers. Mr. Wong Tak Ming, an executive Director (whose
experience and qualifications are disclosed in the section headed Directors and senior
management in this prospectus), is responsible for managing the site equipment for all
projects and determining the types of site equipment to be used, the time for the usage of
site equipment and the transportation logistics of site equipment.
For details on our site equipment, please refer to the paragraph headed Site
equipment in this section.
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Purchasing of construction materials
The key construction materials that we purchase for our civil engineering projects
include concrete, steel reinforcement bars, precast concrete units, timbers and diesel fuel.
Our purchasing department consults our quantity surveyors and engineering department to
determine the quantity, delivery schedule, specifications and type of construction materials
to be purchased in order to meet our customers requirements. Our purchasing department
will then place orders with our approved suppliers and purchase the required materials on a
project basis. In some projects, certain construction materials such as concrete and steel
reinforcement bars may be purchased by our customer i.e. the main contractors, on our
behalf for use in the relevant projects. Please refer to the paragraph headed Suppliers
Contra-charge arrangement with our customers in this section for further details.
Our construction materials are purchased and sent to the site directly from our
suppliers. As the materials are purchased on a project basis in accordance with the project
requirements, we rely on the accurate estimation on the amount of construction materials
needed and we normally allow for a small buffer in each batch of order to avoid wastage.
As such, we do not retain any construction materials as inventory.
For details on our suppliers, please refer to the paragraph headed Suppliers in this
section below.
Appointment of subcontractors
Depending on our capability, resources level, cost effectiveness and the complexity of
the project, we may subcontract specific parts of the project, such as steel fixing works,
formwork erection works and drainage works, to our subcontractors in Hong Kong on our
Groups approved list of subcontractors. Save for such specific parts of the project, we
usually carry out other parts of a project by our direct employees. More than one
subcontractor may be engaged for a project depending on the scale and complexity of the
project.
The agreement between our subcontractor and us generally contains key terms and
conditions including the scope of works, completion date, defects liability period, etc. that
are mirrored to those contained in the agreement between us and our customer. For details
on our subcontracting arrangement, please refer to the paragraph headed Subcontractors in
this section.
Execution
The construction works are executed by our direct labours and/or our subcontractors
under the supervision of our on-site project teams and representatives of our customers.
Throughout the execution phase, our project manager and construction manager will meet
our customers to review work progress and to resolve any issues identified during the course
of execution.
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Variation orders
Our customer may, in the course of project execution, place additional orders
concerning variation to part of the works that are necessary for completion of the project.
Such orders are commonly referred to as variation orders. Variation orders may include: (i)
additions, omissions, substitutions, alterations, changes in quality, form, character, kind,
position or dimension; (ii) changes to any sequence, method or timing of construction
specified in the original contract; and (iii) changes to the site or entrance to and exit from
the site. We will discuss with our customer to mutually agree on the sum of variation orders
which may be added to or deducted from the contract sum under the original contract. We
are usually notified of a variation order by way of a letter from our customer setting out the
detailed works to be carried out as a result of such variation order. We will then prepare and
submit the rate for such variation order to our customer for approval. The principal terms
and settlement of variation orders are generally in line with the terms of the original
contract.
Monitoring and quality inspection
Our executive Directors, with the assistance of our project team, monitor work
progress, project performance, risks in delaying the construction programme, comments from
our customer and follow-up matters for the project. In addition, we hold progress meeting
with our customer throughout the project to keep our customers informed of our projects
status and any major issues identified during project execution.
Our construction manager is responsible for overall supervision of overall workforce on
site to monitor the quality and ensure the projects are executed in accordance with our
quality standards. Our site agent is required to prepare site daily records describing the
works performed by our workers or subcontractors (if any). Such site daily records are
passed to our project manager and construction manager for review. Our site agent also
assists our project manager and construction manager to monitor work progress and
coordinate with our foreman to supervise workmanship and quality.
Our work progress is also inspected by our quantity surveyor before we prepare
payment applications to our customer.
Customer inspection and application for payment and certification
In addition to our quality inspection as described above, our customers also inspect our
works done from time to time in order to confirm and certify completion of the relevant
works before our interim payment applications are certified. Upon completion of such
inspection, our customer may issue a report specifying defects that need to be rectified by us
(if any).
We are entitled to receive progress payments from our customers. Our application for
progress payments is normally made on a monthly basis. Based on the works performed by
us in the preceding month, we submit to our customers interim payment applications which
generally include details of completed works, the actual quantities of our work done,
variation orders (if any) and the cost of the materials delivered on a monthly basis. The
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amount to be received by us from some customers (who are also our suppliers of certain
construction materials and other supplies) is netted off by any contra-charge paid by our
customers on our behalf, details of the contra-charge arrangement are set out in the
paragraph headed Suppliers Contra-charge arrangement with our customers in this
section. Once our customer approves our payment application, a payment certificate will be
issued to us. Generally, we receive payment from our customers within 45 days of our
payment application. Our customer will usually retain up to 10% of each interim payment
and up to a maximum limit of 5% of the contract sum as retention money. 50% of the
retention money is released to us upon completion of a project and the remaining 50% will
be released to us upon expiration of the defects liability period of a project.
We normally pay progress payment to our subcontractors on a monthly basis with
reference to the value of the work performed by our subcontractors in the preceding month
after our inspection and verification on their works. Generally, we are required to pay our
subcontractors within 30 days of payment application submitted by our subcontractors.
Project completion
Once we have completed the entire project to the satisfaction of our customer, our
customer will (i) verbally confirm completion of the project during progress meetings and
such customers verbal confirmation is evidenced by subsequent payment certificates issued
by our customers in respect of our final payment and/or (ii) issue a practical completion
certificate for the project. In some civil engineering projects, certificates of practical
completion are issued by our customers which indicate that the contract works have been
completed, tested and approved. Furthermore, we will take steps to record customers verbal
confirmation on practical completion by exchange of correspondence in writing. During the
Track Record Period and up to the Latest Practicable Date, our Group had not encountered
any disputes with our customers in ascertaining the status and completion of a project
(whether verbal or otherwise). A contract is normally regarded as practically completed
when (i) the works under the contract have been duly completed as verified by our customer
after inspection; (ii) there is no apparent defect; and (iii) maintenance or defects liability
period commences. It generally takes approximately 2 months for us to reach an agreement
on the final account with our customers taking into account the value of our work done
(including variation orders (if any)) and the retention money. We normally receive final
payment and 50% of the retention money from our customers within 45 days after the said
final account is agreed.
Defects liability period and release of retention money
Our customers normally require a defects liability period, during which we are
responsible for rectifying defects or imperfections in relation to our works done which are
discovered after completion. The defects liability period typically last for 12 months after
completion. Upon expiration of the defects liability period, the remaining 50% of the
retention money will be released to us by our customers.
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Working capital requirement associated with undertaking contract works
When undertaking contract works, there are often time lags between making payments
to our subcontractors and receiving payments from our customers, resulting in possible cash
flow mismatch. If we choose to pay our subcontractors only after receiving payments from
our customers, we will risk our reputation for not being able to make payments in a timely
manner, which could harm our ability to engage capable and quality subcontractors for our
business in the future. The extent of such cash flow mismatch is illustrated by the
differences between our creditors turnover days and our debtors turnover days. For the two
years ended 31 March 2015 and the eight months ended 30 November 2015, our creditors
turnover days were approximately 33.6 days, 20.4 days and 24.5 days respectively and our
debtors turnover days were approximately 39.6 days, 33.2 days and 50.2 days, respectively,
which are further discussed in the sections headed Financial information Discussion of
certain combined statements of financial position items Trade and other receivables
Trade receivables and Financial information Discussion of certain combined statements
of financial position items Trade and other payables Trade payables, respectively, in
this prospectus.
In order to manage our liquidity position in view of such possible cash flow mismatch
associated with undertaking contract works, we have adopted the following measures:
(i)
Before undertaking each new project, our finance department led by our financial
controller, Ms. Chan Yin Wa Cecilia, whose experience and qualifications are
disclosed in the section headed Directors and senior management in this
prospectus, will prepare an analysis of the forecast amount and timing of cash
inflows and outflows in relation to a project as well as our other liquidity
requirements associated with our ongoing projects and our overall business
operations so as to ensure the sufficiency of our financial resources before
undertaking a new project.
(ii) Our finance department is also responsible for the overall monitoring of our
current and expected liquidity requirements on a monthly basis to ensure that we
maintain sufficient financial resources to meet our liquidity requirements.
(iii) If, based on our regular monitoring by our finance department, there is any
expected shortage of internal financial resources, we will refrain from undertaking
new projects and/or consider different financing alternatives, including but not
limited to obtaining adequate committed lines of funding from banks and other
financial institutions. In January 2015, we obtained a banking facility of
HK$4,000,000 granted under the SME Financing Guarantee Scheme. We
considered that bank borrowing under the SME Financing Guarantee Scheme was
an appropriate means of raising capital for our Group at that time because the
interest rate of such bank loan was 1% below the Hong Kong dollar prime rate
per annum, which allowed us to obtain a more affordable debt financing with
lower finance cost. Such bank borrowing allowed us to meet the working capital
requirements for our ongoing projects and the projects newly awarded at that time
for paying subcontracting charges, employees wages, material costs and site
equipment rental charges incurred during execution of our civil engineering
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projects at that time. Such banking facility, which aims to help small and
medium-sized enterprises (SMEs) and non-listed enterprises obtain financing for
meeting their working capital and business needs, has been repaid before the
Listing. After the Listing, we will finance our working capital (including any
possible mismatch of cash inflows and outflows of our projects) through, among
others, the cash flow to be generated from our contracts on hand, the estimated
net proceeds from the Placing of approximately HK$35.7 million and our
unutilised banking facilities, details of which are set out in the paragraph headed
Business Strategies (iii) Adherence to prudent financial management to ensure
sustainable growth and capital sufficiency of this section. Hence, our Directors
believe that we have sufficient working capital and financial resources to pay
subcontracting charges, direct wages, material costs and site equipment rental
charges in order to meet our liquidity requirements and minimise the effect of
possible cash flow mismatch associated with the projects undertaken by us after
the Listing.
Our cash flows and working capital position may also be affected by possible delays in
the work progress of our civil engineering projects. During the Track Record Period, we
have experienced delays in several projects. Such delays were mainly caused by the
postponement of the originally scheduled commencement date of a part or a phase of our
works due to the delay in the work progress on the part of our customers or our customers
other subcontractors. As a result of such delays, our customers were unable to hand over the
site to us to commence the relevant part or phase of our works. During the Track Record
Period, our Group did not cause any material delays in completion of our works which led
us to pay liquidated damages. Our Directors consider that the major impact of delays caused
by our customers is to defer our cash inflows and outflows and our plan to deploy labour
and materials but would normally not cause a material impact on our liquidity and
profitability unless there is a significant fluctuation in labour costs and material prices. In
each of the aforesaid delays during the Track Record Period, we have successfully
implemented the following measures in order to manage our working capital resources and
minimise our cash outflows during the delay:
(i)
We participated in regular meetings with our customers who, upon identifying any
expected delays in the originally scheduled commencement date of any part or
phase of our works, would promptly notify us in these meetings. Our project
management team will also exercise its own judgment based on its observations
on site as to whether the next phase of works could be handed over on time by
our customers and timely liaise with them to understand if any possible delay
could occur. If, prior to the originally scheduled commencement date, we had
already performed preparatory works or purchased relevant materials, our
customers would make payments to us based on the amount of certified works
performed and the cost of the materials purchased.
(ii) After receiving the aforesaid notification from customers, we would notify our
relevant subcontractors as soon as practicable and request for a corresponding
delay in their work commencement date. If such subcontractors were already
working on the site for other parts or phases of the works undertaken by us, we
would request for the temporary suspension of their services after their
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completion of said works and before the commencement of the delayed parts or
phases of the works. Staff who are paid on a daily basis may not be called on site
for work. By doing so, we would effectively and promptly put further cash
outflows and costs on hold. In order to alleviate the impact on the said
subcontractors and staff and to maintain good working relationships with them as
well as to optimise the deployment of our available resources, we would consider
engaging or assigning such subcontractors and staff in our other sites and projects
where such opportunities are available.
(iii) During the period of delay, we would continue to participate in regular meetings
with our customers so as to monitor the status of the relevant project
continuously. We would request for a sufficient notice period prior to the
re-scheduled commencement date of the delayed works such that we could have
sufficient time to arrange for necessary resources for the delayed works.
Our Directors confirm that the delays in work progress due to the delays in handover
of site to us would not hold us liable to penalty or liquidated damages. Our Directors
believe that by implementing the aforesaid measures during the Track Record Period, our
Group had successfully minimised cash outflows and avoided unnecessary lock-up of our
working capital resources during the aforesaid delays. Going forward, we will implement the
aforesaid measures to manage our working capital resources and minimise cash outflows
upon the occurrence of delays of a similar nature.
CUSTOMERS
Characteristics of our customers
During the Track Record Period, our customers primarily include main contractors of
various different types of civil engineering projects in Hong Kong. For information
regarding our customers in respect of each of our projects undertaken during the Track
Record Period, please refer to the paragraph headed Our civil engineering contracts in this
section.
Major customers
2015, the percentage of our total revenue attributable to our largest customer amounted to
approximately 63.2%, 53.1% and 36.7%, respectively, while the percentage of our total
revenue attributable to our five largest customers combined amounted to approximately
94.1%, 96.0% and 97.5%, respectively.
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Set out below is a breakdown of our revenue by our five largest customers during the
Track Record Period and their respective background information:
For the year ended 31 March 2014:
Rank Customer
Background of
customer
Type of works
undertaken by
us for the
customer
during the
Track Record
Period
Approximate
years of
business
relationship
with our
Group
Credit term
Payment
term
Revenue derived
from the customer
HK$000
%
China Harbour
A construction
contractor which is a
subsidiary of a
company listed in
Hong Kong
Roads and
drainage,
structural and
site formation
works
12
Within 45 days Mainly by

from the issue cheque
of payment
application
from our Group
to the customer
101,138
63.2
Chun Wo Construction
A construction
subsidiary of a
company listed in
Hong Kong
Roads and
16
drainage and
structural works

of payment
application
from our Group
to the customer
20,145
12.6
China State
Construction
A construction
subsidiary of a
company listed in
Hong Kong
Roads and
drainage,
structural and
site formation
works
11

of payment
application
from our Group
to the customer
11,350
7.1
Customer D
A construction
subsidiary of a
company listed in
Australia
Roads and
drainage works

of payment
application
from our Group
to the customer
9,688
6.1
Leighton China State

Van Oord Joint
Venture
Roads and
A joint venture
construction contractor drainage works
established by
Customer D, China
State Construction and
an independent third
party
10

of payment
application
from our Group
to the customer
8,118
5.1
Five largest customers combined

All other customers
150,439
9,524
94.1
5.9
Total revenue
159,963
100.0
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Rank Customer
Background of
customer
Type of works
undertaken by
us for the
customer
during the
Track Record
Period
Roads and
drainage,
structural and
site formation
works
Approximate
years of
business
relationship
with our
Group
Credit term
Payment
term
Revenue derived
from the customer
HK$000
%
12

of payment
application
from our Group
to the customer
144,349
53.1

of payment
application
from our Group
to the customer
61,682
22.7
Roads and
drainage,
structural and
site formation
works
11

of payment
application
from our Group
to the customer
36,300
13.3
A construction
subsidiary of a
company listed in
Australia
Roads and
drainage works

of payment
application
from our Group
to the customer
11,013
4.0
A construction
subsidiary of a
company listed in
Hong Kong
Roads and
16
drainage and
structural works

of payment
application
from our Group
to the customer
7,988
2.9

All other customers
261,332
10,617
96.0
4.0
Total revenue
271,949
100.0
China Harbour
A construction
subsidiary of a
company listed in
Hong Kong
Dragages China
Harbour VSL J.V.
Structural
A joint venture
construction contractor works
established by China
Harbour and
independent third
parties
China State
Construction
A construction
subsidiary of a
company listed in
Hong Kong
Customer D
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BUSINESS
For the eight months ended 30 November 2015:
Rank Customer
Background of
customer
Type of works
undertaken by
us for the
customer
during the
Track Record
Period
Approximate
years of
business
relationship
with our
Group
Credit term
Payment
term
Revenue derived
from the customer
HK$000
%
China State
Construction
A construction
subsidiary of a
company listed in
Hong Kong
Roads and
drainage,
structural and
site formation
works
11

of payment
application
from our Group
to the customer
56,688
36.7
China Harbour
A construction
subsidiary of a
company listed in
Hong Kong
Roads and
drainage,
structural and
site formation
works
12

of payment
application
from our Group
to the customer
33,643
21.7
Dragages China
Harbour VSL J.V.
A joint venture
Structural
construction contractor works
established by China
Harbour and
independent third
parties

of payment
application
from our Group
to the customer
29,136
18.8
A construction
subsidiary of a
company listed in
Hong Kong
Roads and
16
drainage and
structural works

of payment
application
from our Group
to the customer
16,367
10.6
Customer D
A construction
subsidiary of a
company listed in
Australia
Roads and
drainage works

of payment
application
from our Group
to the customer
15,009
9.7

All other customers
150,843
3,798
97.5
2.5
Total revenue
154,641
100.0
None of our Directors, their close associates, or any Shareholders who or which, to the
knowledge of our Directors, owned more than 5% of the issued Shares of our Company as
at the Latest Practicable Date had any interest in any of the five largest customers of our
Group during the Track Record Period.
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The following table sets out the aggregate revenue attributable to our major customers
and its joint ventures, which our Directors consider them as affiliated entities under the
same group, during the Track Record Period:

2014
2015
% of total
% of total
HK$000
revenue
HK$000
revenue
For the eight

months ended
30 November 2015
% of total
HK$000
revenue
Aggregate revenue
attributable to
China Harbour
and its joint
venture
106,569
66.6
206,031
75.8
62,779
40.5
Aggregate revenue
attributable to
China State
Construction and
its joint ventures
22,520
14.1
41,465
15.2
56,688
36.7
Aggregate revenue
attributable to
Customer D and
its joint ventures
18,847
11.8
17,088
6.3
18,807
12.2
Customer concentration
2015, the percentage of our total revenue attributable to our five largest customers combined
amounted to approximately 94.1%, 96.0% and 97.5% respectively. The percentage of our
total revenue attributable to our largest customer amounted to approximately 63.2%, 53.1%
and 36.7% respectively for the same periods. According to the Ipsos Report, it is common
for civil engineering contractors to rely on a few customers and such customer concentration
is not uncommon for construction companies in Hong Kong. Our Directors consider that
despite the customer concentration, our Groups business model is sustainable despite such
customer concentration due to the following factors:
Due to the nature of the civil engineering construction industry in which our
Group is engaged in, our customer base is relatively concentrated to reputable
main contractors which dominate more than 50% of the market share in the civil
engineering construction industry in Hong Kong. As a result, given the market
landscape of the civil engineering construction industry in Hong Kong, the
potential customer base of our Group is limited.
It is not uncommon for a single project to have a large contract sum such that a
small number of projects can contribute to a substantial amount of our revenue. In
addition, a project of sizeable scale can have a contract period of several years.
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Therefore, if we decide to undertake a certain project with large contract sum, the
relevant customer may easily become our largest customer in terms of revenue
contribution to us for more than one financial year.
We have been actively tendering for projects among major main contractors for
public sector projects. In the event that any of our major customers substantially
reduce the number of contracts placed with us or terminates its business
relationship with us, our Directors consider that we would have extra capacity to
handle other potential projects from other customers in view of the expected
growth of demand for civil engineering services in Hong Kong and our
competitive strengths as detailed in the paragraph headed Competitive strengths
in this section. According to the Ipsos Report, the demand for civil engineering
works is expected to surge in the future and the estimated revenue of the civil
engineering construction industry in Hong Kong is anticipated to grow at a CAGR
of approximately 21.2% from approximately HK$88.6 billion in 2015 to
approximately HK$186.5 billion in 2019.
We experienced a strong demand for our services from a wide range of customers
during the Track Record Period as evidenced by the number of tender invitations
that we received from customers during the Track Record Period. Please refer to
the paragraph headed Operation flow Invitation for tendering, preparation and
submission Tenders submitted during the Track Record Period of this section
for further details.
A majority of our five largest customers have long-standing business relationship

with us for over ten years and we will therefore endeavour to accommodate their
demands for our services to the extent our resources allow in order to capture
more opportunities for larger scale projects in the future.
Our Directors consider that we have a complementary business relationship with

our major customers. Our experience and our proven track record as a quality
subcontractor in handling civil engineering projects also give business advantage
to our customers to ensure their projects are executed on time, within budget and
in accordance with their quality standards.
Our relationship with China Harbour

For the two years ended 31 March 2014 and 2015 and the eight months ended 30
November 2015, revenue from China Harbour amounted to approximately HK$101,138,000,
HK$144,349,000 and HK$33,643,000, representing approximately 63.2%, 53.1% and 21.7%
of our total revenue for the corresponding periods, respectively. The revenue attributable to
China Harbour decreased substantially to 21.7% for the eight months ended 30 November
2015. Such decrease is mainly attributable to completion of 9 contracts with China Harbour
with an aggregate contract sum of approximately HK$70,096,000 during the year ended 31
March 2015.
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Background of China Harbour
China Harbour is one of the key main contractors in the civil engineering construction
industry in Hong Kong. Founded in 1980 and headquartered in the PRC, China Harbour is a
subsidiary of China Communications Construction Company Limited which has been listed
on the Main Board of the Stock Exchange. China Harbour is principally engaged in the
provision of engineering services in engineering-procurement-construction (EPC),
build-operate-transfer (BOT), and public-private-partnership (PPP) formats for both public
and private sectors, including marine engineering, dredging and reclamation, road and
bridge, railway, airport, equipment assembly. China Harbours business also covers other
industries such as building, municipal works, environmental, hydraulic engineering, power
plant and energy, and resource exploration.
Business relationship with China Harbour
We have 12 years business relationship with China Harbour with revenue contribution.
We started to provide civil engineering services to China Harbour as a subcontractor in
2003. During the Track Record Period, we had undertaken 17 contracts with China Harbour,
of which 11 contracts have a contract sum of over HK$10 million. Subsequent to the Track
Record Period, our Group was awarded with one contract with contract sum of
approximately HK$297 million from China Harbour in relation to structural works. China
Harbour also supplied construction materials such as concrete and steel reinforcement bars
to our Group during the Track Record Period. For details, please refer to the paragraph
Suppliers Contra-charge arrangement with our customers in this section.
Contractual arrangement with China Harbour
Consistent with our arrangements with other customers, we entered into construction
contracts with China Harbour on a project-by-project basis. Under our agreement with China
Harbour, it generally contains material terms including (i) interim payment terms which
require China Harbour to pay us on a monthly basis with a credit term of 45 days for the
interim and final payments. China Harbour is generally entitled to retain 5% of each interim
payment and up to a maximum limit of 5% of the total contract sum as retention money; (ii)
supervision and human resources arrangement under which China Harbour would arrange
personnel responsible for managing the project as a main contractor, whereas our Group
would engage other subcontractors to carry out the works if necessary; (iii) contra-charge
arrangement under which China Harbour will procure construction materials, such as
concrete and steel reinforcement bars on our behalf, details of which are set out in the
paragraph headed Suppliers Contra-charge arrangement with our customers in this
section; (iv) maintenance of insurance by China Harbour and our Group; and (v) defects
liability period of 12 months.
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Our Directors consider that the substantial revenue contribution from China Harbour to
us during the Track Record Period will not affect our business prospects and sustainability
of our business based on the following factors:
Sound track records
We have been providing civil engineering services as a subcontractor in

Hong Kong for over 16 years. Our Directors believe that our established
operating history with a wide range of project references allows us to
consolidate our reputation and secure projects from different main
contractors.
China Harbour is one of the key players in the civil engineering construction
industry in Hong Kong. Our Directors believe that our relationship with
China Harbour will enhance our project references and reputation through
building a positive reputation in the industry.
In addition to China Harbour, we also serve China State Construction, one of

the key main contractors in the civil engineering construction industry in
Hong Kong and a subsidiary of China State Construction International
Holdings Limited (listed on the Main Board of the Stock Exchange). China
State Construction was our largest customer for the eight months ended 30
November 2015. Revenue attributable to China State Construction amounted
to approximately HK$11,350,000, HK$36,300,000 and HK$56,688,000,
representing approximately 7.1%, 13.3% and 36.7% of our total revenue for
the two financial years ended 31 March 2015 and the eight months ended 30
November 2015, respectively. This demonstrates that our Group also places
equal emphasis on other major customers instead of confining ourselves to a
single customer.
Our flexibility and capability to take up projects of different scales and meet the
requirements of different customers
Our Groups performance is, to a significant extent, attributable to our possession
of a broad range of site equipment. We possess sufficient number of site
equipment which enables us to perform civil engineering works of different scales
and complexity. To utilise our assets and facilitate our work effectively, we rely
on management who has extensive knowledge and experience in the industry. We
also have a project team with members possessing relevant qualifications and
industry experience, details of which are set out in the section headed Directors
and senior management in this prospectus. As such, we are capable of providing
recommendations on the projects in order to meet the requirement of different
customers.
Our future business plan
Our business opportunities arose mainly from invitation for tenders by

customers. In the civil engineering construction industry in Hong Kong,
reputation, relationships with customers, flexibility and price constitute the
key factors of competition and we consider that our customers will select
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BUSINESS
their subcontractors based on these factors. We experienced a strong demand
for our services from a wide range of customers during the Track Record
Period as evidenced by the number of tender invitations that we received
from customers during the Track Record Period. Please refer to the
paragraph headed Operation flow Invitation for tendering, preparation and
submission Tenders submitted during the Track Record Period of this
section for further details.
A majority of our five largest customers has business relationship with us for
over 10 years. Although our five largest customers represent over 90% of
our revenue during the Track Record Period, the scale of projects from these
major customers continues to grow. For instance, from 2013 to 2014, we
were awarded 2 tender contracts with an aggregate contract value of
approximately HK$87 million relating to construction of portal beams for the
Hong Kong-Zhuhai-Macao Bridge project. From 2014 to 2015, we were
awarded 3 tender contracts by China State Construction with an aggregate
contract value of approximately HK$187 million for roads and drainage
works and structural works relating to widening of Fanling Highway. From
2015 to 2016, we were awarded tender contracts by China Harbour with an
aggregate contract value of approximately HK$929.6 million for structural
works relating to the Hong Kong-Zhuhai-Macao Bridge project and
associated infrastructure works. The above demonstrates our business
strategy to pursue relatively sizeable civil engineering construction projects.
As such, we intend to purchase additional site equipment to cater to a wider

range of requirements from our customers. We intend to use approximately
HK$18.0 million from the net proceeds from the Placing to purchase site
equipment for our projects and approximately HK$7.6 million from the net
proceeds to recruit additional staff members to capture these business
opportunities.
As at the Latest Practicable Date, we had 20 contracts on hand. These

contracts are expected to contribute approximately HK$191,737,000 and
approximately HK$824,469,000 to our revenue for the period from 1
December 2015 to 31 March 2016 and for the year ending 31 March 2017,
respectively. The amount of revenue expected to be recognised is subject to
change due to the actual progress and commencement and completion dates
of our projects. Out of the 20 contracts on hand, 15 contracts have been
entered into between our Group and the customers other than China Harbour
and its joint ventures, such contracts are expected to contribute
approximately HK$47,695,000 and approximately HK$78,411,000 to our
revenue for the period from 1 December 2015 to 31 March 2016 and for the
year ending 31 March 2017, respectively.
Marketing activities
During the Track Record Period, we secured new businesses mainly through direct
invitation for tender by customers. Our Directors consider that due to our proven track
record and our well-established relationship with our existing customers, we are able to
leverage our existing customer base, reputation and our years of experience in civil
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engineering construction projects such that we do not rely heavily on marketing and
promotional activities. Our executive Directors are generally responsible for liaising and
maintaining our relationship with customers and keeping abreast of market developments
and potential business opportunities.
Pricing strategy
Our pricing is determined based on a cost-plus pricing model in general with markup
determined on a project-by-project basis. We estimate our cost of undertaking a project with
reference to various factors including but not limited to (i) the nature, scale and complexity
of the project, (ii) the estimated number and types of workers and site equipment required;
(iii) the construction methods and techniques expected to be applied in a project; (iv) the
completion date requested by customers; and (v) the prevailing market conditions in general.
When preparing for a tender, we also take into account the estimated material cost with
reference to the relevant price indicators on the material and labour prices. When there is
price fluctuation on such price indicators in the preceding month which our management
considers to be material, we will obtain quotations from our suppliers for preparation of the
bills of quantities or schedule of rates which would form part of the tender document and
govern the relevant material costs for a project. Furthermore, we determine a certain
percentage of markup over our estimated cost on a project-by-project basis. The markup
percentage may vary for different projects due to factors such as (i) the size of the project;
and (ii) the likelihood of any material deviation of the actual cost from our estimated cost
having regard to the types and amount of labours, site equipment, materials and other
resources involved in our cost estimations.
Major terms of engagement
Our customers engage us on a project basis and our customers do not enter into
long-term agreements with us. In general, contracts entered into between us and our
customers contain major terms and conditions relating to the particulars of a project,
contract price, contract period, the type and scope of work, bills of quantities or schedule of
rates, payment terms, retention money, liquidated damages, indemnities, insurance and
defects liability period. The following summarises the major terms of engagement with our
customers:
Contract period
The period of a project typically starts from the date when we are allowed to
commence work at the construction site. The contract period varies depending on the project
size and complexity. However, such period may be extended pursuant to the terms of the
relevant contract.
Types and scope of work
The contract also identifies the types and scope of the work in details which we are
engaged to perform under the contracts, details of which are set out in the paragraph headed
Our services in this section.
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Bills of quantities or schedule of rates
Most of our contracts would include the bills of quantities or schedule of rates which
generally contain the description of the types of work, specifications, quantities of works to
be done and the unit rates for each type of works under the project. In general, there is no
specific clauses in relation to price adjustment in our contracts with our customers.
Payment terms
For interim or progress payment, we generally provide our customers with a written
statement of the details of completed works, the estimated fee of our work done along with
any variation orders (if any) and the costs of the materials delivered under the contract on a
monthly basis. In respect of final payment, we usually issue final account showing the
amount we are entitled to for our customers approval. For details, please refer to the
paragraphs headed Operation flow Customer inspection and application for payment and
certification and Operation flow Project completion in this section.
Retention money
Our customers may hold up a certain percentage of each interim payment made to us
as retention money. In general, our customers may retain up to 10% of each interim payment
and up to a maximum limit of 5% of the contract sum as retention money for a project. 50%
of the retention money withheld is normally released to us after completion of a project and
the remaining retention money is normally released after the expiry of the defects liability
period.
As at 31 March 2014 and 2015 and 30 November 2015, our retention monies
receivables
amounted
to
approximately
HK$17,957,000,
HK$19,217,000
and
HK$23,815,000, respectively. Please refer to the section headed Financial information
Discussion of certain combined statements of financial position items Trade and other
receivables in this prospectus for a further discussion and analysis regarding our trade and
other receivables.
Liquidated damages
A contract may contain clauses on liquidated damages to protect our customers against
any significant delay in completion of works subcontracted to us. However, under certain
circumstances such as poor weather conditions or issue of variation orders, our customers
may grant us extension of time without a need to pay liquidated damages to the customers.
During the Track Record Period and up to the Latest Practicable Date, no liquidated
damages of material nature had been claimed by our customers against us by reason of late
completion of any of the contracts undertaken by us.
Indemnities
Pursuant to most of our contracts, we shall indemnify our customers against all
liabilities for bodily injury, damage to property, penalties, proceedings, damages, cost,
charges and expenses which may arise out of or in connection with execution of our work
being in breach of any applicable laws or regulation, unless the aforementioned liabilities or
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BUSINESS
claims are caused solely by the wrongful acts or omissions of our customers. For any
criminal charges against our Group due to non-compliance of applicable laws and
regulations in relation to safety, health and environment by the subcontractors employees,
we are generally entitled under the terms of the subcontracting agreement between us and
our subcontractors to claim against our Groups subcontractors for any losses, liabilities,
costs and expenses resulting from such criminal charges or convictions. Our Directors
confirm that we had not experienced any material claims by our customers arising from
breach of contracts during the Track Record Period and up to the Latest Practicable Date.
Insurance
In general, it is the obligation of the main contractor of the civil engineering project to
effect proper insurance policies against damages, claims and compensation in respect of the
persons who are employed to work at the construction sites. Please refer to the paragraph
headed Insurance in this section below for further details.
Termination
If, in the opinion of our customers, we fail to execute the works in accordance with
our customers requirements and our works are unsatisfactory or likely to be so and cause
unduly delay to the overall progress of the project, our customer may terminate our contract
by giving advance notice of intention to do so.
During the Track Record Period and up to the Latest Practicable Date, we did not
experience any early termination of contracts by our customers.
Performance guarantee
As confirmed by our Directors, it is not uncommon for main contractors to require the
directors and/or shareholders of subcontractors to provide performance guarantee in the
subcontracts as security for our Groups due performance and observance of the subcontract.
During the Track Record Period and up to the Latest Practicable Date, there were 9
contracts in an aggregate contract sum of HK$284,175,000 which involved performance
guarantees provided by Mr. CK Wong and/or Mr. WW Wong, our executive Directors and
Controlling Shareholders, in favour of certain customers. Pursuant to the performance
guarantee, Mr. CK Wong and/or Mr. WW Wong have given a personal guarantee as security
for the due performance and observance of our Groups obligations under the contracts up to
a specified amount ranging from 10% to 25% of the contract sum to an unlimited amount
for all losses and damages suffered by the customers as a result of our Groups default under
the contract. As at the Latest Practicable Date, among those 9 contracts, 4 contracts were
completed and performance guarantee in respect of such contracts were released and 5
contracts are still in progress. Please refer to the section headed Relationship with our
Controlling Shareholders (i) Financial independence in this prospectus for details of the
performance guarantees given by our Controlling Shareholders.
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Defects liability period
After completion of a contract, we are subject to a defects liability period
during which we are responsible to rectify works defects or imperfections
works subcontracted to us. If we have engaged subcontractors for a project,
require an identical defects liability period from our subcontractors in respect
carried out by the subcontractors.
of 12 months
arising from
we normally
of the works
If any defects or imperfections are identified, we will agree on a rectification works

programme with our customers so that the defects can be remedied as soon as practicable.
We will then arrange our direct labours to execute the rectification works at our own costs
or, where applicable, require the relevant subcontractor to rectify the defects and/or bear the
rectification costs. During the Track Record Period, we did not experience any material
claim by our customers arising from defective works.
Collection of our trade receivables and retention monies receivables
As at 31 March 2014 and 2015 and 30 November 2015, we recorded trade receivables
of approximately HK$15,583,000, HK$33,832,000 and HK$29,786,000, respectively, of
which approximately HK$1,447,000, HK$3,514,000 and HK$937,000, respectively had been
past due but not impaired. For the two years ended 31 March 2015 and the eight months
ended 30 November 2015, our debtors turnover days were approximately 39.6 days, 33.2
days and 50.2 days, respectively. In addition, we had concentration of credit risk of
approximately 30.5%, 38.3% and 46.7% of our total trade receivables as at 31 March 2014
and 2015 and 30 November 2015, respectively, were due from our largest debtor, and
approximately 90.2%, 97.2% and 93.6% from our five largest debtors.
In order to mitigate our risk in relation to the collectability of our trade receivables and
retention monies receivables, we have implemented the following measures:
Customer acceptance procedures are performed on our customers, including but

not limited to (i) checking our internal record regarding the payment history of
the existing customer; and (ii) for sizeable projects, depending on the situation
and with the assistance of independent consultant if necessary, doing appropriate
searches to ascertain the potential customers credibility.
Material overdue payments are monitored continuously and evaluated on a

case-by-case basis as to the appropriate follow-up actions having regard to the
customers normal payment processing procedures, our relationship with the
customer, its financial position as well as the general economic environment.
Follow-up actions generally include but not limited to issuing payment reminders,
actively liaising with customers, and, if necessary, taking legal actions.
In addition, we review the recoverable amount of each individual receivable

balance at the end of each reporting period to ensure adequate impairment losses
are provided for irrecoverable amounts.
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Please also refer to
combined statements of
prospectus for a further
receivables turnover days
the section headed Financial information Discussion of certain

financial position items Trade and other receivables in this
discussion and analysis on our trade receivables and our trade
during the Track Record Period.
Seasonality
Our Directors believe that the industry in which we operate does not exhibit any
significant seasonality.
INVENTORIES
We do not maintain any inventories during the Track Record Period as our construction
materials are purchased and consumed on a project-by-project basis.
SUPPLIERS
During the Track Record Period, the principal construction materials used and
purchased by our Group include concrete, steel reinforcement bars, precast concrete units,
timbers and diesel fuel which are sourced from a number of suppliers on our Groups
approved list.
Characteristics of our suppliers
During the Track Record Period, suppliers of goods and services to our Group mainly
include: (i) suppliers of construction materials; (ii) site equipment rental service providers;
and (iii) suppliers of other parts and consumables such as nails and screws and other
miscellaneous goods including personal protective equipment used by our on-site workers
such as reflective vests and safety helmets.
We generally order the relevant construction materials and services on a
project-by-project basis and therefore do not enter into any long-term supply agreements
with our suppliers. Our Directors believe that we have maintained good business
relationships with our suppliers. During the Track Record Period, we did not encounter any
material difficulty in sourcing supplies based on our needs. We are usually responsible for
sourcing construction materials for our projects, and except in the case where we are
provided with materials by our customers pursuant to the contra-charge arrangement, details
of which are set out in the paragraph headed Suppliers Contra-charge arrangement with
our customers in this section below, we are able to choose our own suppliers for our
projects. As at the Latest Practicable Date, there were approximately 69 suppliers included
in our approved list of suppliers. We select our suppliers from our approved list of suppliers
based on their prices, quality, past performances and timeliness of delivery. Our suppliers
normally grant us a credit period of not more than 30 days from the invoice date.
During the Track Record Period, we did not experience any material difficulties or
delays in performing our projects caused by material shortage or delay in the supply of
goods and services that we required. Our Directors consider that the possibility of a material
shortage or delay is low given the abundance of suppliers of the same kind in the market.
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The following table sets out a breakdown of our total purchases incurred by type
during the Track Record Period:

2014
2015
HK$000
% HK$000
%
Subcontracting charges
Construction materials
and supplies
Rental of site
equipment
Parts and consumables
Total purchases
For the eight months ended

30 November
2014
2015
HK$000
% HK$000
34,422
32.3
54,817
30.2
31,923
24.0
50,913
48.0
50,393
47.2
94,606
52.1
78,311
58.9
33,016
31.1
21,441
431
20.1
0.4
31,874
398
17.5
0.2
22,493
296
16.9
0.2
21,988
204
20.7
0.2
106,687
100.0
181,695
100.0
133,023
100.0
106,121
100.0
Please refer to the section headed Financial information Description of selected

components of our income statement Costs of sales in this prospectus for a discussion of
the trend in our purchases from our suppliers during the Track Record Period as shown in
the above table as well as the relevant sensitivity analyses.
During the Track Record Period, aside from one supplier in the PRC which provided
precast concrete units to us, our suppliers were located in Hong Kong and all our purchases
are denominated in HK dollars.
Prices of supplies
Prices are determined by reference to quotations of suppliers as agreed between us and
the suppliers on an order-by-order basis. Our Directors consider various factors, including
but not limited to the future price trend of the materials and services when preparing tender
proposals and hence we could generally pass on the increase in costs to our customers.
During the Track Record Period and up to the Latest Practicable Date, we did not experience
any material fluctuations in the costs of materials and services that had a material impact on
our business, financial condition or results of operations.
Major suppliers
2015, the percentage of our total purchases incurred (excluding subcontracting charges
incurred) from our largest supplier amounted to approximately 29.2%, 50.6% and 19.1% of
our total purchases incurred (excluding subcontracting charges incurred), respectively, while
the percentage of our total purchases incurred (excluding subcontracting charges incurred)
from our five largest suppliers combined amounted to approximately 55.7%, 67.5% and
54.0% of our total purchases incurred (excluding subcontracting charges incurred),
respectively.
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Set out below is a breakdown of our total purchases incurred (excluding subcontracting
charges incurred) by our five largest suppliers during the Track Record Period and their
respective background information:
Approximate
year(s) of
Type of
business
purchases/
relationship
rental from the with our
supplier
Group
Purchases by us
from the supplier
HK$000
%
Background of supplier
China Harbour
A construction contractor
which is a subsidiary of a
company listed in Hong
Kong
12
Purchase of
construction
materials such
as concrete and
steel
reinforcement
bars (Note)
Within 45 days Set off with

from the issue trade
of payment
receivables
application
from our Group
to the customer
21,092
29.2
Chun Wo
Construction
Kong
16
Purchase of
construction
materials such
as concrete and
steel
reinforcement
bars (Note)

of payment
receivables
application
from our Group
to the customer
5,396
7.5
Supplier C
A company incorporated in Rental of dump 4

Hong Kong which
trucks
principally provides
excavators and dump
trucks for rental
Monthly
Mainly by
progress
cheque
payment with a
credit period of
30 days
5,228
7.2
Supplier D
A company incorporated in Purchase of

8
Hong Kong which
precast concrete
principally engaged in the units
provision of precast
concrete units
Monthly
Mainly by
progress
cheque
payment with a
credit period of
30 days
4,826
6.7
Supplier E
A partnership established
in the PRC which is
principally engaged in the
production and sales of
precast concrete units and
hardware processing
Monthly
Mainly by
progress
cheque
payment with a
credit period of
30 days
3,701
5.1
Five largest suppliers combined

All other suppliers
40,243
32,022
55.7
44.3
Total purchases incurred

(excluding subcontracting charges incurred)
72,265
100.0
Purchase of
3
precast concrete
units
Credit term
Payment
term
Rank Supplier
Note:
The purchases of the relevant construction materials are made pursuant to the contra-charge arrangement,
details of which are set out in the paragraph headed Suppliers Contra-charge arrangement with our
customers in this section below.
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BUSINESS
Type of
purchases
from the
supplier
Rank Supplier
China Harbour
Kong
Supplier F
A provider of construction Purchase of

materials such as
scaffoldings
scaffoldings parts in Hong parts
Kong and a subsidiary of a
company listed in London
Approximate
year(s) of
business
relationship
with our
Group
Credit term
Payment
term
Purchases by us
from the supplier
HK$000
%

receivables
of payment
application
from our Group
to the customer
64,160
50.6
Monthly
Mainly by
progress
cheque
payment with a
credit period of
30 days
5,917
4.7
Supplier C
A company incorporated in Rental of dump 4

Hong Kong which
trucks
principally provides
excavators and dump
trucks for rental
Monthly
Mainly by
progress
cheque
payment with a
credit period of
30 days
5,647
4.5
China State
Construction
Kong
Purchase of
11
construction
materials such
as concrete and
steel
reinforcement
bars (Note)

receivables
of payment
application
from our Group
to the customer
5,317
4.2
Supplier H
A company incorporated in
Hong Kong which
principally provides site
equipment such as crane
lorries and hydraulic truck
cranes for rental
Rental of site
8
equipment such
as crane lorries
and hydraulic
truck cranes
Monthly
Mainly by
progress
cheque
payment with a
credit period of
30 days
4,451
3.5

All other suppliers
85,492
41,386
67.5
32.5

126,878
100.0
Purchase of
12
construction
materials such
as concrete and
steel
reinforcement
bars (Note)
Note:
The purchases of the relevant construction materials are made pursuant to the contra-charge arrangement,
details of which are set out in the paragraph headed Suppliers Contra-charge arrangement with our
customers in this section below.
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BUSINESS
Approximate
year(s) of
Type of
business
purchases/
relationship
rental from the with our
supplier
Group
Payment
term
Purchases by us
from the supplier
HK$000
%
Rank Supplier
China State
Construction
Kong
Purchase of
construction
materials such
as concrete and
steel
reinforcement
bars (Note)
11

of payment
receivables
application
from our Group
to the customer
10,561
19.1
China Harbour
Kong
12
Purchase of
construction
materials such
as concrete and
steel
reinforcement
bars (Note)

of payment
receivables
application
from our Group
to the customer
8,361
15.1
Chun Wo
Construction
Kong
Purchase of
construction
materials such
as concrete and
steel
reinforcement
bars (Note)
16

of payment
receivables
application
from our Group
to the customer
3,969
7.2
Supplier H
Hong Kong which
equipment such as crane
lorries and hydraulic truck
cranes for rental
Rental of site
equipment such
as crane lorries
and hydraulic
truck cranes
Monthly
progress
payment with a
credit period of
30 days
Mainly by
cheque
3,666
6.6
Supplier J
Hong Kong which
equipment such as mobile
cranes for rental
Rental of site
equipment such
as mobile
cranes
Less than
1 year
Monthly
progress
payment with a
credit period of
30 days
Mainly by
cheque
3,337
6.0

All other suppliers
29,894
25,314
54.0
46.0

55,208
100.0
Credit term
Note: The purchases of the relevant construction materials are made pursuant to the contra-charge
arrangement, details of which are set out in the paragraph headed Suppliers Contra-charge
arrangement with our customers in this section below.
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BUSINESS
None of our Directors, their close associates, or any Shareholders who to our
Directors knowledge owned more than 5% of the issued Shares of our Company as at the
Latest Practicable Date had any interest in any of the five largest suppliers of our Group
during the Track Record Period.
Contra-charge arrangement with our customers
According to the Ipsos Report, it is common in the civil engineering construction
industry that a main contractor may pay on behalf of its subcontractor for certain expenses
for a civil engineering project. Such expenses are typically deducted from its payments to
that subcontractor in settling its service fees for the project. Such payment arrangement is
referred to as the contra charge arrangement and the amounts involved are referred to as
the contra-charge.
During the Track Record Period, we had contra-charge arrangement with some of our
customers. Such contra-charge consisted of purchase cost of construction materials, rental
cost of site equipment, utility cost and other miscellaneous expenses. Pursuant to the
contra-charge arrangement set out in the contract with our customers, upon our written
request, our customer may purchase construction materials specified in the contract such as
concrete materials and steel reinforcement bars and make payments on our behalf. Such
purchase cost of construction materials is settled by way of contra-charge to the account
with such customer. Our customers may also, upon our request, lease their site equipment to
our Group or pay miscellaneous expenses on our behalf on an as-needed basis, where we
settled such amounts with our customers through the contra-charge arrangement. Effectively,
the payments due to us from our customer will be settled after netting off such contra-charge
amounts. For each of the two years ended 31 March 2015 and the eight months ended 30
November 2015, our contra-charge incurred amounted to HK$27,492,000, HK$73,004,000
and HK$23,985,000 respectively, and such contra-charge incurred amounts attributable to
our top five customers during the Track Record Period amounted to approximately
HK$27,336,000,
HK$71,973,000
and
HK$23,985,000,
respectively,
representing
approximately 99.4%, 98.6% and 100.0% of our total contra-charge incurred for the same
periods, respectively. As we settled such costs by way of contra-charge by netting off with
the payments due from our customers, both cash inflows from the project work done and
cash outflows from the purchase of construction materials were reduced by the same
amount. Therefore, the contra-charge arrangement had no material effect on the Groups
cashflow positions during the Track Record Period.
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BUSINESS
The following table sets forth the information on our customers from whom we had
contra-charge arrangement during the Track Record Period:
For the
year
ended 31
March
2015
For the
year
ended 31
March
2014
China Harbour
Revenue derived and
approximate % of total
revenue
Contra-charge charged by China
Harbour and approximate %
of total purchases incurred
(excluding subcontracting
charges incurred)
Weighted average of gross profit
margin (Note)
China State Construction
Revenue derived and
revenue
State Construction and
purchases incurred (excluding
subcontracting charges
incurred)
margin (Note)
Revenue derived and
revenue
Contra-charge charged by Chun
Wo Construction and
incurred)
For the
eight
months
ended 30
November
2015
HK$000
Approximate
%
HK$000
Approximate
%
HK$000
Approximate
%
101,138
63.2
144,349
53.1
33,643
21.7
21,217
29.4
64,160
50.6
8,361
15.1
4.9
4.9
7.2
11,350
7.1
36,300
13.3
56,688
36.7
679
0.9
5,362
4.2
10,561
19.0
9.7
9.7
9.8
20,145
12.6
7,988
2.9
16,367
10.6
5,396
7.5
2,298
1.8
3,969
7.2
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BUSINESS
For the
year
ended 31
March
2015
For the
year
ended 31
March
2014
HK$000
margin (Note)
Customer D
Revenue derived and
revenue
Contra-charge charged by
Customer D and approximate
% of total purchases incurred
incurred charges)
margin (Note)
Dragages China Harbour
VSL J.V.
Revenue derived and
revenue
Contra-charge charged by
Dragages China Harbour
VSL J.V. and approximate %
of total purchases incurred
charges incurred)
margin (Note)
China State Leader Joint
Venture
Revenue derived and
revenue
For the
eight
months
ended 30
November
2015
Approximate
%
HK$000
1.3
Approximate
%
HK$000
1.3
Approximate
%
1.3
9,688
6.1
11,013
4.0
15,009
9.7
44
0.1
11.0
11.0
9.1
5,431
3.4
61,682
22.7
29,136
18.8
117
0.2
153
0.1
1,094
2.0
14.9
3,052
1.9
140
14.9
4,542
1.7
14.4
BUSINESS
For the
year
ended 31
March
2015
For the
year
ended 31
March
2014

State Leader Joint Venture
and approximate % of total
incurred)
margin (Note)
Note:
For the
eight
months
ended 30
November
2015
HK$000
Approximate
%
HK$000
Approximate
%
HK$000
Approximate
%
39
0.1
1,031
0.8
29.0
29.0
The weighted average of gross profit margin equals the simple average of project gross profit
margins weighted by project revenues.
SUBCONTRACTORS
It is a common industry practice for subcontractors to further subcontract part of their
works to other subcontractors. Subject to our capacity, resources level, types of civil
engineering works, cost effectiveness, complexity of the projects and customers
requirements, we may subcontract our works such as steel fixing works, formwork erection
works and drainage works to other subcontractors in a project.
Our subcontractors include local sole proprietors as well as limited liability companies.
During the Track Record Period, all of our subcontractors were located in Hong Kong and
all of our service fees were denominated in HK dollars. Hop Fung, one of our operating
subsidiaries, is also a subcontractor for one of our civil engineering contracts.
We are accountable to our customers for the works performed in a project, including
those carried out by our subcontractors. Unless otherwise specified in the contracts with our
customers, our customers generally consent to our use of subcontractor for a project and do
not limit which subcontractor to be used by us. According to the agreements we entered into
with our subcontractors, we are entitled to hold our subcontractors liable for any damages
suffered by our Group.
2015, we incurred subcontracting charges of approximately HK$34,422,000, HK$54,817,000
and HK$50,913,000, respectively. Please refer to the section headed Financial Information
Description of selected components of our income statement Costs of sales in this
prospectus for the relevant sensitivity analysis.
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Major subcontractors
2015, the percentage of our Groups subcontracting charges incurred attributable to our
Groups largest subcontractor amounted to approximately 17.3%, 17.7% and 15.0% of our
Groups total subcontracting charges incurred, respectively, while the percentage of our
Groups subcontracting charges incurred attributable to our Groups five largest
subcontractors combined amounted to approximately 61.8%, 53.3% and 55.7% of our
Groups total subcontracting charges incurred, respectively, for the same period.
Set out below is a breakdown of our Groups total subcontracting charges incurred to
major subcontractors of our Group and their respective background information:
Approximate
year(s) of
business
relationship
with our
Group
Total
subcontracting
charges incurred
HK$000
%
Rank
Subcontractor
Type of services
provided by the
subcontractor
Subcontractor A (Note 1)
Formwork erection
10
Mainly by
Within 30 days from the
cheque
issue of payment
application from the
subcontractor to our Group
5,947
17.3
Subcontractor B (Note 2)
Drainage works
Mainly by
cheque
issue of payment
4,678
13.6
Subcontractor C (Note 1)
Steel fixing
Mainly by
cheque
issue of payment
4,082
11.9
Subcontractor D (Note 1)
Formwork erection
Mainly by
cheque
issue of payment
3,343
9.7
Subcontractor E (Note 1)
Drainage works
Mainly by
cheque
issue of payment
3,210
9.3
Five largest subcontractors combined

All other subcontractors
21,260
13,162
61.8
38.2
Total subcontracting charges incurred
34,422
100.0
142
Credit term
Payment term
BUSINESS
Note:
1.
Each of these subcontractors is a sole proprietorship established in Hong Kong and a subcontracting
service provider for civil engineering construction projects.
2.
Subcontractor B is a limited liability company incorporated in Hong Kong and a subcontracting


Approximate
year(s) of
business
relationship
with our
Group
Rank
Subcontractor
Type of services
provided by the
subcontractor
Subcontractor C (Note)
Steel fixing
Mainly by
cheque
issue of payment
9,727
17.7
Subcontractor A (Note)
Formwork erection
10
Mainly by
cheque
issue of payment
6,518
11.9
Subcontractor D (Note)
Formwork erection
Mainly by
cheque
issue of payment
4,918
9.0
Subcontractor F (Note)
Formwork erection
Mainly by
cheque
issue of payment
4,102
7.5
Subcontractor G (Note)
Formwork erection
10
Mainly by
cheque
issue of payment
3,931
7.2

29,196
25,621
53.3
46.7
54,817
100.0
Note:
Credit term
Payment term
Total subcontracting
charges incurred
HK$000
%
Each of these subcontractors is a sole proprietorship established in Hong Kong and a subcontracting
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BUSINESS
Approximate
year(s) of
business
relationship
with our
Group
Rank
Subcontractor
Type of services
provided by the
subcontractor
Subcontractor C (Note)
Steel fixing
Mainly by
cheque
issue of payment
7,626
15.0
Subcontractor H (Note)
Steel fixing
Mainly by
cheque
issue of payment
5,646
11.1
Subcontractor J (Note)
Drainage works
Mainly by
cheque
issue of payment
5,380
10.6
Subcontractor E (Note)
Drainage works
Mainly by
cheque
issue of payment
4,976
9.8
5.
Subcontractor A(Note)
Formwork erection
10
Mainly by
cheque
issue of payment
4,709
9.2

28,337
22,576
55.7
44.3
50,913
100.0
Credit term
Payment term
Total subcontracting
charges incurred
HK$000
%
Note: Each of these subcontractors is a sole proprietorship established in Hong Kong and a subcontracting
None of our Directors, their close associates, or any Shareholders who or which, to the
knowledge of our Directors, owned more than 5% of the issued Shares of our Company as
at the Latest Practicable Date had any interest in any of the five largest subcontractors of
our Group during the Track Record Period.
Basis of selection of subcontractors
We maintain an internal list of approved subcontractors. We carefully evaluate the
performance of our subcontractors and select subcontractors based on a range of factors such
as their background, technical capability, experience, fee quotations, service quality, track
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BUSINESS
records, labour resources, timeliness of delivery, reputation and safety performance. We will
review and update our internal approved list of subcontractors according to our assessment
of their performance on a continuous basis.
Key terms of subcontracting engagement
As our customers engage us on a project basis, we do not enter into any long-term
contract with our subcontractors. We enter into written agreement (with a term of
engagement mirroring with the terms of the contract with our customer) with our
subcontractors governing the general terms of subcontracting arrangement. The following
summarises the major terms of engagement with our subcontractors:
Scope of works and
specification
The scope of services and types of works to be carried

out by the subcontractor are specified in the
subcontracting agreement. In general, a subcontractor is
required to perform its work in accordance with the
specifications required by our customer.
Subcontracting Fee
The subcontracting fee to be received by the

subcontractor is usually represented in a provisional sum,
which is subject to remeasurement and valuation
according to the bills of quantities included in the
subcontract and further subject to any variation orders or
additional works to be performed by the subcontractors
with our prior consent. In general, we determine the
amount of subcontracting charges based on (i) certain
percentage of the amount of fees to be received by us
from our customers in respect of the portion of works
being subcontracted; (ii) the amount of labour resources
required from our subcontractors; (iii) the nature of
works to be performed by our subcontractors; and (iv) the
prevailing market conditions. There is no price
adjustment clause in the subcontracts between our Group
and our subcontractors.
Payment terms
For interim payments, our subcontractors are required to

provide us with a payment application setting out the
details of the completed work on a monthly basis and we
generally pay our subcontractors within 30 days after the
payment application is certified and approved by us.
In respect of final payment, a final account is submitted
by our subcontractor within 60 days after the practical
completion of the project and we will first release 50% of
the retention money and the final payment to our
subcontractor. After the expiry of the defects liability
period, we will release the remaining retention money to
our subcontractor.
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BUSINESS
Defects liability
period and
retention money
Similar to the practices with our customers, we also

require a defects liability period of 12 months during
which our subcontractors shall be responsible for
rectifying works defects arising from works subcontracted
to them at their own expenses. Unless otherwise agreed,
we usually hold up to 5% of each interim payment to our
subcontractor as retention money. 50% of the retention
money withheld is usually released to our subcontractors
after completion of a project and the remaining retention
money is released after the expiry of the defects liability
period.
Safety and
prohibition of
illegal workers
Our subcontractors are required to carry out the works in

accordance with all relevant safety, health and
environmental laws, rules and regulations as well as the
safety rule of the main contractor and these of our Group.
Our subcontractors are also prohibited from hiring illegal
workers. In the event of any non-compliance, the relevant
subcontractor shall indemnify our Group against any
expenses, penalties and other losses arising from such
non-compliance.
Termination
If a subcontractor leaves the work uncompleted, fails to

complete the work on the date of completion or, if in the
opinion of our project manager or construction manager,
the works are unsatisfactory, our Group may terminate
the subcontracting agreement by giving advance notice of
intention to do so.
Indemnity
Subcontractors are required to indemnify our Group

against any loss, expense or claim arising from the failure
to comply with subcontracting agreement by the
subcontractor and/or its employees. We are entitled to
hold our subcontractors liable for any loss and damage
suffered by our Group if their works are not performed in
accordance with the requirements set out in the main
contract.
Control over subcontractors

In order to closely monitor the performance of our subcontractors and to ensure that
the subcontractors comply with the contractual requirements and the relevant laws and
regulations, we require our subcontractors to follow our internal control measures in relation
to quality control, safety and environmental compliance. During project implementation, our
project team regularly meets with our subcontractors and closely monitors their work
progress and performance as well as their compliance with our safety measures and quality
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BUSINESS
standards. For further information regarding our measures in relation to quality control,
safety and environmental compliance, please refer to the paragraphs headed Quality
control, Occupational health and safety and Environmental compliance in this section.
During the Track Record Period and up to the Latest Practicable Date, there were no
material disputes between our Group and our customers with respect to the quality of work
performed by us and our subcontractors.
SITE EQUIPMENT
Type of site equipment
We rely on the use of site equipment to enable us to carry out civil engineering works
and possess a broad range of site equipment to perform different types of projects. Our
Directors believe that our investment in site equipment will enable us to cater to projects of
larger scale and higher complexity in the future.
2015, we acquired new site equipment in the amount of approximately HK$4,310,000,
HK$410,000 and HK$812,000 at cost, respectively. As at 30 November 2015, our site
equipment carried a net book value of approximately HK$6,898,000. Set out below are the
major types of site equipment used by our Group:
(i)
Excavator
An excavator is a heavy construction equipment consisting of a boom, arm, bucket and

cab on an upperstructure which could rotate. The upperstructure sits atop an undercarriage
with tracks or wheels.
(ii) Hydraulic breaker
A hydraulic breaker is a powerful percussion hammer fitted to an excavator for
demolition, construction and quarrying. It is powered by an auxiliary hydraulic system from
the excavator which is fitted with a foot-operated valve for this purpose.
(iii) Vibrating roller
A vibrating roller is a compactor type of engineering vehicle used to compact soil,
gravel, asphalt in the construction of roads and foundations.
(iv) Air compressor
An air compressor is a device that forces air into a chamber and compresses the air to
provide high-pressure air to power pneumatic tools, such as jackhammers.
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BUSINESS
(v)
Generator
A generator provides backup electrical power as virtual power plant at the construction
sites.
(vi) Aerial working platforms
An aerial work platform, also known as an aerial device or an elevating work platform
is a mechanical device used to provide temporary access for people or equipment to
inaccessible areas, usually at height.
(vii) Hydraulic truck crane
A hydraulic truck crane is a type of machine, generally equipped with a hoist rope,
wire ropes or chains, and sheaves, that can be used both to lift and lower materials and to
move them horizontally. It is mainly used for lifting heavy things and transporting them to
other places.
(viii) Others
Other site equipment of our Group include hydraulic cranes, hydraulic hammers,
welding machines and other commonly used construction site equipment.
The following table sets out the useful life and average age of our major types of site
equipment as at 30 November 2015:
Type of site equipment
Expected
useful life
(years)
Average
age
(years)
Excavator
Hydraulic breaker
Vibrating roller
Air compressor
Generator
Aerial working platform
Hydraulic truck crane
Others
10.0
10.0
10.0
10.0
10.0
10.0
10.0
10.0
5.0
4.0
7.5
10.1
4.2
1.9
1.7
8.3
Total
10.0
5.7
We normally purchase our site equipment from authorised dealers in Hong Kong or
directly from the overseas manufacturer and do not purchase any parallel-imported site
equipment.
With the possession of our own site equipment, we do not have to rely completely on
our suppliers for site equipment rental services. During the Track Record Period, we rented
site equipment from independent third parties, save for the site equipment rental arrangement
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with Hop Fung Crane Company as described below. Such site equipment primarily include
dump trucks, crane lorries, hydraulic truck cranes and excavators. For the two years ended
31 March 2015 and the eight months ended 30 November 2015, our site equipment rental
cost incurred amounted to approximately HK$21,441,000, HK$31,874,000 and
For the financial year ended 31 March 2015 and up to 31 October 2015, we rented a
crane and an excavator from Hop Fung Crane Company on normal commercial terms and in
ordinary course of our business. Hop Fung Crane Company is a partnership established in
Hong Kong and was principally engaged in leasing of construction site equipment. Hop
Fung Crane Company is owned by the spouse of Mr. CK Wong (our executive Director and
one of our Controlling Shareholders) and an independent third party. For the two years
ended 31 March 2015 and the eight months ended 30 November 2015, the total site
equipment rental costs paid to Hop Fung Crane Company amounted to approximately
HK$Nil, HK$772,000 and HK$633,000, respectively. Such rental arrangement with Hop
Fung Crane Company has been completed and ceased. Our Directors confirm that, during
the Track Record Period and up to the Latest Practicable Date, Hop Fung Crane Company
did not conduct any business activities which competed or was likely to compete, directly or
indirectly, with the business of our Group.
We believe that our investment in different types of site equipment has placed us in a
position to cater to projects of different scales and complexity. Our Directors also consider
that possession of our own site equipment allows us to devise suitable works schedules and
methods tailored to the different needs and requirements of different customers and enables
us to efficiently and effectively schedule our projects and deploy our manpower.
Repair and maintenance
We perform on-site routine checks on our site equipment prior to commencement of
our projects and during the execution stage of the projects. In addition, routine maintenance
procedures, such as injecting lubricants when they run out and cleaning the dust that pile up
in the key components of the site equipment to ensure smooth operation, are performed on
an on-going basis by our in-house mechanics.
We have a team of in-house mechanics who are capable of repairing and maintaining
our site equipment. As at the Latest Practicable Date, our team of in-house mechanics
consisted of a mechanic with 30 years of experience and the 2 licensed electricians who are
qualified to perform electrical maintenance work. Our in-house mechanics are capable of
repairing minor defects in the site equipment such as replacing the worn-out or
malfunctioning parts and components of a machine when it becomes out of order. As such,
we are able to extend the usable life of our site equipment which is more cost-effective than
replacing the entire machine with a new one. Routine and minor examination and repairing
by our in-house mechanics is less time-consuming and can shorten the idle time during
which a malfunctioning or out-of-order machine remains unusable.
For malfunctioning site equipment that requires major examination and/or specialised
skills, we will send such malfunctioning site equipment to the authorised dealer for repairs if
the site equipment is still under warranty, or send to other third party repair companies.
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Age and replacement cycle of site equipment
The following table sets out a breakdown of the value of our site equipment by
different age groups as at the Latest Practicable Date:
Original cost
of acquisition
of site
equipment
HK$000
Number of
units of site
equipment
Net book
value of site
equipment
HK$000
(unaudited)
6
8
15
27
1,055
3,345
1,669
728
1,105
4,720
3,076
4,163
56
6,797
13,064
Less than 1 year

1 year to less than 3 years
3 years to less than 5 years
5 years or above
Our Directors consider that as at the Latest Practicable Date, our existing site
equipment (including those whose useful life has almost reached the end of the expected
useful life) were in good operating conditions in general. We do not have a pre-determined
or regular replacement cycle for our site equipment. Replacement decisions are made on a
case-by-case basis having regard to the operating condition of each unit of site equipment
and the cost effectiveness of replacing only the malfunctioning parts. The average age of our
site equipment based on the cost of acquisition is approximately 5.8 years. The average
remaining useful life of our site equipment based on accounting estimation is approximately
4.7 years. We replace aged site equipment only when it is imperative to do so. Pursuant to
our accounting policies, depreciation of site equipment is provided for using straight-line
method over a period of 10 years. In particular, as the air compressors owned by our Group
are close to full depreciation, it is our Groups plan to utilise proceeds from the Placing of
approximately HK$0.1 million to acquire an additional air compressor to further enhance
and optimise our overall construction efficiency. Our Directors consider that (i) the existing
air compressors were still in good operating conditions in general as at the Latest
Practicable Date; (ii) it only takes up to one month to replace an air compressor; and (iii) an
air compressor is not costly and can be readily rented and/or purchased from any
independent third parties to satisfy our project needs. Our Group will also continue to
evaluate the operating condition, effectiveness and efficiency of our site equipment and
assess our need for additional site equipment in view of our business development.
Safekeeping of site equipment
Site equipment that are in use at work sites are kept under the general management of
the respective work sites. During the Track Record Period, site equipment that was not in
use was stored in our warehouse located in a leased premises located in Yuen Long, which
were equipped with locked gates and closed-circuit television security cameras. The tenancy
agreement for our warehouse in Yuen Long has been terminated by us in August 2015,
details of the said tenancy agreement is set out in the paragraph headed Properties in this
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section. As at the Latest Practicable Date, given the number of projects on hand and the
availability of our site equipment for such projects, all of our site equipment are operating at
full service capacity in construction sites and no storage of idle site equipment is required.
Financing arrangements for the purchase of motor vehicles and site equipment
Taking into account our liquidity position and capital need, during the Track Record
Period, our Group raised external financing for the purchase of some motor vehicles and site
equipment through finance leases and bank borrowings, respectively. In considering whether
or not to enter into finance lease arrangements, our Group takes into account several factors
including interest cost, availability of funds, repayment schedule and security requirements,
among which interest cost is an important factor. As at 31 March 2014 and 2015 and 30
November 2015, the effective interest rates ranged from 3.21% to 7.35% and from 3.25% to
6.21% and from 3.23% to 6.21% per annum, respectively for our banking facilities
(including finance leases).
During the Track Record Period, our Group acquired certain motor vehicles by way of
finance leases, under which our Group had to pay stipulated monthly rents for use of the
motor vehicles in a fixed term. Since the terms of these finance leases transfer substantially
all the risks and rewards of ownership of the motor vehicles to our Group as the lessee, the
relevant motor vehicles were accounted for as our Groups assets under the category of
property, plant and equipment. Our Group had motor vehicles under finance leases with net
book value amounting to approximately HK$4,103,000, HK$3,223,000 and HK$4,171,000 as
at 31 March 2014 and 2015 and 30 November 2015, representing approximately 94.1%,
92.3% and 87.8% of the net book value of motor vehicles as at 31 March 2014 and 2015
and 30 November 2015, respectively.
Service capacity and utilisation rate
Our Directors consider that due to the nature of our business and operations, it is not
feasible and not practicable to quantify and disclose detailed service capacity and utilisation
rate of our site equipment for the following reasons:
(a)
Different types of site equipment have different functions and it is therefore not
entirely feasible to quantify the capacity of each piece of site equipment by
making reference to an objective and comparable scale or standard of
measurement.
(b)
The utilisation rate of each individual site equipment cannot be clearly defined. A
typical civil engineering projects requires the use of different site equipment at
different stages, and site equipment may from time to time be left unused in
active construction sites pending completion of other stages. Site equipment is
also sometimes left unused for repairing or maintenance at work sites.
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(c)
As set out in the fixed asset register of our Group as at 30 November 2015, we
had more than 50 units of site equipment and over 10 types of site equipment of
various sizes and capacity. Given the number of site equipment owned by our
Group, it is impracticable for our Group to track in details the usage of each
individual site equipment.
In view of the above, it would be difficult and impracticable to define accurate

utilisation rate of site equipment in general and to make a full account of the daily/hourly
usage of each individual site equipment. Nevertheless, we will optimise our operational
efficiency and capacity by scheduling the use of suitable site equipment at suitable time with
reference to the construction method involved in a project.
QUALITY CONTROL
To maintain consistent quality services for our customers, we have established formal
quality management system which is certified to be in compliance with the requirements of
ISO 9001:2008. We have in-house quality assurance requirements specifying, among other
things, specific work procedures for performing different types of works, responsibilities of
personnel of different levels, quality inspection procedures and standards, subcontracting
requirements, accident reporting and complaint and punitive measures for works below our
required standards and work procedures for operating different types of site equipment.
Compliance of these quality assurance requirements is mandatory for our workers and
subcontractors.
Mr. CK Wong and Mr. WW Wong, our executive Directors and our Controlling
Shareholders, are responsible for our overall quality control. For the background and
industry experience of Mr. CK Wong and Mr. WW Wong, please refer to the section headed
Directors and senior management in this prospectus.
Quality control on our services
Our executive Directors closely monitor the progress of each project to ensure that our
service (i) meets our customers requirements; (ii) are completed within the time stipulated
in the contract and the budget allocated for the project; and (iii) comply with all relevant
and applicable rules and regulations. Our project managers and construction managers assist
our executive Directors to monitor overall work quality and project progress. Our site agents
coordinate with our foremen to perform on-site inspections and supervise site workers on a
daily basis. Our project managers will timely inform our executive Directors of the project
status and any quality issues arising from project execution.
For our quality control measures over our subcontractors, please refer to the paragraph
headed Subcontractors Control over subcontractors of this section.
Quality control on our site equipment and materials
We closely monitor the quality of purchased materials and site equipment. To ensure
the quality of supplies, prior to ordering, our purchasing department will ensure that the
materials are sourced from our approved suppliers to ensure overall quality of supplies.
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Upon arrival of the ordered materials, all materials are sent directly to the relevant work
sites for inspection by our foremen and engineers before utilisation. During the inspection,
we will check (i) whether the quantity is correct; (ii) whether there is any observable
defects; and (iii) for site equipment purchased by us, whether it functions normally. In
addition, for certain public sector projects, our Group is also required to engage independent
professionals or professionals appointed by our customers to perform inspection and quality
tests on sample materials such as precast concrete units. Any defective materials or materials
that fall short of the product specifications would be returned to the suppliers for
replacement.
Our Directors confirm that during the Track Record Period and up to the Latest
Practicable Date, we had not received any complaint or claim for compensation from our
customers due to quality issue in relation to works performed by us or by our
subcontractors.
OCCUPATIONAL HEALTH AND SAFETY
Occupational health and work safety measures
We place emphasis on occupational health and work safety during the delivery of our
services as it is our concern not to put our employees, the subcontractors and the general
public in hazards. We have adopted an occupational health and safety system as required by
relevant occupational health and safety laws, rules and regulations and managed by our
safety and environmental department under the supervision of Mr. WW Wong, whose
background and industry experience are set out in the section headed Directors and senior
management in this prospectus. Our occupational health and safety management system is
certified to be in compliance with the standard required under OHSAS 18001:2007. Due to
the nature of works in construction sites, risks of accidents or injuries to workers are
inherent. As such, we have established safety plans and in-house rules to provide our
employees and our subcontractors employees with a safe and healthy working environment
by specifying various safety measures.
Our safety policy sets out the following work safety measures:
Effective promotion and communication of safety procedures are maintained

through, among others, establishing safety bulletin and detailed record of accident
statistics, holding regular internal and external safety meetings, documenting
safety measures and issues identified for each project by preparing safety reports
and training records.
All employees on site, including subcontractors employees, are required to

receive site safety induction briefing sessions and trainings before they commence
work on-site and during the course of execution of project on-site. Topics of our
safety training typically cover safety procedures for performing different types of
work, safety procedures for handling chemicals, safety procedures for emergency
and duties and procedures for reporting hazards, incidents, accidents and diseases,
and good housekeeping of workplaces.
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All employees on site, including subcontractors employees, are required to follow

the general safety rules adopted by our Group which are communicated to the
workers before they commence work and posted on prominent notice boards on
site. Workers who breach any such rules will be subject to internal disciplinary
actions.
Risk assessments are generally conducted by our engineer and safety &
environmental manager to identify the potential hazards and accidents and provide
suggestion on proper preventive measures prior to commencement of works.
Site inspections are carried out on a daily basis by our safety supervisors on site
to ensure strict compliance with the statutory occupational health and safety laws,
rules and regulations.
Specific safety measures in relation to, among others, emergency, working at

height, roadwork or work adjacent to live carriageway, sewerage and drainage
works, site transport, construction of temporary access road, safe operation of site
equipment and reporting of hazards and accidents are communicated with workers
and documented in detail.
Our safety & environmental department, which is supervised by Mr. WW Wong,

consists of a safety & environmental manager, 2 safety officers and 3 safety supervisors.
Our safety & environment department is responsible for preparing safety plans, managing
our occupational health and safety management system to ensure smooth implementation of
our safety procedures and risk control measures. We also keep our customers informed of
the safety issues identified from each project through regular safety meetings and submission
of safety reports. Furthermore, a site safety team is formed for different projects at site level
which generally consists of, among others, our project manager, site agent, engineer, safety
officer or safety supervisor and the authorised representative of subcontractors. The role of
our site safety team is to monitor the implementation of on-site safety measures including
inspection of site equipment to ensure they are safe for use, regular safety checks to
maintain safe working environment and site tidiness, handling safety incidents and keeping
safety records. While our on-site staff are required to attend regular safety briefings
conducted by our customers, we also provide further safety training to our staff covering
topics such as our safety measures and requirements and the use of personal protective
equipment.
We have received a certificate from DW Certification Limited for our current
compliance with OHSAS 18001. Our Group was accredited with OHSAS 18001:2007
compliance certification in August 2015. The current certificate will expire in August 2018.
The accreditation body, DW Certification Limited, conducts an external audit to assess
whether the relevant management system is in conformity with the standards in place every
three years. Such surveillance visit is normally conducted on a yearly basis before the expiry
of the relevant certificate. Upon satisfaction in regards to the relevant management system, a
renewal certificate will be issued.
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It is also noteworthy that we have received certain awards from our customers in
recognition of our good safety performance. For further details, please refer to the paragraph
headed Awards and recognitions in this section.
System of recording and handling accidents and our safety compliance record
If an accident occurs, the injured worker (including our employees and our
subcontractors employees) or the person who witnessed the accident is required to report to
our site staff or safety officer. Our safety officer will then investigate the accident by taking
photos in respect of the accident scene, examine the equipment or material involved (if any)
and take statements from the injured worker, witness(es) of the accident (if any) and other
personnel in relation to the particular project. If the accident is a reportable accident as
assessed by our safety officer, he will prepare an accident report and submit it to our
customer (the main contractor) and the Labour Department within the period as specified
under the relevant laws and regulations. Reportable accidents means workplace accidents
that are required to be reported to the Labour Department. For any accident that results in
total or partial incapacity of an employee, the accident should be reported in writing within
14 days after the date of accident. For accidents that involve death or fatal injury to an
employee, the accident has to be notified to the Labour Department within 7 days after the
accident.
Remedial actions will be taken by our project management team to remove imminent
danger and to prevent reoccurrence of similar accidents in the future. Our safety officer will
carry out follow-up inspection to ensure that remedial works are implemented.
The following table sets out a comparison of the industrial accident rate per 1,000
workers and the industrial fatality rate per 1,000 workers in the construction industry in
Hong Kong between our Group and the industry average during the periods indicated:
From 1 January to 31 December 2013

Industrial accident rate per 1,000 workers in
construction industry
Industrial fatality rate per 1,000 workers in
155
Construction
Industry in Hong
Kong
Our Group
(Note 1)
(Note 2)
40.8
3.36
0.277
41.9
16.88
0.242
3.38(Note
not available
16.22
not available
3)
BUSINESS
Notes:
1.
The statistics are extracted from the Occupational Safety and Health Statistics Bulletin Issue No.15
(August 2015) published by Occupational Safety and Health Branch of the Labour Department of the
Government.
2.
Our Groups accident rate and fatality rate is calculated by dividing the number of reportable
accidents and accidents involving fatal injuries (as the case may be) during the calendar year or
relevant period (i.e., 1 in 2013; 5 in 2014; and 5 in 2015) by the number of site workers as at the
end of the calendar year. The number of site workers includes employees of our Group and our
subcontractors.
3.
In 2014, there was one fatal accident involving a worker employed by a subcontractor of our Group.
Please refer to the paragraph below for further details.
As at the Latest Practicable Date, there were 2 ongoing common law personal injury
claims, 5 ongoing employees compensation litigations, 2 ongoing criminal litigations, 6
potential employees compensation claims and 13 potential common law personal injury
claims arising from 2 accidents and 13 accidents (of which occurrence of 1 accident was
alleged by a claimant of an employees compensation case) occurred before and during the
Track Record Period and up to the Latest Practicable Date, respectively, further details of
which are disclosed in the paragraphs headed Litigation and potential claims Ongoing
litigations in relation to employees compensation claims, common law personal injury
claims and criminal litigations against our Group as at the Latest Practicable Date and
Litigation and potential claims Potential litigations in relation to employees
compensation claims and common law personal injury claims against our Group as at the
Latest Practicable Date, respectively, in this section below. As illustrated above, the
accident rate at our construction sites was substantially lower than the construction industry
average in Hong Kong for the two calendar years ended 31 December 2013 and 31
December 2014. A comparison of the industrys average accident rate and that of our
Groups for the calendar year ended 31 December 2015 is not available as there is no
relevant industrial accident rate for such period as at the Latest Practicable Date.
In November 2014, there was one incident involving fatal injury at the construction site
whereby a worker employed by a subcontractor of our Group was fatally injured and
certified dead in the course of unloading the water pipes. The deceased and the workers
involving in the aforesaid unloading operation which caused injuries to the deceased were
not our direct employees. It was alleged that on the date of the incident, bundles of water
pipes were stacked on the deck of the lorry. Three bundles, namely the first bundle to the
third bundle of 4 water pipes, each was stacked on the deck of the lorry counted from
bottom, and the last bundle of 3 water pipes, namely the fourth bundle, was placed on the
top. During the unloading operation of the the fourth bundle, it struck the deceased who was
working by the left side of the lorry.
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After the aforesaid accident, relevant loading and unloading operations at the relevant
work site was suspended by the Labour Department. In this connection, a method statement
was prepared by the main contractor and submitted to the Labour Department to demonstrate
the safety measures for the loading and unloading procedures to be followed at the relevant
work site. To further strengthen our safety control and avoid re-occurrence of similar
incident in the future, we had reviewed the aforesaid method statement and implemented the
following key internal control measures for carrying out loading and unloading operations:
Temporary traffic arrangement for the loading and unloading operations were
properly implemented.
Access at unloading area shall be checked thoroughly before operation.
Safety briefings for all workers were conducted at the loading and unloading area.
Lifting gear shall be checked and examined thoroughly.
Positions of crane lorry shall be checked and examined thoroughly.
The area of lifting operations shall be fenced off during the operation and no
worker shall be allowed to approach the lifting zone.
All material shall be secured with guide rope during the lifting operations.
After the implementation of the aforementioned measures, the Labour Department

permitted resumption of the relevant loading and unloading operations at the relevant work
site in January 2015. The fatal accident resulted in criminal charges brought against the
relevant main contractor, our Group as a subcontractor and the relevant sub-subcontractor
(engaged by us), which was direct employer of the deceased and workers involving in the
said incident. For further details of the said incident, please refer to the paragraph headed
Litigation and potential claims in this section. Our Directors believe that the accident
should have been caused by the own deviation of the relevant safety requirements by the
deceased and/or workers, who were not our direct employees, involving in the unloading
operation and that the occurrence of the incident was not within our reasonable
foreseeability of the hazards. Our Directors also believe that, so far as reasonably
practicable, we had maintained our safety management system and have followed all
necessary safety requirement as required by the main contractor in the unloading operation.
Further, as it is the burden of the prosecution to prove their case beyond reasonable doubt at
trial, we are advised that we have merits in our defence.
A table showing our Groups lost time injuries frequency rates (LTIFR(s)) is set out
below:
For the year ended 31 December 2013
For the year ended 31 December 2014
From 1 January 2015 to 31 December 2015
Notes:
157
1.14
5.70
5.5
BUSINESS
1.
LTIFR is a frequency rate that shows how many lost time injuries occurred over a specified time
(e.g. per 1,000,000 hours) worked in a period. The LTIFRs shown above are calculated by
multiplying the number of lost time injuries in terms of loss days of our Group that occurred during
the relevant calendar year or period by 1,000,000 divided by the number of hours worked by site
workers over the same calendar year or period. It is assumed that the working hour of each worker is
10 hours per day. The number of working days for the three calendar years ended 31 December 2015
were approximately 295 days, 296 days and 295 days, respectively.
2.
Employees of our Group and our subcontractors are included in the LTIFRs shown above.
For the two calendar years ended 31 December 2015, we experienced an increase in
LTIFRs. Our Directors believe that it was primarily due to the following reasons:
(i)
An increase in total number of construction site workers being employed by our

Group during the aforesaid period resulted in increasing number of reportable
accidents.
(ii) As a result of the shortage of skilled workers in the construction industry in Hong
Kong during the aforesaid period, our Group had to employ more construction
workers who are less experienced with weaker safety awareness.
Our Directors consider that our Groups LTIFRs during the Track Record Period were
comparatively lower than some of the peers in the construction industry. Going forward, we
will continue to take sufficient safety measures and provide more safety training to increase
the work safety awareness of our workers and our subcontractors in the hope of reducing the
number of work accidents in the future.
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The following table sets out the common nature and type of material industrial
accidents which occurred during the Track Record Period or may occur in construction site
and the corresponding safety measures and requirements to prevent the occurrence of similar
accidents:
Nature and type of industrial
accidents
Safety measures and requirements undertaken
Contusion, laceration and/or

fracture injury caused in
connection with lifting and
disposing of materials
We always seek to minimise the needs for our

workers to handle and lift heavy materials where
possible. In circumstances where manual handling
of heavy materials is inevitable, our Group will
provide relevant facilities such as hydraulic truck
cranes, loaders or carts to facilitate such manual
works. Training to workers in relation to the
correct handling techniques will also be conducted
in accordance with the relevant rules and
regulations.
Contusion, laceration and/or

fracture injury in connection
with operating site equipment
Workers are required to strictly follow relevant

safety procedures for operating various types of
site equipment such as grinding wheels and lifting
machinery. Only qualified and/or trained workers
are permitted to operate certain site equipment
according to our in-house safety rules.
Contusion, bruise, sprain and/or

fracture injury caused in
connection with falling from
high-altitude
Workers are required to strictly follow our

Groups relevant safety rules whilst working at
height. For works to be conducted within lift
shafts and at a height of 2 metres or above, the
relevant working platforms or structures shall be
inspected
by
competent
person
before
commencement of work and regularly during the
course of execution of the work. Depending on
the height of works, each worker is strictly
required to wear safety harness.
External safety consultant

To further enhance our employees awareness in work safety, in July 2015, we engaged
an external safety consultant to advise us on the general safety policy of our Group. The
external safety consultant team includes a chartered member of the Institution of
Occupational Safety and Health of the United Kingdom. The external safety consultant
conducted a review on our occupational health and safety policy with a view to assisting our
Group to (i) comply with the statutory obligations, (ii) improve employees occupational
health and safety, (iii) enhance the hazard identification and risk control capabilities, and
(iv) encourage the identification, sharing and implementation of best practice. Furthermore,
the external safety consultant assisted our Group to complete the certification audit of
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OHSAS 18001:2007 in August 2015 which helps our Group to (i) identify and control health
and safety risks, (ii) reduce the potential risks for accidents, (iii) aid legal compliance, and
(iv) improve overall safety performance.
ENVIRONMENTAL COMPLIANCE
Our Groups operations on sites are subject to certain environmental requirements
pursuant to the laws in Hong Kong such as Air Pollution Control Ordinance, Noise Control
Ordinance, Water Pollution Control Ordinance and Waste Disposal Ordinance. For details of
the regulatory requirements, please refer to the section headed Regulatory overview in this
prospectus.
We are committed to the minimisation of any adverse impact on the environment
resulting from our business activities. In order to comply with the applicable environmental
protection laws, we had implemented an environmental management system which was
certified to be in compliance with the standard required under ISO 14001:2004. Apart from
following the environmental protection policies formulated and required by our customers,
we have also established our environmental management policy to ensure proper
management of environmental protection and compliance of environmental laws and
regulations by both our employees and workers of the subcontractors on among others, air
pollution, noise control and waste disposal. For the two years ended 31 March 2015 and the
eight months ended 30 November 2015, we incurred approximately HK$2,472,000,
HK$3,033,000 and HK$1,381,000 respectively, which primarily consisted of Government
levy on dumping of construction wastes. The Group estimates that its annual cost of
compliance going forward will be at a level similar to that during the Track Record Period
and consistent with its scale of operation.
During the Track Record Period and up to the Latest Practicable Date, we did not
record any non-compliance with applicable environmental requirements that resulted in
prosecution or penalty being brought against us.
It is also noteworthy that we have received certain awards from our customers in
recognition of our effort to act as an environmentally responsible subcontractor. For further
details, please refer to the paragraph headed Awards and recognitions in this section.
INSURANCE
Pursuant to section 40 of the Employees Compensation Ordinance, all employers are,
subject to section 40(1B) of the Employees Compensation Ordinance, required to take out
insurance policies to cover their liabilities both under the Employees Compensation
Ordinance and at common law for injuries at work in respect of all their employees. We
have obtained insurance cover in accordance with such requirement.
Pursuant to section 40(1B) of the Employees Compensation Ordinance, where a main
contractor has undertaken to perform any construction work, it may take out an insurance
policy for an amount not less than HK$200 million per event to cover its liability and that
of its subcontractor(s) under the Employees Compensation Ordinance and at common law.
Where a main contractor has taken out a policy of insurance under section 40(1B) of the
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Employees Compensation Ordinance, the main contractor and a subcontractor insured under
the policy shall be regarded as having complied with the relevant requirements of the
Employees Compensation Ordinance. As a subcontractor, our Groups liability in respect of
the claims from employees of our Group and our Groups subcontractors arising out of and
in the course of their employment will be covered by the insurance policy taken out by the
relevant main contractor.
Our Directors confirmed that during the Track Record Period, all our civil engineering
projects were covered and protected by the employees compensation insurance and
contractors all risks insurance taken out by the main contractor for the entire construction
project. Such insurance policies covered and protected all employees of main contractors and
subcontractors of all tiers working in the relevant construction site, and the works performed
by them in the relevant construction site.
During the Track Record Period, our Group maintained insurance coverage against,
among other matters, (i) liability for third party bodily injury occurred in our office
premises; (ii) loss or damage of our site equipment; and (iii) third-party liability in relation
to the use of our vehicles.
Certain types of risks, such as the risk in relation to the collectability of our trade and
retention receivables and liabilities arising from events such as epidemics, natural disasters,
adverse weather conditions, political unrest and terrorist attacks, are generally not covered
by insurance because they are either uninsurable or it is not cost justifiable to insure against
such risks.
Our Directors believe that our current insurance policies is adequate and consistent
with industry norm having regard to our current operations and the prevailing industry
practice. For the two years ended 31 March 2015 and the eight months ended 30 November
2015, our insurance expenses were approximately HK$246,000, HK$262,000 and
HK$409,000 respectively. During the Track Record Period and up to the Latest Practicable
Date, we had not made, and had not been the subject of, any material insurance claim.
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EMPLOYEES
As at the Latest Practicable Date, we had 238 full-time employees who were directly
employed by our Group in Hong Kong. The following table sets out a breakdown of the
number of our employees by functions:
As at
the Latest
Practicable
Date
Directors and general management
Administration, accounting and finance
Project management and supervision
Safety and environmental compliance
Engineering and surveying
Site workers
7
8
17
8
22
176
238
Our Directors consider that we have maintained good relationship with our employees.
We have not experienced any significant disputes with our employees or any disruption to
our operations due to labour disputes, save as disclosed in the paragraph headed Litigation
and potential claims in this section. In addition, we have not experienced any difficulties in
recruitment and retention of experienced core staff or skilled personnel during the Track
Record Period.
We generally recruit our employees through placing advertisements in the open market
with reference to factors such as their experience, qualifications and expertise required for
our business operations. They are normally subject to a probation period ranging from 1
month to 3 months. We endeavour to use our best effort to attract and retain appropriate and
suitable personnel to serve our Group. Our Group assesses the available human resources on
a continuous basis and will determine whether additional personnel are required to cope with
the business development of our Group.
We provide various types of trainings to our employees and sponsor our employees to
attend various training courses, including those on occupational health and safety in relation
to our work. Such training courses include our internal training as well as courses organised
by external parties such as the Construction Industry Council and the Occupational Safety
and Health Council.
The remuneration package our Group offered to our employees includes salary, bonuses
and other cash subsidies. In general, our Group determines employee salaries based on each
employees qualifications, position and seniority. Our Group has designed an annual review
system to assess the performance of our employees, which forms the basis of our decisions
with respect to salary raises, bonuses and promotions.
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Our Group operates MPF scheme for all qualifying employees in Hong Kong. The
assets of the schemes are held separately from those of our Group, in funds under the
control of trustees. Our Group contributes 5% of relevant monthly payroll costs to the MPF
scheme, whose contribution is matched by employees and subject to a cap of HK$1,250
from June 2012 to May 2014 and HK$1,500 thereafter per employee. During the two years
ended 31 March 2015 and the eight months ended 30 November 2015, the total expenses
recognised in the combined statements of comprehensive income amounted to approximately
HK$1,397,000, HK$2,262,000 and HK$1,156,000, respectively, which represents contributions
payable to the scheme by our Group at rates specified in the rules of the MPF scheme.
RESEARCH AND DEVELOPMENT
During the Track Record Period and as at the Latest Practicable Date, we did not
engage in any research and development activity.
COMPETITIVE LANDSCAPE
The top five civil engineering contractors act as main contractors in the overall civil
engineering construction industry, and they accounted for about 54.6% of the total revenue
of the civil engineering construction industry in 2014. Meanwhile, the civil engineering
subcontracting industry in Hong Kong is fragmented. As at the Latest Practicable Date, there
were over 700 structural and civil engineering subcontractors being registered under the
Construction Industry Council. According to the Ipsos Report, in 2014, our Group accounted
for around 1.8% (or HK$254 million) of the total revenue in the civil engineering
construction industry generated by civil engineering subcontractors (HK$14.1 billion) in
Hong Kong.
Our Directors consider that technical expertise, quality of work, relationship with
customers, suppliers and subcontractors, site equipment capability, project pricing and safety
records are the determinants of competitiveness of a civil engineering subcontractors in
Hong Kong. Entry barriers to the civil engineering construction industry in Hong Kong
mainly include: (i) knowledge of civil engineering, structural, geology and technical
expertise; (ii) sufficiency of practical industry experience; (iii) capital requirement; and (iii)
significant capital investment in specialised site equipment. For details, please refer to the
section headed Industry overview Competitive landscape of the civil engineering
construction industry in Hong Kong Entry barriers in this prospectus.
According to the Ipsos Report, the demand for civil engineering works is expected to
surge in future due to various infrastructure development plans, notably the Ten Major
Infrastructure Projects, and the planned increase in the Governments public expenditure on
infrastructure. With our own proven track record, experienced project management team, site
equipment, specialist knowledge in the civil engineering construction industry and stable
relationship with our key customers, suppliers and subcontractors, details of which are set
out in the paragraph headed Competitive strengths in this section, our Directors believe
that our Group is well-positioned to capture the growing demand for civil engineering
construction services in Hong Kong.
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Please refer to the section headed Industry overview Competitive landscape of the
civil engineering construction industry in Hong Kong in this prospectus for further details
of the competitive landscape of the civil engineering construction industry in Hong Kong.
PROPERTIES
Owned properties
The following table summarises the information regarding our owned property as at the
Latest Practicable Date:
Address
Gross floor area

(sq.ft.)
660
Workshop 16, 13th Floor,

New Commerce Centre,
19 On Sum Street, Siu
Lek Yuen, Shatin, New
Territories, Hong Kong
Use of the property
For storage purpose
The above property was purchased by us in June 2007 for a consideration of

HK$1,600,000 (excluding relevant transaction costs) and was pledged as security for bank
loan with an outstanding principal amount of approximately HK$2,008,000 as at 30
November 2015. As at 31 January 2016, the market value of the above property was
approximately HK$4,120,000 as assessed by Ascent Partners Valuation Service Limited, an
independent property valuer. For further details, please refer to the property valuation set out
in Appendix III to this prospectus. For further information regarding our bank loans, please
refer to the section headed Financial information Indebtedness in this prospectus.
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Leased properties
The following table summarises the information regarding our leased properties during
the Track Record Period and up to the Latest Practicable Date:
Address
Landlord
Unit 05 on 15th
Floor of
North Wing,
Delta House,
No. 3 On Yiu
Street,
Sha Tin, New
Territories,
Hong Kong
An independent
third party
D.D. 121 Lot Nos.

1387RP,
1387ARP,
1388 & 1389RP
Yuen Long,
New Territories
Independent third
parties
Gross
floor area
(sq.ft)
625
10,118
Use of the
property
Key terms of the

tenancy
For office use Monthly rental of

HK$16,167 with a term
commencing from 17
August 2015 to 16
August 2016
Used for
storage of
site
equipment
Monthly rental of
HK$16,800 for the
period commencing
from 1 November 2012
to 31 December 2014
and HK$21,000 for the
period commencing
from 1 January 2015 to
31 August 2015. The
term of the tenancy has
expired.
Licensed property
During the Track Record Period and up to 31 October 2015, Mr. CK Wong and Mr.
WW Wong (as owners of the property) granted a licence to use Workshop 17, 13th Floor,
New Commerce Centre, 19 On Sum Street, Siu Lek Yuen, Shatin, New Territories, Hong
Kong to Luen Hing and Hop Fung as their office at nil consideration for such licence. For
the two years ended 31 March 2015 and the eight months ended 30 November 2015, the
management fee and rates of such licensed property amounted to approximately HK$15,000,
HK$18,000 and HK$11,000, respectively. Our Directors confirm that the aforesaid licence
arrangement in relation to such property had been completed and ceased.
Property rental income
During the Track Record Period, we also owned an investment property located at
Festival City, Tai Wai. Such investment property was purchased by us in June 2010 for a
consideration of HK$13,396,000 (excluding relevant transaction costs) with the intention of
leasing it for earning rental income.
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During the Track Record Period, we recognised rental income of approximately
HK$679,000 from the lease of such investment property to independent third parties.
As we intend to focus on our business of undertaking contract works after Listing, we
have, on 18 September 2015, entered into a sale and purchase agreement with an
independent third party for the disposal of the investment property by us for a consideration
of HK$12,700,000. The consideration was determined after arms length negotiation with the
said independent third party and with reference to the market value of the investment
property as assessed by Ascent Partners Valuation Service Limited. Completion of the
disposal of the investment property took place on 30 October 2015.
INTELLECTUAL PROPERTY
As at the Latest Practicable Date, our Group has registered a trade mark in Hong
Kong, which is intended to be used by our Group to foster our corporate image. Our Group
has also registered of a domain name. Please refer to the section headed B. Further
information about the business 2. Intellectual property rights of our Group in Appendix V
to this prospectus for further details of our intellectual property rights.
As at the Latest Practicable Date, (i) we were not aware of any dispute or
infringements by our Group of any intellectual property rights owned by third parties, and
(ii) we were not aware of any dispute or pending or threatened claims against our Group in
relation to material infringement of any intellectual property rights of third parties.
LICENSES, PERMITS AND REGISTRATION
As advised by the Legal Counsel, except for the business registration under the
Business Registration Ordinance (Chapter 310 of the Laws of Hong Kong), there are no
licenses, permits or approvals required to be obtained for our Group to carry on our business
as a subcontractor of the relevant civil engineering projects.
Based on our Directors experience, some of our customers, in particular main
contractors of major public sector projects, prefer to engage subcontractors who are
registered in the Subcontractor Registration Scheme of the Construction Industry Council. In
view of this, we have first completed such registration since 2005. The following table
summarises the details of such registration held by Luen Hing as at the Latest Practicable
Date:
Type of registration
Granted by
Granted to
Trades
Specialties
Registered Subcontractor
Construction Industry
Council
Luen Hing
Concreting Formwork,
Reinforcement Bar
Fixing, Concreting,
General Civil Works,
Other Structural and
Civil Trades, Finishing
Wet Trades, Painting,
Metal Work, Plumbing
Concreting Formwork,
Reinforcement Bar
Fixing, Concreting,
General Civil Works,
Other Structural and
Civil Trades, Brick/
block work, Painting,
Metal Work, Plumbing
166
Date of
upcoming
expiry
13/01/2017
BUSINESS
The Subcontractor Registration Scheme was introduced by the Construction Industry
Council in order to build up a pool of capable and responsible subcontractors with
specialised skills and strong professional ethics. The registration and the renewal of
registration for the Subcontractor Registration Scheme are subject to the satisfaction of
certain entry requirements which primarily concern the applicants experience and/or
qualification in the relevant works. For further details in relation to the Subcontractor
Registration Scheme, please refer to the section headed Regulatory overview Contractor
licensing regime and operation Contractor licensing regime and subcontractor registration
scheme in this prospectus. Our Directors confirm that during the Track Record Period and
up to the Latest Practicable Date, we had satisfied all requirements for the registration and
the renewal of registration for the Subcontractor Registration Scheme. Our Directors
confirmed that our Group had not experienced any material difficulties in obtaining and/or
renewing the aforesaid registration and they were not aware of any circumstances that would
significantly hinder or delay the renewal of the registration. Our Directors do not foresee
any material impediment in the renewal of the aforesaid registration by us.
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AWARDS AND RECOGNITIONS
We have received a number of awards or certificates during our operating history in
recognition of our commitment and dedication to safety management and environmental
compliance. The following table summarises the awards or certificates obtained by our
Group:
Certifications for compliance with ISO/OHSAS requirements
Date
Award or recognition
Issuing organisation
August 2015
(Note)
Certification of approval in
relation to our quality
management system to be in
compliance with the
requirements of ISO
9001:2008 in respect of our
provision of civil engineering
works
DW Certification Limited
August 2015
(Note)
Certification of approval in
relation to our occupational
health and safety management
system to be in compliance
with the requirements of ISO
works
August 2015
(Note)
Certificate of approval in
relation to our environmental
management system to be in
compliance with the
requirements of OHSAS
works
Note: The certification will be renewed every three years and the current certificate will expire on 16
August 2018.
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Awards in recognition of our Groups safety and environmental compliance
Date
Award or recognition
July 2000
Distinction Safety Performance Subcontractor Tseung Kwan O

Road Project (TKOTL55) granted by an affiliate of our major
customer
2005-2006
Construction Industry Safety Award Scheme Bronze Award

granted by the Labour Department
March 2009
The Environmental Subcontractor Award granted by our major

customer
April 2009
The Safest Subcontractor Award granted by our major customer
August 2009
The Environmental Subcontractor Award granted by our major

customer
January 2010
Excellent Site Safety Award granted by our major customer
May 2013
Winner of Safe Sub-contractor Award granted by our major

customer
June 2014
The Best Subcontractor/ Joint Venture Working Team Award

granted by our major customer under the Safety &
Environmental Incentive Scheme
LITIGATION AND POTENTIAL CLAIMS

During the Track Record Period and as at the Latest Practicable Date, our Group had
been or is involved in a number of claims, litigations and potential claims against our
Group. Set out below are the details of (i) the ongoing litigations in relation to employees
compensation claims, common law personal injury claims and criminal litigations against
our Group as at the Latest Practicable Date; (ii) potential litigations in relation to
employees compensation claims and common law personal injury claims against our Group
as at the Latest Practicable Date; (iii) the litigation in relation to employees compensation
claims and common law personal injury claims against our Group settled or withdrawn
during the Track Record Period and up to the Latest Practicable Date; and (iv) our criminal
convictions during the Track Record Period and up to the Latest Practicable Date.
Our Groups liabilities in a case of personal injuries to our employees by accidents
arising out of and in the course of their employment include those under (i) the Employees
Compensation Ordinance; and (ii) common law personal injury claim. The Employees
Compensation Ordinance establishes a no-fault, non-contributory employee compensation
system which gives employees the right to compensation in respect of (i) injuries or death
caused by accidents arising out of and in the course of employment, or (ii) prescribed
occupational diseases under the Employees Compensation Ordinance. On the other hand,
unlike an employee compensation claim under the Employees Compensation Ordinance
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which no proof of our fault is required, if the injury is caused to an employee by our
negligence, breach of statutory duty, or other wrongful act or omission, an injured employee
may also bring a common law personal injury claim against us. For some of the potential
claims, even if the relevant employees compensation had been settled under our employees
compensation insurance, the injured employees may still pursue litigation claims through
personal injury claims against us under common law. The damages awarded under common
law claims are normally reduced by the value of the compensation paid or payable under the
Employees Compensation Ordinance in any event. Our Directors are of the view that
occurrence of personal injury claims and employees compensation claims is not uncommon
in the industry.
Ongoing litigations in relation to employees compensation claims, common law
personal injury claims and criminal litigations against our Group as at the Latest
Practicable Date
Luen Hing has joined as a defendant in respect of the following nine outstanding
claims and litigations:
Name(s) of our
Group
company(ies)
Particulars of the
charges
Total amount
involved for the
ongoing claims
Status
Insurance
coverage
Potential consequence and maximum

penalties
Personal injury claims

1. Luen Hing
In June 2012, it was

purported that the
plaintiff sustained
injuries to his left foot
whilst erecting
formwork in the course
of work.
To be assessed by
the court.
(Note 1)
Ongoing.
Checklist review
hearing to be held
on 8 April 2016.
To be covered
by insurance
policy.
N/A
2. Luen Hing
In September 2012, it
was purported that the
plaintiff suffered
fracture of his right
shoulder whilst
transferring metal plates
in the course of work.
Approximately
HK$1,399,000
plus interest and
costs as shown in
the claimants
without prejudice
pre-action letter,
however, the final
amount is to be
assessed by the
court.
Ongoing.
Checklist review
hearing to be held
on 26 August
2016.
To be covered
by insurance
policy.
N/A
Employees compensation claims

3. Luen Hing
In January 2015, it was

purported that the
plaintiff sustained
injury to his right foot
whilst the operator of
the crane lorry operated
the crane lorry to lift
up iron chain without
awaiting the plaintiff to
unfasten a bundle of
iron bars from the iron
chain
To be assessed by
the court.
Ongoing. First
hearing to be held
on 27 May 2016.
To be covered
by insurance
policy.
N/A
4. Luen Hing
In August 2014, it was

purported that the
plaintiff crushed his left
middle finger whilst
positioning the loading
or unloading manhole
cover and frame.
To be assessed by
the court.
Ongoing. First
hearing to be held
on 5 August 2016.
To be covered
by insurance
policy.
N/A
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Name(s) of our
Group
company(ies)
Particulars of the
charges
Total amount
involved for the
ongoing claims
Status
Insurance
coverage

penalties
5. Luen Hing
In August 2014, it was

purported that the
plaintiff sustained
injury on his right
shoulder whilst prying
the base of a concrete
barrier with a crowbar.
To be assessed by
the court.
Ongoing. First
hearing to be held
on 2 September
2016.
To be covered
by insurance
policy.
N/A
6. Luen Hing
In March 2015, it was

purported that the
plaintiff sustained
injuries over his head,
neck and back whilst
performing bar bending
work.
To be assessed by
the court.
(Note 2)
Ongoing. First
hearing to be held
on 2 September
2016.
To be covered
by insurance
policy.
N/A
7. Luen Hing
In February 2014, it
was purported that the
plaintiff sustained
injuries to his right
elbow and left hand
whilst using a drilling
machine.
To be assessed by
the court.
(Notes 2 and 3)
Ongoing. First
hearing to be held
on 9 September
2016.
To be covered
by insurance
policy.
N/A
In October 2014, Luen

Hing was charged by
the Labour Department
that it failed: (i) to
provide and maintain
safe plant and system
of work, (ii) to provide
necessary information,
instruction, training and
supervision for safety at
work of person(s)
employed at industrial
undertaking as required
under the Factories and
Industrial Undertakings
Ordinance, and (iii) to
ensure workman
wearing suitable safety
helmet as required
under the Construction
Sites (Safety)
Regulation.
To be assessed by
the court.
Ongoing. Trial
hearing to be held
on 29 April 2016.
As confirmed
by our
Directors,
penalties
arising from
criminal
claims are
usually not
covered by
insurance.
Under the Factories and Industrial

Undertakings Ordinance, in relation to
charges (i) and (ii), the maximum penalty
for each of them is a fine of HK$500,000
and imprisonment for 6 months.
Criminal litigations
8. Luen Hing
Under the Construction Sites (Safety)

Regulation, in relation to charge (iii), the
maximum penalty is a fine of HK$50,000.
As advised by our Legal Counsel, since the
directors, officers and employees of Luen
Hing are not the defendant, they will not
have any liability under charges and the
likelihood of the Court to impose maximum
penalty is not particularly high and a fair
estimate of the likely penalty would be fine
of HK$120,000, HK$120,000 and
HK$15,000 for the charges (i), (ii) and (iii),
respectively, if Luen Hing is found liable.
Our Legal Counsel also opined that if Luen
Hing is so convicted, the conviction will not
have any significant impact creating
impediment on the application for renewal
of registration of Luen Hing under the
Subcontractor Registration Scheme. In view
of the amount of the likely penalty, our
Directors consider that no provision is
necessary to be made.
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Name(s) of our
Group
company(ies)
9. Luen Hing
Particulars of the
charges
In November 2014,
Luen Hing was charged
by the Labour
Department that it
failed: (i) to provide
and maintain a system
of work for unloading
water pipes, so far as
reasonably practicable,
safe and without risks
to health and (ii) to
provide such
information, instruction,
training and supervision
for the health and
safety at work of all
employees which
resulted in the death of
a worker.
Total amount
involved for the
ongoing claims
To be assessed by
the court.
Status
Ongoing. Trial
hearing to be held
on 17-20 and 24
May 2016 (with
25 May 2016 be
reserved).
Insurance
coverage

penalties
As confirmed
by our
Directors,
penalties
arising from
criminal
claims are
usually not
covered by
insurance.
Under the Factories and Industrial

Undertakings Ordinance, a fine of
HK$500,000 and to imprisonment for 6
months.
As advised by our Legal Counsel, since the
directors, officers and employees of Luen
Hing are not the defendant, they will not
have any liability under these charges and
the likelihood of the Court to impose
maximum penalty is not particularly high
and a fair estimate of the likely penalty
would be a fine of HK$150,000 for each of
the charges (i) and (ii) if Luen Hing is
found liable. As further advised by our
Legal Counsel that according to the cases
presented by the prosecution, Luen Hing
was not the one accused for failure to
provide and maintain a system of work and
proper information, training and supervision
for the health and safety of workers at the
industrial undertaking, however, under
section 13(1) of the Factories and Industrial
Undertakings Ordinance, even if the offence
is committed by other proprietor(s), Luen
Hing (as one of the proprietors of the same
industrial undertaking) will still be liable for
the same offence. Our Legal Counsel,
therefore, opined that even if Luen Hing
was so convicted, its role and culpability in
this case would be minor and the conviction
would not have any significant impact
creating impediment on the application for
renewal of registration of Luen Hing under
the Subcontractor Registration Scheme. In
view of the amount of the likely penalty,
our Directors consider that no provision is
necessary to be made.
Notes:
1.
As at the Latest Practicable Date, no statement of damages was received by our Group. As such, we
are not in a position to assess the likely amount of compensation and/or damages to be claimed by
the claimant in relation to such claim. Our Directors take the view that the amount to be borne by
our Group in the proceeding shall be covered by the relevant insurance policy and our Groups entire
conduct of its defence against such claim in the proceeding has been taken up by the relevant insurer.
2.
As at the Latest Practicable Date, the Labour Department had not yet assessed the amount of such
claim. Our Directors take the view that the amount to be borne by our Group for this claim shall be
covered by the relevant insurance policy.
3.
The occurrence of the accident was being alleged by the claimant of the employees compensation
case.
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BUSINESS
Potential litigations in relation to employees compensation claims and common law
personal injury claims against our Group as at the Latest Practicable Date
As confirmed by our Directors, as at the Latest Practicable Date, there were 13
workplace accidents (of which occurrence of 1 accident was alleged by a claimant of an
employees compensation claim) occurred during the Track Record Period and up to the
Latest Practicable Date, which gave rise to ongoing employees compensation claims and
may give rise to potential employees compensation and/or common law personal injury
claims.
Potential claims refer to those claims that have not commenced against our Group but
are within the limitation period of two years (for employees compensation claims) or three
years (for personal injury claims) from the date of the relevant incidents pursuant to the
Limitation Ordinance (Chapter 347 of the Laws of Hong Kong). As such court proceedings
have not commenced, we are not in a position to assess the likely quantum of such potential
claims and outstanding claims. Our Directors take the view that the amount of such potential
claims and outstanding claims to be borne by our Group in the proceedings shall be covered
by relevant insurance policy. These accidents (save for 1 accident as alleged by a claimant
of an employees compensation claim) were caused during usual and ordinary course of our
business and have neither caused disruption to our Groups business nor have an adverse
impact on our Group to obtain any licences or permits for our operation. Please see below a
summary of the expiry of limitation period of the aforesaid work injury cases:
Year
Number of
employees
compensation
claims which
limitation
period will
expire
Number of
personal
injury claims
which
limitation
period will
expire
2016
2017
2018
2019
2
3
1
0
0
6
6
1
Total:
13
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The number of accidents that we recorded during the Track Record Period and up to
the Latest Practicable Date is summarised in the following table:
For the year ended
31 March
2014
2015
Number of accidents resulting in
injuries of:
our employees
our subcontractors employees
From 1 April 2015

to the Latest
Practicable Date
1(Note)
0
7
1
3
1
Note: The occurrence of the accident was being alleged by the claimant of an employees compensation
case.
Litigations against our Group settled or withdrawn during the Track Record Period
and up to the Latest Practicable Date
During the Track Record Period and up to the Latest Practicable Date, the following
employees compensation claims and/or personal injury claims, being covered by insurance
policies, were settled or withdrawn against our Group.
Name(s) of our
Group
company(ies)
Nature of the
claims
Particulars of the
claims
Approximate
settlement
amount
Date of
settlement/
withdrawal of
claims
1.
Luen
Hing
Employees
compensation
claim
On 20 September
2012, the applicant
suffered fracture of
his right shoulder
while moving a
metal plate.
HK$110,000
(exclusive of
costs) (Note 1)
19 January
2015
2.
Luen
Hing
Employees
compensation
claim
On 14 June 2012, the

applicant sustained
injuries to his left
foot whilst erecting
formwork.
HK$591,000
(exclusive of
costs) (Note 1)
17 December
2014
3.
Luen
Hing
(i)
On 5 July 2012, the

applicants right
thigh was lacerated
whilst using a steel
bending machine.
HK$1,054,000 (Note 2) 4 February

2016
(exclusive of
costs) (Note 1)
(ii)
Employees
compensation
claim
Personal
injury claim
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Name(s) of our
Group
company(ies)
Nature of the
claims
Particulars of the
claims
4.
(i)
Employees
compensation
claim
Personal
injury claim
On 18 September
2010, the plaintiff
fell down a manhole
or pit for a distance
of about 3 to 4
meters and sustained
injuries to his left
sided lumbar spine
and left knee.
HK$1,837,040 (Note 2) 11 March 2015

(exclusive of
costs) (Note 1)
Employees
compensation
claim
Personal
injury claim
On 26 July 2011, the

plaintiff sustained
injuries to his lower
back, left shoulder
and left chest whilst
lifting rebars.
HK$878,200 (Note 2)
(exclusive of
costs) (Note 1)
30 June 2014
Luen
Hing
(ii)
5.
Luen
Hing
(i)
(ii)
Approximate
settlement
amount
Date of
settlement/
withdrawal of
claims
6.
Luen
Hing
Personal injury
claim
On 10 September
2010, the plaintiffs
right foot was
contused and crashed
by a dislodged
segment of the
concrete pipe whilst
installing a concrete
pipe.
HK$1,050,000
(exclusive of
costs) (Note 1)
17 January
2014
7.
Luen
Hing
Personal injury
claim
On 1 September
2011, the plaintiff
sustained injuries to
his left back and
right lower limb
whilst transporting
building materials.
HK$250,000
(exclusive of
costs) (Note 1)
2 October
2013
Notes:
1.
Our Directors confirm our Groups entire conduct of its defence against such claims and settlement
negotiation in the proceeding have been taken up by the relevant insurer and the amount of
settlement and litigation costs shall be totally covered by the relevant insurance policy.
2.
The settlement amount settled both personal injury and employees compensation claims raised by the
claimant.
There are insurance policies in place to cover our potential liabilities in relation to the
above. For details, please refer to the paragraph headed Insurance in this section.
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No provision for litigation claims
Having considered, among other things, (i) the nature and the degree of injuries of the
incidents; (ii) any payments made so far for settlement for the incidents; (iii) the status of
the injured employees; (iv) the difficulty and uncertainty in estimating total costs of
treatment and potential claims against our Group; (v) the coverage of insurance policy; and
(vi) our Groups historical litigation records, our Directors consider that no provision for
contingent liabilities in respect of current, pending and potential litigations is necessary.
Indemnity given by our Controlling Shareholders
Our Controlling Shareholders have entered into a Deed of Indemnity whereby our
Controlling Shareholders have agreed to indemnify our Group, subject to the terms and
conditions of the Deed of Indemnity, in respect of any liabilities and penalties which may
arise as a result of any outstanding and potential litigations (including criminal litigations),
claims of our Group on or before the date on which the Placing becomes unconditional.
Further details of the Deed of Indemnity are set out in the paragraph headed E. Other
information Tax and other indemnities in Appendix V to this prospectus.
Save as disclosed above, our Directors, to the best of their knowledge, information and
belief having made all reasonable enquiries, are not aware of any litigation proceedings
(current, pending or threatened) against us which could have a material adverse effect on our
financial condition or results of operations.
176
BUSINESS
Criminal convictions
During the Track Record Period and up to the Latest Practicable Date, our Group was
convicted for the following criminal litigations:
Name(s) of our
Group
company(ies)
1. Luen Hing
2. Luen Hing
Particulars of the convictions
Consequence and penalties
In October 2013, it was purported that

Luen Hing failed to take adequate steps
to prevent a person from falling from a
height of 2 metres or more, which
contravenes Regulations 38B(1A),
68(1)(a) and 68(2)(g) of the Construction
Sites (Safety) Regulations (Chapter 59I
of the laws of Hong Kong).
Luen Hing was convicted and fined

HK$20,000.
In November 2014, it was purported that

Luen Hing failed to ensure that each
chain, rope and lifting gear in use shall
be thoroughly examined by a competent
examiner in the preceding six months
before it is used, which contravenes
Regulation 18(1)(e) and 19 of the
Factories and Industrial Undertakings
(Lifting Appliances and Lifting Gear)
Regulations (Chapter 59J of the laws of
Hong Kong).
Luen Hing was convicted and was fined

HK$4,000.
Luen Hing paid the fine of HK$20,000 on 5

June 2014.
Our Legal Counsel opined that this conviction
will not have any significant impact creating
impediment on the application for renewal of
registration of Luen Hing under the
Subcontractor Registration Scheme.
Luen Hing paid the fine of HK$4,000 on 6

August 2015.
Our Legal Counsel opined that this conviction
will not have any significant impact creating
impediment on the application for renewal of
registration of Luen Hing under the
Subcontractor Registration Scheme.
The criminal convictions were all monetary penalty and such convictions were made
against our Group but not against our Directors or the senior management of our Group
personally.
Save as disclosed above and to best of our Directors knowledge and belief, during the
Track Record Period and up to the Latest Practicable Date, our Group did not experience
any significant incidents or accidents in relation to workers safety and we were not
convicted for any material breach of workplace safety laws and regulations.
177
BUSINESS
NON-COMPLIANCE
Our Directors confirm that they were aware of the occurrence of certain
non-compliances of our Group with (1) the Predecessor Companies Ordinance and the
Companies Ordinance in respect of matters including among others, timely adoption of
audited accounts, failure to convene annual general meetings within the prescribed time, and
late filing of or missing reportable information in statutory forms to the Companies Registry;
and (2) the Employment Ordinance (Chapter 57 of the Laws of Hong Kong) in respect of
late payment of wages to the Group employees. As advised by the Legal Counsel, those
non-compliance incidents not disclosed in this prospectus are either time barred by the time
limit for prosecution of three years under both Predecessor Companies Ordinance and
Companies Ordinance or immaterial in nature under the relevant ordinances. Taking into
account the above and the fact that any loss, fee, expense and penalty of our Group in
relation to non-compliance matters will be fully indemnified by our Controlling
Shareholders, our Directors consider, and the Sponsor concurs, that the impact of them
would be immaterial upon our Groups operation and financial positions.
As confirmed by our Directors, as at the Latest Practicable Date, save as disclosed
above, our Group did not receive any notices for any fines or penalties for any
non-compliance that is material and systemic.
Indemnity given by our Controlling Shareholders
Our Controlling Shareholders, collectively as the indemnifiers, entered into the Deed of
Indemnity whereby our Controlling Shareholders have agreed to indemnify our Group,
subject to the terms and conditions of the Deed of Indemnity, in respect of any liabilities
and penalties which may arise as a result of any non-compliances of our Group on or before
the date on which the Placing becomes unconditional. Further details of the Deed of
Indemnity are set out in the paragraph headed E. Other information Tax and other
indemnities in Appendix V to this prospectus.
No provision
No provision was made in the financial statements of our Group in respect of the
aforementioned non-compliances as our Directors have taken into consideration the
following: (i) up to the Latest Practicable Date, our Directors were not aware of any
prosecution instituted against us or any notices for any fine or penalties in relation to the
above non-compliances; (ii) even if there is any prosecution, the actual amount of penalty
cannot be estimated with reasonable accuracy and the potential maximum penalties of the
abovementioned non-compliance incidents to be immaterial; (iii) legal opinion on chance of
prosecution and legal liability; and (iv) our Controlling Shareholders shall indemnify our
Group pursuant to the Deed of Indemnity.
Having taken into account (i) the nature of the abovementioned non-compliances; and
(ii) after adopting the preventative measures as set out in the paragraph headed
Non-compliance Internal control measures to prevent the recurrence of non-compliance
incidents of this section below, there has not been any recurrence of similar types of
non-compliances and there was no indication that our Directors lack the ability to operate
178
BUSINESS
the business in a fully compliant manner after adopting the preventative measures, our
Directors are of the view, and the Sponsor concurs, that our Groups internal control
measures are adequate and effective.
Furthermore, taking into account (i) the non-compliances mentioned above did not
involve intentional misconduct, fraud, dishonesty or corruption on the part of our Directors;
and (ii) our Directors have adopted the preventative measures as set out in the paragraph
headed Non-compliance Internal control measures to prevent the recurrence of
non-compliance incidents of this section below, our Directors are of the view, and the
Sponsor concurs, that these non-compliances do not reflect a material defect in the character,
integrity or experience of our Directors. Furthermore, our Directors have been given training
on the new Companies Ordinance. Our Directors are therefore of the view, and the Sponsor
concurs, that our Directors are suitable to act as our Companys Directors under Rules 5.01
and 5.02 of the GEM Listing Rules. Furthermore, given the rectification status of the
non-compliances identified as well as the Deed of Indemnity given in favour of us by our
Controlling Shareholders, our Directors are of the view, and the Sponsor concurs, that the
abovementioned non-compliances do not affect our suitability of Listing under Rule 11.06 of
the GEM Listing Rules.
Internal control measures to prevent the recurrence of non-compliance incidents
In relation to the non-compliance incidents mentioned above, our Group has engaged
CT Partners, an independent internal control adviser, to review and provide
recommendations to our internal control designs for preventing the recurrence of the
above-mentioned non-compliance incidents. After taking into account the recommendations
made by CT Partners, our Group has adopted or will adopt the following key measures:
1.
with regard to the non-compliance in relation to the Predecessor Companies

Ordinance and the Companies Ordinance, our company secretary, Mr. Woo Yuen
Fai, has been responsible for keeping the filing register up to date on a monthly
basis in respect of, among other things, the status of all relevant documents
required under the Companies Ordinance (including the preparation status of
financial statements that are required to be laid in the following annual general
meeting of each company in our Group) starting from November 2015 and we
will seek legal advice from external legal adviser to ensure ongoing compliance;
and
2.
with regard to the non-compliance in relation to the Employment Ordinance

(Chapter 57 of the Laws of Hong Kong), written procedures have been put in
place to ensure on-going compliance on payroll. Our financial controller, Ms.
Chan Yin Wa Cecilia, has been responsible for checking and approval of the
payroll record with the assistance from the designated personnel from the human
resources and administrative department.
179
BUSINESS
REVIEW BY CT PARTNERS
We endeavour to uphold the integrity of our business by maintaining an internal control
system into our organisational structure. In preparation for the Listing and to further
improve our internal control system, in August 2015, we engaged CT Partners, an
independent internal control adviser, to perform an evaluation under the Committee of
Sponsoring Organisations of the Treadway Commissions 2013 framework of the adequacy
and effectiveness of our Groups internal control system including the areas of financial,
operation, compliance and risk management.
CT Partners is a company rendering internal control review services, which has been
previously engaged in internal control review projects for a number of companies listed on
the Stock Exchange. Besides, the engagement team of CT Partners includes members of the
Hong Kong Institute of Certified Public Accountants, a Certified Internal Auditor, a member
of the Society of Chinese Accountants & Auditors, a fellow member of the Associations of
Chartered Certified Accountants, an associate member of the Association of International
Accountants, a member of Certified General Accountants Association of British Columbia,
and an associate of the Taxation Institute of Hong Kong and a Certified Tax Adviser (HK).
In August 2015, CT Partners completed the first review of our internal control system
on, among others, our control environment, risk assessment, control activities, information
and communication, monitoring activities, financial reporting and disclosure, human
resources and payroll, cash management and treasury, sales and receipts cycle, project
management and compliance procedures with Appendix 15 Corporate Governance Code of
the GEM Listing Rules. In order to strengthen our internal control system and aside from
the key measures taken to prevent the recurrence of the non-compliance incidents, albeit
immaterial in nature, stated in the paragraph headed Non-compliance of this section, our
Group has also adopted or will adopt the following key measures:
we agree to establish system and manuals in relation to, among others,

distribution of annual, interim or quarterly reports and publication, handling and
monitoring of inside information prior to public announcement and other
requirements under the GEM Listing Rules;
we have established an authorisation and written approval matrix for handling

cheque payment and the daily operation of the Group;
in November 2015, our Directors attended training sessions conducted by our

legal advisers as to Hong Kong law on the on-going obligations and duties of a
director of a company whose shares are listed on the Stock Exchange;
we will engage CT Partners to have an annual review on the adequacy and

effectiveness of our internal control system for the financial year ending 31 March
2016, including areas of financial, operational, compliance and risk management;
180
BUSINESS
we have engaged TC Capital as our compliance adviser and will, upon Listing,
engage a legal adviser as to Hong Kong laws, which will advise and assist our
Board on compliance matters in relation to the GEM Listing Rules and/or other
relevant laws and regulations applicable to our Company;
we have established an audit committee which comprises all independent

non-executive Directors, namely Mr. Liu Yan Chee James, Mr. Wong Chi Kan and
Mr. Tai Hin Henry. The audit committee has adopted its terms of reference which
sets out clearly its duties and obligations to, among other things, overseeing the
internal control procedures and accounting and financial reporting matter of our
Group, and ensuring compliance with the relevant laws and regulations. For the
biographical details of the independent non-executive Directors, please refer to the
section headed Directors and senior management in this prospectus; and
when considered necessary and appropriate, we will seek professional advice and
assistance form independent internal control consultants, external legal advisers
and/or other appropriate independent professional advisers with respect to matters
related to our internal controls and legal compliance.
In October 2015, CT Partners performed a follow-up review on our internal control

system and we did not note any findings of material weakness or insufficiency in our
Groups internal control system.
View of our Directors and the Sponsor
Having considered that:
(i)
the employees compensation and personal injury claims against our Group during
the Track Record Period were fully covered by the insurance policies maintained
by the relevant main contractors;
(ii) enhanced safety measures were put in place and remedial actions were effectively
carried out by us to prevent the occurrence of fatal and significant industrial
accidents; and
(iii) the total amount of fine paid by us during the Track Record Period and up to the
Latest Practicable Date in relation to our safety and health related convictions was
only HK$24,000 and that the said convictions did not adversely affect our
registration under the Subcontractor Registration Scheme,
our Directors are of the view, and the Sponsor concurs, the fatal accident, the convictions in
relation to the breach of safety and health-related laws and regulations, and the accidents
which resulted in personal injury claims and/or employees compensation claims disclosed in
this section would not have material adverse impact on our Groups operation and financial
position.
181
BUSINESS
As set out in the paragraphs headed Occupational health and safety,
Non-compliance and Litigation and potential claims in this section, our Group has laid
down and implemented additional safety measures to enhance internal control measures in
order to monitor ongoing compliance with the relevant laws and regulations to prevent the
recurrence of the litigations, prosecutions and non-compliance incidents in the future. On the
basis that (i) our accident rates were lower than the industry average during the Track
Record Period; and (ii) we have been accredited with OHSAS 18001 qualification in respect
of our occupational safety and health management system, our Directors believe, and the
Sponsor concurs that, these measures are adequate and effective to promote a safer and
healthier environment for the workers at our construction sites and to prevent recurrence of
the said incidents.
Furthermore, our Directors and Legal Counsel both take the view, and the Sponsor
concurs, that the above mentioned litigations, prosecutions and immaterial non-compliance
incidents would not affect (i) the suitability of our executive Directors under Rules 5.01 and
5.02 of the GEM Listing Rules; and (ii) or our Companys suitability of Listing under Rule
11.06 of the GEM Listing Rules on the following grounds:
(i)
The litigations, prosecutions and past immaterial non-compliance would not have
material adverse impact on our Groups operation and financial position as
disclosed above.
(ii) The litigations, prosecutions and past immaterial non-compliance incidents were
unintentional, did not involve any dishonesty of fraudulent act on the part of our
Directors or cast any doubt on their integrity or competence.
(iii) Our Group has implemented and will continue to implement appropriate measures
to avoid recurrence of the litigations, prosecutions and non-compliance incidents
and will engage an external professional adviser for ensuring strict compliance
with the relevant laws and regulations.
(iv) Our Group has carried out remedial actions and fully rectified all of the
immaterial non-compliance incidents, if applicable.
(v)
Our Directors confirm, and the Sponsor concurs that, the internal control measures
implemented by our Group are sufficient and could effectively ensure a proper
internal control system of our Group and prevent the recurrence of
non-compliance incident of same nature.
182
DIRECTORS AND SENIOR MANAGEMENT

OVERVIEW
Our Board currently consists of seven Directors, comprising four executive Directors
and three independent non-executive Directors. Our Directors are supported by our senior
management in the day-to-day management of our business.
The following table sets out the information in respect of our Directors and senior
management:
Directors
Date of
joining our
Group
Date of
appointment
as Director of
our Company
Relationship with
other Director(s)
and/or senior
management
Name
Age
Position
Mr. WONG Che Kwo
57
Executive Director
and Chairman of
our Board
November
1998
16 October
2015
Joint responsibility of
formulation of overall
business development
strategy and overall
management and major
business decisions of our
Group and the chairman of
the nomination committee
Father-in-law of Mr.
CHIU Chi Wang
58
Executive Director,
Chief Executive
Officer
November
1998
16 October
2015
Joint responsibility of
formulation of overall
strategy and execution of
daily management and
administration of our
business and operations and
monitoring occupational
health, safety and
environmental compliance
and a member of the
remuneration committee
N/A
55
Executive Director
June 1999
16 November
2015
Overseeing execution of daily

management of site
operations of our Group
N/A
31
Executive Director
November
2012
16 November
2015
Overseeing the engineering and

technical aspects of various
projects of our Group
Son-in-law of Mr.
WONG Che Kwo
30
Independent
non-executive
Director
24 March 2016
24 March 2016
Chairman of the remuneration

committee and a member of
the audit committee and a
member of the nomination
committee
N/A
Mr. LIU Yan Chee

James
45
Independent
non-executive
Director
24 March 2016
24 March 2016
Chairman of the audit

the remuneration committee
N/A
Mr. TAI Hin Henry
30
Independent
non-executive
Director
24 March 2016
24 March 2016
A member of the audit

the nomination committee
N/A
Mr. WONG Wing Wah
Mr. WONG Tak Ming
Mr. CHIU Chi Wang
Mr. WONG Chi Kan
183
Principal responsibilities

Senior Management
Relationship
with other
Date of
Date of
joining our
appointment of
Principal
and/or senior
Director(s)
Name
Age Position
Group
current position
responsibilities
management
Ms. CHAN Yin
27
August 2015
August 2015
Overseeing the
N/A
Financial Controller
financial
Wa Cecilia
operations of our
Group
Mr. LO Shek
64
Quantity Surveyor
Manager
Kwong
June 2005
June 2005 and
and
reappointed in
quantity surveying
rejoined in
May 2009
functions of our
May 2009
Mr. WONG Ka
39
Site Agent
Overseeing all
June 2004
N/A
projects
September 2009
Monitoring work
N/A
progress of our
Chun Jeffery
projects and
supervising
workmanship and
quality
Executive Directors
Mr. WONG Che Kwo , aged 57, is the co-founder of our Group, an
executive Director and our Chairman. Mr. CK Wong is one of our Controlling Shareholders
and also a director of Hop Fung, Luen Hing and Super Pioneer. He has over 30 years of
experience in civil engineering construction industry in Hong Kong. Mr. CK Wong is
primarily responsible for formulation of overall business development strategy and overall
management and major business decisions of our Group. Prior to establishing our Group,
from May 1982 to June 1983, Mr. CK Wong worked as a construction worker in a civil
engineering construction contractor in Hong Kong where he started to gain exposure to
project execution of civil engineering construction. In 1983, he started the business of civil
engineering works as a sole proprietorship where he continued to extend his expertise and
experience in civil engineering works as a subcontractor focusing on road and drainage
works. In November 1998, he co-founded Luen Hing with Mr. WW Wong, our executive
Director and our Chief Executive Officer, in order to capture the growing business
opportunities for civil engineering construction works in Hong Kong. Mr. CK Wong is the
father-in-law of Mr. Chiu Chi Wang who is an executive Director.
Mr. WONG Wing Wah , aged 58, is the co-founder of our Group, an
executive Director and our Chief Executive Officer. Mr. WW Wong is one of our Controlling
Shareholders and also a director of Hop Fung, Luen Hing and Super Pioneer. He has over 19
years of experience in civil engineering construction industry in Hong Kong. Mr. WW Wong
is primarily responsible for formulation of overall business development strategy, execution
of daily management and administration of our business and operations and monitoring
184

occupational health, safety and environmental compliance. Prior to joining our Group, in
February 1996, Mr. WW Wong worked for Luen Hing Civil Eng Co., a sole proprietorship
established by Mr. CK Wong, and commenced his career in the civil engineering
construction industry. In November 1998, Mr. WW Wong co-founded Luen Hing with Mr.
CK Wong in order to capture the growing business opportunities for civil engineering
construction works in Hong Kong.
Mr. WONG Tak Ming, aged 55, is an executive Director. Mr. Wong has
over 25 years of experience in civil engineering construction industry in Hong Kong. He is
primarily responsible for overseeing execution of daily management of site operations of our
Group. He joined our Group as a site superintendent in June 1999 and was promoted to site
agent in May 2003. He was further promoted to construction manager in January 2011.
Prior to joining our Group, Mr. Wongs working experience includes:
Principal business
activity
Position
Period of service
Shun Yip Construction Co.,

Ltd
Construction
Site foreman
May 1992 May

1993
Tobishima Corporation
Construction
Foreman
June 1993
October 1994
Yiu Kee Engineering Co.
Construction
Site supervisor
November 1994
May 1995
Tobishima Corporation
Construction
General foreman
September 1996
March 1998
Kin Lee Ko Construction

Co. Ltd
Construction
Site agent
March 1998 June

1998
Chun Wo Construction &

Engineering Co., Ltd
Construction
General foreman
July 1998 June

1999
Name of companies
Mr. Wong has completed the training courses conducted by the Occupational Safety &
Health Council on Basic Safety Management, Construction Safety and Basic Occupational
Health in October 1992. He was also awarded a certificate for Safety & Health Supervisor
(Construction) in January 1993.
Mr. CHIU Chi Wang, aged 31, is an executive Director. Mr. Chiu joined
our Group as a trainee engineer in November 2012. He was promoted to engineer in March
2015 and he is responsible for overseeing the engineering and technical aspects of various
projects of our Group. Prior to joining our Group, he worked as a police constable from
January 2007 to November 2012. Mr. Chiu graduated from Rosaryhill School in July 2004.
Mr. Chiu completed the Standard Criminal Investigation Course in September 2012. He
185

completed a Diploma in Civil Engineering in February 2016 which is a part-time course
offered by the Hong Kong Institute of Vocational Education. Mr. Chiu is the son-in-law of
Mr. CK Wong who is an executive Director and the Chairman of our Board.
Mr. WONG Chi Kan, aged 30, is an independent non-executive Director.
He has over 5 years of experience in auditing and accounting. Mr. Wong has served as an
assistant financial controller in iRregular Consulting Limited, a company principally engaged
in provision of financial public relations services, since March 2016. He worked as an
accounting manager in Hao Wen Holdings Limited (a company listed on GEM of the Stock
Exchange (stock code: 8019) and principally engaged in sale of biodegradable food
containers and disposable industrial packaging for consumer products) between March 2015
and March 2016. From January 2014 to February 2015, he was a senior associate and further
promoted to an assistant manager in BDO Limited. From November 2010 to January 2014,
he served as an accountant and later promoted to senior accountant in HLB Hodgson Impey
Cheng Limited. Mr. Wong obtained a Bachelor of Commerce degree and a masters degree
in Professional Accounting from the University of New South Wales in May 2009 and
August 2010 respectively. He is also a fellow member of the Certified Practising
Accountants Australia since March 2014. Mr. Wong is a certified public accountant of the
Hong Kong Institute of Certified Public Accountants.
Mr. LIU Yan Chee James , aged 45, is an independent non-executive
Director. He has more than 20 years of experience in finance and accounting. He has been a
director of Special Fine Investment and Management Limited, a company principally
engaged in fund management business, since January 2014.
Mr. Lius previous working experience primarily includes:
Name of companies
Principal business
activity
Tung Shing (Brokers) Group
Position
Period of service
Investment banking
Sales Director and

Head of
Institutional Sales
September 2011
October 2015
KGI Asia Limited
Investment banking
Sales Director
October 2007
September 2011
Enlighten Securities Limited
Investment banking
Sales Director
November 2003
October 2007
Sun Hung Kai Investment

Services Limited
Investment banking
Sales Director
Mid-2001
October 2003
Vickers Ballas, Hong Kong

Limited
Investment banking
Sales Director
March 1997
mid-2001
186
Name of companies
Sun Hung Kai Investment
Services Limited
Principal business
activity
Position
Period of service
Investment banking
Account Manager
July 1995 March

1997
Mr. Liu graduated from Dalhousie University in Canada with a Bachelor of Commerce
in February 1994.
Mr. TAI Hin Henry , aged 30, is an independent non-executive Director.
Mr. Tai has over 6 years of experience in auditing and accounting. He has been an
accounting manager of Rich Gain Construction Development Company Limited, a
construction company in Hong Kong, since August 2014. From May 2009 to July 2014, Mr.
Tai worked as an audit senior in Louis Leung and Partners CPA Limited. He also worked at
New Time Trading Company, a company principally engaged in the trading of jewellery and
jade, as a sales executive during the period from September 2007 to April 2009. Mr. Tai
graduated from the London School of Economics and Political Science, University of
London with a Bachelor of Science majoring in Accounting and Finance in June 2007. He
has completed the CPA Qualification Programme of the Hong Kong Institute of Certified
Public Accountants in August 2015.
Disclosure required under Rule 17.50(2) of the GEM Listing Rules
Save as disclosed above, each of our Directors confirms with respect to himself that:
(i) he has not held directorships in the last three years in other public companies the
securities of which are listed on any securities market in Hong Kong or overseas; (ii) he
does not hold any other position in our Company or any of its subsidiaries; (iii) save as
disclosed in the section C. Further information about Substantial Shareholders, Directors
and Experts 1. Disclosure of interests in Appendix V to this prospectus, he does not have
any interests in the Shares within the meaning of Part XV of the SFO; (iv) had no other
relationship with any Directors, Substantial Shareholders, Controlling Shareholders, or senior
management of our Company as at the Latest Practicable Date; (v) there is no other
information that needs to be disclosed pursuant to Rule 17.50(2) of the GEM Listing Rules;
and (vi) to the best of the knowledge, information and belief of our Directors having made
all reasonable enquiries, there are no other matters with respect to the appointment of our
Directors that need to be brought to the attention of our Shareholders.
SENIOR MANAGEMENT
Ms. CHAN Yin Wa Cecilia , aged 27, is the financial controller of our
Group. Ms. Chan joined our Group in August 2015 and is responsible for overseeing the
financial operations of our Group. Ms. Chan graduated from the University of Queensland in
Australia in December 2009 with a Bachelor of Commerce majoring in Accounting and
Finance. She is a fellow member of the Certified Practising Accountants Australia. Prior to
joining our Group, from December 2010 to March 2015, she worked at Wong Brothers & Co
where she was promoted from a trainee accountant to an accountant.
187

During the three years immediately preceding the Latest Practicable Date, Ms. Chan
has not been a director of a public company the securities of which are listed on any
securities market in Hong Kong or overseas.
Mr. LO Shek Kwong, aged 64, is the quantity surveyor manager of our
Group. He has over 25 years of experience in quantity surveying, contractual administration
and construction project management. He is responsible for overseeing all quantity surveying
function of our projects. Mr. Lo first joined our Group as a quantity surveyor manager in
June 2005. In January 2007, he left our Group and joined Leighton-China State-John
Holland Joint Venture as a quantity surveyor manager until he re-joined our Group in May
2009 as a quantity surveyor manager. Prior to joining our Group, from December 1982 to
October 2002, Mr. Lo worked in the quantity surveying department of various construction
companies such as Sang Lee Construction Co., Ltd, Leighton Contractors (Asia) Ltd., Shui
On-China Harbour Joint Venture, K.E.C. Joint Venture headed by Kumagai Gumi Co., Ltd
(Hong Kong) and China Overseas (Hong Kong) Limited which he was responsible for the
quantity surveying functions of various major construction projects.
Mr. Lo obtained an Ordinary Certificate in Building Technology in July 1974 and a
Higher Certificate in Building Technology in November 1976 from the Hong Kong
Polytechnic (now known as the Hong Kong Polytechnic University). He also obtained a
Certificate in Quality Assurance in June 2004 from Seneca College, Canada.
During the three years immediately preceding the Latest Practicable Date, Mr. Lo has
not been a director of a public company the securities of which are listed on any securities
market in Hong Kong or overseas.
Mr. WONG Ka Chun Jeffery, aged 39, is the site agent of our Group.
He has over 14 years of experience in civil engineering construction industry in Hong Kong.
Mr. Wong joined our Group as an engineer in June 2004 and was promoted to site agent in
September 2009. He is responsible for monitoring work progress of our projects and
supervising workmanship and quality. Prior to joining our Group, from September 2003 to
May 2004, he worked as an assistant engineer at China Overseas (Hong Kong) Limited, a
company principally engaged in property and construction businesses. He worked as an
assistant engineer at HK Construction AMEC China Railway China Everbright Joint
Venture from March 2001 to September 2003. Mr. Wong graduated from the McMaster
University in Canada in June 2001 with a Bachelor of Engineering.
During the three years immediately preceding the Latest Practicable Date, Mr. Wong
has not been a director of a public company the securities of which are listed on any
securities market in Hong Kong or overseas.
188

COMPANY SECRETARY
Mr. Woo Yuen Fai, aged 32, was appointed as the company secretary of
our Company on 24 March 2016. Mr. Woo has more than 9 years of experience in auditing
and finance. He is the financial controller and the company secretary of Chun Sing
Engineering Holdings Limited, a company listed on the Main Board of the Stock Exchange
(stock code: 2277) and is principally engaged in the foundation and substructure
construction business. From September 2006 to August 2014, Mr. Woo worked in the
assurance and business advisory department of SHINEWING (HK) CPA Limited, a certified
public accounting firm. Mr. Woo obtained his bachelors degree of business administration
(honors) in accountancy and law from the City University of Hong Kong in November 2006
and is a member of the Hong Kong Institute of Certified Public Accountants.
During the three years immediately preceding the Latest Practicable Date, Mr. Woo has
not been a director of a public company the securities of which are listed on any securities
market in Hong Kong or overseas.
COMPLIANCE OFFICER
Mr. WW Wong, an executive Director, our Chief Executive Officer and one of the
Controlling Shareholders of our Company, was appointed as the compliance officer of our
Company on 24 March 2016. Please refer to the paragraph headed Directors above in this
section for the biographical details of Mr. WW Wong.
REMUNERATION POLICY
Our executive Director, independent non-executive Directors and senior management
receive compensation in the form of director fees, salaries, benefits in kind and/or
discretionary bonuses with reference to those paid by comparable companies, time
commitment and the performance of our Group. Our Group also reimburses our Directors
and senior management for expenses which are necessarily and reasonably incurred for the
provision of services to our Group or executing their functions in relation to the operations
of our Group. Our Group regularly reviews and determines the remuneration and
compensation packages of our Directors and senior management by reference to, among
other things, market level of remuneration and compensation paid by comparable companies,
the respective responsibilities of our Directors and the performance of our Group.
After Listing, the remuneration committee of our Company will review and determine
the remuneration and compensation packages of our Directors with reference to their
responsibilities, workload, the time devoted to our Group and the performance of our Group.
Our Directors may also receive options to be granted under the Share Option Scheme details
of which are set out in the paragraph headed D. Share Option Scheme in Appendix V to
this prospectus.
189

REMUNERATIONS OF DIRECTORS AND SENIOR MANAGEMENT
Our Directors receive compensation in the form of Directors fees, salaries, allowances,
discretionary bonuses and other benefits as well as contributions to retirement benefit
schemes. The total compensation accrued to our Directors for the two years ended 31 March
2015 and the eight months ended 30 November 2015 was HK$3,946,000, HK$3,934,000 and
The aggregate compensation (including Directors fees, salaries, discretionary bonus,
contributions to retirement benefit schemes, pension, allowances and other benefits) paid to
our five highest paid individuals during the two years ended 31 March 2015 and the eight
months ended 30 November 2015 were HK$4,747,000, HK$4,783,000 and HK$2,641,000,
respectively.
Under the arrangement currently in force, we estimate the total compensation
(including Directors fees, salaries, discretionary bonus, contributions to retirement benefit
schemes, pension) to be paid or accrued to our Directors for the year ending 31 March 2016
to be HK$4.4 million.
We did not pay to our Directors or the five highest paid individuals any inducement
fees to join us or as compensation for loss of office for each of the two years ended 31
March 2015 and the eight months ended 30 November 2015. Furthermore, none of our
Directors waived any compensation for the same period.
Save as disclosed above, no other payments has been paid or is payable, in respect of
the two years ended 31 March 2015 and the eight months ended 30 November 2015 by us or
any of our subsidiaries to our Directors.
BOARD COMMITTEES
Audit committee
Our Company established an audit committee on 24 March 2016 with its written terms
of reference in compliance with the GEM Listing Rules. The primary duties of the audit
committee are to review and supervise our financial reporting process and internal control
system, nominate and monitor external auditors and to provide advice and comments to the
Board on matters related to corporate governance.
The audit committee of our Company comprises the three independent non-executive
Directors, namely Mr. Liu Yan Chee James, Mr. Wong Chi Kan and Mr. Tai Hin Henry. Mr.
Liu Yan Chee James currently serves as the chairman of the audit committee.
Remuneration committee
Our Company established a remuneration committee on 24 March 2016 with its written
terms of reference in compliance with the GEM Listing Rules. The primary duty of the
remuneration committee is to make recommendations to the Board on the remuneration of
our Directors and our senior management.
190

The remuneration committee of our Company comprises Mr. Wong Wing Wah, our
executive Director and Chief Executive Officer, Mr. Liu Yan Chee James and Mr. Wong Chi
Kan, our independent non-executive Directors. Mr. Wong Chi Kan currently serves as the
chairman of the remuneration committee.
Nomination committee
Our Company established a nomination committee on 24 March 2016 with its written
terms of reference by reference to the code provisions of the Corporate Governance Code
and Corporate Governance Report set out in Appendix 15 to the GEM Listing Rules. The
primary duties of the nomination committee are to make recommendations to the Board
regarding candidates to fill vacancies on the Board and/or in senior management.
The nomination committee of our Company comprises Mr. Wong Che Kwo, our
executive Director and Chairman, Mr. Wong Chi Kan and Mr. Tai Hin Henry, our
independent non-executive Directors. Mr. Wong Che Kwo currently serves as the chairman
of the nomination committee.
CORPORATE GOVERNANCE
Our Company will comply with the Corporate Governance Code in Appendix 15 to the
GEM Listing Rules.
Our Directors will review our corporate governance policies and compliance with the
Corporate Governance Code each financial year and comply with the comply or explain
principle in our corporate governance report which will be included in our annual reports
upon the Listing.
COMPLIANCE ADVISER
In accordance with Rule 6A.19 of the GEM Listing Rules, our Company has appointed
TC Capital as its compliance adviser. Pursuant to Rule 6A.23 of the GEM Listing Rules, our
Company will consult with and seek advice from the compliance adviser on a timely basis
in the following circumstances:
(1)
before the publication of any regulatory announcement, circular or financial

report;
(2)
where a transaction, which might be a notifiable or connected transaction, is

contemplated including share issues and share repurchases;
(3)
where our Company proposes to use the proceeds of the Placing in a manner
different from that detailed in this prospectus or where the business activities,
developments or results of our Company deviate from any forecast, estimate, or
other information in this prospectus; and
(4)
where the Stock Exchange makes an inquiry of the listed issuer under Rule 17.11
of the GEM Listing Rules.
191

The term of appointment of the compliance adviser of our Company shall commence
on the Listing Date and end on the date on which our Company complies with Rule 18.03 of
the GEM Listing Rules in respect of the financial results for the second full financial year
commencing after the Listing Date and such appointment shall be subject to extension by
mutual agreement.
The compliance adviser of our Company shall provide us with services, including
guidance and advice as to compliance with the requirements under the GEM Listing Rules
and applicable laws, rules, codes and guidelines, and to act as one of our principal channels
of communication with the Stock Exchange.
192
RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS

OUR CONTROLLING SHAREHOLDERS
Immediately following completion of the Capitalisation Issue and the Placing, each of
Mr. CK Wong, Mr. WW Wong and Blooming Union will control more than 30% of the
issued share capital of our Company. Mr. CK Wong and Mr. WW Wong have had a mutual
understanding all along to actively cooperate with each other to jointly control our Group
and thus Mr. CK Wong and Mr. WW Wong are presumed to be acting in concert (within the
meaning of the Takeovers Code). Given the aforesaid and for the purpose of the GEM
Listing Rules, Mr. CK Wong, Mr. WW Wong and Blooming Union are our Controlling
Shareholders. Blooming Union is an investment holding company and has not commenced
any substantive business activities as at the Latest Practicable Date. Each of Mr. CK Wong,
Mr. WW Wong and Blooming Union confirms that he/it does not hold or conduct any
business which competes, or is likely to compete, either directly or indirectly, with the
business of our Group, and would require disclosure pursuant to Rule 11.04 of the GEM
Listing Rules.
INDEPENDENCE OF OUR GROUP
In the opinion of our Directors, our Group is capable of carrying on our businesses
independently of, and does not place undue reliance on, our Controlling Shareholders, their
respective close associates or any other parties, taking into account the following factors:
(i)
Financial independence
Our Group has an independent financial system and makes financial decisions
according to our own business needs. Our Group has sufficient capital to operate its
business independently, and has adequate internal resources and a strong credit profile
to support its daily operations.
During the Track Record Period, our Controlling Shareholders had provided
personal guarantees in respect of certain credit facilities provided by financial
institutions. Please refer to notes 21 and 22 of Section II in the Accountants Report in
Appendix I to this prospectus for details of the balances of the credit facilities taken by
our Group during the Track Record Period. Our Directors confirm that all personal
guarantees provided by our Controlling Shareholders in respect of the aforesaid credit
facilities will be released or replaced by our Companys corporate guarantee upon the
Listing.
During the Track Record Period and up to the Latest Practicable Date, our Group
has entered into 9 contracts (the Guaranteed Contracts) in an aggregate contract
sum of approximately HK$284,175,000 which involved performance guarantee with
certain customers. Pursuant to the performance guarantee, Mr. CK Wong and/or Mr.
WW Wong, our Controlling Shareholders and executive Directors, have given
performance guarantee in favour of our customers as security for the due performance
and observance of our Groups obligations under the Guaranteed Contracts between our
Group and the relevant customers. If our Group fails to perform our obligations leading
to a breach of the Guaranteed Contracts, Mr. CK Wong and/or Mr. WW Wong will be
required to indemnify the relevant customers up to (i) a specified amount ranging from
193

10% to 25% of the contract sum or (ii) an unlimited amount for all losses, claims,
damages, costs and expenses suffered by the relevant customers as a result of our
Groups default under the Guaranteed Contracts.
As at the Latest Practicable Date, among the 9 contracts, 4 contracts were
completed and the respective performance guarantees given have been released and 5
contracts were still in progress. The following table sets out the details of the
Guaranteed Contracts involving the performance guarantees given by our Controlling
Shareholders which have not yet been released:
Contract
no.
Customer (Note 1)
Type of works
involved
Roads and drainage

and structural
works
Roads and drainage
and site formation
works
Roads and drainage
and structural
works
Structural works
Structural works
Chun Wo
Construction
(Note 4)
2.
China State
Construction
(Note 5)
3.
China State
Construction
(Note 6)
4.
China State
Construction
Public or
private
sector
project
Actual or
Contract expected
sum completion
(Note 2)
date (Note 3)
(HK$000)
Extent of
liability of
contract
Project status
sum
Public
11,011 December
2016
In progress
25%
Public
17,077 May 2016
In progress
Unlimited
Public
122,770 December
2018
In progress
10%
Public
59,000 May 2017
In progress
Unlimited
Public
22,693 April 2016
In progress
25%
(Note 5)
5.
Chun Wo
Construction
(Note 4)
Notes:
1.
The above customers are among our five largest customers during the Track Record Period, details of
which are set out in the section headed Business Customers Major customers in this
prospectus.
2.
The contract sum is based on the initial agreement between our customers and us and may not
include additions, modifications due to subsequent variation orders and therefore, final revenue
recognised from a contract may differ from the contract sum.
3.
The expected completion date for a particular contract is provided based on our managements best
estimation. In making the estimation, our management takes into account factors including the
expected completion date specified in the relevant contract (if any), the extension period granted by
our customers (if any) and the actual work schedule.
4.
The personal guarantees given by Mr. CK Wong and Mr. WW Wong will be replaced by our
Companys corporate guarantee upon the Listing.
5.
Our Company was informed that save for occurrence of any event which renders the contract to be
inevitably amended, it is the internal policy of the customer not to amend the terms of the existing
contracts. Therefore, the customer has declined our request to release the personal guarantee provided
by Mr. CK Wong and/or Mr. WW Wong. Our Group will take out a surety bond before Listing from
194

an authorised insurer, which is a wholly-owned subsidiary of a Hong Kong licensed bank, in favour
of the customer in the value of the contract sum for the due performance of our Groups obligations
under the contract on normal commercial terms. Such surety bond will be granted without any
guarantees or other financial support from our Controlling Shareholders.
6.
Our Company was informed that save for occurrence of any event which renders the contract to be
inevitably amended, it is the internal policy of the customer not to amend the terms of the existing
contracts. Therefore, the customer has declined our request to release the personal guarantee provided
by Mr. CK Wong and/or Mr. WW Wong. Our Group will take out a surety bond before Listing from
an insurer in favour of the customer in the value representing 10% of the contract sum for the due
performance of our Groups obligations under the contract on normal commercial terms. Such surety
bond will be granted without any guarantees or other financial support from our Controlling
Shareholders.
Our Directors confirm that it is not uncommon for main contractors to require directors
and/or shareholders of subcontractors to provide performance guarantee in the subcontracts
to ensure our Groups due performance and observance of a subcontract. In addition, our
Directors are of the view that release of all of the personal guarantees without consent of
the respective counterparty will give rise to early termination liabilities and practical and
commercial difficulties against our Group, and renegotiation of the release of all personal
guarantees to be replaced by our Companys corporate guarantee will also not be feasible
and cost-effective. For the Guaranteed Contracts which the performance guarantees given by
our Controlling Shareholders have not yet been released, (i) our Group has obtained consent
from the relevant customer to have such personal guarantee to be replaced by our
Companys corporate guarantee upon Listing; or (ii) our Group will take out a surety bond
before Listing, on a stand-alone basis, from an independent authorised insurer, which is a
wholly-owned subsidiary of a Hong Kong licensed bank, in the contract sum or
predetermined percentage of the contract sum of the relevant contract, as the case may be, in
favour of the relevant customer to secure the due performance of our Groups obligations
under the respective contract. With regard to the aforesaid surety bonds arrangement, we
expect that annual premium of approximately HK$1,060,000 for the issue of the surety bond
will be recognised as expenses commencing from April 2016, and the surety bonds will be
valid until the release of personal guarantees given by our Controlling Shareholders under
the relevant Guaranteed Contracts. In addition, our Directors decide that, going forward, our
Group will not enter into any contract involving similar performance guarantee to be given
by our Controlling Shareholders.
As at 21 March 2016, Mr. CK Wong and Mr. WW Wong had advanced loans of
HK$284,157.17 and HK$5,267,065.80, respectively, to Luen Hing. On 21 March 2016, by
way of loans capitalisation, Luen Hing applied HK$280,000 owed to Mr. CK Wong and
HK$5,200,000 owed to Mr. WW Wong toward the satisfaction of the issue and allotment of
5,480,000 new shares of Luen Hing at a subscription price of HK$1 per share to Super
Pioneer (as directed by Mr. CK Wong and Mr. WW Wong). The remaining uncapitalised
balance of HK$4,157.17 and HK$67,065.80 will be repaid by Luen Hing to Mr. CK Wong
and Mr. WW Wong, respectively, upon Listing.
As at 21 March 2016, Mr. CK Wong had advanced a loan of HK$4,924,580.87 to Hop
Fung. On 21 March 2016, by way of loan capitalisation, Hop Fung applied HK$4,920,000
owed to Mr. CK Wong toward the satisfaction of the issue and allotment of 4,920,000 new
195

shares of Hop Fung at a subscription price of HK$1 per share to Super Pioneer (as directed
by Mr. CK Wong). The remaining uncapitalised balance of HK$4,580.87 will be repaid by
Hop Fung to Mr. CK Wong upon Listing.
In view of the above, our Directors are of the view that our Group will be financially
independent from the Controlling Shareholders after the Listing.
(ii) Operational independence
Our Group has established our own organisational structure comprising individual
departments, each with specific areas of responsibilities. Our Group has not shared our
operational resources, such as suppliers, customers, marketing, sales and general
administration resources with the Controlling Shareholders and/or their close associates.
For the financial year ended 31 March 2015 and up to 31 October 2015, we
rented site equipment from Hop Fung Crane Company on normal commercial terms and
in the ordinary course of our business. Hop Fung Crane Company is a partnership
established in Hong Kong and was principally engaged in leasing of construction site
equipment. Hop Fung Crane Company is owned by the spouse of Mr. CK Wong (our
executive Director and one of our Controlling Shareholders) and an independent third
party. For the two years ended 31 March 2015 and the eight months ended 30
November 2015, the total site equipment rental costs paid to Hop Fung Crane Company
amounted to approximately HK$Nil, HK$772,000 and HK$633,000, respectively. Such
rental arrangement with Hop Fung Crane Company has been completed and ceased.
Our Directors confirm that, during the Track Record Period and up to the Latest
Practicable Date, Hop Fung Crane Company did not conduct any business activities
which competed or was likely to compete, directly or indirectly, with the business of
our Group.
Pursuant to an agreement entered into among Mr. CK Wong, Mr. WW Wong,
Luen Hing and Hop Fung, Mr. CK Wong and Mr. WW Wong (as owners of the
Property) granted a licence to use Workshop 17, 13th Floor, New Commerce Centre, 19
On Sum Street, Siu Lek Yuen, Shatin, New Territories, Hong Kong (the Property) to
Luen Hing and Hop Fung for office use during the Track Record Period and up to 31
October 2015. Although the consideration for such licence was nil, Luen Hing and Hop
Fung were jointly required to pay the management fee and rates of the Property on
behalf of Mr. CK Wong and Mr. WW Wong during the term of the licence. For the two
years ended 31 March 2015 and the eight months ended 30 November 2015, the
aggregate amount of management fee and rates paid by our Group for the Property
amounted to approximately HK$15,000, HK$18,000 and HK$11,000, respectively. Our
Directors confirm that the aforesaid licence arrangement in relation to the Property had
been completed and ceased. On 9 September 2015, our Group entered into a tenancy
agreement with an independent third party to lease a property located at Unit 5, 15th
Floor, North Wing, Delta House, No. 3 On Yiu Street, Shatin, New Territories for a
term of one year since 17 August 2015 with monthly rent of HK$16,167. Our Group
started occupying such property the aforesaid premises since 1 November 2015. Our
Directors are of the view that the additional monthly rent of HK$16,167 has no
material impact on our profitability.
196

Our Directors are of the view that our Group has no operational dependence on
the Controlling Shareholders.
(iii) Independence of management
Our Company aims at establishing and maintaining a strong and independent
Board to oversee our Groups business. Our Boards main function includes the
approval of the overall business plans and strategies of our Group, monitoring the
implementation of these policies and strategies and the management of our Company.
Our Group has an independent management team, which is led by a team of senior
management with substantial experience and expertise in our business, to implement
our Groups policies and strategies.
Our Board consists of seven Directors, comprising four executive Directors and
three independent non-executive Directors. Mr. CK Wong and Mr. WW Wong are also
the directors of Blooming Union. No other Directors or senior management serves any
executive or management role in Blooming Union.
Each of our Directors is aware of his or her fiduciary duties as a Director which
require, among other things, that he or she acts for the benefit and in the best interests
of our Company and does not allow any conflict between his or her duties as a
Director and his or her personal interest to exist. In the event that there is a potential
conflict of interest arising out of any transaction to be entered into between our Group
and our Directors or their respective close associates, the interested Director(s) shall
abstain from voting at the relevant meeting of our Board in respect of such transactions
and shall not be counted in the quorum. In addition, the senior management team of
our Group is independent from the Controlling Shareholders. Our Directors are of the
view that the Board and senior management are capable of managing our Groups
business independently from the Controlling Shareholders.
(iv) Independence of major suppliers and major subcontractors
Our Directors confirm that none of the Controlling Shareholders, our Directors
and their respective close associates, have any relationship with the major suppliers and
major subcontractors of our Group (other than the business contacts in the ordinary and
usual course of business of our Group) during the Track Record Period.
(v)
Independence of major customers
Our Directors confirm that none of the Controlling Shareholders, our Directors
and their respective close associates, have any relationship with the major customers of
our Group (other than the business contacts in the ordinary and usual course of
business of our Group) during the Track Record Period.
197

RULE 11.04 OF THE GEM LISTING RULES
The Controlling Shareholders, our Directors and their respective close associates do not
have any interest in a business (apart from our Groups business) which competes or is
likely to compete, directly or indirectly, with our Groups business, and would require
disclosure pursuant to Rule 11.04 of the GEM Listing Rules.
NON-COMPETITION UNDERTAKINGS
In order to maintain a clear delineation of the businesses between us and our
Controlling Shareholders, our Controlling Shareholders (together the Covenantors) have
entered into the Deed of Non-Competition in favour of our Company (for itself and as
trustee for each of our subsidiaries from time to time).
Under the Deed of Non-Competition:
(a)
each of the Covenantors hereby jointly and severally, and irrevocably and
unconditionally undertakes to our Company that each of the Covenantors shall not
and shall procure (other than members of our Group) that neither the Covenantors
nor their close associates and/or companies controlled by the Covenantors (other
than members of our Group) will:
(i)
directly or indirectly be interested in or engaged in any form of business,

including but not limited to joint venture, alliance, cooperation, partnership,
which competes or is likely to compete directly or indirectly with our
Groups business (being in the provision of civil engineering works as a
subcontractor, including but not limited to, (i) roads and drainage works
(including construction and improvement of local road, carriageway with
junction improvement and the associated footpaths, planting areas, drains,
sewers, water mains and utilities diversion); (ii) structural works (including
construction of reinforced concrete structures for bridges and retaining
walls); and (iii) site formation works (including excavation and/or filling
works for forming a new site or achieving designed formation level for later
development) (the Restricted Activity) in territories in which any member
of our Group carries on or is engaged or invests in the Restricted Activity
from time to time (the Restricted Territories), nor provide support in any
form to persons other than members of our Group to engage in business that
constitute or may constitute direct or indirect competition with the
businesses that our Group is currently and from time to time carrying on
unless the prior written consent of our Company has been obtained (based on
an affirmative vote of a majority of the independent non-executive Directors,
who do not have, and are not deemed to have, a material interest in the
relevant matter);
(ii) solicit or procure any of the suppliers, the subcontractors and/or the
customers of our Group from time to time to terminate their business
relationships or otherwise reduce the amount of business with our Group;
and
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(iii) solicit or procure any of the Directors, senior management or other
employees of our Group from time to time to resign or otherwise cease
providing services to our Group;
(b)
each of the Covenantors undertakes to our Company that in the event the
Covenantors or any of their close associates (other than members of our Group)
are given any business opportunity that is or may involve direct or indirect
competition with the businesses of our Group (the Business Opportunity), the
Covenantors shall refer the Business Opportunity on our Group and shall assist
our Group to obtain such Business Opportunity in the terms no less favourable
than those offered to any of the Covenantors or their close associates (the First
Right of Refusal). In addition, each of the Covenantors hereby jointly and
severally, irrevocably and unconditionally, undertakes with our Company that
none of the Covenantors and their respective close associates (other than member
of our Group) will pursue the Restricted Activity and/or the Business Opportunity
until our Company decides not to pursue the Restricted Business and/or the
Business Opportunity because of commercial reasons and provides such decision
in writing to the Covenantors. Any decision of our Company will have to be
approved by the independent non-executive Directors taking into consideration our
Groups prevailing business and financial resources, the financial resources
required for the Business Opportunity and any expert opinion on the commercial
viability of the Business Opportunity;
(c)
each of the Covenantors undertakes to our Company that the Covenantors shall,
during the term of the Deed of Non-Competition, indemnify and keep indemnified
our Company and our Group against any loss suffered by our Company or our
Group (as relevant) arising out of any breach of any of the Covenantors
undertakings under the Deed of Non-Competition;
(d)
each of the Covenantors acknowledges that:

(i)
the independent non-executive Directors will review, at least on an annual

basis, the compliance with the Deed of Non-Competition by the Covenantors
and the First Right of Refusal provided by the Covenantors on the
Covenantors existing or future competing businesses; and
(ii) our Company will disclose the decisions on matters reviewed by the
independent non-executive Directors relating to the compliance and
enforcement of the Deed of Non-Competition (e.g. the exercise of the First
Right of Refusal) either through the annual report of our Company or by
way of announcements published by our Company to the public;
(e)
each of the Covenantors further undertakes as follows:

(i)
the Covenantors shall, upon demand, promptly provide all information

necessary for the annual review by the independent non-executive Directors
and the enforcement of the Deed of Non-Competition; and
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(ii) the Covenantors shall make an annual declaration on compliance with the
Deed of Non-Competition in the annual report of our Company and/or as
required by the relevant requirements under the GEM Listing Rules;
(f)
the aforesaid undertakings are conditional upon our Shares being listed and quoted
on GEM;
(g)
each of the Covenantors represents and warrants that neither the Covenantors nor
their close associates and/or companies controlled by the Covenantors (other than
members of our Group) are currently directly or indirectly interested in or
engaged in any business, apart from the business operated by members of our
Group, which competes or is likely to compete, directly or indirectly, with our
Groups business as at the date of the Deed of Non-Competition;
(h)
the Covenantors obligations under the Deed of Non-Competition shall remain in

effect until:
(i)
the date upon which our Shares cease to be listed on the Stock Exchange; or
(ii) the date upon which the Covenantors and their close associates, individually
or collectively, cease to own 30% or more of the then issued share capital of
our Company directly or indirectly, or are otherwise ceased to be regarded as
controlling shareholders under the GEM Listing Rules,
whichever occurs first; and
(i)
The aforesaid undertakings do not apply to the following situations:

(i)
the holding by the Covenantors and their close associates of interests in

shares or other securities that represents (or upon conversion will represent)
not more than 5% voting rights in any company the shares of which are
listed on a recognised stock exchange and which conducts or is engaged in
any Restricted Activity;
(ii) the holding by the Covenantors and their close associates of interests in
shares or other securities that represents (or upon conversion will represent)
not more than 5% voting rights in any non-listed company which conducts
or is engaged in any Restricted Activity, provided that the Covenantors and/
or their close associates are not entitled to appoint a majority of the directors
or management of that company;
As confirmed by our Directors, as at the Latest Practicable Date, our Controlling
Shareholders and their respective close associates and/or companies controlled by them do
not have any interests in any form of business apart from the business operated by members
of our Group that competes or is likely to compete, directly or indirectly with the business
of our Group.
200

CORPORATE GOVERNANCE MEASURES
Each of the Controlling Shareholders has confirmed that he/it fully comprehends his/its
obligations to act in the best interests of our Company and the Shareholders as a whole. To
avoid potential conflicts of interest, our Group will implement the following measures:
(a)
the Covenantors will make an annual confirmation as to compliance with his/its

undertaking under the Deed of Non-competition for inclusion in the annual report
of our Company;
(b)
our Board is committed to the view that our Board should include a balanced
composition of executive and non-executive Directors (including independent
non-executive Directors) so that there is a strong independent element on our
Board which can effectively exercise independent judgment. Our Company has
appointed three independent non-executive Directors. Our Directors believe that
our independent non-executive Directors are of sufficient calibre, are free of any
business or other relationship which could interfere in any material manner with
the exercise of their independent judgment and will be able to provide impartial
and professional advice to protect the interests of the minority Shareholders.
Details of our independent non-executive Directors are set out in the section
headed Directors and senior management in this prospectus;
(c)
our Company has appointed TC Capital as our compliance adviser, which will
provide advice and guidance to our Company in respect of compliance with the
applicable laws and the GEM Listing Rules including various requirements
relating to directors duties and internal controls. Please refer to the section
headed Directors and senior management Compliance adviser in this
prospectus for further details in relation to the appointment of compliance adviser;
(d)
the Controlling Shareholders undertake to provide all information requested by

our Group which is necessary for the annual review by the independent
non-executive Directors and the enforcement of the Deed of Non-competition; and
(e)
our independent non-executive Directors will, based on the information available

to them, review on an annual basis (a) the compliance with the Deed of
Non-competition; and (b) all the decisions taken in relation to whether to pursue
the new opportunity under the Deed of Non-competition.
201
SUBSTANTIAL SHAREHOLDERS
So far as our Directors are aware, immediately following completion of the
Capitalisation Issue and the Placing (without taking into account any Shares which may be
issued pursuant to the exercise of any options which may be granted under the Share Option
Scheme), the following persons will have interests or short positions in our Shares or
underlying Shares which would fall to be disclosed to us and the Stock Exchange under the
provisions of Divisions 2 and 3 of Part XV of the SFO, or who will be directly or indirectly,
interested in 10% or more of the nominal value of any class of share capital carrying rights
to vote in all circumstances at general meetings of any other member of our Group:
Long position in the Shares
Name
Capacity/Nature
of interest
Number of
Shares held/
interested in
immediately
following
completion of the
Capitalisation
Issue and the
Placing
Blooming Union
Beneficial owner
936,000,000
75%
Mr. CK Wong
Interest of a controlled
corporation (Note 1)
936,000,000
75%
Mr. WW Wong
Interest of a controlled
936,000,000
75%
Ms. Law Oi
Ling
Interest of spouse
(Note 3)
936,000,000
75%
Ms. Lai Siu

Kuen
Interest of spouse
(Note 4)
936,000,000
75%
Percentage of
Shareholding
immediately
following
completion of the
Capitalisation
Issue and the
Placing
Notes:
1.
Mr. CK Wong beneficially owns 50% of the entire issued shares of Blooming Union. Therefore, Mr.
CK Wong is deemed, or taken to be, interested in 936,000,000 Shares held by Blooming Union for
the purpose of the SFO.
2.
Mr. WW Wong beneficially owns 50% of the entire issued shares of Blooming Union. Therefore, Mr.
WW Wong is deemed, or taken to be, interested in 936,000,000 Shares held by Blooming Union for
the purpose of the SFO.
3.
Ms. Law Oi Ling, the spouse of Mr. CK Wong, is deemed, or taken to be, interested in 936,000,000
shares in which Mr. CK Wong is interested for the purpose of the SFO.
4.
Ms. Lai Siu Kuen, the spouse of Mr. WW Wong, is deemed, or taken to be, interested in 936,000,000
Shares in which Mr. WW Wong is interested for the purpose of the SFO.
202
SUBSTANTIAL SHAREHOLDERS
Save as disclosed above, our Directors are not aware of any other persons who will,
immediately following completion of the Capitalisation Issue and the Placing (without taking
into account any Shares which may be issued pursuant to the exercise of any options which
may be granted under the Share Option Scheme), have interests or short positions in the
Shares or underlying Shares which would be required to be disclosed to our Company and
the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or
who will be directly or indirectly, interested in 10% or more of the nominal value of any
class of share capital carrying rights to vote in all circumstances at general meetings of our
Company or any of its subsidiaries.
203
SHARE CAPITAL
SHARE CAPITAL
Without taking into account any Shares to be issued upon exercise of any options
which may be granted under the Share Option Scheme, the share capital of our Company
immediately following the Capitalisation Issue and the Placing will be as follows:
Authorised share capital
2,000,000,000
HK$
Shares
20,000,000
Issued and to be issued, fully paid or credited as fully paid upon

completion of the Capitalisation Issue and the Placing:
10,000
1,039,990,000
208,000,000
1,248,000,000
HK$
Shares in issue at the date of this prospectus

Shares to be issued pursuant to the Capitalisation
Issue
Shares to be issued pursuant to the Placing
100
10,399,900
Total
12,480,000
2,080,000
MINIMUM PUBLIC FLOAT

According to Rule 11.23(7) of the GEM Listing Rules, at the time of the Listing and at
all times thereafter, our Company must maintain the minimum prescribed percentage of
25% of our Companys issued share capital in the hands of the public.
The table is prepared on the basis of the Placing becoming unconditional and the
Capitalisation Issue and the issue of the Placing Shares being completed.
It takes no account of any Shares to be issued upon exercise of any options which may
be granted under the Share Option Scheme or of any Shares which may be allotted and
issued or repurchased by our Company under the general mandate as referred to below or
otherwise.
RANKING
The Placing Shares will rank pari passu in all respects with all our Shares now in issue
or to be issued as mentioned in this prospectus, and, in particular, will qualify in full for all
dividends or other distributions declared, made or paid on our Shares in respect of a record
date which falls after the date of Listing other than participation in the Capitalisation Issue.
204
SHARE CAPITAL
CAPITALISATION ISSUE
Pursuant to the resolutions of our sole Shareholder passed on 24 March 2016, subject
to the share premium account of our Company being credited as a result of the Placing, our
Directors are authorised to allot and issue a total of 1,039,990,000 Shares credited as fully
paid at par to Blooming Union by way of capitalisation of the sum of HK$10,399,900
standing to the credit of the share premium account of our Company, and our Shares to be
allotted and issued pursuant to this resolution shall rank pari passu in all respects with the
existing issued Shares.
GENERAL MANDATE TO ISSUE SHARES
Subject to the Placing becoming unconditional, our Directors have been granted a
general unconditional mandate to allot, issue and deal with the Shares or securities
convertible into Shares or options, warrants or similar rights to subscribe for Shares or such
securities convertible into Shares, and to make or grant offers, agreements or options which
might require such Shares to be allotted and issued or dealt with subject to the requirement
that the aggregate nominal value of the Shares so allotted and issued or agreed conditionally
or unconditionally to be allotted and issued (otherwise than pursuant to a rights issue, or
scrip dividend scheme or similar arrangements, or a specific authority granted by the
Shareholders) shall not exceed:
(a)
20% of the aggregate nominal value of the share capital of our Company in issue
immediately following the completion of the Capitalisation Issue and the Placing
(not including Shares to be issued upon exercise of any options which may be
granted under the Share Option Scheme); and
(b)
the aggregate nominal value of the share capital of our Company repurchased by
the Company (if any) pursuant to the general mandate to repurchase Shares
referred 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 rights
issue or pursuant to the exercise of the options which may be granted under the Share
Option Scheme. This general mandate to issue Shares will remain in effect until the earliest
of:
(a)
the conclusion of the next annual general meeting of our Company;
(b)
the expiration of the period within which the next annual general meeting of our
Company is required by the Memorandum and the Articles or the Companies Law
or any other applicable laws of the Cayman Islands to be held; or
(c)
the time when such mandate is revoked or varied by an ordinary resolution of the
Shareholders in general meeting.
205
SHARE CAPITAL
For further details of this general mandate, please refer to the sub-paragraph headed 3.
Written resolutions of our sole Shareholder passed on 24 March 2016 under the paragraph
A. Further information about the Company in Appendix V to this prospectus.
GENERAL MANDATE TO REPURCHASE SHARES
Subject to the Placing becoming unconditional, our Directors have been granted a
general unconditional mandate to exercise all the powers of our Company to repurchase
Shares with an aggregate nominal value of not more than 10% of the aggregate nominal
value of the share capital of our Company in issue following the completion of the
Capitalisation Issue and the Placing (without taking into account any Shares to be issued
upon exercise of any options which may be granted under the Share Option Scheme).
This mandate only relates to repurchases made on GEM, or on any other stock
exchange on which the securities of our Company may be listed and which is recognised by
the SFC and the Stock Exchange for this purpose, and such repurchases are made in
accordance with all applicable laws and the requirements of the GEM Listing Rules. A
summary of the relevant GEM Listing Rules is set out in the paragraph headed A. Further
information about the Company 6. Repurchase of shares by our Company in Appendix V
to this prospectus.
The general mandates to issue and repurchase Shares will remain in effect until the
earliest of:
(a)
(b)
the expiration of the period within which the next annual general meeting of our
Company is required by the Memorandum and the Articles or the Companies Law
or any other applicable law of the Cayman Islands to be held; or
(c)
the time when such mandate is revoked or varied by an ordinary resolution of the
Shareholders in general meeting,
For further details of this general mandate, please refer to the paragraph headed A.
Further information about the Company 6. Repurchase of shares by our Company in
Appendix V to this prospectus.
SHARE OPTION SCHEME
Our Company has conditionally adopted the Share Option Scheme. Details of the
principal terms of the Share Option Scheme are summarised in the paragraph headed D.
Share Option Scheme in Appendix V to this prospectus.
Our Group did not have any outstanding share options, warrants, convertible
instruments, or similar rights convertible into the Shares as at the Latest Practicable Date.
206
SHARE CAPITAL
CIRCUMSTANCES UNDER WHICH GENERAL MEETING AND CLASS MEETING
ARE REQUIRED
As a matter of the Companies Law, an exempted company is not required by law to
hold any general meetings or class meetings. The holding of general meeting or class
meeting is prescribed for under the articles of association of a company. Accordingly, our
Company will hold general meetings as prescribed for under the Articles, a summary of
which is set out in Summary of the constitution of our Company and Cayman Islands
Company Law set out in Appendix IV to this prospectus.
207
FINANCIAL INFORMATION
You should read this section in conjunction with our audited combined financial
information, including the notes thereto, as set out in the Accountants Report in
Appendix I to this prospectus. Our combined financial information have been prepared in
accordance with the Hong Kong Financial Reporting Standards (including Hong Kong
Accounting Standards, amendments and interpretations) issued by the Hong Kong
Institute of Certified Public Accountants (HKFRSs). You should read the entire
Accountants Report and not merely rely on the information contained in this section.
The following discussion and analysis contains certain forward-looking statements
that reflect the current views with respect to future events and financial performance.
These statements are based on assumptions and analyses made by us in light of our
experience and perception of historical trends, current conditions and expected future
developments, as well as other factors we believe are appropriate under the
circumstances. However, whether actual outcomes and developments will meet our
expectations and projections depends on a number of risks and uncertainties over which
we do not have control. For further information, please refer to the sections headed
Risk factors and Forward-looking statements in this prospectus.
OVERVIEW
We are principally engaged in the provision of civil engineering works in Hong Kong
During the Track Record Period, the civil engineering works provided by our Group
mainly included (i) roads and drainage works (including construction and improvement of
local road, carriageway with junction improvement and the associated footpaths, planting
areas, drains, sewers, water mains and utilities diversion); (ii) structural works (including
construction of reinforced concrete structures for bridges and retaining walls); and (iii) site
formation works (including excavation and/or filling works for forming a new site or
achieving designed formation level for later development). We primarily undertook
construction projects in the public sector in Hong Kong and were generally engaged as a
subcontractor.
During the Track Record Period, our revenue was approximately HK$159,963,000,
HK$271,949,000 and HK$154,641,000 for each of the two years ended 31 March 2015 and
the eight months ended 30 November 2015, respectively.
BASIS OF PRESENTATION
The combined financial information incorporates the financial information of our
Company and all our subsidiaries during the Track Record Period. The financial statements
of our subsidiaries are prepared for the same reporting period as our Company, using
consistent accounting policies.
Subsidiaries are entities controlled by our Group. Our Group controls an entity when
our Group is exposed, or has rights, to variable returns from its involvement with the entity
and has the ability to affect those returns through its power over the entity. When assessing
whether our Group has power over the entity, only substantive rights relating to the entity
(held by our Group and others) are considered.
208
Our Group includes the income and expenses of a subsidiary in the combined financial
statements from the date we gain control until the date when our Group ceases to control the
subsidiary.
Intra-group transactions, balances and unrealised gains and losses on transactions
between group companies are eliminated in preparing the combined financial statements.
Amounts reported in the financial statements of subsidiaries have been adjusted where
necessary to ensure consistency with the accounting policies adopted by our Group.
Changes in our Groups interests in subsidiaries that do not result in a loss of control
are accounted for as equity transactions, whereby adjustments are made to the amounts of
controlling interests within combined equity to reflect the change in relative interests, but no
adjustments are made to goodwill and no gain or loss is recognised.
When our Group loses control of a subsidiary, the profit or loss on disposal is
calculated as the difference between (i) the aggregate of the fair value of the consideration
received and the fair value of any retained interest; and (ii) the previous carrying amount of
the assets (including goodwill) and liabilities of the subsidiary and any non-controlling
interests. Where certain assets of the subsidiary are measured at revalued amounts or fair
values and the related cumulative gain or loss has been recognised in other comprehensive
income and accumulated in equity, the amounts previously recognised in other
comprehensive income and accumulated in equity are accounted for as if our Company had
directly disposed of the related assets (i.e., reclassified to profit or loss or transferred
directly to retained earnings). The fair value of any investment retained in the former
subsidiary at the date when control is lost is regarded as the fair value on initial recognition
for subsequent accounting under HKAS 39 Financial Instruments: Recognition and
Measurement or, when applicable, the cost on initial recognition of an investment in an
associate or a joint venture.
FACTORS AFFECTING OUR RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
Our results of operations and financial condition have been and will continue to be
affected by a number of factors, many of which may be beyond our control, including those
factors set out in the section headed Risk factors of this prospectus and those set out
below.
Market demand for construction activities
We derive our revenue mainly from civil engineering works, whose demand relates to
the number of infrastructure projects, which may vary according to a combination of factors
including the amount of Government spending, investment prospects of Hong Kong, the
demand of infrastructure, supply of land, population growth, etc. Our revenue was affected
by the number and size of civil engineering projects we undertook during the Track Record
Period. The construction industry in Hong Kong has been benefited from the Governments
efforts to supply land for residential buildings and the ongoing Ten Major Infrastructure
Projects and other large scale infrastructure projects.
209
The increase or decrease in the demand for construction activities would therefore
affect the demand of our services. There is no assurance that the number of construction
projects will not decrease in the future and any reduction in the number of construction
projects in Hong Kong would adversely and materially affect our business in general and
our results of operation.
Cost control and management
Costs of construction materials and supplies, staff costs, subcontracting charges and site
equipment rental are the main components of our costs of sales. During the Track Record
Period, these four components of cost in aggregate amounted to approximately
HK$137,620,000, HK$233,075,000 and HK$131,586,000 representing approximately 94.9%,
94.6% and 95.8% of our costs of sales for each of the two years ended 31 March 2015 and
the eight months ended 30 November 2015, respectively. Although we determine our project
prices based on a cost-plus method with reference to the time and costs estimated to be
involved in a project, the actual time and costs involved in completing our civil engineering
projects may be adversely affected by a number of uncontrollable or unforeseen factors,
including shortage and cost escalation in materials and labour, unexpected difficult
geological conditions, adverse weather conditions and changes in rules, regulations and
policies set out by the Government. Most of our construction contracts are remeasurement
contracts which contain, among other things, bills of quantities or schedule of rates that are
based on the agreed unit rates and the estimated quantities of each item to be consumed in
the project. We will be paid based on actual quantities of works done by us in the project,
which normally will be measured by our customer upon completion of the project.
The price of each construction contract is determined with reference to our bids and
substantially agreed to at the time a project is awarded. In order to determine the bids, we
need to estimate the time and costs involved in a project. However, we may fail to
accurately estimate completion costs. The actual amount of total costs incurred in
completing a project may be adversely affected by many factors, such as adverse weather
conditions, accidents, unforeseen site conditions and fluctuations in the price of raw
materials. If the costs for a project exceed the contracted price in the relevant contract, we
may achieve lower-than-expected profits or even incur losses, which could materially and
adversely affect our financial performance and results of operations.
Collectability and timing of collection of our trade debtors and retention monies
receivables
We normally receive progress payments from our customers on a monthly basis with
reference to the value of works done, and a portion of such payment, ranging from 1% to
10% and subject to a ceiling, is usually withheld by our customers as retention money and
half of which will be remitted to us after completion of the construction project works and
the remaining half of which will be remitted to us after the defects liability period.
Accordingly, there can be no assurance that the retention money or any future retention
money will be remitted by our customers to us on a timely basis and in full. Any late
payment, whether arising from payment practice of our customers or delay in completion of
the construction project, may adversely affect our future liquidity position.
210
CRITICAL ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS
Our combined financial information has been prepared in accordance with HKFRSs.
We have identified certain accounting policies that are critical to the preparation of our
financial information. These accounting policies are important for an understanding of our
results of operations and financial position and are set forth in Note 2 of Section II of the
Accountants Report in Appendix I to this prospectus.
In addition, the preparation of the financial information requires our management to
make significant and subjective estimates, assumptions and judgments that affect the
reported amounts of revenues, expenses, assets and liabilities, and the disclosure of
contingent liabilities, at the end of each of the two years ended 31 March 2014 and 2015
and the eight months ended 30 November 2015. However, uncertainties about these
assumptions, estimates and judgments could result in outcomes that require a material
adjustment to the carrying amounts of the assets and liabilities affect in the future. These
key assumptions and estimates are set forth in Note 3 of Section II of the Accountants
Report in Appendix I to this prospectus.
We believe the following critical accounting policies and accounting estimates involve
the most significant or subjective judgments and estimates used in the preparation of the
financial information.
Accounting policies
Revenue recognition
Please refer to Note 2.14 of Section II of the Accountants Report in Appendix I to this
prospectus.
Construction contracts
prospectus.
Property, plant and equipment
prospectus.
Accounting estimates
prospectus.
211
RESULTS OF OPERATIONS OF OUR GROUP
The following table sets out the combined results of our Group for each of the two
years ended 31 March 2014 and 2015 and the eight months ended 30 November 2014 and
2015, which are derived from, and should be read in conjunction with, the combined
financial information set out in the Accountants Report in Appendix I to this prospectus:
Year ended 31 March

2014
2015
HK$000
HK$000
Revenue
Costs of sales
Gross profit
Eight months ended

30 November
2014
2015
HK$000
HK$000
(unaudited)
159,963
(144,943)
271,949
(246,349)
186,325
(170,904)
154,641
(137,355)
15,020
25,600
15,421
17,286
425
346
347
2,236
Other income
Administrative and other operating
expenses
(3,607)
(3,772)
(1,493)
(10,122)
Profit from operations
11,838
22,174
14,275
9,400
Finance costs
(452)
(471)
(291)
(338)
Profit before income tax
11,386
21,703
13,984
9,062
Income tax expense
(1,956)
(3,624)
(2,337)
(2,670)
9,430
18,079
11,647
6,392
Profit and total comprehensive

income for the year/period
attributable to equity holders of
the Company
212
213
China Harbour
China Harbour
China Harbour
China Harbour
China Harbour
1.
2.
3.
4.
5.
Reconstruction and
improvement of Tuen
Mun Road Sam
Shing Hui section
(a)
(Note)
Customer
Contract
No.
Civil engineering project

involved
Extension of concrete
structure and
miscellaneous works
Concrete structure and
miscellaneous works
Construction of concrete
footing for noise
barrier foundation
Construction of retaining
walls
Widening of bridge
Principal works
done by us
13,153
1,152
5,700
5,120
1,228
3,149
967
Revenue for the year

ended 31 March
2014
2015
(HK$000)
(HK$000)
Revenue for
the eight
months
ended 30
November
2015
(HK$000)
13,153
6,272
5,700
3,149
2,195
Accumulated
revenue
recognised
during the
Track
Record
Period
(HK$000)
100
100
100
100
100
Percentage
of
completion
as at 30
November
2015
%
The following table sets out our revenue during the Track Record Period and the percentage of completion by reference to the stage of
completion of the contract, which is established according to the progress certificates (by reference to the amount of completed works
confirmed by customers) issued by the customers, as at 30 November 2015:
Our revenue was principally generated from the provision of civil engineering works. During the Track Record Period, we were involved
in a total of 48 contracts, of which 29 contracts were completed and 19 contracts were still ongoing as at 30 November 2015.
Revenue
DESCRIPTION OF SELECTED COMPONENTS OF OUR INCOME STATEMENT
(b)
Road improvements in
Tuen Mun Road
Town Centre section

involved
China Harbour
China Harbour
China Harbour
China Harbour
China Harbour
China Harbour
9.
10.
11.
12.
13.
China Harbour
7.
8.
China Harbour
6.
(Note)
Customer
Contract
No.
Roads and drainage

works for traffic
control surveillance
system; and installation
and construction of
portal beams for land
viaduct
Supply and installation of
fire fighting system
Roads and drainage
works
bridge (excluding the
pile caps and
abutment)
Roads and drainage
works
Reconstruction of
carriageway
Landscaping and site
formation for slope
works
Diversion of sewerage
pipe
Principal works
done by us
214
1,721
4,147
5,975
36
180
542
13,733
2,755
185
14,258
106,183
281
3,017
60,261

ended 31 March
2014
2015
(HK$000)
(HK$000)
7,578
Revenue for
the eight
months
ended 30
November
2015
(HK$000)
1,721
10,122
216
3,297
13,733
466
17,275
174,022
Accumulated
revenue
recognised
during the
Track
Record
Period
(HK$000)
100
100
100
100
100
100
100
99.9
Percentage
of
completion
as at 30
November
2015
%
Provision of
barrier-free access
facilities for highway
structures
Development at
Anderson Road
(d)
(e)
14.
Hong
Kong-Zhuhai-Macao
Bridge Project
(c)
215
20.
19.
18.
17.
16.
15.
Contract
No.

involved
(Note)
China State
Construction
China State
Construction
China State
Construction
China State
Construction
Dragages China
Harbour VSL
J.V.
Dragages China
Harbour VSL
J.V.
China Harbour
Customer
Earthworks and drainage

works
Site formation works for
slope formation
Construction of transit
barrier, planter box,
concrete slab and
associated works
Demolition works and

construction of
reinforced concrete
structures
Construction of bridges
Construction of portal
beam
Construction of portal
beams for land viaduct
Principal works
done by us
10,501
4,779
1,744
10,098
4,702
56,980
5,431

ended 31 March
2014
2015
(HK$000)
(HK$000)
2,255
5,422
13,545
340
4,328
4,012
25,124
Revenue for
the eight
months
ended 30
November
2015
(HK$000)
2,255
5,422
24,046
15,217
6,072
8,714
87,535
Accumulated
revenue
recognised
during the
Track
Record
Period
(HK$000)
64.4
77.1
88.1
89.7
20.7
100
92.3
Percentage
of
completion
as at 30
November
2015
%
(h)
Liantang/Heung Yuen
Wai Boundary
Control Point site
formation and
infrastructure works
Chun Wo
Construction
Chun Wo
Construction
26.
24.
25.
Improvement works in
Fanling Highway
(g)
China State
Construction
China State
Construction
China State
Construction
22.
23.
China State
Construction
21.
Widening of Fanling
Highway
(Note)
(f)
Customer
Contract
No.

involved
216
Construction of
reinforced concrete
structure of bridge
(including decking)
Earthworks and sheet

piling works
Earthworks and
construction of
concrete footing for
erection of noise
barriers
Excavation and
construction of box
culvert
bridge
Road and drainage and

construction of
retaining wall
Principal works
done by us
2,880
5,085
1,114
12,285
409
525
20,086
138

ended 31 March
2014
2015
(HK$000)
(HK$000)
16,367
24,470
10,656
Revenue for
the eight
months
ended 30
November
2015
(HK$000)
21,452
15,165
1,114
409
24,995
30,880
Accumulated
revenue
recognised
during the
Track
Record
Period
(HK$000)
80.3
96.5
100
100
42.1
24.2
Percentage
of
completion
as at 30
November
2015
%
32.
31.
30.
29.
28.
27.
(i)
Infrastructure works at
Town Centre South
and Tiu Keng Leng,
Tseung Kwan O
Contract
No.

involved
(Note)
Chun Wo
Construction
Chun Wo
Construction
Chun Wo
Construction
Chun Wo
Construction
Chun Wo
Construction
Chun Wo
Construction
Customer
Construction of water
mains
Earthworks and road
works
Earthworks and road
works
Roads and drainage
works
Construction of
reinforced concrete
structures works
Drainage works
Principal works
done by us
23
611
1,829
1,193
2,788
759
680

ended 31 March
2014
2015
(HK$000)
(HK$000)
Revenue for
the eight
months
ended 30
November
2015
(HK$000)
1,829
634
1,193
2,788
759
680
Accumulated
revenue
recognised
during the
Track
Record
Period
(HK$000)
100
100
100
100
100
100
Percentage
of
completion
as at 30
November
2015
%
217
(k)
China State
Leader Joint
Venture
Customer D
37.
Roads and drainage

works adjacent to
railway line
218
38.
36.
35.
34.
Leighton China
State Van Oord
Joint Venture
China State
Leader Joint
Venture
China State
Leader Joint
Venture
China State
Leader Joint
Venture
33.
Wan Chai Development

Phase II Central
Wan Chai Bypass at
Wan Chai West
(Note)
(j)
Customer
Contract
No.

involved
Construction of
underground drainage,
manholes, conduits,
cable trenches, paving,
kerbs and surface
drains
1,722
119
1,352
185
9,688
2,701
2,013
854
Construction of
temporary traffic
arrangement
Construction of box
culvert
Installation of temporary
structures including
sheet piling, shoring,
ground treatment,
concrete block placing,
access deck and
subsequent removal for
the construction of box
culvert
Modification of road
junction
623
8,118

ended 31 March
2014
2015
(HK$000)
(HK$000)
Roads and drainage

works
Principal works
done by us
Revenue for
the eight
months
ended 30
November
2015
(HK$000)
11,040
304
3,735
2,701
854
8,741
Accumulated
revenue
recognised
during the
Track
Record
Period
(HK$000)
100
100
100
100
100
100
Percentage
of
completion
as at 30
November
2015
%
Customer H
Customer H
Customer
Customer
Customer
Customer
China Harbour
China Harbour
China Harbour
40.
41.
42.
43.
44.
45.
46.
47.
219
48.
Hong Kong Zhuhai

Macao Bridge
project
Construction of
reinforced concrete
structure for pier
Construction of bridge
decks
Construction of boundary
crossing facilities,
vehicle plazas and
ancillary buildings and
facilities
Roadworks
Roadworks
Drainage work
Drainage work

External drainage works
Underground drainage
works
Principal works
done by us
271,949
159,963
1,403
9,661
1,869
2,180
375
666

ended 31 March
2014
2015
(HK$000)
(HK$000)
154,641
16,005
4,286
1,446
1,860
14,360
649
710
1,228
586,553
16,005
4,286
1,446
1,403
1,860
24,021
649
2,954
3,408
666
Accumulated
revenue
recognised
during the
Track
Record
Period
(HK$000)
3.5
3.6
2.4
45.9
52.6
1.8
100
64.9
96.8
100
Percentage
of
completion
as at 30
November
2015
%
The above customers are our major customers during the Track Record Period. Details of our five largest customers are set out in the section headed Business
Customers Major customers in this prospectus.
Note:
(o)
(m) Roads and drainage

works adjacent to
railway lines
(n) Development at Hong
Kong Boundary
Crossing Facilities
H
H
D
D
Customer H
39.
Roads and drainage

works adjacent to
railway line
(l)
(Note)
Customer
Contract
No.

involved
Revenue for
the eight
months
ended 30
November
2015
(HK$000)
The following table sets out our revenue for our public and private sector projects
during the Track Record Period:
Year ended 31 March
2014
2015
HK$000
% HK$000
Private sector
projects
Eight months ended 30 November

2014
2015
HK$000
% HK$000
%
149,234
93.3
255,484
93.9
180,479
96.9
135,834
87.8
10,729
6.7
16,465
6.1
5,846
3.1
18,807
12.2
159,963
100.0
271,949
100.0
186,325
100.0
154,641
100.0
During the Track Record Period, the majority of our revenue was derived from public
sector projects.
Costs of sales
Our Groups costs of sales consist primarily of construction materials and supplies,
direct staff costs, subcontracting charges and an appropriate portion of variable and fixed
construction overheads, which included depreciation and miscellaneous direct costs. The
following table sets out the breakdown of our Groups costs of sales during the Track
Record Period:
Year ended 31 March

2014
2015
HK$000
HK$000
Construction materials and supplies

Staff costs
Rental of site equipment
Repair and maintenance
Depreciation
Parts and consumables
Professional fees
Others
Eight months ended

30 November
2014
2015
HK$000
HK$000
(unaudited)
51,678
37,004
31,617
17,321
909
2,923
898
78
2,515
79,074
60,219
59,971
33,811
1,746
2,560
1,710
159
7,099
59,693
42,090
37,866
21,904
1,290
1,561
1,182
108
5,210
49,083
27,576
35,512
19,415
477
1,641
1,051
173
2,427
144,943
246,349
170,904
137,355
Construction materials and supplies

Construction materials and supplies mainly represent the expenses for the purchase of
concrete, steel reinforcement bars, structural steel and diesel fuel and these costs are directly
charged to our construction project works. For each of the two years ended 31 March 2015
220
and the eight months ended 30 November 2015, construction materials and supplies
expenses amounted to approximately HK$51,678,000, HK$79,074,000 and HK$49,083,000,
representing approximately 35.7%, 32.1% and 35.7% of our total costs of sales, respectively.
Staff costs
Staff costs represent the labour costs for the provision of our construction project
works. For each of the two years ended 31 March 2015 and the eight months ended 30
November 2015, staff costs amounted to approximately HK$37,004,000, HK$60,219,000 and
HK$27,576,000, representing approximately 25.5%, 24.4% and 20.1% of our total costs of
sales, respectively.
Subcontracting charges represent charges and fees paid to our subcontractors which
mainly provide labour and services necessary for the completion of the civil engineering
works undertaken by us. For each of the two years ended 31 March 2015 and the eight
months ended 30 November 2015, subcontracting charges amounted to approximately
HK$31,617,000, HK$59,971,000 and HK$35,512,000, representing approximately 21.8%,
24.3% and 25.9% of our total costs of sales, respectively.
Rental of site equipment
Rental of site equipment represents the expenses for the rental of site equipment and
motor vehicles for carrying out the civil engineering works undertaken by us. For each of
the two years ended 31 March 2015 and the eight months ended 30 November 2015, rental
of site equipment expenses amounted to approximately HK$17,321,000, HK$33,811,000 and
HK$19,415,000, representing approximately 12.0%, 13.7% and 14.1% of our total costs of
sales, respectively.
Other costs of sales expenses
Other costs of sales expenses include less significant and/or miscellaneous direct costs
for carrying out the civil engineering works undertaken by us, which mainly include
entertainment expenses, depreciation of our site equipment and motor vehicles, repair and
maintenance of our site equipment, parts and consumables purchased for replacement of
wearable parts of our site equipment and professional fees for the testing of construction
material and supplies.
Sensitivity analyses
The following sensitivity analyses illustrates the impact of hypothetical changes, based
on historical fluctuations in construction materials and supplies, staff costs and
subcontracting charges under costs of sales during the Track Record Period:
221
Costs of construction materials and supplies
Percentage change in price of

construction materials and
supplies
+10%
+5%
+2%
-2%
-5%
-10%
Corresponding change in costs of sales

for the eight
months ended
for the year ended 31 March
30 November
2014
2015
2015
HK$000
HK$000
HK$000
5,168
2,584
1,034
(1,034)
(2,584)
(5,168)
7,907
3,954
1,581
(1,581)
(3,954)
(7,907)
4,908
2,454
982
(982)
(2,454)
(4,908)
Staff costs
Percentage change in
staff costs
+10%
+5%
+2%
-2%
-5%
-10%

for the eight
months ended
30 November
2014
2015
2015
HK$000
HK$000
HK$000
3,700
1,850
740
(740)
(1,850)
(3,700)
6,022
3,011
1,204
(1,204)
(3,011)
(6,022)
2,758
1,379
552
(552)
(1,379)
(2,758)
Percentage change in
+10%
+5%
+2%
-2%
-5%
-10%

for the eight
months ended
30 November
2014
2015
2015
HK$000
HK$000
HK$000
3,162
1,581
632
(632)
(1,581)
(3,162)
222
5,997
2,999
1,199
(1,199)
(2,999)
(5,997)
3,551
1,776
710
(710)
(1,776)
(3,551)
Gross profit margin
The following table sets out our gross profit and gross profit margin during the Track
Record Period:
Year ended 31 March

2014
2015
Gross profit (HK$000)
Gross profit margin
15,020
9.4%
25,600
9.4%
Eight months ended

30 November
2014
2015
15,421
8.3%
17,286
11.2%
During the Track Record Period, our gross profit margin varied substantially from
project to project and is mainly attributable to our pricing, which is determined based on a
cost-plus pricing model in general with mark-up determined on a project-by-project basis
and such mark-up is determined based on the following factors:
Contract value of the project
We would normally set a tender price based on a relatively lower mark-up for
projects with a larger contract value due to the larger absolute amounts of revenue and
gross profit (being the contract sum less the expected costs of sales) expected to be
derived from a project with a larger contract value.
Nature and complexity of civil engineering works
When preparing our tender price, we consider, among other factors, (i) the amount
of project management; (ii) the level of difficulty; (iii) the amount of uncertainties; (iv)
the types and amount of works to be performed using different techniques; (v) the
types and amount of resources such as labour skills, construction materials and supplies
and site equipment; and (vi) the quality, safety and environmental standards. We would
also take into account the likelihood of any material deviation of actual costs from our
estimated costs having regard to the estimated subcontracting charges, staff costs,
construction materials and supplies costs, rental of site equipment costs and other costs
of sales.
Competition
The level of competition for each construction project is subject to factors beyond
our control, including, among others, the number of contractors invited to bid for the
construction project, our competitors capacity and the nature and complexity of the
works involved. If the level of competition of a particular construction project is low
or if our competitors tender prices are relatively high, which is due to their own
commercial decisions, we may be able awarded the construction project even if our
tender price is not particularly competitive.
223
Cost control
While we may obtain preliminary quotations from our subcontractors when
preparing our tender prices, the final agreed prices with our subcontractors are subject
to further negotiations after we are successfully awarded with a tender and after we
obtain more specific information regarding the works and the site conditions. Such
further negotiations with our subcontractors may result in higher or lower gross profit
margins.
We enter into contra charge arrangements with some of our customers for, among
others, the purchase of construction materials and supplies and site equipment rental
and hence any increase in these costs are borne by our customers. The prices of
construction materials and supplies and site equipment rental and other costs of sales
that are not covered by contra charge arrangements are determined by reference to
quotations of suppliers as agreed by us and our suppliers on an order-by-order basis.
While we price in the estimated future price trend of these costs of sales when
preparing our tender proposals, material deviation of the actual costs from our
estimated costs may arise, which would result in higher or lower gross profit margins.
Due to, among others, the factors stated above, our gross profit margin varied
substantially from project to project during the Track Record Period.
The following table sets out our gross profit and gross profit margins for our public
and private sector projects during the Track Record Period:
Year ended 31 March
2014
2015
%
Gross profit (HK$000)
Overall gross profit
12,755
2,265
15,020
Gross profit margin

Overall gross profit margin
8.6%
21.1%
9.4%
84.9
15.1
100.0
23,063
2,537
25,600
9.0%
15.4%
9.4%
90.1
9.9
100.0
Eight months ended 30 November

2014
2015
%
%
14,099
1,322
15,421
7.8%
22.6%
8.3%
91.4
8.6
100.0
15,745
1,541
17,286
91.1
8.9
100.0
11.6%
8.2%
11.2%
As discussed above, we would normally set a tender price based on a relatively lower
gross profit margin for projects with a larger contract value due to the larger absolute
amounts of revenue and gross profit (being the contract sum less the expected costs of sales)
expected to be derived from a project with a larger contract value. As the contract values of
our public sector projects were generally larger than the contract values of our private sector
projects. During the two years ended 31 March 2015 we recorded lower gross profit margins
for our public sector projects than for our private sector projects. Gross profit margin for our
public sector projects increased during the eight months ended 30 November 2015 mainly
due to a variation order received for the Reconstruction and improvement of Tuen Mun
Road Sam Shing Hui section project, which generated a gross profit margin of
224
approximately 27.5%. Gross profit margin for our private sector projects decreased during
the Track Record Period. This is mainly attributable to the commencement of a project with
a larger contract value during the year ended 31 March 2015. The increase in overall gross
profit margin during the eight months ended 30 November 2015 is mainly attributable to the
higher gross profit margin generated by the variation order under the public sector project.
During the Track Record Period, we recorded gross loss in one project of
approximately HK$464,000, which was mainly due to the additional manpower and time
required to complete the earthworks as a result of unexpected difficult geological conditions.
The loss-making project was completed in March 2014 and the Directors expect that all of
the costs for the project have been incurred and recognised by the Group before and during
the Track Record Period and there would not be any further losses to be recognised for the
project subsequent to the Track Record Period.
Other income
Our other income consist primarily of gain on disposal of investment property, rental
income and gain on disposal of property, plant and equipment.
Administrative and other operating expenses
Our administrative and other operating expenses consist primarily of staff costs and
directors remuneration, depreciation, rental fees, building management fees and rates,
Listing expenses and other administrative expenses. The following table sets out our
administrative expenses by nature during the Track Record Period:
Year ended 31 March

2014
2015
HK$000
HK$000
Staff costs, including directors

emoluments
Depreciation
Rental fees, building management
fees and rates
Utility expenses
Entertainment
Audit fee
Professional fees
Listing expenses
Others
Eight months ended

30 November
2014
2015
HK$000
HK$000
(unaudited)
2,072
753
1,923
704
567
469
922
368
279
108
64
24
4
303
301
91
43
24
4
682
192
64
43
154
223
82
1
61
36
7,883
546
3,607
3,772
1,493
10,122
225
Income tax
Income tax expenses primarily consist of deferred tax and provision for current income
tax expenses incurred in Hong Kong. During the Track Record Period, all of our Groups
revenue was derived in Hong Kong and our Group was subject to profits tax in Hong Kong.
During each of the two years ended 31 March 2014 and 2015 and the eight months ended 30
November 2015, the effective tax rate of our Group was approximately 17.2%, 16.7% and
29.5%, respectively.
Our Company and its subsidiaries are incorporated in different jurisdictions, with
different taxation requirements illustrated below:
The Cayman Islands and the BVI
Pursuant to the applicable laws, rules and regulations of the Cayman Islands and the
BVI, our Group is not subject to any profits tax in the Cayman Islands and the BVI.
Hong Kong
All of our Companys Hong Kong incorporated subsidiaries were subject to Hong Kong
profits tax at a rate of 16.5% during the Track Record Period.
Our Directors confirm that they were not aware of any disputes/unresolved tax issues
with any tax authorities as at the Latest Practicable Date.
PERIOD TO PERIOD COMPARISON OF RESULTS OF OPERATIONS
Eight months ended 30 November 2015 compared with eight months ended 30
November 2014
Revenue
Our Groups revenue decreased by approximately HK$31,684,000, or 17.0%, from
approximately HK$186,325,000 for the eight months ended 30 November 2014 to
HK$154,641,000 for the eight months ended 30 November 2015. Such decrease is mainly
attributable to the completion of 16 projects with an aggregate contract sum of
approximately HK$137,700,000 during the year ended 31 March 2015, while a major project
with contract sum of approximately HK$455,319,000 was awarded in late August, which had
only commenced in September 2015.
Costs of sales
Our Groups costs of sales decreased by approximately HK$34,549,000, or 19.6%,
from approximately HK$170,904,000 for the eight months ended 30 November 2014 to
HK$137,355,000 for the eight months ended 30 November 2015. Staff costs decreased by
approximately 34.5% and subcontracting charges decreased by a smaller percentage of
approximately 6.2% due to the commercial decision to subcontract more of our project
works to our subcontractors during the eight months ended 30 November 2015.
226
Gross profit and gross profit margin
Our Groups gross profit increased by approximately HK$1,865,000, or 12.1%, from
approximately HK$15,421,000 for the eight months ended 30 November 2014 to
approximately HK$17,286,000 for the eight months ended 30 November 2015. Gross profit
margin increased from 8.3% for the eight months ended 30 November 2014 to 11.2% for the
eight months ended 30 November 2015 mainly due to a variation order received for the
Reconstruction and improvement of Tuen Mun Road Sam Shing Hui section project, which
generated a gross profit margin of approximately 27.5%. Our Directors consider that our
resulting gross profit margin is a combination of our pricing of each project, competition for
the project and cost control. Our gross profit margin was determined on a project-by-project
basis and is generally (i) lower for projects with a larger contract value as we set our tender
prices based on lower expected profit margins due to the larger absolute amounts of revenue
and gross profit expected to be derived from a project with a larger contract value; and (ii)
higher for projects which require more project management, greater level of techniques in
construction works and/or a higher standard of quality and safety.
Other income
Our Groups other income increased by approximately HK$1,889,000, from
approximately HK$347,000 for the eight months ended 30 November 2014 to approximately
HK$2,236,000 for the eight months ended 30 November 2015. Other income increased
mainly due to an increase of gain on disposal of investment property of approximately
HK$1,792,000 during the eight months ended 30 November 2015, which mainly arose from
the gain on disposal of an investment property located at Festival City, Tai Wai.
Our Groups administrative and other operating expenses increased by approximately
HK$8,629,000 from approximately HK$1,493,000 for the eight months ended 30 November
2014 to approximately HK$10,122,000 for the eight months ended 30 November 2015. Such
increase is mainly attributable to the Listing expenses of approximately HK$7,883,000 for
the eight months ended 30 November 2015 and the increase in staff costs mainly due to the
addition of administrative staff.
Finance costs
Our Groups finance costs increased by approximately HK$47,000, or 16.2%, from
approximately HK$291,000 for the eight months ended 30 November 2014 to approximately
HK$338,000 for the eight months ended 30 November 2015. The increase is mainly
attributable to a drawdown of a bank loan in the principal amount of HK$4,000,000 in
March 2015 for the acquisition of site equipment and general working capital to facilitate
our business operations.
227
Income tax expense
During each of the eight months ended 30 November 2014 and 2015, the effective tax
rate of our Group was approximately 16.7% and 29.5%, respectively. The effective tax rate
of our Group for the eight months ended 30 November 2015 was higher than the statutory
tax rate of 16.5% because Listing expenses were non-deductible.
Profit for the period and net profit margin
As a result of the foregoing, our Groups profit for the period decreased by
approximately HK$5,255,000, or 45.1%, from approximately HK$11,647,000 for the eight
months ended 30 November 2014 to approximately HK$6,392,000 for the eight months
ended 30 November 2015. Our net profit margin decreased from 6.3% for the eight months
ended 30 November 2014 to 4.1% for the eight months ended 30 November 2015. The
decrease in net profit margin is mainly attributable to the increase in administrative and
other operating expenses due to the Listing expenses of approximately HK$7,883,000,
partially offset by a higher gross profit margin for the eight months ended 30 November
2015.
Year ended 31 March 2015 compared with year ended 31 March 2014
Revenue
Our Groups revenue increased by approximately HK$111,986,000, or 70.0%, from
approximately HK$159,963,000 for the year ended 31 March 2014 to HK$271,949,000 for
the year ended 31 March 2015. Such increase is mainly attributable to the increase in
construction works to speed up the progress of two projects with an aggregate contract sum
of approximately HK$195,541,000 to meet completion deadlines during the year ended 31
March 2015.
Costs of sales
Our Groups costs of sales increased by approximately HK$101,406,000, or 70.0%,
from approximately HK$144,943,000 for the year ended 31 March 2014 to HK$246,349,000
for the year ended 31 March 2015. While costs of sales increased in line with our revenue
as a result of the increase in construction activities, subcontracting charges increased by
approximately 89.7% whereas staff costs increased by approximately 62.7% for the year
ended 31 March 2015 compared with the year ended 31 March 2014. For the year ended 31
March 2015, our Directors considered that it was more appropriate to subcontract more
construction works to subcontractors having considered our capacity, resources level, types
of construction works, cost effectiveness and complexity of our projects.
Gross profit and gross profit margin
Our Groups gross profit increased by approximately HK$10,580,000, or 70.4%, from
approximately HK$15,020,000 for the year ended 31 March 2014 to approximately
HK$25,600,000 for the year ended 31 March 2015. Gross profit increased in line with our
revenue. Gross profit margin was stable at approximately 9.4% for each of the years ended
31 March 2014 and 2015.
228
Other income
Our Groups other income decreased by approximately HK$79,000, or 18.6%, from
approximately HK$425,000 for the year ended 31 March 2014 to approximately HK$346,000
for the year ended 31 March 2015. Other income decreased due to a gain on disposal of
property, plant and equipment of approximately HK$120,000 during the year ended 31
March 2014.
Our Groups administrative and other operating expenses increased by approximately
HK$165,000, or 4.6%, from approximately HK$3,607,000 for the year ended 31 March 2014
to approximately HK$3,772,000 for the year ended 31 March 2015. Our staff costs,
representing the largest item within our administrative and other operating expenses, had
decreased by approximately HK$149,000, from approximately HK$2,072,000 for the year
ended 31 March 2014 to approximately HK$1,923,000 for the year ended 31 March 2015
mainly due to a decrease in bonus paid to Directors by approximately HK$200,000.
Depreciation decreased slightly due to the disposal and the writing off of fixed assets during
the year ended 31 March 2015. Other expenses increased by approximately HK$379,000,
from approximately HK$303,000 for the year ended 31 March 2014 to approximately
HK$682,000 for the year ended 31 March 2015 mainly due to a loss recognised on disposal
of property plant and equipment of approximately HK$306,000. The remaining items in our
administrative and other operating expenses were at similar levels or had increased/
decreased slightly in terms of dollar amounts.
Finance costs
Our Groups finance costs increased by approximately HK$19,000, or 4.2%, from
approximately HK$452,000 for the year ended 31 March 2014 to approximately HK$471,000
for the year ended 31 March 2015. The increase is mainly attributable to an increase in bank
loans for the acquisition of site equipment and general working capital to facilitate our
business operations and bank overdrafts for the financing of our working capital, although
there was a decrease in finance leases.
Income tax expense
During each of the two years ended 31 March 2014 and 2015, the effective tax rate of
our Group was approximately 17.2% and 16.7%, respectively, which were slightly higher
than the statutory tax rate of 16.5% due to an effect arising from non-deductible expenses.
No income tax was paid during each of the two years ended 31 March 2014 and 2015
due to the offset of assessable profits by tax losses brought forward.
Profit for the year and net profit margin
As a result of the foregoing, our Groups profit for the year increased by approximately
HK$8,649,000, or 91.7%, from approximately HK$9,430,000 for the year ended 31 March
2014 to approximately HK$18,079,000 for the year ended 31 March 2015. Our net profit
229
margin increased from 5.9% for the year ended 31 March 2014 to 6.6% for the year ended
31 March 2015. The improvement in net profit margin is mainly attributable to the decrease
in administrative and other operating expenses as a proportion of revenue as a result of
scale.
LIQUIDITY, FINANCIAL RESOURCES AND CAPITAL STRUCTURE
We have historically met our liquidity requirements principally through a combination
of cash flow from operations and bank borrowings. Our uses of cash are mainly for the
financing of our operations and working capital requirements and capital expenditures on
property, plant and equipment. Going forward, we do not expect any material changes to the
underlying drivers of our sources of cash and uses of cash, except for the net proceeds from
the Placing which will be used according to our use of proceeds plan as detailed in the
section headed Statement of business objective and use of proceeds in this prospectus. As
at the Latest Practicable Date, we had not experienced any liquidity problems in settling our
payables in the normal course of business.
Cash flows
The following table sets forth our Groups cash flows for the years/periods indicated:
Year ended 31 March

2014
2015
HK$000
HK$000
Operating cash flow before

working capital changes
Net cash generated from/(used in)
operating activities
investing activities
financing activities
Eight months ended

30 November
2014
2015
HK$000
HK$000
(unaudited)
15,394
25,744
16,194
9,497
7,402
(3,687)
(1,169)
5,228
11,495
(4,478)
209
(383)
(894)
477
(1,998)
(9,332)
7,391
Net increase/(decrease) in cash and

cash equivalents
Cash and cash equivalents at the
beginning of the year/period
2,030
(3,001)
(3,550)
1,389
3,419
3,419
Cash and cash equivalents at the

end of the year/period
3,419
418
230
(131)
418
7,809
Cash flows from operating activities
Cash flows from operating activities primarily consisted of our Groups revenues from
civil engineering projects undertaken by us. Our Group mainly derives its cash inflow from
operating activities from the receipt of payments from customers and the primary sources of
cash outflow from operations include payrolls, payment to subcontractors and suppliers.
Our cash from operating activities reflects profit before tax for the year, mainly
adjusted for depreciation, gain or loss on disposal of property, plant and equipment and
finance costs.
During the eight months ended 30 November 2015, our cash generated from operations
consisted of operating profit of approximately HK$9,497,000 before working capital
changes. Working capital changes primarily included (i) a decrease in amounts due to
customers for contract work of approximately HK$11,654,000 in line with the decrease in
revenue of approximately HK$31,684,000 due to a decrease in construction activities
undertaken by us and is driven by progress billings and the settlement thereof; (ii) an
increase in amounts due from customers for contract work of approximately HK$8,119,000
which is also driven by progress billings and the settlement thereof.
During the eight months ended 30 November 2014, our cash generated from operations
consisted of operating profit of approximately HK$16,194,000 before working capital
changes. Working capital changes primarily included (i) an increase in trade and other
receivables of approximately HK$19,061,000; and (ii) an increase in trade and other
payables of approximately HK$4,908,000.
During the year ended 31 March 2015, our cash generated from operations consisted of
operating profit of approximately HK$25,744,000 before working capital changes. Working
capital changes primarily included (i) an increase in trade and other receivables of
approximately HK$18,939,000 in line with the increase in revenue of approximately
HK$111,986,000 due to an increase in construction activities undertaken by us; (ii) a
decrease in trade and other payables of approximately HK$4,224,000; and (iii) a decrease in
amounts due to Directors of approximately HK$3,915,000, which were unsecured,
interest-free and have no fixed terms of repayment.
During the year ended 31 March 2014, our cash generated from operations consisted of
operating profit of approximately HK$15,394,000 before working capital changes. Working
capital changes primarily included (i) a decrease in amounts due to customers for contract
work of approximately HK$13,855,000; (ii) an increase in trade and other payables of
approximately HK$8,749,000; and (iii) an increase in amounts due from customers for
contract work of approximately HK$7,149,000, all of which were driven by progress billings
and the settlement thereof.
Cash flows from investing activities
Cash inflows from investing activities were primarily utilised to purchase property,
plant and equipment and cash inflows from investing activities were primarily from the
disposal of investment property and property, plant and equipment.
231
During the eight months ended 30 November 2015, we recorded net cash generated
from investing activities amounting to approximately HK$11,495,000, which was mainly
derived from proceeds generated from the disposal of investment property of approximately
HK$12,700,000 and partly offset by the purchases of property, plant and equipment of
approximately HK$1,643,000.
During the eight months ended 30 November 2014, we recorded net cash used in
investing activities amounting to approximately HK$383,000, which was mainly due to the
purchase of property, plant and equipment.
During the year ended 31 March 2015, we recorded net cash generated
activities amounting to approximately HK$209,000, which was mainly
proceeds generated from the disposal of property, plant and equipment of
HK$719,000 and partly offset by the purchases of property, plant and
approximately HK$510,000.
from investing
derived from
approximately
equipment of
During the year ended 31 March 2014, we recorded net cash used in investing
activities amounting to approximately HK$4,478,000, which was mainly due to purchases of
property, plant and equipment of approximately HK4,625,000 and partly offset by the
proceeds generated from the disposal of property, plant and equipment of approximately
HK$147,000.
Cash flows from financing activities
Cash inflows from financing activities were primarily from drawdown of bank
borrowings and cash outflows for financing activities were primarily from repayment of
bank loans and finance leases and the payment of interests accrued thereon.
financing activities amounting to approximately HK$9,332,000. Cash outflows for financing
activities included (i) repayment of bank loans of approximately HK$7,938,000; (ii)
repayment of capital element of finance leases of approximately HK$1,056,000; (iii) interest
paid of approximately HK$214,000; and (iv) interest element of finance leases of
financing activities amounting to approximately HK$1,998,000. Cash outflows for financing
activities included (i) repayment of capital element of finance leases of approximately
HK$991,000; (ii) repayment of bank loans of approximately HK$716,000; (iii) interest paid
of approximately HK$181,000; and (iv) payment of interest element of finance leases of
During the year ended 31 March 2015, we recorded net cash generated from financing
activities amounting to approximately HK$477,000. Cash inflows from financing activities
was due to the drawdown of bank borrowings of approximately HK$4,000,000. Cash
outflows for financing activities included (i) repayment of capital element of finance leases
232
of approximately HK$1,974,000; (ii) repayment of bank loans of approximately
HK$1,078,000; (iii) interest paid of approximately HK$302,000; and (iv) payment of interest
element of finance leases of approximately HK$169,000.
During the year ended 31 March 2014, we recorded net cash used in financing
activities amounting to approximately HK$894,000. Cash inflows from financing activities
was due to the drawdown of bank borrowings of approximately HK$3,000,000. Cash
outflows for financing activities included (i) repayment of bank loans of approximately
HK$1,876,000; (ii) repayment of capital element of finance leases of approximately
HK$1,566,000; (iii) interest paid of approximately HK$238,000; and (iv) payment of interest
element of finance leases of approximately HK$214,000.
Current assets and liabilities
The following table sets forth details of our Groups current assets and liabilities as at
the respective dates indicated:
As at 31 March
2014
2015
HK$000
HK$000
Current assets
Amount due from a director
Amounts due from customers for contract work
Trade and other receivables
Cash and bank balances
Current liabilities
Trade and other payables
Amounts due to customers for contract work
Amounts due to directors
Obligations under finance leases
Bank loans and overdrafts
Tax payable
As at
30 November
2015
HK$000
As at
31 January
2016
HK$000
(unaudited)
7,555
35,276
3,419
523
9,474
54,215
5,900
17,593
54,320
7,977
16,795
54,872
14,367
46,250
70,112
79,890
86,034
23,941
39,891
6,604
1,474
10,536
19,717
39,980
2,689
1,199
18,940
27,436
28,326
10,056
1,537
5,688
1,607
40,101
23,316
9,874
1,660
5,295
1,607
82,446
82,525
74,650
81,853
(36,196)
(12,413)
5,240
4,181
As at 31 January 2016, we recognised net current assets of approximately

HK$4,181,000. Our current assets of approximately HK$86,034,000 comprised of (i) trade
and other receivables of approximately HK$54,872,000; (ii) cash and bank balances of
approximately HK$14,367,000; and (iii) amounts due from customers for contract work of
approximately HK$16,795,000. Our current liabilities of approximately HK$81,853,000 is
233
comprised of (i) trade and other payables of approximately HK$40,101,000; (ii) amounts due
to customers for contract work of approximately HK$23,316,000; (iii) amounts due to
directors of approximately HK$9,874,000; (iv) bank loans and overdrafts of approximately
HK$5,295,000; (v) obligations under finance lease of approximately HK$1,660,000; and (vi)
tax payable of approximately HK$1,607,000.
As at 30 November 2015, we recognised net current assets of approximately
HK$5,240,000. Our current assets of approximately HK$79,890,000 comprised of (i) trade
and other receivables of approximately HK$54,320,000; (ii) amounts due from customers for
contract work of approximately HK$17,593,000; and (iii) cash and bank balances of
approximately HK$7,977,000. Our current liabilities of approximately HK$74,650,000 is
comprised of (i) amounts due to customers for contract work of approximately
HK$28,326,000; (ii) trade and other payables of approximately HK$27,436,000; (iii)
amounts due to directors of approximately HK$10,056,000; (iv) bank loans and overdrafts of
approximately HK$5,688,000; (v) tax payable of approximately HK$1,607,000; and (vi)
obligations under finance leases of approximately HK$1,537,000.
During the year ended 31 March 2015, our net current liabilities decreased by
approximately HK$23,783,000, or 65.7%, from approximately HK$36,196,000 as at 31
March 2014 to approximately HK$12,413,000 as at 31 March 2015. Such decrease is driven
by an increase in our construction activities during the year ended 31 March 2015 which in
turn lead to an increase in our trade and other receivables and amounts due from customers
for contract work. Our current liabilities remained at similar levels as an increase in bank
loans and overdrafts was offset by decreases in trade and other payables and amounts due to
directors.
The net current liabilities positions of approximately HK$36,196,000 and
HK$12,413,000 as at 31 March 2014 and 2015, respectively, were primarily attributable to
(i) the amounts due to customers for contract work of approximately HK$39,891,000 and
HK$39,980,000 as at 31 March 2014 and 2015, respectively. Such amounts are temporary
differences mainly arising from progress billings exceeding costs incurred plus(less)
recognised profit(loss), which will cease to exist at completion of the relevant project; and
(ii) the mortgage loan, which is a current liability, drawn to fund the acquisition of the
investment property, a non-current asset as at 31 March 2014 and 2015, which was
subsequently reclassified as held for sale in current assets and disposed of in October 2015.
234
DISCUSSION OF CERTAIN COMBINED STATEMENTS OF FINANCIAL POSITION
ITEMS
The following table sets out the respective carrying values of our Groups property,
plant and equipment as at the respective dates indicated:
Furniture
Land and
and
Site
buildings equipment equipment
HK$000
HK$000
HK$000
Motor
vehicles
HK$000
Total
HK$000
As at
31 March 2014
1,045
420
7,899
4,358
13,722
31 March 2015
964
250
7,128
3,491
11,833
30 November 2015
911
713
6,898
4,752
13,274
As shown in the table above, our Groups property, plant and equipment consists
primarily of site equipment and motor vehicles. We purchased our site equipment and motor
vehicles mainly with our internally generated resources, bank loans and/or through finance
lease arrangements.
Site equipment are primarily the various types of machinery for our civil engineering
construction works, which include excavators, vibrating rollers, generators, air compressors,
a hydraulic truck crane, hydraulic breakers and aerial working platforms. The site equipment
had a carrying amount of approximately HK$7,899,000 as at 31 March 2014, which
decreased slightly to approximately HK$7,128,000 as at 31 March 2015 due to depreciation
of site equipment, offset by the purchase of a number of site equipment during the year. The
carrying amount of site equipment then decreased slightly to approximately HK$6,898,000
as at 30 November 2015 as a result of disposals and depreciation of site equipment. For
further details of the site equipment for our Groups operations, please refer to the section
headed Business Site equipment of this prospectus.
Motor vehicles are mainly vans and crane lorries used for transportation of employees
among sites and construction works, respectively. Our Group also owned some motor
vehicles to facilitate our project management staff to travel between different construction
sites and offices. The carrying amount of our motor vehicles was approximately
HK$4,358,000 as at 31 March 2014 which decreased to approximately HK$3,491,000 as at
31 March 2015 due to disposals and depreciation of motor vehicles, although partly offset
by purchases of a few new motor vehicles. The carrying amount of motor vehicles then
increased to approximately HK$4,752,000 as at 30 November 2015 due to the addition of
certain motor vehicles.
235
Our Group owns a property for operational use and leases a property for general office
use. For details of our properties, please also refer to the section headed Business
Properties of this prospectus.
Some of our motor vehicles were purchased by entering into finance lease
arrangements during the Track Record Period. As at 31 March 2014 and 2015 and 30
November 2015, our motor vehicles with net book amount of approximately HK$4,103,000,
HK$3,223,000 and HK$4,171,000, respectively, were held under finance leases.
Amounts due to/from customers for contract work
Our construction contracts in progress are recorded as the amount of costs incurred
plus(less) recognised profit(losses) less progress billings and are presented as (i) amounts
due from customers for contract work as an asset when costs incurred plus(less) recognised
profit(losses) exceeds progress billings; or (ii) amounts due to customers for contract work
as a liability when progress billings exceeds costs incurred plus(less) recognised
profit(losses). Unlike trade receivables, amounts due from customers for contract work
represent work performed by us, for which the payment certificates have not yet been
obtained from our customers as at the end of a financial year/period.
The following table sets out our Groups amounts due from/to customers for contract
work as at the respective dates indicated:
As at 31 March
2014
2015
HK$000
HK$000
As at
30
November
2015
HK$000
7,555
(39,891)
9,474
(39,980)
17,593
(28,326)
(32,336)
(30,506)
(10,733)
The amounts due from/to customers for contract work vary from period to period due
to the difference in volume and value of construction works we performed close to the end
of each reporting period and duration between our submission of progress payment
applications and receipt of progress certificates from our customers. It normally takes
approximately 45 days for our customers to certify our progress payment applications.
Notwithstanding the above, payment certification for final payment would normally take
longer as they are usually subject to a process of negotiation.
As at 31 March 2014 and 2015 and 30 November 2015, amounts due from customers
for contract work included a balance of HK$Nil, HK$Nil and approximately HK$1,900,000
not yet certified by customers, respectively, relating to projects which we recognised revenue
for the works done submitted in the account application by reference to the amount of
completed works estimated by our in-house surveyor to the customers. Our Directors are of
the view that the revenue recognised during the Track Record Period by reference to our
236
in-house surveyors estimation of works done thus represents an insignificant portion.
Referring to the impairment of trade receivables described in the paragraph headed Trade
and other receivables Trade receivables below, based on the fact that (i) we have
on-going business relationships with these customers and we have not received any notice of
disagreement on our final payment application from these customers as at the Latest
Practicable Date; (ii) we have received all interim payments timely on the same project and
we are not aware of the deterioration of the credit quality of these customers; and (iii) it is
the industry norm to allow a defects liability period of 12 months from date of completion
of the project before final accounts are to be approved by our customers and settled, our
Directors consider that no impairment of trade receivables is necessary.
Our trade and other receivables consisted of (i) trade receivables; (ii) retention monies
receivables; and (iii) other receivables, deposits and prepayments. The following table sets
out the breakdown of trade and other receivables as at the respective dates indicated:
As at 31 March
2014
2015
HK$000
HK$000
Trade receivables
Retention monies receivables
Other receivables, deposits and prepayments
As at
30
November
2015
HK$000
15,583
17,957
1,736
33,832
19,217
1,166
29,786
23,815
719
35,276
54,215
54,320
Trade receivables
Trade receivables were mainly derived from our provision of construction works. Our
customers are generally required to make payments to us within 45 days after the
submission of payment application by our Group, which is usually made on a monthly basis
for each ongoing project.
Our trade receivables increased from approximately HK$15,583,000 as at 31 March
2014 to approximately HK$33,832,000 as at 31 March 2015 due to the increase in
construction works to speed up the progress of two projects to meet completion deadlines
imposed by the customers during the year ended 31 March 2015, which led to an increase in
our revenue, combined with fluctuations in the actual works progress of our ongoing
projects, the amount certified by the relevant customers and the amount settled by the
relevant customers as at the respective reporting dates.
237
Our trade receivables decreased from approximately HK$33,832,000 as at 31 March
2015 to approximately HK$29,786,000 as at 30 November 2015. This was primarily due to
fluctuations in the actual works progress of our ongoing projects, the amount certified by the
relevant customers and the amount settled by the relevant customers as at the respective
reporting dates.
To a certain extent, our trade receivables (including retention monies receivables) were
concentrated to our largest debtor and the five largest debtors as illustrated in the table
below for the respective dates indicated:
As at 31 March
2014
2015
HK$000
HK$000
Largest debtor
Five largest debtors
8,506
29,331
17,309
51,517
As at
30
November
2015
HK$000
20,763
50,931
We seek to maintain strict control over our outstanding trade receivables as well as
retention monies receivables to minimise credit risk. Our management reviews overdue
balances regularly and sends out payment reminders for such balances. We do not hold any
collateral or other credit enhancements over our trade receivables balances. Trade
receivables are non-interest bearing.
The following table sets out our ageing analysis of trade receivables from clients,
presented based on date of invoice as at the respective dates indicated:
As at 31 March
2014
2015
HK$000
HK$000
0-30 days
31-60 days
61-90 days
Over 90 days
As at
30
November
2015
HK$000
7,511
7,833
154
85
14,383
19,449
25,825
3,024
66
871
15,583
33,832
29,786
Trade receivables which were past due but not impaired related to a number of
independent customers that had a good track record of credit with us. Based on past credit
history, our Directors believe that no provision for impairment is necessary in respect of
these balances as there has not been a significant change in credit quality and the balances
are still considered to be fully recoverable.
238
As at the Latest Practicable Date, approximately HK$15,583,000 or 100%,
HK$33,832,000 or 100% and HK$29,108,000 or 97.7% of trade receivables as at 31 March
2014 and 2015 and 30 November 2015, respectively, were settled.
The following table sets out our debtors turnover days during the year/period
indicated:
For the year ended

31 March
2014
2015
days
days
Debtors turnover days
39.6
33.2
For the
eight
months
ended 30
November
2015
days
50.2
Note: Debtors turnover days is calculated by the average trade receivables as at the respective period end
divided by the total revenue for the period and multiplied by the number of days in the period.
The debtors turnover days decreased from approximately 39.6 days for the year ended
31 March 2014 to approximately 33.2 days for the year ended 31 March 2015. The decrease
is mainly attributable to a substantial increase in revenue during the year ended 31 March
2015. This is slightly offset by an increase in trade receivables due to the fluctuations in the
actual works progress of our ongoing projects, the amount certified by the relevant
customers and the amount settled by the relevant customers as at the respective reporting
dates.
The debtors turnover days increased from approximately 33.2 days for the year ended
31 March 2015 to approximately 50.2 days for the eight months ended 30 November 2015.
The increase is mainly attributable to the progress of several major projects being
concentrated towards the end of the period, thereby accumulating trade receivables which
had not been settled as at 30 November 2015. This is slightly offset by a decrease in trade
receivables due to the fluctuations in the actual works progress of our ongoing projects, the
amount certified by the relevant customers and the amount settled by the relevant customers
as at the respective reporting dates.
When undertaking contract works, some of our customers may, depending on the
contract terms, hold up a certain percentage of each payment made to us as retention money.
In general, our customers will retain up to 10% of each interim payment and up to a
maximum limit of 5% of the contract sum as retention money for the project. 50% of the
retention money withheld is normally released to us after the completion of a project and the
remaining retention money is normally released after the expiry of the defects liability
period.
239
Our retention monies receivables increased from approximately HK$17,957,000 as at
31 March 2014 to approximately HK$19,217,000 as at 31 March 2015 due to the increase in
construction works to speed up the progress of two projects with an aggregate contract sum
of HK$195,541,000 to meet completion deadlines during the year ended 31 March 2015, and
hence retention monies receivables grew in line with the increase in our revenue.
Our retention monies receivables increased from approximately HK$19,217,000 as at
31 March 2015 to HK$23,815,000 as at 30 November 2015, such increase is due to the
retaining of retention money by our customers for our construction works without any
significant release of retention monies during the eight months ended 30 November 2015.
Prepayments and deposits mainly represented amounts paid for rental and utility
deposits for warehouse, deposits for material purchase and advance payments to injured
workers. Prepayments and deposits were amounted to approximately HK$1,736,000,
HK$1,166,000 and HK$719,000 as at 31 March 2014 and 2015 and 30 November 2015,
respectively.
Our trade and other payables consisted of (i) trade payables; (ii) retention monies
payables; and (iii) accruals and other payables. The following table sets out the breakdown
of trade and other payables as at the respective dates indicated:
As at 31 March
2014
2015
HK$000
HK$000
Trade payables
Retention monies payables
Accruals and other payables
As at
30
November
2015
HK$000
17,489
2,045
4,407
10,114
3,278
6,325
17,416
3,647
6,373
23,941
19,717
27,436
Trade payables
Our trade payables mainly represented amounts payable to our suppliers, from whom
we purchased construction materials, and subcontracting charges.
As our business is project-based and our construction projects may not be recurring,
our costs of sales during the Track Record Period fluctuated subject to the size and the
progress of our construction works and as such our trade payables balance and creditors
turnover days as at a reporting date or during a reporting period may be affected.
240
Our trade payables decreased from approximately HK$17,489,000 as at 31 March 2014
to approximately HK$10,114,000 as at 31 March 2015.
Our trade payables increased from approximately HK$10,114,000 as at 31 March 2015
to approximately HK$17,416,000 as at 30 November 2015.
The following table sets out our ageing analysis of trade payables presented based on
the invoice dates as at the respective dates indicated:
As at 31 March
2014
2015
HK$000
HK$000
0-30 days
31-60 days
61-90 days
Over 90 days
As at 30
November
2015
HK$000
10,411
5,556
466
1,056
6,894
2,646
69
505
17,183
31
202
17,489
10,114
17,416
The credit period on trade payables is generally 0 to 30 days. As at the Latest

Practicable Date, all of our trade payables as at 31 March 2014 and 2015 were settled and
approximately HK$16,571,000 or 95.2% of trade payables as at 30 November 2015 were
settled.
The following table sets out our creditors turnover days during the year/period
indicated:
For the year ended

31 March
2014
2015
days
days
Creditors turnover days
33.6
20.4
For the
eight
months
ended 30
November
2015
days
24.5
Note: Creditors turnover days is calculated by the average trade payables as at the respective period end
divided by costs of sales for the period and multiplied by the number of days in the period.
The creditors turnover days were 33.6 days, 20.4 days and 24.5 days for each of the
years ended 31 March 2014 and 2015 and for the eight months ended 30 November 2015,
respectively. As discussed above, our creditors turnover days may fluctuate due to the
non-recurring and project-by-project basis of our civil engineering works.
241
The amounts due to directors was approximately HK$6,604,000, HK$2,689,000 and
HK$10,056,000 as at 31 March 2014 and 2015 and 30 November 2015, respectively, which
mainly represented advances for financing the daily operations of our Group and for the
settlement of Listing expenses during the eight months ended 30 November 2015. Such
amounts were unsecured, interest free and have no fixed terms of repayment. On 21 March
2016, Luen Hing applied HK$280,000 and HK$5,200,000 owed by Luen Hing to Mr. CK
Wong and Mr. WW Wong, respectively, toward the satisfaction of the issue and allotment of
5,480,000 new shares of Luen Hing at a subscription price of HK$1 per share to Super
Pioneer (as directed by Mr. CK Wong and Mr. WW Wong, respectively) and the remaining
uncapitalised balance of amounts due to directors of HK$4,157.17 and HK$67,065.80 will
be repaid by Luen Hing to Mr. CK Wong and Mr. WW Wong, respectively, upon Listing;
and Hop Fung applied HK$4,920,000 owed by Hop Fung to Mr. CK Wong toward the
satisfaction of the issue and allotment of 4,920,000 new shares of Hop Fung at a
subscription price of HK$1 per share to Super Pioneer (as directed by Mr. CK Wong) and
the remaining uncapitalised balance of amounts due to directors of HK$4,580.87 will be
repaid by Hop Fung to Mr. CK Wong upon Listing.
Capital deficiency/Equity attributable to equity holders of our Company
During the Track Record Period, we recognised a capital deficiency attributable to
equity holders of our Company of approximately HK$9,775,000 as at 31 March 2014 and
equity attributable to equity holders of our Company of approximately HK$8,304,000 and
HK$14,696,000 as at 31 March 2015 and 30 November 2015, respectively. The capital
deficiency as at 31 March 2014 is attributable to accumulated losses incurred prior to the
Track Record Period. The accumulated losses incurred are mainly attributable to the thin
gross profit margins recognised and losses incurred on several projects due to unforeseen
circumstances and/or errors or inaccurate estimations of project duration and costs.
Unforeseen circumstances and errors or inaccurate estimations of project duration and costs
arose due to the inherent risks involved in determining tender prices by estimating the
construction costs under the contract duration as specified in the tender invitation documents
which may differ substantially upon project implementation. Many factors affect the time
taken and the costs actually involved in completing construction projects undertaken.
Examples of such factors include shortage and cost escalation of labour and materials,
difficult geological conditions, adverse weather conditions, variations to the construction
plans instructed by customers, stringent technical construction requirements, accidents, and
changes in the Governments policies. Other unforeseen problems or circumstances may also
occur during project implementation.
During the construction industry downturn in Hong Kong prior to 2010, such risks
were not fully priced into the markups when submitting bids for several projects in order to
remain competitive and increase our revenue stream to pay for our staff costs and fixed
overheads and service our debts. Upon the recovery of the construction industry in Hong
Kong and during the Track Record Period, we were able to gradually set higher tender
prices, whilst remaining competitive, to take into consideration the likelihood of
uncertainties and material deviations in estimated and actual project duration and costs. As it
took several years to gradually set higher tender prices and to complete projects that we
242
were awarded during the construction industry downturn, we recorded an accumulated loss
as at 31 March 2014. In addition, to improve our profitability, we also established an
estimating department in 2013 to review and assess new projects to minimise the likelihood
of unforeseen circumstances and improve project duration and costs estimations.
Furthermore, we focused on bidding for contracts of the same infrastructural projects as our
experience with the relevant project and familiarity with the conditions of the relevant site
would allow us to reduce the likelihood of unforeseen circumstances and make better
estimations of project duration and costs.
RELATED PARTY TRANSACTIONS AND BALANCES
Please refer to notes 16, 21, 22 and 29 of Section II in the Accountants Report in
Appendix I to this prospectus for details of the related parties transactions and balances with
related parties. Our Directors are of the view that these transactions were conducted on an
arms length basis, and would not distort our results of operation during the Track Record
Period or make our historical results during the Track Record Period not reflective of our
expectations of our future performance. Our Directors confirm that all other personal
guarantees provided for our Group will be released or replaced by corporate guarantees or
guaranteed by surety bonds and all amounts due to/from related parties will be settled before
Listing.
INDEBTEDNESS
The following table sets out our Groups indebtedness as at the respective dates
indicated:
As at 31 March
2014
2015
HK$000
HK$000
Current liabilities
Non-current liabilities
As at 30
November
2015
HK$000
As at 31
January
2016
HK$000
(unaudited)
6,604
1,474
10,536
2,689
1,199
18,940
10,056
1,537
5,688
9,874
1,660
5,295
18,614
22,828
17,281
16,829
2,278
1,912
2,411
2,471
20,892
24,740
19,692
19,300
The amounts due to directors were unsecured, interest free and have no fixed terms of
repayment.
243
Bank overdrafts and bank loans
The following table sets out the breakdown of bank loans and overdrafts as at the
respective dates indicated:
As at 31 March
2014
2015
HK$000
HK$000
Secured term loans

Secured bank overdrafts
Secured mortgage loan
As at 30
November
2015
HK$000
As at 31
January
2016
HK$000
(unaudited)
2,984
7,552
6,404
5,482
7,054
5,520
168
5,295
10,536
18,940
5,688
5,295
As at 31 January 2016, we had total bank overdraft facilities of HK$6,000,000, of

which the unutilised and unrestricted bank overdraft facilities amounted to approximately
HK$6,000,000.
Our bank loans are classified as current liabilities according to the HK Interpretation 5,
Presentation of Financial Statements Classification by the Borrower of a Term Loan that
Contains a Repayment on Demand Clause issued by the Hong Kong Institute of Certified
Public Accountants. According to the repayment schedule, the bank overdrafts and bank
loans are repayable as follows:
As at 31 March
2014
2015
HK$000
HK$000
Within 1 year or on demand
10,536
18,940
As at 30
November
2015
HK$000
5,688
The carrying amount of bank overdrafts and bank loans are denominated in HK dollars.
The bank overdrafts and bank loans bear interests on a floating basis at effective interest
rates ranging from 0.91% to 5.50%, 0.92% to 5.50% and 3.23% to 5.50% per annum as at
31 March 2014 and 2015 and 30 November 2015, respectively.
244
The bank term loans and overdrafts were secured by the land and building of our
Group, a property owned by the Controlling Shareholders and their unlimited personal
guarantees.
In addition, as at 31 March 2014 and 2015 and 30 November 2015, bank term loan
(the HKMC Loan) of HK$Nil, HK$4,000,000 and HK$3,512,000 were secured by the
guarantee given by the Hong Kong Mortgage Corporation Limited and unlimited personal
guarantees given by the Controlling Shareholders. Pursuant to terms as set out in the loan
agreement, Luen Hing shall not have its shares listed on the Main Board or the GEM of the
Stock Exchange or any similar exchanges in or outside Hong Kong. The funds from a new
bank term loan to be drawn in April 2016, that does not have a covenant forbidding Luen
Hing from having its shares listed on the Main Board or the GEM of the Stock Exchange,
will be been used to fully repay the HKMC Loan before the Listing.
The mortgage loan was secured by the investment property of our Group. As at the
Latest Practicable Date, the investment property of our Group was sold and the mortgage
loan has been fully repaid.
In March 2016, we obtained a credit facility from a bank of up to HK$20,000,000
which consists of: (i) a factoring facility of up to HK$10,000,000 by factoring of certain
accounts receivable from our major customer(s) to the bank; and (ii) a banking facility of
HK$10,000,000. Such credit facility was secured by unlimited personal guarantees given by
the Controlling Shareholders.
The personal guarantees provided by the Controlling Shareholders in respect of the
bank term loans and overdrafts will be released and replaced by a corporate guarantee
provided by our Company upon Listing.
245
Finance lease liabilities
During the Track Record Period, we acquired certain motor vehicles by way of finance
lease arrangements mainly through banks and finance lease companies. The carrying
amounts of all finance lease liabilities are denominated in HK dollars. The following table
sets out our obligations under finance leases repayable as at the respective dates indicated:
As at 31 March
2014
2015
HK$000
HK$000
Total minimum lease payments
Within one year
After one year but within two
years
After two years but within five
years
Future finance charges on finance

leases
Present value of finance lease
liabilities
Present value of finance lease
payments
Within one year
After one year but within two
years
After two years but within five
years
As at
30
November
2015
HK$000
As at 31
January
2016
HK$000
(unaudited)
1,619
1,314
1,677
1,805
1,254
1,001
1,398
1,549
1,149
1,008
1,121
1,022
4,022
3,323
4,196
4,376
(270)
(212)
(248)
(245)
3,752
3,111
3,948
4,131
1,474
1,199
1,537
1,660
1,177
937
1,319
1,474
1,101
975
1,092
997
3,752
3,111
3,948
4,131
The underlying interest rates of these obligations under finance leases ranged from
6.05% to 7.35%, 5.44% to 6.21% and 5.44% to 6.21% per annum as at 31 March 2014 and
2015 and 30 November 2015, respectively.
The finance leases liabilities are secured by our motor vehicles as at 31 March 2014
and 2015 and 30 November 2015, respectively. Finance leases liabilities with carrying
amounts of approximately HK$3,752,000 and HK$3,111,000 as at 31 March 2014 and 2015,
respectively, are guaranteed by personal guarantees given by Mr. CK Wong and Mr. WW
Wong. Finance lease liabilities with carrying amounts of approximately HK$3,948,000 as at
30 November 2015 are guaranteed by personal guarantees given by Mr. CK Wong. Our
Directors confirm that the said personal guarantees given by Mr. CK Wong will be released
upon the Listing.
246
Save for the continual use of the financial lease arrangements subsequent to the Listing
for the acquisition of motor vehicles for our daily operation uses and the credit facility
obtained from the bank in March 2016 of up to HK$20,000,000 for strengthening our
working capital position and enhancing our financial resources for our contracts on hand and
newly awarded projects, our Directors confirm that our Company did not have any other
external financing plans as at the Latest Practicable Date.
Contingent liabilities
We had no significant contingent liabilities as at 31 March 2014 and 2015 and 30
November 2015.
Commitments
We have the following capital commitments as at the respective dates indicated:
As at 31 March
2014
2015
HK$000
HK$000
Contracted but not provided for
Acquisition of property, plant and equipment
As at
30
November
2015
HK$000
490
Our Group had outstanding commitments in respect of future minimum lease payments
under non-cancellable operating leases as at the respective dates indicated:
As at 31 March
2014
2015
HK$000
HK$000
As lessee in respect of our warehouse and
office equipment
Within one year
In the second to fifth years
As lessor in respect of our investment

property
Within one year
247
As at
30
November
2015
HK$000
160
29
98
35
159
26
189
133
185
23
50
Our Directors confirm that (i) our Group has not experienced any difficulty in
obtaining bank borrowings, has not defaulted in payments on bank borrowings or breached
any finance covenants during the Track Record Period and up to the Latest Practicable Date;
(ii) there has not been any material change in our indebtedness and contingent liabilities
since 30 November 2015 and up to the Latest Practicable Date; (iii) our Directors are not
aware of any material defaults in the payment of our trade and non-trade payables and bank
borrowings during the Track Record Period and up to the Latest Practicable Date; (iv) our
bank borrowings are subject to standard banking conditions; and (v) our Group has not
received any notices from banks indicating that they might withdraw or downsize our
banking facilities and none of our Groups banking facilities is subject to the fulfillment of
covenants relating to financial ratio requirements or any other material covenants which
would adversely affect our Groups ability to undertake additional debt or equity financing.
Save as disclosed above in the paragraph headed Indebtedness in this section, we did
not have, at the close of business on 30 November 2015, any loan capital issued and
outstanding or agreed to be issued, bank overdrafts, loans or other similar indebtedness,
liabilities under acceptances or acceptance credits, debentures, mortgages, charges, hire
purchase commitments, guarantees or other material contingent liabilities.
OFF-BALANCE SHEET ARRANGEMENTS
Our Group did not enter into any material off-balance sheet transactions or
arrangements as at the Latest Practicable Date.
CAPITAL EXPENDITURES
Our capital expenditures during the Track Record Period primarily comprised of
additions to property, plant and equipment in line with our business expansion. The
following table sets forth details of our capital expenditures during the Track Record Period:
Year ended 31 March

2014
2015
HK$000
HK$000
Land and buildings
Furniture and equipment
Site equipment
Motor vehicles
Eight
months
ended 30
November
2015
HK$000
196
4,310
2,784
84
410
1,349
514
812
2,210
7,290
1,843
3,536
Our capital expenditures were funded out of internally generated resources, bank term
loans and finance lease arrangements.
248
Our Group plans to finance future capital expenditures primarily through the net
proceeds of the Placing, hire-purchase arrangements and cash generated from operations. To
cope with expansion needs, our Group expects to further incur additional capital
expenditures which are expected to be generally on site equipment and motor vehicles. It is
expected that approximately 50.4% of the net proceeds, or approximately HK$18.0 million
will be used to acquire site equipment and motor vehicles.
SUMMARY OF KEY FINANCIAL RATIOS
The table below sets out a summary of key financial ratios respect of our Groups
results of operation for the years/period ended or as at 31 March 2014 and 2015 and 30
November 2015:
Notes
As at or for the year

ended 31 March
2014
2015
As at or
for the
eight
months
ended 30
November
2015
Profitability ratios
Return on assets
Return on equity
1
2
12.6%
N/A
19.4%
217.7%
6.9%
43.5%
Liquidity ratios
Current ratio
Quick ratio
3
4
0.6
0.6
0.8
0.8
1.1
1.1
Capital adequacy ratios

Gearing ratio
Net debt to equity ratio
Interest coverage
5
6
7
N/A
N/A
26.2
265.5%
194.5%
47.1
65.6%
11.3%
27.8
Notes:
1.
Return on assets is calculated by dividing net profit for the year/period divided by the total assets at
the end of the respective year/period and expressed as a percentage.
2.
Return on equity is calculated by dividing net profit attributable to the owners of our Company for
the year/period divided by the total equity attributable to the owners of our Company at the end of
the respective year/period and expressed as a percentage.
3.
Current ratio is calculated by dividing the total current assets by the total current liabilities.
4.
Quick ratio is calculated by dividing total current assets net of inventories by current liabilities.
5.
Gearing ratio is calculated by dividing all interest-bearing borrowings and obligations under finance
leases by total equity and expressed as a percentage.
249
6.
Net debt to equity ratio is calculated by dividing all interest-bearing borrowings and obligations
under finance leases net of cash and cash equivalents by total equity and expressed as a percentage.
7.
Interest coverage is calculated by the profit before interest and tax divided by the interest expenses.
8.
We had deficiency in our total equity as at 31 March 2014. As such, return on equity, gearing ratio
and net debt to equity ratio as at 31 March 2014 are not applicable.
Profitability ratios
Return on assets
During the year ended 31 March 2015, our Group carried out a substantial amount of
construction works of two projects with an aggregate contract sum of approximately
HK$195,541,000, which resulted in an increase in revenue, profit for the year and trade and
other receivables. Accordingly, our return on assets increased from 12.6% for the year ended
31 March 2014 to 19.4% for the year ended 31 March 2015 due to the increase in profit for
the year at a rate greater than the increase in our total assets.
We recorded a decrease in return on total assets to approximately 6.9% for the eight
months ended 30 November 2015 and such decrease was mainly due to profit for only eight
months recorded and a decrease in profit for the period due to the completion of 16 projects
with an aggregate contract sum of approximately HK$137,700,000 during the year ended 31
March 2015 and incurring of Listing expenses during the eight months ended 30 November
2015.
Return on equity
We have deficiency in our total equity as at 31 March 2014. As such, return on equity
for the year ended 31 March 2014 is not applicable. We recorded a decrease in return on
equity from approximately 217.7% for the year ended 31 March 2015 to approximately
43.5% for the eight months ended 30 November 2015 primarily due to profit for only eight
months being recorded and the incurring of Listing expenses during the eight months ended
30 November 2015.
Liquidity ratios
Current ratio
Our current ratio increased from approximately 0.6 as at 31 March 2014 to
approximately 0.8 as at 31 March 2015. This was primarily due to the increase in our trade
receivables as a result of the growth in our revenue as discussed above.
Our current ratio increased from approximately 0.8 as at 31 March 2015 to
approximately 1.1 as at 30 November 2015. This was primarily due to the repayment of
bank overdrafts with the cash generated from operations.
250
Quick ratio
During the Track Record Period, we did not hold any inventory, accordingly, our quick
ratio was the same as our current ratio.
Capital adequacy ratios
Gearing ratio
We have deficiency in our total equity as at 31 March 2014. As such, gearing ratio for
the year ended 31 March 2014 is not applicable. Our gearing ratio decreased from
approximately 265.5% as at 31 March 2015 to approximately 65.6% as at 30 November
2015. This is mainly due to bank overdrafts being substantially repaid during the eight
months ended 30 November 2015 with cash generated from operations while our Group
continued to accumulate retained earnings.
Net debt to equity ratio
We have deficiency in our total equity as at 31 March 2014. As such, net debt to
equity ratio for the year ended 31 March 2014 is not applicable. Our net debt to equity ratio
decreased from approximately 194.5% as at 31 March 2015 to approximately 11.3% as at 30
November 2015. This is mainly due to an increase in retained earnings as a result of the net
profit growth during the eight months ended 30 November 2015 as discussed above, while
cash overdrafts were substantially repaid during the eight months ended 30 November 2015
with cash generated from operations.
Interest coverage
Our interest coverage was approximately 26.2, 47.1 and 27.8 times for the years ended
31 March 2014 and 2015 and the eight months ended 30 November 2015, respectively.
During the year ended 31 March 2015, our interest coverage increased substantially to 47.1
times as a result of the carrying out of a substantial amount of construction works of two
projects with an aggregate contract sum of approximately HK$195,541,000 which gave rise
to a growth of profit before interest and tax. Our interest coverage decreased to 27.8 times
during the eight months ended 30 November 2015 due to a decrease in profit for the period
as a result of the Listing expense incurred of HK$7,883,000 during the eight months ended
30 November 2015 and the completion of 16 projects with an aggregate contract sum of
approximately HK$137,700,000 during the year ended 31 March 2015. Our finance costs
remained relatively stable during the Track Record Period.
WORKING CAPITAL
Set out below is the details of our financial obligations, totaling approximately
HK$19,300,000, expected to be fulfilled after 31 January 2016, which is the latest
practicable date for our indebtedness statement, and before 31 March 2016:
Repayment of bank borrowings, which were primarily for the acquisition of site
equipment, of approximately HK$5,295,000 for the year ending 31 March 2016;
251
Repayment of amount due to directors of approximately HK$9,874,000; and
Repayment of obligations under finance leases of approximately HK$4,131,000.
Our plans to meet our financial obligations as mentioned above using the following
expected financial resources:
Bank balances and cash as at 31 January 2016 amounting to approximately

HK$14,367,000;
Expected cash generated from our operations for the year ending 31 March 2016;
Estimated net proceeds from the Placing of approximately HK$35.7 million,

assuming a Placing Price of HK$0.26 per Placing Share; and
Unrestricted unutilised bank overdraft facilities of approximately HK$6,000,000 as

of 31 January 2016.
As advised by our Directors, our Group has not experienced any difficulty in obtaining
credit facilities, and any withdrawal of facilities, defaults in payment of bank borrowings or
breach of covenants, and cancellation of customer orders during the Track Record Period
Our Directors are of the opinion, after due and careful enquiry, that after taking into
consideration the financial resources available to our Group including banking facilities and
internal resources, and the estimated net proceeds from the Placing, our Group has sufficient
working capital for our present requirements, for at least the next 12 months from the date
of this prospectus. Based on the above factors and after taking into account that (i) our
Directors confirmation that our Group has not had any material default with regard to our
trade or other payables or any bank borrowings, and has not breached any financial
covenants in our bank borrowings during the Track Record Period; and (ii) our Directors
confirmation that during the Track Record Period and up to the Latest Practicable Date, our
Group had not experienced any difficulty in obtaining credit facilities or withdrawal of
facilities, request for early repayment, default in payments or breach of financial covenants
of bank borrowings, the Sponsor also concurs with our Directors view that our Group has
sufficient working capital for at least the next 12 months from the date of this prospectus.
252
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
Foreign exchange risk
Our Group currently is not exposed to foreign exchange risk as all of our monetary
assets and liabilities are denominated in Hong Kong dollars.
Interest rate risk
Our Group is exposed to cash flow interest rate risk due to the fluctuation of the
prevailing market interest rate on bank balances.
Our bank loans and overdrafts charge interest at floating interest rates. Having balanced
the costs and benefits, our Directors do not consider a policy on cash flow hedges of interest
rate risk necessary. Nevertheless, the management of our Group keeps monitor any change
of interest exposure and will consider implementing measures from time to time to mitigate
the adverse change of interest rate should the need arise.
Credit risk
Our Group is exposed to credit risk primarily due to the collectability risk of the trade
receivables due from our customers. Our Directors consider that our customers are reputable
corporations and hence the credit risk attached to our customers is relatively low. Our Group
performs on-going credit evaluation on the financial condition of our debtors, past history of
making payments and tightly monitors the ageing of the trade receivables. Our Group would
take necessary follow up action in case of overdue balances or when the above credit
evaluation results draw the attention of our Directors. In addition, our management reviews
the recoverable amount of the trade receivables individually and collectively at each
reporting date to ensure that adequate impairment losses are made for irrecoverable amounts.
The credit policies have been followed by our Group during the Track Record Period and
are considered to be effective in limiting our exposure to credit risk.
Liquidity risk
Our Group has a policy in place to regularly monitor our Groups liquidity
requirements, both current and expected, in order to maintain sufficient reserves of cash and
adequate lines of funding from banks and other financial institutions to meet their liquidity
requirements in the short and long term. Our Directors are of the view that our liquidity risk
management policy enables our Group to have sufficient resources to meet our debt
obligations and working capital needs.
Capital risk
Our Groups objectives for managing capital are to ensure our ability to continue as a
going concern and to maintain an optimal capital structure in order to minimise our costs of
capital, support our business and maximise shareholders value.
253
To maintain or adjust capital structure, we may adjust our dividend payout ratio, make
return of capital to Shareholders in the form of dividend or share buyback, issue new Shares
or raise new debt. No changes in the objectives, policies or processes were made during the
Track Record Period.
Neither our Company nor any of our subsidiaries are subject to any externally imposed
capital requirements.
DIVIDENDS
No member of our Group had declared any dividend during the Track Record Period
There is no expected dividend payout ratio after the Listing. The payment and the
amount of any future dividends will be at the discretion of our Directors and will depend
upon our Groups future operations and earnings, capital requirements and surplus, general
financial condition, contractual restrictions and other factors which our Directors deem
relevant. Any final dividend for a financial year will be subject to Shareholders approval.
Holders of the Shares will be entitled to receive such dividends pro rata according to the
amounts paid up or credited as paid up on the Shares.
Dividends may be paid only out of our Companys distributable profits as permitted
under the relevant laws. There can be no assurance that our Company will be able to declare
or distribute in the amount set out in any plan of our Board or at all. The past dividend
distribution record may not be used as a reference or basis to determine the level of
dividends that may be declared or paid by our Company in the future.
LISTING EXPENSES
Group as to approximately HK$2.5 million and HK$18.4 million, respectively. The listing
expenses are non-recurring in nature and are mainly consisted of professional fees paid to
the Sponsor, the legal advisers, the reporting accountants and other professional parties for
the provision of their services in connection with the Placing. No significant listing expense
was incurred by our Group during the two years ended 31 March 2015. Of the aggregate
listing expenses of approximately HK$18.4 million, approximately HK$7.9 million was
charged to profit or loss for the eight months ended 30 November 2015 and approximately
HK$1.7 million is expected to be charged to profit or loss for the four months ending 31
March 2016. Our Group expects to further charge approximately HK$3.9 million to profit or
loss, while approximately HK$4.9 million is expected to be directly attributable to the issue
of Shares and accounted for as a deduction from equity upon successful listing under the
relevant accounting standards. The amount of Listing expenses is a current estimate for
reference only and the final amount to be recognised to the consolidated statement of
comprehensive income of our Group for the year ending 31 March 2017 is subject to audit
and the actual changes in variables and assumptions.
254
SUBSEQUENT EVENTS AFTER THE REPORTING PERIOD
Please refer to Section III of the Accountants Report in Appendix I to this prospectus
for events of our Group which took place subsequent to 30 November 2015.
RECENT DEVELOPMENTS
continued to focus on developing our business of undertaking civil engineering works in
Hong Kong.
As at the Latest Practicable Date, we had a total of 20 contracts on hand. Please refer
to the section headed Business Our civil engineering contracts Contracts on hand in
this prospectus for a full list of our contracts on hand as at the Latest Practicable Date.
The aggregate contract sum of all contracts on hand is approximately
HK$1,384,140,000 and approximately HK$234,304,000 of revenue has been recognised for
the contracts on hand (with approximately HK$6,241,000 of revenue recognised exceeding
the original contract sum), representing approximately 16.9% of the aggregate contract sum
of all contracts on hand. As at the Latest Practicable Date, all existing projects have
continued to contribute revenue to our Group and none of them have had any material
interruption. We expect to recognise revenue of approximately HK$285,367,000 for the year
ending 31 March 2016 based only on our contracts on hand, which is higher than our
revenue of approximately HK$159,963,000 and HK$271,949,000 for the years ended 31
March 2014 and 2015, respectively. The amount of revenue expected to be recognised is
subject to change due to the actual progress and commencement and completion dates of our
projects. Based on the budget costs of each project, our Directors expect that our gross
profit margin for the year ending 31 March 2016 to be at similar levels to that recorded
during the Track Record Period. Accordingly, our Directors currently expect an increase in
our revenue and gross profit for the year ending 31 March 2016. Our Directors also expect
that our financial performance will be affected by the Listing expenses to be recognised for
the year ending 31 March 2016.
255
Subsequent to the Track Record Period and up to the Latest Practicable Date, our
Group have been awarded with two additional contracts with an aggregate contract sum of
approximately HK$301,317,000, the details of which are as follows:
Civil engineering
project involved
Customer
Type(s) of
works
involved
Principal works
done/to be done
by us
Expected
completion
date
Contract
sum
(HK$000)
Road and drainage

works adjacent to
railway lines
Customer D
Roads and
drainage
works
Construction of
cable draw-pits
and cable ducting
July 2016
4,415
Hong KongZhuhai-Macao
Bridge project
China
Harbour
Structural
works
Construction of
sub-structure for
bridge, abutments
and retaining
walls
May 2017
296,902
Our Directors consider that our Group is well-positioned to take on new civil
engineering projects and believe that the Governments increasing public expenditure on
infrastructure would favour the growth of our Group and the demand of our services.
In addition, we expect that annual premium of approximately HK$1,060,000 for the
purposes of obtaining surety bonds for the due performance of our Groups obligations under
certain contracts will be recognised as expenses commencing from April 2016 until the
expiry of the defects liability period of the relevant contracts. For further details of the
guarantees of sureties, please refer to the section headed Relationship with our Controlling
Shareholders Independence of our Group (i) Financial Independence of this prospectus.
Save and except for the Listing expenses as disclosed above, our Group did not have
any significant non-recurrent items in our combined statements of comprehensive income
subsequent to the Track Record Period. Our results of operation for the year ending 31
March 2016 are expected to be significantly affected by the non-recurring Listing expenses
as discussed in the paragraph headed Listing expenses in this section.
256
DISTRIBUTABLE RESERVES
As at 30 November 2015, our Company had no distributable reserves available for
distribution to its equity holders.
UNAUDITED PRO FORMA ADJUSTED NET TANGIBLE ASSETS
The following is an illustrative statement of our unaudited pro forma adjusted net
assets attributable to owners of our Company as at 30 November 2015 as shown in the
Accountants Report, the text of which is set out in Appendix I to this prospectus, and
adjusted as described below:
Adjusted Capitalisation
of amounts
combined net
due to
tangible
assets directors by
way of
attributable
issuance of
to owners of
shares by
our Company
Luen Hing
as at 30
and Hop
November
Fung
2015
HK$000
HK$000
(Note 1)
(Note 3)
Based on Placing Price
of HK$0.26 per Share
14,696
10,400
Estimated
net proceeds
from the
Placing
HK$000
(Note 4)
43,562
Unaudited
pro forma
adjusted
combined net
tangible
assets
attributable
to owners of
our Company
HK$000
68,658
Unaudited
pro forma
adjusted net
tangible
assets per
Share
HK$000
(Note 5)
0.06
Notes:
1.
The unadjusted audited combined net tangible assets attributable to the owners of our Company as of
30 November 2015 is extracted from the Accountants Report in Appendix I to this prospectus, which
is based on the audited combined net assets of our Group attributable to the owners of our Company
of approximately HK$14,696,000.
2.
Our Groups land and buildings was revalued as at 31 January 2016 by Ascent Partners Valuation
Service Limited, an independent property valuer, and relevant property valuation report is set out in
Appendix III Property Valuation. The net surplus over their carrying value amounting to
HK$3,222,000 has not been included in the combined net tangible assets of our Group attributable to
equity holders of our Company as at 30 November 2015. The above adjustment does not take into
account the above valuation surplus. Had the land and buildings been stated as such valuation, an
additional depreciation of HK$289,000 per annum in respect of revaluation surplus, before income
taxes, would be charged against the combined statement of profit or loss and other comprehensive
income.
3.
The increase in combined net tangible assets of the Group attributable to equity holders of the
Company upon completion of share issuance of Luen Hing and Hop Fung are based on (i) 5,480,000
new shares of Luen Hing issued at a subscription price of HK$1 per share to Super Pioneer; and (ii)
4,920,000 new shares of Hop Fung issued at a subscription price of HK$1 per share to Super Pioneer
on 21 March 2016 by the way of capitalisation of amounts due to the directors. Any remaining
balances will be settled by cash.
257
4.
The estimated net proceeds from the Placing are based on 208,000,000 Shares at the Placing Price of
HK$0.26 per Placing Share, after deduction of relevant estimated underwriting commissions and fees
and other related fees.
5.
The unaudited pro forma combined adjusted net tangible assets per Share are determined after the
adjustments as described in Notes 1 and 2 above and on the basis that 1,248,000,000 Shares are
issued and outstanding as set out in the section headed Share Capital of this prospectus (assuming
that the Placing Shares and the Capitalisation Issue had been issued on 30 November 2015).
6.
The unaudited pro forma financial information presented above does not take into account of any
trading or other transactions subsequent to the date of the financial statements included in the
unaudited pro forma financial information (i.e. 30 November 2015).
PROPERTY INTERESTS AND PROPERTY VALUATION

Ascent Partners Valuation Service Limited, an independent property valuer, has valued
the property interest of our Group at HK$4,120,000 as at 31 January 2016.
The table below sets forth the reconciliation of the aggregate amount of net book value
of our property interests from our combined financial information as at 30 November 2015
and the valuation of such property interests as at 31 January 2016 as set out in Appendix III
to this prospectus:
HK$000
Valuation of property interest owned, occupied and held
under development by our Group as at 31 January 2016 as
set out in the property valuation report in Appendix III to
this prospectus
Net book value of the following properties as at 30
November 2015 as set out in Appendix I to this
prospectus:
Add: Additions during the period from 1 December 2015 to
31 January 2016
Less: Depreciation and amortisation during the period from 1
December 2015 to 31 January 2016
Net book value as at 31 January 2016
Net valuation surplus
HK$000
4,120
911
(13)
(898)
3,222
258
DISCLOSURE REQUIRED UNDER CHAPTER 17 OF THE GEM LISTING RULES
Our Directors have confirmed that as of the Latest Practicable Date, there were no
circumstances which would have given rise to a disclosure requirement under Rules 17.15 to
17.21 of the GEM Listing Rules upon the listing of the Shares on the GEM.
MATERIAL ADVERSE CHANGE
The impact of the Listing expenses on the profit and loss accounts has posted a
material adverse change in the financial or trading position or prospect of our Group since
30 November 2015 (being the date of the latest audited consolidated financial statements
were made up). Prospective investors should be aware of the impact of the Listing expenses
on the financial performance of our Group for the year ending 31 March 2016.
Save as disclosed above, our Directors have confirmed that, up to the date of this
prospectus, there had been no material adverse change in the financial or trading positions
or prospect of our Company or its subsidiaries since 30 November 2015 (being the date of
which our Groups latest audited consolidated financial statements were made up as set out
in the Accountants Report in Appendix I to this prospectus) and there had been no event
since 30 November 2015 which would materially affect the information shown in the
Accountants Report in Appendix I to this prospectus.
259
STATEMENT OF BUSINESS OBJECTIVE AND USE OF PROCEEDS

BUSINESS OBJECTIVES AND STRATEGIES
Please refer to the section headed Business Business strategies in this prospectus
for our Groups business objectives and strategies.
IMPLEMENTATION PLAN
Our Groups implementation plans are set forth below for each of the six-month
periods until 31 March 2018. Investors should note that the implementation plans and their
scheduled times for attainment are formulated on the bases and assumptions referred to in
the paragraph headed Bases and assumptions below. These bases and assumptions are
inherently subject to many uncertainties, variables and unpredictable factors, in particular the
risk factors set out in the section headed Risk Factors in this prospectus. Our Groups
actual course of business may vary from the business objective set out in this prospectus.
There can be no assurance that the plans of our Group will materialise in accordance with
the expected time frame or that the objective of our Group will be accomplished at all.
Based on our Groups business objectives, our Directors intend to carry out the following
implementation plans:
From the Latest Practicable Date to 30 September 2016
Business strategy
Implementation activities
site equipment
Purchase three hydraulic truck

cranes to improve our efficiency
and technical capability in
structural works for larger scale
civil engineering projects
Purchase three motor vehicles

for use in our projects
Purchase three generators for

use in our projects
Evaluate the effectiveness and

efficiency of site equipment and
assess our need for additional
site equipment in view of our
business development and obtain
quotation for new site equipment
260
Sources of
funding
Listing proceeds
of approximately
HK$17.3 million
Business strategy

manpower
Recruit three crane operators to

operate our hydraulic truck
cranes in construction site
Recruit two engineers to

strengthen our engineering team
Recruit one project manager, one

foreman and one administrative
staff to cope with our business
development and our plan to
participate in larger scale civil
engineering projects
Provide training to our existing

and newly recruited staff and/or
sponsor our staff to attend
training courses on occupational
health and safety, site equipment
operation and civil engineering
works techniques
Sources of
funding
Listing proceeds
of approximately
HK$6.8 million
From 1 October 2016 to 31 March 2017
Business strategy
site equipment
Continue to evaluate the

effectiveness and efficiency of
new site equipment and assess
our need for additional site
equipment in view of our
Obtain and review quotations

and detailed functional
specifications of the new site
equipment that could enhance
our efficiency and technical
capability
261
Sources of
funding
Not applicable
Business strategy

manpower
Continue to assess the

sufficiency of our labour
resources having regard to our
Continue to provide training to

our existing and newly recruited
staff and/or sponsor our staff to
attend training courses on
occupational health and safety,
site equipment operation and
civil engineering works
techniques
Sources of
funding
Our internal
resources
From 1 April 2017 to 30 September 2017
Business strategy
site equipment
Purchase additional new site

equipment including an air
compressor and an excavator to
improve our efficiency and
technical capability

262
Sources of
funding
Listing proceeds
of approximately
HK$0.7 million
Business strategy

manpower
Recruit two foremen and one

quantity surveyor to strengthen
our site manpower to cope with
our plan to undertake more
projects


techniques
Sources of
funding
Listing proceeds
of approximately
HK$0.8 million
From 1 October 2017 to 31 March 2018

Sources of
funding
Business strategy
site equipment

Not applicable

manpower

Not applicable

techniques
263

BASES AND ASSUMPTIONS
The business objectives set out by our Directors are based on the following bases and
assumptions:
Our Group will have sufficient financial resources to meet the planned capital
expenditure and business development requirements during the period to which
our future plans relate.
There will be no material change in the funding requirement for each of our
Groups future plans described in this prospectus from the amount as estimated by
our Directors.
There will be no material change in existing laws and regulations, or other

governmental policies relating to our Group, or in the political, economic or
market conditions in which our Group operates.
There will be no change in the effectiveness of the licences, permits and

qualifications obtained by our Group.
There will be no material changes in the bases or rates of taxation applicable to

the activities of our Group.
There will be no disasters, natural, political or otherwise, which would materially

disrupt the businesses or operations of our Group.
Our Group will not be materially affected by the risk factors as set out under the
section headed Risk factors in this prospectus.
REASONS FOR THE LISTING

Our Directors believe that the listing of the Shares on GEM will facilitate the
implementation of our business strategies. As stated in the section headed Business
Business strategies in this prospectus, we plan to expand our market share in the civil
engineering construction industry in Hong Kong by competing for sizeable civil engineering
projects in Hong Kong through acquisition of additional site equipment and further
strengthening our manpower. The net proceeds of the Placing will provide financial
resources to our Group to achieve such business strategies which will further strengthen our
market position and expand our market share. A public listing status will also enhance our
corporate profile and recognition and assist us in reinforcing our brand awareness and
image. We believe that a public listing status on GEM could attract potential customers,
suppliers and subcontractors who are more willing to establish business relationship with
listed companies. It will also generate reassurance among our Groups existing customers,
suppliers and subcontractors and strengthen our competitiveness in the market. The Listing
will also enable our Group to have access to capital market for raising funds both at the
time of Listing and at later stages, which would in turn assist us in future business
development of our Group. A public listing status on GEM may offer our Company a
264

broader shareholder base which could potentially lead to a more liquid market in the trading
of the Shares. We also believe that our internal control and corporate governance practices
could be further enhanced following the Listing.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the Sale Shares by the Selling
Shareholder in the Placing.
The net proceeds to be received by us from the Placing based on the Placing Price of
HK$0.26 per Placing Share, after deducting related underwriting fees and estimated expenses
in connection with the Placing, are estimated to be approximately HK$35.7 million. Our
Directors presently intend that the net proceeds will be applied as follows:
be used for acquisition of additional site equipment;
be used for further strengthening our manpower;
be used for the repayment of bank borrowings and finance lease to reduce our
finance cost. Specifically, (i) approximately HK$3.1 million will be used to
wholly prepay the bank loan to be drawn in April 2016 for settlement of the
outstanding indebtedness under the SME Financing Guarantee Scheme for
financing our Groups working capital bearing interest at 1% below the Hong
Kong dollar prime rate per annum and an effective interest rate of 3.99% per
annum and is repayable on a monthly basis over the loan term of 50 months up to
April 2020; (ii) approximately HK$1.6 million will be used to wholly prepay the
bank loan drawn in March 2014 for acquisition of a site equipment bearing
interest at 3% over the Hong Kong Interbank Offered Rate per annum and an
effective interest rate of 3.23% per annum and is repayable on a monthly basis
over the loan term of 5 years up to January 2019; (iii) approximately HK$1.0
million will be used to wholly prepay the finance lease incurred since September
2013 which will mature in 5 years from the date of occurrence bearing interest
rate at a fixed rate of 2.50% per annum and an effective interest rate of 6.05% per
annum, which were incurred to fund our purchase of motor vehicle; and (iv)
approximately HK$1.0 million will be used to wholly prepay the finance lease
incurred since September 2015 which will become mature in 4 years from the
date of occurrence bearing interest rate at a fixed rate of 2.25% per annum and
effective interest rate of 5.5% per annum, which were incurred to fund our
purchase of motor vehicle; and (v) approximately HK$0.1 million will be used to
wholly prepay the finance lease incurred since January 2015 which will become
mature in 3 years from the date of occurrence bearing interest rate at a fixed rate
of 2.25% per annum and effective interest rate of 5.58% per annum, which were
incurred to fund our purchase of motor vehicle; and
265
be used as general working capital of our Group.
The following table sets forth a breakdown of how the net proceeds to be received by
us from the Placing are intended to be applied and the timing of application:
From the
Latest
Practicable
Date to
30 September
2016
HK$ million
From
From
1 April
1 October
2017 to
2016 to
31 March 30 September
2017
2017
HK$ million HK$ million
From
1 October
2017 to
31 March
2018
HK$ million
Total
HK$ million
17.3
0.7
18.0
Further strengthening our manpower
6.8
0.8
7.6
Repayment of bank loans and finance lease
6.7
0.1
6.8
General working capital of our Group
3.3
3.3
Our Directors consider that the net proceeds to be received by us from the Placing of
about HK$35.7 million, together with our Groups internal resources, cash generated from
our operation and our available banking facilities, will be sufficient to finance the business
plans of our Group as scheduled up to 31 March 2018.
To the extent that the net proceeds from the issue of the Placing Shares are not
immediately required for the above purpose, it is the present intention of our Directors that
such proceeds will be placed on short-term interest bearing deposits or treasury products
with authorised financial institutions.
We estimate that the Selling Shareholder will receive net proceeds of approximately
HK$24.6 million after deduction of underwriting fees and commissions and estimated
expenses payable by the Selling Shareholder in relation to the Placing. We will not receive
any of the net proceeds of the Placing from the sale of the Sale Shares by the Selling
Shareholder.
266
UNDERWRITING
UNDERWRITERS
Gransing Securities Co., Limited
Suncorp Securities Limited
UNDERWRITING ARRANGEMENTS AND EXPENSES
Underwriting Agreement
Pursuant to the Underwriting Agreement, our Company and the Selling Shareholder
will conditionally place the Placing Shares with institutional, professional and other
investors in Hong Kong at the Placing Price subject to the terms and conditions in the
Underwriting Agreement and this prospectus.
Subject to, among other conditions, the Listing Department granting the listing of, and
permission to deal in, the Shares in issue and to be issued as mentioned in this prospectus
and to certain other conditions as set out in the Underwriting Agreement being satisfied or
waived on or before the dates and times as specified therein or such other dates as the Joint
Bookrunners (for themselves and on behalf of the Underwriters) may agree but in any event
not later than the 30th day after the date of this prospectus, the Underwriters have agreed to
subscribe for or to procure subscribers for their respective applicable proportions of the
Placing Shares on the terms and conditions under the Underwriting Agreement and in this
prospectus.
Grounds for termination
The Sponsor and/or the Joint Bookrunners (for themselves and on behalf of the
Underwriters) shall have the absolute right which is exercisable by the Sponsor and/or the
Joint Bookrunners (for themselves and on behalf of the Underwriters), upon giving notice in
writing to our Company (for itself and on behalf of the Selling Shareholder, our executive
Directors and our Controlling Shareholders), to terminate the arrangements set out in the
Underwriting Agreement with immediate effect if any of the following events occur at any
time prior to 8:00 a.m. (Hong Kong time) on the Listing Date (which is expected to be on
Tuesday, 12 April 2016):
(a)
it has come to the notice of the Sponsor and/or the Joint Bookrunners that:
(i)
any statement contained in the Prospectus or other documents issued or used

by or on behalf of our Company or information provided to the Sponsor and
the Joint Bookrunners in connection with the Placing (the Relevant
Documents), considered by the Sponsor and/or the Joint Bookrunners in its/
their absolute opinion was, when it was issued, or has become, or been
discovered to be untrue, inaccurate, incorrect or misleading in any material
respect;
267
UNDERWRITING
(ii) any matter has arisen or has been discovered which would, had it arisen or
been discovered immediately before the date of this prospectus, constitute an
omission therefrom considered by the Sponsor and/or the Joint Bookrunners
in its/their absolute opinion to be material in the context of the Placing;
(iii) any breach of any of the obligations imposed upon any party to the
Underwriting Agreement considered by the Sponsor and/or the Joint
Bookrunners in its/their absolute opinion to be material in the context of the
Placing (other than upon any of the Underwriters);
(iv) either (1) there has been a breach of any of the warranties or provisions of
the Underwriting Agreement by any of our Company, our executive Directors
or our Controlling Shareholders (collectively, the Warrantors) or (2) any
matter or event showing or rendering any of the warranties contained in the
Underwriting Agreement, as applicable, in the absolute opinion of the
Sponsor and/or the Joint Bookrunners, to be untrue, incorrect or misleading
in any material respect when given or repeated;
(v)
any event, act or omission which gives or is likely to give rise to any
liability of a material nature of any of the Warrantors pursuant to the
indemnity provisions under the Underwriting Agreement; or
(vi) any event, series of events, matter or circumstance occurs or arises on or

after the date of this prospectus and prior to 8:00 a.m. on the Listing Date,
would have rendered any warranties, in the absolute opinion of the Sponsor
and/or the Joint Bookrunners, untrue, incorrect, inaccurate or misleading in
any respect;
(b)
there shall develop, occur, happen, exist or come into effect:

(i)
any event, or series of events in the nature of force majeure, including,

without limitation, acts of government, fire, explosion, flooding, civil
commotion, acts of war, acts of God, acts of terrorism (whether or not
responsibility has been claimed), declaration of a national or international
emergency, riots, public disorder, economic sanctions, outbreaks of diseases
or epidemics in Hong Kong;
(ii) any change or development involving a change or development, or any event

or series of events, matters or circumstances likely to result in or represent
any change or development, in the local, national, regional, international
financial, economic, political, military, industrial, fiscal, regulatory, currency,
credit, market or exchange control conditions or any monetary or trading
settlement system or matters and/or disaster (including without limitation a
change in the system under which the value of the Hong Kong currency is
linked to that of the currency of the United States, or a material fluctuation
in the exchange rate of the Hong Kong dollar);
268
UNDERWRITING
(iii) any new law or regulation or any change or development involving a
prospective change in existing laws or regulations or any change or
development involving a prospective change in the interpretation or
application thereof by any court or other competent authority in or affecting
Hong Kong, the Cayman Islands or BVI (the Relevant Jurisdictions);
(iv) the imposition of economic sanctions on any of the Relevant Jurisdictions;
(v)
a change or development involving a prospective change in any taxation or

exchange control (or the implementation of any exchange control) in any of
the Relevant Jurisdictions;
(vi) any litigation or claim of importance instigated against any member of our
Group or any Director;
(vii) a Director being charged with an indictable offence or prohibited by
operation of law or regulation or otherwise disqualified from taking part in
the management of a company;
(viii) a valid demand by any creditor for repayment or payment of any material
indebtedness of any member of our Group or in respect of which any
member of our Group is liable prior to its stated maturity;
(ix) any material loss or damage sustained by any member of our Group
(howsoever caused and whether or not the subject of any insurance or claim
against any person);
(x)
any contravention by any member of our Group or any Director of the GEM
Listing Rules or any applicable laws;
(xi) a prohibition on our Company and the Selling Shareholder for whatever
reason from allotting the New Shares and/or transferring the Sale Shares (as
the case may be) pursuant to the terms of the Placing;
(xii) non-compliance of this prospectus (and/or any other documents used in
connection with the subscription and purchase of the Placing Shares) or any
aspect of the Placing with the GEM Listing Rules or any other applicable
laws by any of the Directors or the Warrantors;
(xiii) the issue or requirement to issue by our Company of a supplement or
amendment to any of the Relevant Documents (and/or any other documents
used in connection with the subscription of the Placing Shares);
(xiv) any change in the business, business prospects, financial or trading position,
conditions or prospects (financial or otherwise) of our Group taken as a
whole;
269
UNDERWRITING
(xv) a petition or an order is presented for the winding-up or liquidation of any
member of our Group or any member of our Group makes any composition
or arrangement with its creditors or enters into a scheme of arrangement or
any resolution is passed for the winding-up of any member of our Group or
a provisional liquidator, receiver or manager is appointed over all or part of
the assets or undertaking of any member of our Group or any analogous
matter thereto occurs in respect of any member of our Group;
(xvi) a disruption in or any general moratorium on commercial banking activities
or foreign exchange trading or securities settlement, or payment or clearance
services or procedures in or affecting any of the Relevant Jurisdictions;
(xvii) any change or development in the conditions of local, national or
international equity securities or other financial markets; or
(xviii) the imposition of any moratorium, suspension or restriction on trading in
shares or securities generally on or by the Stock Exchange or by any of the
other exchanges or by such system or by order of any regulatory or
governmental authority,
which in each case or in aggregate in the sole and absolute opinion of the
Sponsor and/or the Joint Bookrunners (for themselves and on behalf of the
Underwriters):
(i)
is or will be materially adverse to or may prejudicially affect the business,

financial, trading or other condition or prospects of our Group (as a whole)
or any member of our Group;
(ii) has or will have a material adverse effect on the success of the Placing or
the level of interest under the Placing;
(iii) makes or may make it inadvisable, inexpedient or impracticable to proceed
with the Placing or the delivery of the Placing Shares on the terms and in
the manner contemplated by any of the Relevant Documents; or
(iv) has or would have the effect of making any part of the Underwriting
Agreement (including undertaking) incapable of implementation or
performance in accordance with its terms and in the manner contemplated by
any of the Relevant Documents and the Underwriting Agreement or which
prevents the processing of applications and/or payments pursuant to the
Placing or pursuant to the underwriting thereof.
Without prejudice to the above, if, at any time prior to 8:00 a.m. (Hong Kong time) on
the Listing Date, it comes to the notice of the Sponsor and/or the Joint Bookrunners:
(a)
any matter or event showing any of the warranties contained in the Underwriting
Agreement to be untrue, inaccurate or misleading in any material respect when
given or repeated or any breach of any of the warranties contained in the
270
UNDERWRITING
Underwriting Agreement or any other provision of the Underwriting Agreement by
any party hereto (other than the Sponsor, the Joint Bookrunners and the Joint
Lead Managers), which is considered, in the sole and absolute opinion of the
Sponsor and/or the Joint Bookrunners (for themselves and on behalf of the
Underwriters), to be material in the context of the Placing; or
(b)
any matter which, had it arisen immediately before the date of this prospectus and
not having been disclosed in this prospectus, would have constituted a material
omission in the sole and absolute opinion of the Sponsor and/or the Joint
Bookrunners (for themselves and on behalf of the Underwriters) in the context of
the Placing; or
(c)
any statement contained in the this prospectus and the placing letter reasonably
considered to be material by the Sponsor and/or the Joint Bookrunners which is
discovered to be or becomes untrue, incorrect or misleading in any respect and in
the sole and absolute opinion of the Sponsor and/or the Joint Bookrunners (for
themselves and on behalf of the Underwriters) to be material in the context of the
Placing; or
(d)
any event, act or omission which gives rise or is likely to give rise to any
material liability of any of the Warrantors pursuant to the indemnities contained in
the Underwriting Agreement,
the Sponsor and/or the Joint Bookrunners (for themselves and on behalf of the
Underwriters) shall be entitled (but not bound) by notice in writing to our Company
(for itself and on behalf of the Selling Shareholder, the executive Directors and our
Controlling Shareholders) on or prior to such time to terminate the Underwriting
Agreement.
Commission and expenses
In connection with the Placing, the Underwriters will receive an underwriting
commission of 3.5% of the aggregate Placing Price of all the Placing Shares, out of which
they will pay any sub-underwriting commissions.
In connection with the Listing, the Sponsor will receive a sponsorship fee of
HK$4,800,000 and will be reimbursed for its expenses.
In connection with the Listing and the Placing, the total expenses are estimated to be
approximately HK$20.9 million based on the Placing Price of HK$0.26 per Placing Share
and including underwriting commission, brokerage fee, the Stock Exchange trading fee, the
SFC transaction levy, the sponsorship and documentation fee, the listing fee, legal and other
professional fees, printing cost and other expenses relating to the Placing of which
approximately HK$18.4 million and approximately HK$2.5 million shall be borne by our
Company and the Selling Shareholder, respectively.
271
UNDERWRITING
Our Company, our Controlling Shareholders and our executive Directors have agreed to
indemnify the Underwriters for certain losses which they may suffer, including losses arising
from their performance of their obligations under the Underwriting Agreement and any
breach by our Company, the Selling Shareholder, our Controlling Shareholders and our
executive Directors pursuant to the terms of the Underwriting Agreement.
Sponsors and Underwriters interests in our Company
The Sponsor has been appointed as the compliance adviser of the Company with effect
from the Listing Date until the despatch of the audited consolidated financial results for the
second full financial year after the Listing Date, and our Company will pay to the Sponsor
an agreed fee for its provision of services as required under the GEM Listing Rules.
Save for the interests and obligations under the Underwriting Agreement and the
advisory fee payable to the Sponsor in respect of the Placing, none of the Sponsor, the Joint
Bookrunners, the Joint Lead Managers or the Underwriters is interested beneficially or
non-beneficially in any shares in any member of our Group or has any right (whether legally
enforceable or not) or option to subscribe for or to nominate persons to subscribe for any
shares in any member of our Group.
Undertakings
Undertakings to the Stock Exchange pursuant to the GEM Listing Rules
Pursuant to Rule 13.16A of the GEM Listing Rules, each of the Controlling
Shareholders has jointly and severally undertaken to our Company and the Stock Exchange
that save as contemplated under the Placing or as provided under Rule 13.18 of the GEM
Listing Rules, he or it shall not and shall procure that the relevant registered shareholder(s)
shall not, without the prior consent of the Stock Exchange:
(a)
in the period commencing on the date by reference to which disclosure of our

interests in our Company is made in this prospectus and ending on the date which
is six months from the Listing Date, dispose of, nor enter into any agreement to
dispose of or otherwise create any mortgage, charge, pledge, lien, option,
restriction, right of first refusal, right of pre-emption, third-party right or interest,
other right, interest or encumbrance or security of any kind or another type of
preferential arrangement (including without limitation, a title transfer or retention
arrangement) having similar effect (the Encumbrances) in respect of, any of the
Shares (or any securities of our Company) in respect of which he or it is shown
by this prospectus to be the beneficial owner; or
(b)
in the period of six months commencing on the date on which the period referred
to in (a) above expires, dispose of, nor enter into any agreement to dispose of or
otherwise create any Encumbrances in respect of, any of the Shares (or any
securities of our Company) referred to in (a) above if, immediately following such
disposal or upon the exercise or enforcement of such options, rights, interests or
Encumbrances, the Controlling Shareholders would, either individually or taken
together with any of them, cease to be a Controlling Shareholder.
272
UNDERWRITING
Further, each of the Controlling Shareholders has jointly and severally undertaken to
the Stock Exchange that he/it shall comply with the following requirements:
(i)
in the event that he or it pledges or charges any direct or indirect interest in any
Shares or other securities of our Company under Rule 13.18(1) of the GEM
Listing Rules or pursuant to any right or waiver granted by the Stock Exchange
pursuant to Rule 13.18(4) of the GEM Listing Rules at any time during the
relevant periods specified in sub-paragraphs (a) and (b) above, he or it must
inform our Company immediately in writing disclosing the details specified in
Rule 17.43(1) to (4) of the GEM Listing Rules; and
(ii) having pledged or charged any interest in the Shares or other securities of our
Company under sub-paragraph (i) above, he or it must inform our Company
immediately in writing, in the event that he or it becomes aware that the pledgee
or chargee has disposed of or intends to dispose of such interest and of the
number of Shares (or other securities of our Company) affected.
Undertakings pursuant to the Underwriting Agreement
Under the Underwriting Agreement:
(a)
(i)
each of our Controlling Shareholders has jointly and severally undertakes to

and covenants with our Company, the Sponsor, the Joint Bookrunners and
the Joint Lead Managers (for themselves and on behalf of the Underwriters)
that:
(a)
he or it shall comply with all the applicable restrictions and

requirements under the GEM Listing Rules on the disposal by him or it
or by any registered holder on his or its behalf, of any Shares or other
securities of our Company in respect of which he or it is shown in this
prospectus to be the beneficial owner (directly or indirectly);
(b)
during the period commencing on the date by reference to which

disclosure of the shareholding of our Controlling Shareholder is made
in this prospectus and ending on the date which is 6 months from the
Listing Date (the First Six-Month Period), he/it shall not, and shall
procure that the relevant registered holder(s) and his/its associates and
companies controlled by him/it and any nominee or trustee holding on
trust for himself/itself shall not, without the prior written consent of the
Sponsor and the Joint Bookrunners or otherwise in compliance with the
requirements of the GEM Listing Rules, (i) offer, pledge, charge, sell,
contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant or agree to grant any option, right or
warrant to purchase or subscribe for, lend or otherwise transfer or
dispose of, either directly or indirectly, any of the Shares or any
securities convertible into or exercisable or exchangeable for, or that
represent the right to receive any such Shares or such securities; or (ii)
enter into any swap or other arrangement that transfers to another, in
273
UNDERWRITING
whole or in part, any of the economic consequences of ownership of
such Shares, whether any of the foregoing transactions is to be settled
by delivery of Shares or such other securities, in cash or otherwise; (iii)
agree (conditionally or unconditionally) to enter into or effect any
transaction with the same economic effect as any of the transactions
referred to in (i) or (ii) above; or (iv) announce any intention to enter
into or effect any of the transactions referred to in (i), (ii) or (iii)
above;
(c)
during the period of 6 months commencing on the date immediately

following the date on which the First Six-Month Period expires (the
Second Six-Month Period), he/it shall not, and shall procure that the
relevant registered holder(s) and his/its associates or companies
controlled by him/it and any nominee or trustee holding in trust for
himself/itself shall not, without the prior written consent of the
Sponsor, the Joint Bookrunners and the Stock Exchange (if required
under the GEM Listing Rules), dispose of, nor enter into any agreement
to dispose of or otherwise create any options, rights, interests or
encumbrances in respect of, any Shares held by him/it or any of his/its
associates or companies controlled by him/it or any nominee or trustee
holding on trust for himself/itself if, immediately following such
disposal or upon the exercise or enforcement of such options, rights,
interests or encumbrances, he/it would together cease to be our
Controlling Shareholder; and
(d)
in the event of a disposal of any Shares or securities of our Company

or any interest therein within the Second Six-Month Period, he/it shall
take all reasonable steps to ensure that such a disposal shall not create
a disorderly or false market for any Shares or other securities of the
Company,
provided that the restrictions in this paragraph (i)(b) and (c) shall not apply
to any Shares which our Controlling Shareholders or any of his/its respective
associates may acquire or become interested in following the Listing Date;
(ii) each of our Controlling Shareholders undertakes to and covenants with our
Company, the Sponsor, the Joint Bookrunners, the Joint Lead Managers and
the Stock Exchange that:
(A) in the event that he/it pledges or charges any of his/its direct or indirect
interest in the Shares under Rule 13.18(1) of the GEM Listing Rules or
pursuant to any right or waiver granted by the Stock Exchange pursuant
to Rule 13.18(4) of the GEM Listing Rules at any time during the
relevant periods as specified in paragraph (i) above, he/it must inform
our Company, the Sponsor, the Joint Bookrunners and the Joint Lead
Managers immediately thereafter, disclosing the details as specified in
Rule 17.43(1) to (4) of the GEM Listing Rules; and
274
UNDERWRITING
(B) having pledged or charged any of his/its interests in the Shares under
sub-paragraph (A) above, he/it must inform our Company, the Sponsor,
the Joint Bookrunners and the Joint Lead Managers immediately in the
event that he/it becomes aware that the pledgee or chargee has disposed
of or intends to dispose of such interest and of the number of the
Shares affected; and
(b)
our Company undertakes to and covenants with the Sponsor, the Joint
Bookrunners and the Joint Lead Managers (for themselves and on behalf of the
Underwriters), and each of our executive Directors and our Controlling
Shareholders jointly and severally undertakes to and covenants with the Sponsor,
the Joint Bookrunners and the Joint Lead Managers (for themselves and on behalf
of the Underwriters) to procure that, save with the prior written consent of the
Sponsor and the Joint Bookrunners (for themselves and on behalf of the
Underwriters), or save pursuant to the Placing, our Company shall not, within the
period of six months from the Listing Date:
(i)
save as permitted under the GEM Listing Rules (including but not limited to
Rule 17.29 of the GEM Listing Rules) and the applicable laws or pursuant to
an issue of Shares under the Share Option Scheme, either directly or
indirectly, conditionally or unconditionally, allot or issue or agree to allot or
issue any Shares or any other securities of our Company (including warrants
or other convertible securities (and whether or not a class already listed));
(ii) grant or agree to grant either directly or indirectly, conditionally or

unconditionally, any options, warrants or other rights carrying any rights to
subscribe for or otherwise convert into, or exchange for any Shares or any
other securities of our Company;
(iii) purchase any securities of our Company;
(iv) enter into any swap or other arrangement that transfers to another, in whole
or in part, any of the economic consequences of subscription or ownership of
Shares or such securities, whether any of the foregoing transactions is to be
settled by delivery of Shares or such securities, in cash or otherwise; or
(v)
offer to or agree to do any of the foregoing or announce any intention to do

so.
Our Company will inform the Stock Exchange as soon as it has been informed of the
above matters (if any) by the Controlling Shareholders and disclose such matters by way of
publishing an announcement in accordance with Rule 17.43 of the GEM Listing Rules.
275

PRICE PAYABLE ON SUBSCRIPTION
The Placing Price plus a 1% brokerage fee, a 0.0027% SFC transaction levy and a
0.005% Stock Exchange trading fee make up the total price payable in cash on subscription.
CONDITIONS OF THE PLACING
The Placing will be conditional upon, among others:
(a)
the Stock Exchange granting the listing of, and permission to deal in, the Shares
in issue and the Shares to be issued as mentioned herein on GEM; and
(b)
the obligations of the Underwriters under the Underwriting Agreement becoming

unconditional (including the waiver of any condition(s) by the Joint Bookrunners
(for themselves and on behalf of the Underwriters) and the Underwriting
Agreement not being terminated in accordance with the terms of that agreement or
otherwise),
in each case, on or before the dates and times specified in the Underwriting Agreement
(unless and to the extent such conditions are validly waived on or before such dates
and times) or such other dates as the Joint Bookrunners (for themselves and on behalf
of the Underwriters) may agree but in any event not later than the 30th day after the
date of this prospectus.
If such conditions are not fulfilled or waived by the Joint Bookrunners (for themselves
and on behalf of the Underwriters) prior to the times and dates specified, the Placing will
lapse and the Stock Exchange will be notified immediately. Notice of the lapse of the
Placing will be published by our Company on the website of the Stock Exchange at
www.hkexnews.hk and the website of our Company at www.luenwong.hk immediately
following such lapse.
THE PLACING
312,000,000 Placing Shares (comprising 208,000,000 New Shares to be offered by our
Company and 104,000,000 Sale Shares to be offered by the Selling Shareholder) are being
offered pursuant to the Placing, representing in aggregate 25% of the enlarged issued share
capital of our Company immediately after completion of the Placing and the Capitalisation
Issue.
The Placing is fully underwritten by the Underwriters (subject to the terms and
conditions of the Underwriting Agreement). Pursuant to the Placing, 208,000,000 New
Shares are being conditionally offered by our Company for subscription and 104,000,000
Sale Shares conditionally offered by the Selling Shareholder for purchase. It is expected that
the Underwriters or selling agents nominated by them, on behalf of our Company and the
Selling Shareholder, will conditionally place 312,000,000 Placing Shares (comprising
208,000,000 New Shares to be offered by our Company and 104,000,000 Sale Shares to be
offered by the Selling Shareholder) at the Placing Price to selected professional, institutional
and other investors in Hong Kong. Professional and institutional investors generally include
276

brokers, dealers, companies, high net worth individuals and companies (including fund
managers) whose ordinary business involves dealings in shares and other securities and
corporate entities which regularly invest in shares and other securities.
BASIS OF ALLOCATION
Allocation of the Placing Shares to selected professional, institutional and other
investors will be based on a number of factors, including the level and timing of demand
and whether or not it is expected that the relevant investors are likely to purchase further
Shares or hold or sell their Shares after the Listing. Such allocation is intended to result in a
distribution of the Placing Shares which would lead to the establishment of a solid
professional and institutional shareholder base to the benefit of our Company and the
Shareholders as a whole. In particular, the Placing Shares will be allocated pursuant to Rule
11.23(8) of the GEM Listing Rules, that not more than 50% of the Shares in public hands at
the time of Listing will be owned by the three largest public Shareholders. There will not be
any preferential treatment in the allocation of the Placing Shares to any persons.
No allocations will be permitted to nominee companies unless the name of the ultimate
beneficiary is disclosed, without the prior written consent of the Stock Exchange. Details of
the Placing will be announced in accordance with Rules 10.12(4), 16.08 and 16.16 of the
GEM Listing Rules.
COMMENCEMENT OF DEALINGS
Dealings in the Shares on GEM are expected to commence at 9:00 a.m. on Tuesday, 12
April 2016. The Shares will be traded in board lots of 10,000 Shares each. The stock code
of the Shares is 8217.
SHARES WILL BE ELIGIBLE FOR ADMISSION INTO CCASS
If the Stock Exchange grants the listing of and permission to deal in the Shares in
issue and to be issued as mentioned in this prospectus on GEM and the Company complies
with the stock admission requirements of HKSCC, the Shares will be accepted as eligible
securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the
date of commencement of dealings in the Shares on GEM or any other date as determined
by HKSCC. Settlement of transactions between participants of the Stock Exchange is
required to take place in CCASS on the second business day after any trading day.
All 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 CCASS
Operational Procedures in effect from time to time.
In respect of the dealings in the Shares which may be settled through CCASS,
investors should seek the advice of their stockbroker or other professional adviser for details
of those settlement arrangements and how such arrangements will affect their rights and
interests.
277

PLACING PRICE
Based on the Placing Price of HK$0.26 per Placing Share plus 1% brokerage fee,
0.0027% SFC transaction levy and 0.005% Stock Exchange trading fee, one board lot of
10,000 Shares will amount to a total of HK$2,626.20.
Our Company experts to announce the level of indication of interests in the Placing on
or before Monday, 11 April 2016 on the website of the Stock Exchange at
www.hkexnews.hk and our Companys website at www.luenwong.hk.
278
APPENDIX I
ACCOUNTANTS REPORT
The following is the text of a report received from the Companys reporting
accountants, Grant Thornton Hong Kong Limited, Certified Public Accountants, Hong Kong,
for the purpose of incorporation in this prospectus. It is prepared and addressed to the
directors of the Company and to the Sponsor pursuant to the requirements of Auditing
Guideline 3.340 Prospectuses and the Reporting Accountant issued by the Hong Kong
Institute of Certified Public Accountants.
31 March 2016
The directors
Dear Sirs,
We report on the financial information of Luen Wong Group Holdings Limited (the
Company) and its subsidiaries (collectively referred to as the Group), which comprises
the combined statements of financial position as at 31 March 2014 and 2015, and 30
November 2015, and the statement of financial position of the Company as at 30 November
2015, the combined statements of comprehensive income, the combined statements of
changes in equity and the combined statements of cash flows for each of the years ended 31
March 2014 and 2015 and the eight months ended 30 November 2015 (the Track Record
Period), and a summary of significant accounting policies and other explanatory
information (the Financial Information) and the comparative combined statement of
comprehensive income, combined statement of changes in equity and combined statement of
cash flows of the Group for the eight months ended 30 November 2014 (the Interim
Comparative Information), prepared on the basis of presentation set out in Note 1.3 of
Section II below, for inclusion in Appendix I to the prospectus of the Company dated 31
March 2016 (the Prospectus) in connection with the initial listing of the shares of the
Company on the Growth Enterprise Market (GEM) of The Stock Exchange of Hong Kong
Limited (the Stock Exchange).
The Company was incorporated as an exempted company with limited liability in the
Cayman Islands under the Companies Law (as revised) of the Cayman Islands on 16 October
2015. Pursuant to a group reorganisation (the Reorganisation) as detailed in the section
headed History and Development in the Prospectus, which was completed on 22 February
2016, the Company became the holding company of the companies now comprising the
Group. Apart from the Reorganisation, the Company has not commenced any business or
operation since its incorporation.
I-1
APPENDIX I
ACCOUNTANTS REPORT
As at the date of this report, the Company has direct and indirect interests in the
subsidiaries as set out in Note 1.2 of Section II below. All of these companies are private
companies or, if incorporated or established outside Hong Kong, have substantially the same
characteristics as a Hong Kong incorporated private company.
No audited financial statements have been prepared by the Company as it is not
required to issue any audited financial statements under the statutory requirement in the
Cayman Islands. The audited financial statements of the other companies now comprising
the Group as at the date of this report for which there are statutory audit requirements have
been prepared in accordance with the relevant accounting principles generally accepted in
their place of incorporation. The details of the statutory auditors of these companies are set
out in Note 1.2 of Section II below.
For the purpose of this report, the directors of the Company have prepared the
combined financial statements of the Group (the Underlying Financial Statements) in
accordance with Hong Kong Financial Reporting Standards (HKFRSs), which include all
applicable Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards
(HKASs) and Interpretations issued by the Hong Kong Institute of Certified Public
Accountants (the HKICPA). The Underlying Financial Statements for each of the years
ended 31 March 2014 and 2015 and the eight months ended 30 November 2015 were
audited by us in accordance with Hong Kong Standards on Auditing issued by the HKICPA
pursuant to separate terms of engagement with the Company.
The Financial Information has been prepared based on the Underlying Financial
Statements, with no adjustment made thereon.
Directors responsibility
The directors of the Company are responsible for the preparation of the Underlying
Financial Statements and the Financial Information that give a true and fair view in
accordance with HKFRSs, and for such internal control as the directors determine is
necessary to enable the preparation of the Underlying Financial Statements and the Financial
Information that are free from material misstatement, whether due to fraud or error. The
directors of the Company are responsible for the preparation of the Interim Comparative
Financial Information in accordance with the same basis adopted in respect of the Financial
Information.
Reporting accountants responsibility
It is our responsibility to form an independent opinion and a review conclusion on the
Financial Information and the Interim Comparative Information, respectively, and to report
our opinion and review conclusion thereon to you.
For the purpose of this report, we have carried out procedures on the Financial
Information in accordance with Auditing Guideline 3.340 Prospectuses and the Reporting
Accountant issued by the HKICPA.
I-2
APPENDIX I
ACCOUNTANTS REPORT
We have also performed a review of the Interim Comparative Information in

accordance with Hong Kong Standard on Review Engagements 2410 Review of Interim
Financial Information Performed by the Independent Auditor of the Entity issued by the
HKICPA. A review consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance with Hong Kong
Standards on Auditing and consequently does not enable us to obtain assurance that we
would become aware of all significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion on the Interim Comparative Information.
Opinion in respect of the Financial Information
In our opinion, for the purpose of this report and on the basis of presentation set out in
Note 1.3 of Section II below, the Financial Information gives a true and fair view of the
state of affairs of the Group as at 31 March 2014 and 2015 and 30 November 2015 and of
the Company as at 30 November 2015, and of the combined results and cash flows of the
Group for each financial year/period during the Track Record Period.
Review conclusion in respect of the Interim Comparative Information
Based on our review, for the purpose of this report, nothing has come to our attention
that causes us to believe that the Interim Comparative Information is not prepared, in all
material respects, in accordance with the same basis adopted in respect of the Financial
Information.
I-3
APPENDIX I
I
ACCOUNTANTS REPORT
COMBINED STATEMENTS OF COMPREHENSIVE INCOME
Note
Revenue
Costs of sales
Gross profit
Other income
Administrative and other
operating expenses
Year ended 31 March

2014
2015
HK$000
HK$000
Eight months ended

30 November
2014
2015
HK$000
HK$000
(Unaudited)
159,963
(144,943)
271,949
(246,349)
186,325
(170,904)
154,641
(137,355)
15,020
425
25,600
346
15,421
347
17,286
2,236
(3,607)
(3,772)
(1,493)
(10,122)
22,174
(471)
14,275
(291)
9,400
(338)
Profit from operations

Finance costs
11,838
(452)

Income tax expense
8
9
11,386
(1,956)
21,703
(3,624)
13,984
(2,337)
9,062
(2,670)
9,430
18,079
11,647
6,392
N/A
N/A
N/A
N/A
Profit and total

comprehensive income for
the year/period
attributable to equity
holders of the Company
Earnings per share
attributable to equity
holders of the Company
Basic and diluted
13
I-4
APPENDIX I
ACCOUNTANTS REPORT
COMBINED STATEMENTS OF FINANCIAL POSITION
Note
ASSETS AND LIABILITIES
Non-current assets
Investment property
Deferred tax assets
14
15
23
Current assets
Amounts due from customers for
contract work
As at 30
November
2015
HK$000
11,697
13,722
3,280
11,140
11,833
13,274
28,699
22,973
13,274
523
7,555
35,276
3,419
9,474
54,215
5,900
17,593
54,320
7,977
46,250
70,112
79,890
20
23,941
19,717
27,436
17
16(b)
21
22
39,891
6,604
1,474
10,536
39,980
2,689
1,199
18,940
28,326
10,056
1,537
5,688
1,607
82,446
82,525
74,650
(36,196)
(12,413)
5,240
(7,497)
10,560
18,514
16(a)
17
18
19
Current liabilities
Amounts due to customers for contract
work
Tax payable
As at 31 March
2014
2015
HK$000
HK$000

Total assets less current liabilities
I-5
APPENDIX I
ACCOUNTANTS REPORT
Note
Non-current liabilities
Deferred tax liabilities
21
23
Net (liabilities)/assets
Capital and reserves
Share capital
Reserves
24
(Capital deficiency)/Equity
attributable to equity holders of the
Company
I-6
As at 31 March
2014
2015
HK$000
HK$000
As at 30
November
2015
HK$000
2,278
1,912
344
2,411
1,407
2,278
2,256
3,818
(9,775)
8,304
14,696
(9,775)
8,304
14,696
(9,775)
8,304
14,696
APPENDIX I
ACCOUNTANTS REPORT
STATEMENT OF FINANCIAL POSITION OF THE COMPANY
Note
As at 30
November
2015
HK$000
ASSETS AND LIABILITIES

Current asset
Amount due from ultimate holding company
Net assets
EQUITY
Share capital
Accumulated losses
24
Total equity
I-7
APPENDIX I
ACCOUNTANTS REPORT
COMBINED STATEMENTS OF CHANGES IN EQUITY

(Capital deficiency)/Equity attributable to
equity holders of the Company
(Accumulated
losses)/
(Capital
Capital
Retained
deficiency)/
Share capital
reserve
earnings
Total equity
HK$000
HK$000
HK$000
HK$000
(Note 24)
(Note 25)
Balance as at 1 April 2013
Profit and total
comprehensive income
for the year
3,820
(23,025)
(19,205)
9,430
9,430
Balance as at 31 March
2014 and 1 April 2014
3,820
(13,595)
(9,775)
Profit and total

for the year
18,079
18,079
Balance as at 31 March
2015 and 1 April 2015
3,820
4,484
8,304
Profit and total

for the period
6,392
6,392
Balance as at 30
November 2015
3,820
10,876
14,696
Balance as at 1 April 2014

(audited)
3,820
(13,595)
(9,775)
Profit and total

for the period (unaudited)
11,647
11,647
Balance as at 30
November 2014
(unaudited)
3,820
(1,948)
1,872
I-8
APPENDIX I
ACCOUNTANTS REPORT
COMBINED STATEMENTS OF CASH FLOWS
Note
Cash flows from operating

activities
Adjustments for:
Depreciation
(Gain)/Loss on disposal of
property, plant and
equipment
Gain on disposal of
investment property
Finance costs
Operating profit before
working capital changes
Decrease/(Increase) in trade
and other receivables
Increase in amounts due from
customers for contract work
Decrease/(Increase) in amount
due from a director
Increase/(Decrease) in trade
and other payables
(Decrease)/Increase in
amounts due to customers
for contract work
Increase/(Decrease) in
amounts due to directors
Net cash generated from/(used
in) operating activities
Year ended 31 March

2014
2015
HK$000
HK$000
Eight months ended

30 November
2014
2015
HK$000
HK$000
(Unaudited)
11,386
21,703
13,984
9,062
3,676
3,264
2,030
2,009
(120)
306
(111)
(120)
452
471
291
15,394
25,744
16,194
3,695
(18,939)
(19,061)
(105)
(7,149)
(1,919)
(4,841)
(8,119)
(1,792)
338
9,497
23
(523)
523
8,749
(4,224)
4,908
7,719
(13,855)
89
228
(11,654)
545
(3,915)
1,403
7,367
7,402
(3,687)
(1,169)
5,228
I-9
APPENDIX I
ACCOUNTANTS REPORT
Note
Year ended 31 March

2014
2015
HK$000
HK$000
Eight months ended

30 November
2014
2015
HK$000
HK$000
(Unaudited)
Cash flows from investing

activities
Proceeds from disposal of
property, plant and
equipment
Proceeds from disposal of
investment property
Purchases of property, plant
and equipment
(4,625)
(510)
(494)
(1,643)
Net cash (used in)/generated

from investing activities
(4,478)
209
(383)
11,495
3,000
(238)
4,000
(302)
(181)
(214)
(214)
(1,876)
(169)
(1,078)
(110)
(716)
(124)
(7,938)
(1,566)
(1,974)
(991)
(1,056)
(1,998)
(9,332)
7,391
Cash flows from financing

activities
Proceeds from new bank
loans
Interest paid
Interest element of finance
leases
Repayments of bank loans
Repayment of capital element
of finance leases
Net cash (used in)/generated
from financing activities
719
111
438
12,700
(894)
Net increase/(decrease) in
cash and cash equivalents
Cash and cash equivalents at
the beginning of the
year/period
Cash and cash equivalents
at the end of the year/
period
147
19
477
2,030
(3,001)
(3,550)
1,389
3,419
3,419
3,419
418
I-10
(131)
418
7,809
APPENDIX I
ACCOUNTANTS REPORT
II
NOTES TO THE FINANCIAL INFORMATION
1.
GENERAL INFORMATION, REORGANISATION AND BASIS OF PRESENTATION

1.1
General information
The Company was incorporated as an exempted company with limited liability in the Cayman Islands
under the Companies Law (as revised) of the Cayman Islands on 16 October 2015. The addresses of the
Companys registered office and principal place of business are set out in the section headed Corporate
Information of the Prospectus.
The Company is an investment holding company. The Group is principally engaged in the provision
of civil engineering works.
The Companys immediate and ultimate holding company is Blooming Union Investments Limited, a
company incorporated in the British Virgin Islands (BVI). Blooming Union Investments Limited is
controlled by Mr. Wong Che Kwo and Mr. Wong Wing Wah. Blooming Union Investments Limited, Mr.
Wong Che Kwo and Mr. Wong Wing Wah are referred to as the Controlling Shareholders.
1.2
Reorganisation
Pursuant to a group reorganisation (the Reorganisation) as detailed in the section headed History
and Development in the Prospectus, which was completed on 22 February 2016, the Company became the
holding company of the companies now comprising the Group.
Upon the completion of the Reorganisation and as at the date of this report, the Company had direct
or indirect interest in the following subsidiaries:
Name of company
Place and date of

incorporation
Super Pioneer Trading

Limited (Super
Pioneer)
BVI,
1 July 2015
Luen Hing Construction &

Eng. Limited (Luen
Hing)
Hong Kong,
11 November 1998
Hop Fung Construction &

Engineering Company
Limited (Hop Fung)
Hong Kong,
31 July 2002
Issued and
paid up
capital
Equity
interest
held
US$1
Principal activities
Note
100%
(Direct)
Investment holding
(a)
HK$3,800,000
100%
(Indirect)
Provision of civil
engineering works
(b)
HK$20,000
100%
(Indirect)
Provision of civil
engineering works
(b)
Notes:
(a)
No audited financial statements have been prepared as it is not required to issue any audited
financial statements under the statutory requirement in its place of incorporation.
(b)
The statutory financial statements for the year ended 31 March 2014 were prepared in
accordance with the Small and Medium-sized Entity Financial Reporting Standard issued by
the HKICPA and were audited by Francis S.L. Yan & Co., Certified Public Accountants. The
statutory financial statements for the year ended 31 March 2015 were prepared in accordance
with Hong Kong Financial Reporting Standards issued by the HKICPA and were audited by
Lai Yiu Hong Certified Public Accountants (Practising).
All companies comprising the Group have adopted 31 March as their financial year end date.
I-11
APPENDIX I
1.3
ACCOUNTANTS REPORT
Basis of presentation
Pursuant to the Reorganisation as more fully explained in the paragraphs headed Reorganisation in
the section headed History and Development to the Prospectus, the Company became the holding
company of the companies now comprising the Group on 22 February 2016. During the Track Record
Period, both of Luen Hing and Hop Fung were controlled by the Controlling Shareholders.
Pursuant to the Reorganisation, which was completed by interspersing the Company and Super
Pioneer between Luen Hing and Hop Fung and the Controlling Shareholders, the Company became the
holding company of the companies now comprising the Group on 22 February 2016. The Group is under
the common control of the Controlling Shareholders prior to and after the Reorganisation. The Group
comprising the Company and its subsidiaries resulting from the Reorganisation is regarded as a continuing
entity.
The combined statements of comprehensive income, combined statements of changes in equity and
combined statements of cash flows for the Track Record Period which include the results, changes in equity
and cash flows of the companies comprising the Group have been prepared using the principles of merger
accounting under Hong Kong Accounting Guideline 5 Merger Accounting for Common Control
Combinations as if the Company had always been the holding company of the Group and the current group
structure had been in existence throughout the Track Record Period, or since their respective dates of
incorporation/establishment, where it is a shorter period.
The combined statements of financial position as at 31 March 2014 and 2015 and 30 November 2015
have been prepared to present the assets and liabilities of the companies comprising the Group as if the
current group structure had been in existence at those dates.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of the Financial Information are set out below.
These policies have been consistently applied to all the periods presented, unless otherwise stated.
2.1
Basis of preparation
The Financial Information has been prepared in accordance with Hong Kong Financial Reporting
Standards (HKFRSs) issued by the HKICPA which are effective for the accounting period beginning on 1
April 2015 throughout the Track Record Period. The Financial Information also complies with the
applicable disclosure provisions of the Rules Governing the Listing of Securities on the Growth Enterprise
Market (GEM) of the Stock Exchange. The significant accounting policies that have been used in the
preparation of this Financial Information are summarised below. These policies have been consistently
applied to all the periods presented in the Financial Information.
The Financial Information has been prepared on the historical cost convention. The Financial
Information is presented in Hong Kong Dollars (HK$), which is the functional currency of the Company
and its major subsidiaries, and all values are rounded to the nearest thousands (HK$000), except when
otherwise indicated.
The preparation of the Financial Information in conformity with HKFRSs requires the use of certain
critical accounting estimates. It also requires management to exercise its judgement in the process of
applying the accounting policies of the Group. The areas involving a higher degree of judgement or
complexity, or areas where assumptions and estimates are significant to the Financial Information are
disclosed in Note 3 below.
The following new and amended HKFRSs that are relevant to the Group have been issued but are not
yet effective for the financial year beginning 1 April 2015, and have not been early adopted by the Group:
Annual Improvements Project
Annual Improvements 2012-2014 Cycle1
HKAS 1 Amendment
Disclosure Initiative1
HKFRS 9
Financial Instruments2
I-12
APPENDIX I
ACCOUNTANTS REPORT
Revenue from Contracts with Customers2
HKFRS 15
1
2
Effective for annual periods beginning on or after 1 January 2016

Effective for annual periods beginning on or after 1 January 2018
The Group is in the process of making an assessment of the impact of these new and revised
HKFRSs upon initial application and not yet in a position to state whether they would have a significant
impact on the Groups results of operations and financial position.
2.2
Basis of consolidation and combination
The Financial Information incorporates the financial statements of the Company and its subsidiaries
(collectively referred to as the Group) for the Track Record Period. The financial statements of the
subsidiaries are prepared for the same reporting period as the Company, using consistent accounting
policies.
Subsidiaries are entities controlled by the Group. The Group controls an entity when the Group is
exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect
those returns through its power over the entity. When assessing whether the Group has power over the
entity, only substantive rights relating to the entity (held by the Group and others) are considered.
The Group includes the income and expenses of a subsidiary in the combined financial statements
from the date it gains control until the date when the Group ceases to control the subsidiary.
Intra-group transactions, balances and unrealised gains and losses on transactions between group
companies are eliminated in preparing the combined financial statements. Amounts reported in the financial
statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting
policies adopted by the Group.
Changes in the Groups interests in subsidiaries that do not result in a loss of control are accounted
for as equity transactions, whereby adjustments are made to the amounts of controlling interests within
combined equity to reflect the change in relative interests, but no adjustments are made to goodwill and no
gain or loss is recognised.
When the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the
difference between (i) the aggregate of the fair value of the consideration received and the fair value of any
retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of
the subsidiary and any non-controlling interests. Where certain assets of the subsidiary are measured at
revalued amounts or fair values and the related cumulative gain or loss has been recognised in other
comprehensive income and accumulated in equity, the amounts previously recognised in other
comprehensive income and accumulated in equity are accounted for as if the Company had directly
disposed of the related assets (i.e., reclassified to profit or loss or transferred directly to retained earnings).
The fair value of any investment retained in the former subsidiary at the date when control is lost is
regarded as the fair value on initial recognition for subsequent accounting under HKAS 39 Financial
Instruments: Recognition and Measurement or, when applicable, the cost on initial recognition of an
investment in an associate or a joint venture.
2.3
Foreign currency translation
In the individual financial statements of the combined entities, foreign currency transactions are
translated into the functional currency of the individual entity using the exchange rates prevailing at the
dates of the transactions. At the reporting date, monetary assets and liabilities denominated in foreign
currencies are translated at the foreign exchange rates ruling at that date. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the reporting date retranslation of monetary
assets and liabilities are recognised in profit or loss.
Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated
at the rates prevailing on the date when the fair value was determined. Non-monetary items that are
measured in terms of historical cost in a foreign currency are not retranslated.
I-13
APPENDIX I
2.4
ACCOUNTANTS REPORT
Investment property
Investment property is land and/or buildings which are owned or held under a leasehold interest to
earn rental income and/or for capital appreciation. These include land held for a currently undetermined
future use and property that is being constructed or developed for future use as investment property.
When the Group holds a property interest under an operating lease to earn rental income and/or for
capital appreciation, the interest is classified and accounted for as an investment property on a
property-by-property basis. Any such property interest which has been classified as an investment property
is accounted for as if it was held under a finance lease.
On initial recognition, investment property is measured at cost, including any directly attributable
expenditure. Subsequent to initial recognition, investment property is stated at cost less subsequent
accumulated depreciation and impairment losses. Depreciation is provided to write-off the cost of
investment property using the straight line method over their estimated useful life of 25 years or over the
lease term, if shorter.
Gains or losses arising from the sale of an investment property are included in profit or loss in the
period in which they arise.
2.5
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.
Cost includes expenditure that is directly attributable to the acquisition of the asset. Purchased software that
is integral to the functionality of the related equipment is capitalised as part of that equipment.
Depreciation is provided to write-off the cost less their residual values over their estimated useful
lives, using the straight-line method, at the rates per annum as follows:
Land and buildings
5%
Furniture and equipment
10%
Site equipment
10%
Motor vehicles
20%
Assets held under finance leases are depreciated over their expected useful lives on the same basis as
owned assets or, where shorter, the term of the relevant lease.
The assets residual values, depreciation methods and useful lives are reviewed, and adjusted if
appropriate, at each reporting date.
The gain or loss arising on retirement or disposal is determined as the difference between the sales
proceeds and the carrying amount of the asset and is recognised in profit or loss.
Subsequent costs are included in the assets carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to the
Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is
derecognised. All other costs, such as repairs and maintenance are charged to profit or loss during the
financial period in which they are incurred.
2.6
Financial assets
The Groups accounting policies for financial assets other than investments in subsidiaries are set out
below.
I-14
APPENDIX I
ACCOUNTANTS REPORT
Financial assets of the Group are classified into loans and receivables. Management determines the
classification of its financial assets at initial recognition depending on the purpose for which the financial
assets were acquired and where allowed and appropriate, re-evaluates this designation at every reporting
date.
All financial assets are recognised when, and only when, the Group becomes a party to the
contractual provisions of the instrument. Regular way purchases of financial assets are recognised on trade
date. When financial assets are recognised initially, they are measured at fair value, plus, in the case of
investments not at fair value through profit or loss, directly attributable transaction costs.
Derecognition of financial assets occurs when the rights to receive cash flows from the investments
expire or are transferred and substantially all of the risks and rewards of ownership have been transferred.
At each reporting date, financial assets are reviewed to assess whether there is objective evidence of
impairment. If any such evidence exists, an impairment loss is determined and recognised based on the
classification of the financial asset.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that
are not quoted in an active market. Loans and receivables are subsequently measured at amortised cost
using the effective interest method, less any impairment losses. Amortised cost is calculated taking into
account any discount or premium on acquisition and includes fees that are an integral part of the effective
interest rate and transaction cost.
Impairment of financial assets
At each reporting date, financial assets are reviewed to determine whether there is any objective
evidence of impairment.
Objective evidence of impairment of individual financial assets includes observable data that comes
to the attention of the Group about one or more of the following loss events:
significant financial difficulty of the debtor;
a breach of contract, such as a default or delinquency in interest or principal payments;
it becoming probable that the debtor will enter bankruptcy or other financial reorganisation;
significant changes in the technological, market, economic or legal environment that have an
adverse effect on the debtor;
the disappearance of an active market for that financial asset because of financial difficulties;
and
a significant or prolonged decline in the fair value of an investment in an equity instrument

below its cost.
Loss events in respect of a group of financial assets include observable data indicating that there is a
measurable decrease in the estimated future cash flows from the group of financial assets. Such observable
data includes but not limited to adverse changes in the payment status of debtors in the Group and, national
or local economic conditions that correlate with defaults on the assets in the Group.
If there is objective evidence that an impairment loss on loans and receivables carried at amortised
cost has been incurred, the amount of the loss is measured as the difference between the assets carrying
amount and the present value of estimated future cash flows (excluding future credit losses that have not
been incurred) discounted at the financial assets original effective interest rate (i.e. the effective interest
rate computed at initial recognition). The amount of the loss is recognised in profit or loss of the period in
which the impairment occurs.
I-15
APPENDIX I
ACCOUNTANTS REPORT
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be
related objectively to an event occurring after the impairment was recognised, the previously recognised
impairment loss is reversed to the extent that it does not result in a carrying amount of the financial asset
exceeding what the amortised cost would have been had the impairment not been recognised at the date the
impairment is reversed. The amount of the reversal is recognised in profit or loss of the period in which the
reversal occurs.
Impairment losses on financial assets other than trade and retention monies receivables that are stated
at amortised cost, are written-off against the corresponding assets directly. Where the recovery of trade and
retention monies receivables is considered doubtful but not remote, the impairment losses for doubtful
receivables are recorded using an allowance account. When the Group is satisfied that recovery of trade and
retention monies receivables is remote, the amount considered irrecoverable is written-off against trade and
retention monies receivables directly and any amounts held in the allowance account in respect of that
receivable are reversed. Subsequent recoveries of amounts previously charged to the allowance account are
reversed against the allowance account. Other changes in the allowance account and subsequent recoveries
of amounts previously written-off directly are recognised in profit or loss.
2.7
Construction contracts are contracts specifically negotiated for the construction of an asset or a
combination of assets where the customer is able to specify the major structural elements of the design. The
accounting policy for contract revenue is set out in Note 2.14.
When the outcome of a construction contract can be estimated reliably, contract costs are recognised
as an expense by reference to the stage of completion of the contract at the reporting date. When it is
probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an
expense immediately. When the outcome of a construction contract cannot be estimated reliably, contract
costs are recognised as an expense in the period in which they are incurred.
Construction contracts in progress at the reporting date are recorded in the combined statements of
financial position at the net amount of costs incurred plus recognised profit less recognised losses and
progress billings, and are presented as Amounts due from customers for contract work (as an asset) or
Amounts due to customers for contract work (as a liability). Progress billings not yet paid by customers
are included in the combined statements of financial position under Trade and other receivables. Amounts
received before the related work is performed are included under Trade and other payables.
2.8
Cash and cash equivalents
Cash and cash equivalents include cash at bank and in hand, demand deposits with banks and short
term highly liquid investments with original maturities of three months or less that are readily convertible
into known amounts of cash and which are subject to an insignificant risk of changes in value. For the
purpose of the combined statements of cash flows presentation, cash and cash equivalents include bank
overdrafts which are repayable on demand and form an integral part of the Groups cash management.
2.9
Financial liabilities
The Groups financial liabilities include trade and other payables, bank loans, overdrafts, amounts
due to directors and finance lease liabilities. Financial liabilities are recognised when the Group becomes a
party to the contractual provisions of the instrument. All interest related charges are expensed when
incurred. A financial liability is derecognised when the obligation under the liability is discharged or
cancelled or expires.
Where an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially modified, such an exchange or
modification is treated as a derecognition of the original liability and the recognition of a new liability, and
the difference in the respective carrying amount is recognised in profit or loss.
I-16
APPENDIX I
ACCOUNTANTS REPORT
Trade and other payables and amounts due to directors

They are recognised initially at their fair value and subsequently measured at amortised cost, using
the effective interest method.
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are
subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the
redemption value is recognised in profit or loss over the period of the borrowings using the effective
interest method.
Finance lease liabilities
Finance lease liabilities are measured at initial value less the capital element of lease repayments (see
Note 2.11).
2.10 Impairment of non-financial assets
Investment property and property, plant and equipment are subject to impairment testing. They are
tested for impairment whenever there are indications that the assets carrying amount may not be
recoverable.
An impairment loss is recognised as an expense immediately for the amount by which the assets
carrying amount exceeds its recoverable amount. Recoverable amount is the higher of fair value, reflecting
market conditions less costs of disposal, and value in use. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
assessment of time value of money and the risk specific to the asset.
For the purposes of assessing impairment, where an asset does not generate cash inflows largely
independent from those from other assets, the recoverable amount is determined for the smallest group of
assets that generate cash inflows independently (i.e. a cash-generating unit). As a result, some assets are
tested individually for impairment and some are tested at cash-generating unit level.
Impairment losses recognised is charged pro rata to the assets in the cash generating unit, except that
the carrying value of an asset will not be reduced below its individual fair value less costs of disposal, or
value in use, if determinable.
An impairment loss is reversed if there has been a favourable change in the estimates used to
determine the assets recoverable amount and only to the extent that the assets carrying amount does not
exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no
impairment loss had been recognised.
2.11
Leases
An arrangement, comprising a transaction or a series of transactions, is or contains a lease if the

Group determines that the arrangement conveys a right to use a specific asset or assets for an agreed period
of time in return for a payment or a series of payments. Such a determination is made based on an
evaluation of the substance of the arrangement and is regardless of whether the arrangement takes the legal
form of a lease.
Classification of assets leased to the Group
Assets that are held by the Group under leases which transfer to the Group substantially all the risks
and rewards of ownership are classified as being held under finance leases. Leases which do not transfer
substantially all the risks and rewards of ownership to the Group are classified as operating leases.
I-17
APPENDIX I
ACCOUNTANTS REPORT
Assets acquired under finance leases

Where the Group acquires the use of assets under finance leases, the amounts representing the fair
value of the leased asset, or, if lower, the present value of the minimum lease payments of such assets, are
included in property, plant and equipment and the corresponding liabilities, net of finance charges, are
recorded as obligation under finance leases.
Subsequent accounting for assets held under finance lease agreements corresponds to those applied to
comparable acquired assets. The corresponding finance lease liability is reduced by lease payments less
finance charges.
Finance charges implicit in the lease payments are charged to profit or loss over the period of the
leases so as to produce an approximately constant periodic rate of charge on the remaining balance of the
obligations for each accounting period.
Operating lease charges as the lessee
Where the Group has the right to use of assets held under operating leases, payments made under the
leases are charged to the profit or loss on a straight-line basis over the lease terms except where an
alternative basis is more representative of the time pattern of benefits to be derived from the leased assets.
Lease incentives received are recognised in profit or loss as an integral part of the aggregate net lease
payments made. Contingent rental are charged to profit or loss in the accounting period in which they are
incurred.
Assets leased out under operating leases as the lessor
Assets leased out under operating leases are measured and presented according to the nature of the
assets. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying
amount of the leased asset and recognised as an expense over the lease term on the same basis as the rental
income.
Rental income receivable from operating leases is recognised in profit or loss on a straight-line basis
over the periods covered by the lease term, except where an alternative basis is more representative of the
time pattern of benefits to be derived from the use of the leased asset. Lease incentives granted are
recognised in profit or loss as an integral part of the aggregate net lease payments receivable. Contingent
rentals are recognised as income in the accounting period in which they are earned.
2.12 Provisions and contingent liabilities
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result
of a past event, and it is probable that an outflow of economic benefits will be required to settle the
obligation and a reliable estimate of the amount of the obligation can be made. Where the time value of
money is material, provisions are stated at the present value of the expenditure expected to settle the
obligation.
All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate.
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot
be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow
of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the
occurrence or non-occurrence of one or more future uncertain events not wholly within the control of the
Group, are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is
remote.
2.13 Share capital
Ordinary shares are classified as equity. Share capital is determined using the nominal value of shares
that have been issued.
I-18
APPENDIX I
ACCOUNTANTS REPORT
Any transaction costs associated with the issuing of shares are deducted from share premium (net of
any related income tax benefit) to the extent they are incremental costs directly attributable to the equity
transaction.
2.14 Revenue recognition
Revenue comprises the fair value of the consideration received or receivable. Provided it is probable
that the economic benefits will flow to the Group and the revenue and costs, if applicable, can be measured
reliably, revenue is recognised as follows:
Contract revenue
When the outcome of a construction contract can be estimated reliably, revenue from a fixed price
contract work is recognised based on the stage of completion of the contracts, provided that the stage of
contract completion and the gross billing value of contracting work can be measured reliably. The stage of
completion of a contract is established according to the progress certificate (by reference to the amount of
completed works confirmed by customers) issued by the customers.
Variations in contract work, claims and incentive payments are included in contract revenue to the
extent that they have been agreed with the customers or the outcome of which can be estimated reliably by
management and are capable of being reliably measured.
When the outcome of a construction contract cannot be estimated reliably, revenue is recognised only
to the extent of contract costs incurred that it is probable will be recoverable.
Rental income
Rental income is recognised in profit or loss in equal instalments over the periods covered by the
lease term, except where an alternative basis is more representative of the pattern of benefits to be derived
from the use of the leased asset. Lease incentives granted are recognised in profit or loss as an integral part
of the aggregate net lease payments receivable.
2.15 Employee benefits
Retirement benefits
Retirement benefits to employees are provided through defined contribution plans.
The Group operates defined contribution retirement benefit plans for its employees, the assets of
which are held separately from those of the Group in independently administered funds. The Groups
contributions are made based on specified percentages of the employees basic salaries.
The Groups contributions under the plans are recognised as an expense in profit or loss as
employees render services during the year. The Groups obligations under these plans are limited to the
fixed percentage contributions payable.
Short-term employee benefits
Employee entitlements to annual leave are recognised when they accrue to employees. A provision is
made for the estimated liability for annual leave as a result of services rendered by employees up to the
reporting date.
Non-accumulating compensated absences such as sick leave and maternity leave are not recognised
until the time of leave.
I-19
APPENDIX I
ACCOUNTANTS REPORT
2.16 Borrowing costs

Borrowing costs incurred for the acquisition, construction or production of any qualifying asset are
capitalised during the period of time that is required to complete and prepare the asset for its intended use.
A qualifying asset is an asset which necessarily takes a substantial period of time to get ready for its
intended use or sale. Other borrowing costs are expensed when incurred.
Borrowing costs are capitalised as part of the cost of a qualifying asset when expenditure for the
asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the
asset for its intended use or sale are being undertaken. Capitalisation of borrowing costs ceases when
substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are
complete.
2.17 Accounting for income taxes
Income tax comprises current tax and deferred tax.
Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal
authorities relating to the current or prior reporting period, that are unpaid at the reporting date. They are
calculated according to the tax rates and tax laws applicable to the fiscal periods to which they relate, based
on the taxable profit for the year. All changes to current tax assets or liabilities are recognised as a
component of tax expense in the profit or loss.
Deferred tax is calculated using the liability method on temporary differences at the reporting date
between the carrying amounts of assets and liabilities in the financial statements and their respective tax
bases. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax
assets are recognised for all deductible temporary differences, tax losses available to be carried forward as
well as other unused tax credits, to the extent that it is probable that taxable profit, including existing
taxable temporary differences, will be available against which the deductible temporary differences, unused
tax losses and unused tax credits can be utilised.
Deferred tax assets and liabilities are not recognised if the temporary difference arises from goodwill
or from initial recognition (other than in a business combination) of assets and liabilities in a transaction
that affects neither taxable nor accounting profit or loss.
Deferred tax is calculated, without discounting, at tax rates that are expected to apply in the period
the liability is settled or the asset realised, provided they are enacted or substantively enacted at the
reporting date.
Changes in deferred tax assets or liabilities are recognised in the profit or loss, or in other
comprehensive income or directly in equity if they relate to items that are charged or credited to other
comprehensive income or directly in equity.
Current tax assets and current tax liabilities are presented in net if, and only if,
(a)
the Group has the legally enforceable right to set off the recognised amounts; and
(b)
intends either to settle on a net basis, or to realise the asset and settle the liability
simultaneously.
The Group presents deferred tax assets and deferred tax liabilities in net if, and only if,
(a)
the entity has a legally enforceable right to set off current tax assets against current tax
liabilities; and
(b)
the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same
taxation authority on either:
(i)
the same taxable entity; or
I-20
APPENDIX I
(ii)
ACCOUNTANTS REPORT
different taxable entities which intend either to settle current tax liabilities and assets on
a net basis, or to realise the assets and settle the liabilities simultaneously, in each future
period in which significant amounts of deferred tax liabilities or assets are expected to
be settled or recovered.
2.18 Fair value measurements

For financial reporting, fair value measurement is categorised into Level 1, 2 and 3 of the three level
fair value hierarchy as defined under the HKFRS 13. The level into which a fair value measurement is
classified is determined with reference to the observability and significance of the inputs used in the
valuation technique as follows:
Level 1 valuations:
Fair value measured using only Level 1 inputs i.e. unadjusted quoted prices in
active markets for identical assets or liabilities at the measurement date;
Level 2 valuations:
Fair value measured using Level 2 inputs i.e. observable inputs which fail to
meet Level 1, and not using significant unobservable inputs. Unobservable
inputs are inputs for which market data are not available;
Level 3 valuations:
Fair value measured using significant unobservable inputs.
2.19 Segment reporting

The Group identifies operating segments and prepares segment information based on the regular
internal financial information reported to the chief operating decision maker (CODM) for their decisions
about resources allocation to the Groups business components and for their review of the performance of
those components.
2.20 Related parties
For the purposes of the Financial Information, a party is considered to be related to the Group if:
(a)
the party is a person or a close member of that persons family and if that person:
(i)
has control or joint control over of 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.
I-21
APPENDIX I
(b)
ACCOUNTANTS REPORT
the party is an entity and if 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 an associate or joint
venture of a member of a group of which the other entity is a member).
(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 the
third entity.
(v)
the entity is a post-employment benefit plan for the benefit of employees of either the
Group or an entity related to the Group.
(vi)
the entity is controlled or jointly controlled by a person identified in (a).
(vii)
a person identified in (a)(i) has significant influence over the entity or is a member of
the key management personnel of the entity (or of a parent of the entity).
Close family members of an individual are those family members who may be expected to influence,
or be influenced by, that individual in their dealings with the entity.
3.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
3.1
Sources of estimation uncertainty
The Group makes estimates and assumptions concerning the future. The resulting accounting
estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that
have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities
within the next financial year are discussed below:
As explained in Note 2.7 and 2.14, revenue recognition on a project is dependent on managements
estimation of the total outcome of the construction contracts, with reference to the progress certificate
issued by the customer. The Group reviews and revises the estimates of contract revenue, contract costs and
variation orders, prepared for each construction contract as the contract progresses. Budgeted construction
costs are prepared by management based on the quotations from time to time provided by the major
contractors, suppliers or vendors involved and other direct costs to be incurred with reference to their past
experience. In order to keep the budget accurate and up-to-date, management conducts periodic reviews of
the budgeted construction costs by comparing the budgeted amounts to the actual costs incurred.
Significant judgement is required in estimating the contract revenue, contract costs and variation
work which may have an impact on percentage of completion of the construction contracts and the
corresponding profit taken.
Management exercised their judgements and estimations based on contract costs and revenues with
reference to the latest available information, which includes detailed contract sum. In many cases the results
reflect the expected outcome of long-term contractual obligations which span more than one reporting
period. Contract costs and revenues are affected by a variety of uncertainties that depends on the outcome
of future events and often need to be revised as events unfold and uncertainties are resolved. The estimates
of contract costs and revenues are updated regularly and significant changes are highlighted through
established internal review procedures.
I-22
APPENDIX I
3.2
ACCOUNTANTS REPORT
Critical judgements in applying the Groups accounting policies
Depreciation
Investment property (Note 14) and property, plant and equipment (Note 15) are depreciated on a
straight-line basis over their estimated useful lives, after taking into account the estimated residual value.
The Group reviews the estimated useful lives of the investment property and property, plant and equipment
regularly in order to determine the amount of depreciation to be recorded during any reporting period. The
useful lives are based on the Groups historical experience with similar assets taking into account
anticipated technological changes. The depreciation for future periods is adjusted if there are significant
changes from previous estimates.
Impairment of trade receivables
The Group evaluates whether there is any objective evidence that trade receivables (Note 2.6) are
impaired, and estimates allowances for doubtful debts as a result of the inability of the debtors to make the
required payments. The Group based on the estimates on the ageing of the trade receivables balance,
credit-worthiness of the customer and historical write-off experience to assess the financial conditions of the
debtors. If the financial condition of the debtors were to deteriorate, actual impairment would be higher
than the amount estimated.
4.
REVENUE
Revenue represents receipts from the provision of civil engineering works.
Revenue recognised during the Track Record Period are as follows:
Year ended 31 March

2014
2015
HK$000
HK$000
Revenue from the provision of civil

engineering works
5.
159,963
271,949
Eight months ended

30 November
2014
2015
HK$000
HK$000
(Unaudited)
186,325
154,641
SEGMENT INFORMATION
The Groups operating activities are attributable to a single reportable and operating segment focusing
primarily on the provision of civil engineering works. This operating segment has been identified on the basis of
internal management reports reviewed by the CODM, being the executive directors of the Company. The CODM
mainly reviews revenue derived from the provision of civil engineering works. The CODM reviews the overall
results of the Group as a whole to make decisions about resources allocation. Accordingly other than the
entity-wide disclosure, no segment analysis is presented.
(a)
Geographical information
The Groups operations are located in Hong Kong and all the revenue of the Group were derived
from Hong Kong customers. The Groups non-current assets are located in Hong Kong.
I-23
APPENDIX I
(b)
ACCOUNTANTS REPORT
Major customers
Revenue from customers which individually contributed over 10% of the Groups revenue is as
follows:
Year ended 31 March

2014
2015
HK$000
HK$000
Customer
Customer
Customer
Customer
1
2
3
4
101,138
20,145
N/A (Note)
N/A (Note)
144,349
N/A (Note)
61,682
36,300
Eight months ended

30 November
2014
2015
HK$000
HK$000
(Unaudited)
123,357
N/A (Note)
32,999
18,478
33,643
16,367
29,136
56,688
Note: The corresponding revenue did not individually contribute over 10% of the Groups revenue
during the corresponding period of the Track Record Period.
6.
OTHER INCOME
Year ended 31 March

2014
2015
HK$000
HK$000
Gain on disposal of property, plant and

equipment
Gain on disposal of investment property
Rental income
Sundry income
7.
Eight months ended

30 November
2014
2015
HK$000
HK$000
(Unaudited)
120
276
29
298
48
111
198
38
120
1,792
105
219
425
346
347
2,236
FINANCE COSTS
Year ended 31 March

2014
2015
HK$000
HK$000
Finance charges on obligations under

finance leases
Interests on bank loans and overdrafts
wholly repayable within five years
I-24
Eight months ended

30 November
2014
2015
HK$000
HK$000
(Unaudited)
214
169
110
124
238
302
181
214
452
471
291
338
APPENDIX I
8.
ACCOUNTANTS REPORT
PROFIT BEFORE INCOME TAX

Profit before income tax is arrived at after charging/(crediting):
Year ended 31 March

2014
2015
HK$000
HK$000
Auditors remuneration
Depreciation:
own assets
leased assets
Depreciation of investment property
(Gain)/Loss on disposal of property, plant
and equipment, net
Gain on disposal of investment property
Site equipment rental costs (included in
cost of sales)
Operating lease charges in respect of
premises and office equipment
Subcontracting charges (included in cost of
sales)
Rental income less direct outgoings
9.
Eight months ended

30 November
2014
2015
HK$000
HK$000
(Unaudited)
24
24
61
1,494
1,625
557
1,628
1,079
557
1,084
575
371
1,058
719
232
(120)
306
(111)
(120)
(1,792)
17,321
33,811
21,904
19,415
208
227
142
172
31,617
(229)
59,971
(248)
37,866
(175)
35,512
(85)
INCOME TAX EXPENSE
Hong Kong profits tax has been provided at the rate of 16.5% based on the estimated assessable profits for
the respective year/period during the Track Record Period.
Year ended 31 March

2014
2015
HK$000
HK$000
Eight months ended

30 November
2014
2015
HK$000
HK$000
(Unaudited)
Current Hong Kong Profits Tax

Deferred tax (Note 23)
1,956
3,624
2,337
1,607
1,063
Income tax expense
1,956
3,624
2,337
2,670
I-25
APPENDIX I
ACCOUNTANTS REPORT
Reconciliation between income tax expense and accounting profit at applicable tax rates:
Year ended 31 March

2014
2015
HK$000
HK$000
10.
Eight months ended

30 November
2014
2015
HK$000
HK$000
(Unaudited)
11,386
21,703
13,984
9,062
Tax on profit before taxation at 16.5%

Tax effects on:
Non-deductible expenses
Non-taxable income
Unrecognised tax losses
Unrecognised temporary differences
Utilisation of previously unrecognised
tax losses
1,878
3,580
2,307
1,495
58
20
76
23
33
(26)
(32)
Income tax expense
1,956
3,624
2,337
1,326
(132)
(4)
(15)
2,670
EMPLOYEE BENEFIT EXPENSES (INCLUDING DIRECTORS EMOLUMENTS)
Year ended 31 March

2014
2015
HK$000
HK$000
Salaries, wages and other benefits

Contributions to defined contribution
retirement plans
Eight months ended

30 November
2014
2015
HK$000
HK$000
(Unaudited)
37,679
59,880
41,090
27,342
1,397
2,262
1,567
1,156
39,076
62,142
42,657
28,498
I-26
APPENDIX I
11.
ACCOUNTANTS REPORT
DIRECTORS EMOLUMENTS AND FIVE HIGHEST PAID INDIVIDUALS

(a)
Directors emoluments
The directors emoluments paid/payable by the Group during the Track Record Period are as follows:
Fees
HK$000
Salaries,
allowances
and benefits
in kind
HK$000
Discretionary
bonuses
HK$000
Retirement
scheme
contributions
HK$000
Total
HK$000
832
832
358
557
600
600
44
63
15
15
15
15
1,447
1,447
417
635
2,579
1,307
60
3,946
900
900
362
591
500
500
45
64
18
18
18
18
1,418
1,418
425
673
2,753
1,109
72
3,934
720
720
256
416
12
12
12
12
732
732
268
428
2,112
48
2,160
560
560
240
392
12
12
12
12
572
572
252
404
1,752
48
1,800
Year ended 31
March 2014
Executive directors
Mr. Wong Che Kwo
Mr. Wong Wing Wah
Mr. Chiu Chi Wang
Mr. Wong Tak Ming
Year ended 31
March 2015
Executive directors
Mr. Wong Che Kwo
Mr. Wong Wing Wah
Mr. Chiu Chi Wang
Mr. Wong Tak Ming
Eight months ended

30 November 2015
Executive directors
Mr. Wong Che Kwo
Mr. Wong Wing Wah
Mr. Chiu Chi Wang
Mr. Wong Tak Ming
Eight months ended

30 November 2014
(unaudited)
Executive directors
Mr. Wong Che Kwo
Mr. Wong Wing Wah
Mr. Chiu Chi Wang
Mr. Wong Tak Ming
I-27
APPENDIX I
ACCOUNTANTS REPORT
Mr. Wong Che Kwo and Mr. Wong Wing Wah were appointed as directors of the Company on 16
October 2015. Mr. Chiu Chi Wang and Mr. Wong Tak Ming were appointed as directors of the Company on
16 November 2015. The independent non-executive directors, Mr. Wong Chi Kan, Mr. Liu Yan Chee James
and Mr. Tai Hin Henry were appointed as directors of the Company on 24 March 2016. During the Track
Record Period, the independent non-executive directors have not yet been appointed and have not received
any directors remuneration in the capacity of independent non-executive directors.
The emoluments above represented remuneration received by the directors in the capacity of
employees and/or directors of the companies comprising the Group.
(b)
Five highest paid individuals
The five highest paid individuals of the Group during the Track Record Period include three directors
whose emoluments are disclosed above. Details of the emoluments of the remaining two highest paid
individuals are as follows:
Year ended 31 March

2014
2015
HK$000
HK$000
Salaries, wages and other benefits

Discretionary bonuses
Contributions to defined contribution
retirement plans
Eight months ended

30 November
2014
2015
HK$000
HK$000
(Unaudited)
1,036
152
1,073
166
694
725
30
35
23
24
1,218
1,274
717
749
The emoluments of the remaining two highest paid individuals are within the following bands:
Eight months ended
30 November
2014
2015
(Unaudited)
Number of individuals
Year ended 31 March

2014
2015
HK$Nil to HK$1,000,000
During the Track Record Period, no emoluments were paid by the Group to the directors or the five
highest paid individuals as an inducement to join or upon joining the Group or as compensation for loss of
office. No directors or five highest paid individuals has waived or agreed to waive any emoluments during
the Track Record Period.
12.
DIVIDENDS
No dividend was declared or paid by the Group during the Track Record Period to its equity holders.
13.
EARNINGS PER SHARE
Information of earnings per share is not presented as its inclusion, for the purpose of this Financial
Information is not considered meaningful due to the Reorganisation and the presentation of the results of the
Group for the Track Record Period on a combined basis as disclosed in Note 1.3 of Section II above.
I-28
APPENDIX I
14.
ACCOUNTANTS REPORT
INVESTMENT PROPERTY
HK$000
Costs
As at 1 April 2013, 31 March 2014 and 2015 and 1 April 2015
Disposal
13,925
(13,925)
Accumulated depreciation
As at 1 April 2013
Charge for the year
1,671
557
As at 31 March 2014 and 1 April 2014

Charge for the year
2,228
557

Charge for the period
Written back on disposal
2,785
232
(3,017)
Net book amount

As at 1 April 2013
12,254
As at 31 March 2014
11,697
As at 31 March 2015
11,140
As at 31 March 2014 and 2015, the Groups investment property was located in Hong Kong, held under
medium lease and were pledged to the bank as security for bank mortgage loan granted to the Group (Note 22).
As at 31 March 2014 and 2015, the fair value of the investment property was approximately
HK$11,000,000 and HK$12,450,000 respectively which was determined by Ascent Partners Valuation Service
Limited, an independent professional qualified valuer who has recent relevant experience in the location and
category of the Groups investment property being valued, where comparison based on prices realised on actual
sales of comparable properties is made. Comparable properties of similar size, character and location are analysed
and carefully weighted against all the respective advantages and disadvantages of each property in order to arrive
at a fair comparison of values.
I-29
APPENDIX I
ACCOUNTANTS REPORT
Set out below are information about the fair values of investment property categorised under Level 3 of the
three-level fair value hierarchy as defined under HKFRS 13.
Valuation technique
Direct comparison method
15.
Significant
unobservable input
Range of unobservable inputs

31 March
2014
2015
Discount on quality of
the investment
property
HK$ 10,293 to
HK$12,019 per
square feet
HK$12,537 to
HK$14,057 per
square feet
Relationship of significant inputs to

fair value
An increase in percentage of market

unit sale per square feet would
results in an increase in fair value
of the investment property by the
same percentage, and vice versa.
PROPERTY, PLANT AND EQUIPMENT
Land and
buildings
HK$000
Furniture
and
equipment
HK$000
Site
equipment
HK$000
Motor
vehicles
HK$000
Total
HK$000
As at 1 April 2013
Cost
1,608
(482)
774
(440)
8,827
(4,062)
11,023
(7,670)
22,232
(12,654)
Net book amount
1,126
334
4,765
3,353
9,578
Year ended 31 March

2014
Opening net book amount
Additions
Disposals
Charge for the year
1,126
(81)
334
196
(18)
(92)
4,765
4,310
(9)
(1,167)
3,353
2,784
(1,779)
9,578
7,290
(27)
(3,119)
Closing net book amount
1,045
420
7,899
4,358
13,722
As at 31 March 2014 and

1 April 2014
Cost
1,608
(563)
943
(523)
12,903
(5,004)
13,614
(9,256)
29,068
(15,346)
Net book amount
1,045
420
7,899
4,358
13,722
I-30
APPENDIX I
ACCOUNTANTS REPORT
Land and
buildings
HK$000
Furniture
and
equipment
HK$000
Site
equipment
HK$000
Motor
vehicles
HK$000
Total
HK$000
Year ended 31 March

2015
Additions
Disposals
Charge for the year
1,045
(81)
420
84
(188)
(66)
7,899
410
(1,181)
4,358
1,349
(837)
(1,379)
13,722
1,843
(1,025)
(2,707)
964
250
7,128
3,491
11,833
1,608
(644)
678
(428)
13,078
(5,950)
12,088
(8,597)
27,452
(15,619)
Net book amount
964
250
7,128
3,491
11,833
Period ended 30
November 2015
Additions
Disposals
Charge for the period
964
(53)
250
514
(51)
7,128
812
(307)
(735)
3,491
2,210
(11)
(938)
11,833
3,536
(318)
(1,777)
911
713
6,898
4,752
13,274
Cost
1,608
(697)
1,182
(469)
12,771
(5,873)
14,077
(9,325)
29,638
(16,364)
911
713
6,898
4,752
13,274
As at 31 March 2015 and

1 April 2015
Cost
Net book amount
As at 31 March 2014 and 2015 and 30 November 2015, the Groups land and buildings were located in
Hong Kong, held under long term lease and were pledged to the bank as security of bank term loans and
overdrafts granted to the Group (Note 22).
As at 31 March 2014 and 2015 and 30 November 2015, the Groups motor vehicles with net book amount
of HK$4,103,000, HK$3,223,000 and HK$4,171,000 respectively were held under finance lease (Note 21).
I-31
APPENDIX I
16.
ACCOUNTANTS REPORT
AMOUNTS DUE FROM/TO A DIRECTOR/DIRECTORS

The amounts are unsecured, interest free and have no fixed terms of repayment.
(a)
Name of director
Mr. Wong Wing Wah
Name of director
Mr. Wong Wing Wah
Name of director
Mr. Wong Wing Wah
(b)
Maximum
outstanding
during the
year ended
31 March
2014
HK$000
As at 1
April 2013
HK$000
As at 31
March 2014
HK$000
173
23
Maximum
outstanding
during the
year ended
31 March
2015
HK$000
As at 1
April 2014
HK$000
As at 31
March 2015
HK$000
523
523
Maximum
outstanding
during the
eight
months
ended 30
November
2015
HK$000
As at 1
April 2015
HK$000
As at 30
November
2015
HK$000
733
523
As at 31 March
2014
2015
HK$000
HK$000
As at 30
November
2015
HK$000
Name of directors
Mr. Wong Che Kwo

Mr. Wong Wing Wah
I-32
6,027
577
2,689
6,589
3,467
6,604
2,689
10,056
APPENDIX I
17.
ACCOUNTANTS REPORT
AMOUNTS DUE FROM/TO CUSTOMERS FOR CONTRACT WORK
As at 31 March
2014
2015
HK$000
HK$000
Contract costs incurred plus recognised profits less
recognised losses
Less: Progress billings
Recognised and included in the combined statements of

financial position as:
As at 30
November
2015
HK$000
649,003
(681,339)
822,298
(852,804)
403,420
(414,153)
(32,336)
(30,506)
(10,733)
7,555
(39,891)
9,474
(39,980)
17,593
(28,326)
(32,336)
(30,506)
(10,733)
All amounts due from/to customers for contract work are expected to be recovered/settled within one year.
18.
TRADE AND OTHER RECEIVABLES
As at 31 March
2014
2015
HK$000
HK$000
Trade receivables
As at 30
November
2015
HK$000
15,583
17,957
1,736
33,832
19,217
1,166
29,786
23,815
719
35,276
54,215
54,320
As at 31 March
2014
2015
HK$000
HK$000
As at 30
November
2015
HK$000
The ageing analysis of trade receivables based on invoice date is as follows:
0 30 days
31 60 days
61 90 days
Over 90 days
7,511
7,833
154
85
14,383
19,449
25,825
3,024
66
871
15,583
33,832
29,786
The Group usually grants customers a credit period of 45 days.

At each reporting date, the Group reviewed trade receivables for evidence of impairment on both an
individual and collective basis. Based on this assessment, no impairment has been recognised during the Track
Record Period and as at 31 March 2014 and 2015 and 30 November 2015.
I-33
APPENDIX I
ACCOUNTANTS REPORT
The Group did not hold any collateral as security or other credit enhancements over the trade receivables.
The ageing analysis of trade receivables that were past due but not impaired is as follows:
As at 31 March
2014
2015
HK$000
HK$000
Neither past due nor impaired
Less than 30 days past due
31 60 days past due
61 90 days past due
Over 90 days past due
As at 30
November
2015
HK$000
14,136
1,208
154
33
52
30,318
3,514
28,849
66
692
179
15,583
33,832
29,786
Trade receivables which were neither past due nor impaired related to a range of customers for whom there
was no recent history of default.
Trade receivables which were past due but not impaired related to a number of independent customers that
had a good track record of credit with the Group. Based on past credit history, management believe that no
provision for impairment is necessary in respect of these balances as there has not been a significant change in
credit quality and the balances are still considered to be fully recoverable.
As at 31 March 2014 and 2015 and 30 November 2015, the retentions held by customers for contract works
included in retention monies receivables under current assets of the Group was HK$17,957,000, HK$19,217,000
and HK$23,815,000, of which HK$11,056,000, HK$11,757,000 and HK$18,482,000 are expected to be recovered
after more than one year respectively.
19.
CASH AND CASH EQUIVALENTS
As at 31 March
2014
2015
HK$000
HK$000
Cash and bank balances presented in the combined
statements of financial position
Less: bank overdrafts (Note 22)
3,419
Cash and cash equivalents presented in the combined

statements of cash flows
3,419
Cash in banks earns interest at floating rates based on daily bank deposit rates.
I-34
5,900
(5,482)
418
As at 30
November
2015
HK$000
7,977
(168)
7,809
APPENDIX I
20.
ACCOUNTANTS REPORT
TRADE AND OTHER PAYABLES
As at 31 March
2014
2015
HK$000
HK$000
Trade payables
Retention monies payables
Accruals and other payables
As at 30
November
2015
HK$000
17,489
2,045
4,407
10,114
3,278
6,325
17,416
3,647
6,373
23,941
19,717
27,436
As at 31 March
2014
2015
HK$000
HK$000
As at 30
November
2015
HK$000
The ageing analysis of trade payables based on invoice date is as follows:
0 30 days
31 60 days
61 90 days
Over 90 days
10,411
5,556
466
1,056
6,894
2,646
69
505
17,183
31
202
17,489
10,114
17,416
The Group is granted by its suppliers a credit period ranging from 0 to 30 days.
As at 31 March 2014 and 2015 and 30 November 2015, the retentions held by the Group for contract works
included in retention monies payables under current liabilities of the Group was HK$2,045,000, HK$3,278,000
and HK$3,647,000, of which HK$425,000, HK$1,719,000 and HK$2,217,000 are expected to be payable after
more than one year respectively.
I-35
APPENDIX I
21.
ACCOUNTANTS REPORT
OBLIGATIONS UNDER FINANCE LEASES
As at 31 March 2014 and 2015 and 30 November 2015, the Group had obligations under finance leases
repayable as follows:
As at 31 March
2014
2015
HK$000
HK$000
As at 30
November
2015
HK$000
Total minimum lease payments

Within one year
After one year but within two years
After two years but within five years
1,619
1,254
1,149
1,314
1,001
1,008
1,677
1,398
1,121
Future finance charges on finance lease
4,022
(270)
3,323
(212)
4,196
(248)
Present value of finance lease liabilities
3,752
3,111
3,948
Present value of minimum lease payments

Within one year
After one year but within two years
After two years but within five years
1,474
1,177
1,101
1,199
937
975
1,537
1,319
1,092
3,752
3,111
3,948
As at 31 March 2014 and 2015, the finance lease liabilities were secured by the personal guarantee given
by the Controlling Shareholders. As at 30 November 2015, the finance lease liabilities were secured by the
personal guarantee given by one of the Controlling Shareholders.
22.
BANK LOANS AND OVERDRAFTS
As at 31 March 2014 and 2015 and 30 November 2015, the secured bank loans and overdrafts were
repayable as follows:
As at 31 March
2014
2015
HK$000
HK$000
Within 1 year or on demand
10,536
I-36
18,940
As at 30
November
2015
HK$000
5,688
APPENDIX I
ACCOUNTANTS REPORT
As at 31 March 2014 and 2015 and 30 November 2015, the bank loans and overdraft were secured as
follow:
As at 31 March
2014
2015
HK$000
HK$000
Secured term loans (Note i)
Secured bank overdrafts (Note i)
Secured mortgage loan (Note ii)
As at 30
November
2015
HK$000
2,984
7,552
6,404
5,482
7,054
5,520
168
10,536
18,940
5,688
Notes:
(i)
As at 31 March 2014 and 2015 and 30 November 2015, the bank term loans bear interest on floating
basis. The effective interest rates of bank term loans were 3.21%, 3.25% to 4.00%, and 3.23% to
3.99% per annum respectively.
As at 31 March 2014 and 2015 and 30 November 2015, the bank overdraft bears interest on floating
basis. The effective interest rates of bank overdrafts were 5.5%, 5.5% and 5.5% per annum
respectively.
The bank term loans and overdrafts were secured by the land and buildings of the Group, a property
owned by the Controlling Shareholders and their unlimited personal guarantees.
In addition, as at 31 March 2014 and 2015 and 30 November 2015, bank term loans of HK$Nil,
HK$4,000,000 and HK$3,512,000 were secured by the guarantee given by the Hong Kong Mortgage
Corporation Limited and unlimited personal guarantees given by the Controlling Shareholders.
Pursuant to terms as set out in the loan agreement, Luen Hing, as the borrower, should not have its
shares listed on the Main Board or the GEM of The Stock Exchange or any similar exchanges in or
outside Hong Kong.
(ii)
As at 31 March 2014 and 2015, the mortgage loan bears interest on floating basis. The effective
interest rate was 0.91% and 0.92% per annum respectively and was secured by the investment
property of the Group.
As at 31 March 2014 and 2015 and 30 November 2015, the bank term loans and mortgage loan were
classified as current liabilities because the corresponding loan agreements include a clause that the banks have the
overriding right to call the loan at any time regardless any other terms and maturity as set out in the loan
agreements.
23.
DEFERRED TAXATION
Deferred taxation is calculated in full on temporary differences under the liability method using taxation
rate of 16.5% in Hong Kong.
I-37
APPENDIX I
ACCOUNTANTS REPORT
The movements in deferred tax assets/(liabilities) during the Track Record Period are as follows:
Year ended 31 March

2014
2015
HK$000
HK$000
At the beginning of the year/period

Charged to profit or loss
5,236
(1,956)
At the end of the year/period
3,280
Eight
months
ended
30
November
2015
HK$000
3,280
(3,624)
(344)
(1,063)
(344)
(1,407)
The components of deferred tax assets/(liabilities) recognised in the combined statements of financial
position and the movements during the Track Record Period are as follows:
Accelerated
tax
depreciation
HK$000
As at 1 April 2013
Charged to profit or loss (Note 9)
Tax losses
HK$000
Total
HK$000
(818)
(413)
6,054
(1,543)
5,236
(1,956)

Credited/(Charged) to profit or loss (Note 9)
(1,231)
144
4,511
(3,768)
3,280
(3,624)

Charged to profit or loss (Note 9)
(1,087)
(320)
743
(743)
(344)
(1,063)
(1,407)
(1,407)
Represented by:
As at 31 March
2014
2015
HK$000
HK$000
Deferred tax assets
Deferred tax liabilities
As at 30
November
2015
HK$000
3,280
(344)
(1,407)
3,280
(344)
(1,407)
Deferred tax assets are recognised for tax losses carried forward to the extent that realisation of the related
tax benefit through the future taxable profits is probable.
As at 31 March 2014 and 2015 and 30 November 2015, the Group did not have any material unrecognised
deferred tax assets/liabilities.
I-38
APPENDIX I
24.
ACCOUNTANTS REPORT
SHARE CAPITAL
The Company
No. of shares
HK$000
Authorised:
38,000,000 ordinary shares of HK$0.01 each
Issued and fully paid:

1 ordinary share of HK$0.01, upon incorporation and as at 30 November
2015
38,000,000
380
The Company was incorporated on 16 October 2015 with authorised share capital of HK$380,000 divided
into 38,000,000 shares of HK$0.01 each and has not carried on any business since the date of incorporation
except for the Reorganisation. On the date of incorporation, one nil-paid share was allotted and issued.
On 22 February 2016, 9,999 shares were allotted and issued at par.
On 24 March 2016, pursuant to the written resolution of the shareholder, the authorised share capital of the
Company was increased from HK$380,000 to HK$20,000,000 by creation of an additional of 1,962,000,000 shares
of HK$0.01 each, each ranking pari passu with the shares then in issue in all respects.
There was no authorised and issued capital as at 31 March 2014 and 2015 since the Company has not yet
been incorporated.
25.
RESERVES
The Group
The amounts of the Groups reserves and the movements during the Track Record Period are
presented in the combined statements of changes in equity of the Financial Information.
The capital reserve of the Group as at 31 March 2014 and 2015 and 30 November 2015 represents
the share capital of entities comprising the Group throughout the Track Record Period.
The Company
The Company has not commenced any business or operation since its incorporation and therefore
does not have any profit or loss or movements in reserves since its incorporation and up to 30 November
2015.
26.
MAJOR NON-CASH TRANSACTIONS
During the years ended 31 March 2014 and 2015 and the eight months ended 30 November 2015, additions
to property, plant and equipment of approximately HK$2,665,000, HK$1,333,000 and HK$1,893,000 respectively
were financed by finance lease arrangements.
I-39
APPENDIX I
27.
ACCOUNTANTS REPORT
OPERATING LEASE COMMITMENTS

As lessee
The total future minimum lease payments under non-cancellable operating leases in respect of
warehouse and office equipment were as follows:
As at 31 March
2014
2015
HK$000
HK$000
Within one year
In the second to fifth years
As at 30
November
2015
HK$000
160
29
98
35
159
26
189
133
185
As lessor
As at 31 March 2014 and 2015 and 30 November 2015, the Groups future aggregate minimum lease
receipts under non-cancellable operating lease in respect of its investment property were as follows:
As at 31 March
2014
2015
HK$000
HK$000
Within one year
28.
23
50
As at 30
November
2015
HK$000
CAPITAL COMMITMENTS
As at 31 March 2014 and 2015 and 30 November 2015, capital commitments of the Group were as follows:
As at 31 March
2014
2015
HK$000
HK$000
Contracted but not provided for
Acquisition of property, plant and equipment
I-40
As at 30
November
2015
HK$000
490
APPENDIX I
29.
ACCOUNTANTS REPORT
RELATED PARTY TRANSACTIONS

(a)
Material related party transactions
Other than as disclosed in Note 16, Note 21 and Note 22 above, the Group entered into the following
material related party transactions during the Track Record Period:
Year ended 31 March

2014
2015
HK$000
HK$000
Eight months ended

30 November
2014
2015
HK$000
HK$000
(Unaudited)
Name of related
parties
Nature
Hop Fung Crane

Company (Note i)
Equipment rental
expenses
772
409
633
The Controlling
Shareholders (Note ii)
Licence to use
office premise
Notes
(i)
Hop Fung Crane Company is an unincorporated company owned by the spouse of one of the
Controlling Shareholders.
In the opinion of the directors, these transactions were entered into in the normal course of
business at mutually agreed prices and terms.
(b)
(ii)
During the Track Record Period, the Group was licensed to use an office premise owned by
the Controlling Shareholders without any consideration.
(iii)
As at 31 March 2014 and 2015 and 30 November 2015, certain contracts for the performance
works of provision of civil engineering works amounted to HK$62,635,000, HK$232,551,000
and HK$232,551,000 respectively were secured by the personal guarantees given by the
Controlling Shareholders.
Key management personnel compensation

The emoluments of the key management personnel during the Track Record Period are as follows:
Year ended 31 March

2014
2015
HK$000
HK$000
Short-term employee benefits

Post-employment benefits
30.
Eight months ended

30 November
2014
2015
HK$000
HK$000
(Unaudited)
4,938
90
4,971
105
2,390
69
2,886
77
5,028
5,076
2,459
2,963
CONTINGENT LIABILITIES
The Group is the defendant of certain outstanding litigation cases in respect of alleged violations of certain
safety and health regulations and accidents and the court has not yet made the judgement up to the date of this
report. After consulting the Groups lawyer, the directors are of the opinion that it is not possible to determine the
outcome and hence no provision has been made to the Financial Information.
I-41
APPENDIX I
31.
ACCOUNTANTS REPORT
FINANCIAL RISK MANAGEMENT AND FAIR VALUE MEASUREMENT

(a)
Categories of financial instruments
As at 31 March
2014
2015
HK$000
HK$000
Financial assets
Loans and receivables
Financial liabilities
Financial liabilities at amortised cost
(b)
As at 30
November
2015
HK$000
33,777
3,419
53,195
523
5,900
53,770
7,977
37,196
59,618
61,747
23,941
6,604
10,536
3,752
19,717
2,689
18,940
3,111
27,436
10,056
5,688
3,948
44,833
44,457
47,128
Financial risk factors
The Groups activities exposed it to a variety of financial risks including interest rate risk, credit risk
and liquidity risk.
The Groups overall risk management programme focuses on the unpredictability of financial markets
and seeks to minimise potential adverse effects on the Groups financial performance.
(i)
Interest rate risk
Interest rate risk relates to the risk that the fair value or cash flows of a financial instrument
will fluctuate because of changes in market interest rates. The Groups interest rate risk arises
primarily from its bank loans and overdrafts. As at 31 March 2014 and 2015 and 30 November 2015,
the Groups bank loans and overdrafts were committed on floating rate basis and were denominated
in Hong Kong Dollars.
As at 31 March 2014 and 2015 and 30 November 2015, it is estimated that if there was a
decrease of 50 basis points in interest rate, with all other variables remaining constant, the Groups
combined equity and net profit would have increased by approximately HK$44,000, HK$79,000 and
HK$24,000 respectively. The same percentage increase in interest rate would have the same
magnitude on the Groups combined equity and net profit but of opposite effect. The 50 basis points
represents the reasonable possible change in interest rates over the periods until the next reporting
date.
The Group currently does not have an interest rate hedging policy. However, the management
monitors the Groups interest rate exposure and will consider hedging significant interest exposure
should the need arise.
I-42
APPENDIX I
(ii)
ACCOUNTANTS REPORT
Credit risk
Credit risk arises mainly from trade and other receivables, amount due from a director and
cash and bank balances. The Groups maximum exposure to credit risk in the event of the
counterparties failure to perform their obligations as at the reporting dates in relation to each class
of recognised financial assets is the carrying amount of those assets as stated in the combined
statements of financial position.
The credit risk of cash and bank balances is limited because the counterparties are banks with
sound credit ratings assigned by international credit-rating agencies.
In respect of trade and other receivables, individual credit evaluations are performed on all
customers and counterparties. These evaluations focus on the counterpartys financial position, past
history of making payments and take into account information specific to the counterparty as well as
pertaining to the economic environment in which the counterparty operates. Monitoring procedures
have been implemented to ensure that follow-up action is taken to recover overdue debts. In addition,
the Group reviews the recoverable amount of each individual trade and other receivable balance at
the end of each reporting period to ensure adequate impairment losses are made for irrecoverable
amounts.
As at 31 March 2014 and 2015 and 30 November 2015, trade and retention monies receivables
from an individual customer accounted for 25%, 33% and 39% of the total trade and retention
monies receivables respectively.
(iii)
Liquidity risk
The Groups policy is to regularly monitor current and expected liquidity requirements and its
compliance with debt covenants, to ensure that it maintains sufficient reserves of cash and adequate
committed lines of funding from banks and other financial institutions to meet their liquidity
requirements in the short and long term. Management believes there is no significant liquidity risk as
the Group has sufficient committed facilities to fund their operations.
The following table details the remaining contractual maturities of financial liabilities at the
reporting dates, which are based on contractual undiscounted cash flows (including interest payments
computed using contractual rates or, if floating, based on rates current at the reporting dates) and the
earliest date the Group can be required to pay:
As at 31 March
2014
Trade and other
payables
Amounts due to
directors
Term loans and
mortgage loan
Obligations under
finance leases
On
demand or
within one
year
HK$000
Between
one and
two years
HK$000
Between
two and
five years
HK$000
Total
HK$000
Carrying
amount
HK$000
23,941
23,941
23,941
6,604
6,604
6,604
10,536
10,536
10,536
1,619
1,254
1,149
4,022
3,752
42,700
1,254
1,149
45,103
44,833
I-43
APPENDIX I
ACCOUNTANTS REPORT
On
demand or
within one
year
HK$000
Between
one and
two years
HK$000
Between
two and
five years
HK$000
Total
HK$000
Carrying
amount
HK$000
19,717
19,717
19,717
2,689
5,482
2,689
5,482
2,689
5,482
13,458
13,458
13,458
1,314
1,001
1,008
3,323
3,111
42,660
1,001
1,008
44,669
44,457
27,436
27,436
27,436
10,056
168
5,520
10,056
168
5,520
10,056
168
5,520
1,677
1,398
1,121
4,196
3,948
44,857
1,398
1,121
47,376
47,128
As at 31 March
2015
Trade and other
payables
Amount due to a
director
Bank overdrafts
Term loans and
mortgage loan
Obligations under
finance leases
As at 30 November
2015
Trade and other
payables
Amounts due to
directors
Bank overdrafts
Term loans
Obligations under
finance leases
Bank loans with a repayment on demand clause are included in the On demand or within one
year time band in the above maturity analysis.
As at 31 March 2014 and 2015 and 30 November 2015 the aggregate undiscounted principal
and interest of these bank loans payable in accordance with the scheduled payment terms were as
follows:
On
demand or
within one
year
HK$000
Between
one and
two years
HK$000
Between
two and
five years
HK$000
Over five
years
HK$000
Total
HK$000
As at 31 March 2014
Term loans and mortgage loan
1,233
1,235
3,594
5,245
11,307
As at 31 March 2015
Term loans and mortgage loan
2,119
2,119
5,578
4,678
14,494
Term loans
1,552
1,552
2,843
5,947
I-44
APPENDIX I
ACCOUNTANTS REPORT
As at 31 March 2014 and 2015 and 30 November 2015, taking into account of the Groups
financial position, the directors do not believe that it is probable that the banks will exercise their
discretionary rights to demand immediate repayment. Included in the above balances, the directors
believe that such bank loans will be repaid in accordance with the scheduled repayment dates as set
out in the loan agreements.
(c)
Fair value measurement
The carrying amounts of the Groups financial assets and liabilities are not materially different from
their fair values as at 31 March 2014 and 2015 and 30 November 2015.
32.
CAPITAL MANAGEMENT
The Groups capital management objectives are to ensure the Groups ability to continue as a going concern
and to maintain optimal capital structure in order to minimise the costs of capital, support its business and
maximise shareholders value.
The Group actively and regularly reviews its capital structure and makes adjustments in light of changes in
economic conditions. The Group monitors its capital structure on the basis of the debt to equity ratio. For this
purpose, debt is defined as borrowings net of cash and bank balance. In order to maintain or adjust the ratio, the
Group may adjust the amount of dividends paid to shareholders, share buyback, issue new shares and raise new
debts.
The debt to equity ratio at each reporting date was:
As at 31 March
2014
2015
HK$000
HK$000
As at 30
November
2015
HK$000

Obligation under finance lease
10,536
3,752
18,940
3,111
5,688
3,948
Total borrowings
Less: cash and bank balances
14,288
(3,419)
22,051
(5,900)
9,636
(7,977)
Net debts
10,869
16,151
1,659
(Capital deficiency)/Total equity
(9,775)
8,304
14,696
N/A
194%
11%
Debt to equity ratio
I-45
APPENDIX I
III
ACCOUNTANTS REPORT
SUBSEQUENT EVENTS
The following significant events took place subsequent to 30 November 2015:
(a)
Group reorganisation
The companies comprising the Group underwent and completed the

Reorganisation in preparation for the listing of the Companys shares on the Stock
Exchange. Further details of the Reorganisation are set out in the section headed
History and Development in the Prospectus. Upon completion of the Reorganisation
on 22 February 2016, the Company became the holding company of the Group.
(b)
Settlements of the amounts due to directors
On 21 March 2016, Luen Hing allotted and issued 5,480,000 new shares at a
subscription price of HK$1 each to Super Pioneer by the way of capitalisation of
amounts due to the directors.
On 21 March 2016, Hop Fung allotted and issued 4,920,000 new shares at a
subscription price of HK$1 each to Super Pioneer by the way of capitalisation of
amounts due to the directors.
Upon completion of the share issuance, the remaining outstanding balances with
directors will be settled by cash.
(c)
Taking out of surety bonds
Subsequent to the reporting date, the Group has accepted a quotation to take out
surety bonds before Listing from an authorised insurer, which is a wholly-owned
subsidiary of a Hong Kong licensed bank, in favour of a customer, who declined the
Groups request to release personal guarantees given by the Controlling Shareholders,
in the value of the contract sum or predetermined percentage of the contract sum, as
the case may be, for due performance of the Groups obligations under the contracts.
I-46
APPENDIX I
IV
ACCOUNTANTS REPORT
SUBSEQUENT FINANCIAL STATEMENTS AND DIVIDENDS
No audited financial statements have been prepared by the Company, or its subsidiaries
in respect of any period subsequent to 30 November 2015. No dividend has been declared or
made by the Company or any of the companies now comprising the Group in respect of any
period subsequent to 30 November 2015.
Yours faithfully,
Certified Public Accountants
Level 12
28 Hennessy Road
Wanchai
Hong Kong
Shaw Chi Kit
Practising Certificate No.: P04834
I-47
APPENDIX II
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The information set forth in this appendix does not form part of the Accountants
Report on the financial information of the Group for the two years ended 31 March 2015
and the eight months ended 30 November 2015 prepared by Grant Thornton Hong Kong
Limited, Certified Public Accountants, Hong Kong, the reporting accountants of our
Company, as set forth in Appendix I of this prospectus (the Accountants Report), and is
included herein for illustrative purposes only. The unaudited pro forma financial information
should be read in conjunction with the section headed Financial Information in this
prospectus and the Accountants Report set forth in Appendix I of this prospectus.
A.
UNAUDITED PRO FORMA STATEMENT OF ADJUSTED COMBINED NET

TANGIBLE ASSETS
The following is an illustrative unaudited pro forma statement of adjusted combined net
tangible assets of the Group which has been prepared in accordance with paragraph 31 of
Chapter 7 of the GEM Listing Rules for the purpose of illustrating the effect of the Placing
on the audited combined net tangible assets of the Group attributable to equity holders of
the Company as at 30 November 2015, as if the Placing had taken place on 30 November
2015.
The unaudited pro forma statement of adjusted combined net tangible assets of the
Group has been prepared for illustrative purposes only and because of its hypothetical
nature, it may not give a true picture of the combined net tangible assets of the Group
attributable to equity holders of the Company had the Placing been completed as at 30
November 2015 or at any future dates. It is prepared based on the audited combined net
tangible assets of the Group attributable to equity holders of the Company as at 30
November 2015 as set out in the Accountants Report in Appendix I to this Prospectus, and
adjusted as described below.
Unaudited
Audited
Unaudited
pro forma
combined net
pro forma
adjusted
tangible assets Capitalisation
adjusted combined net
of the Group
of amounts
combined net tangible assets
attributable to
due to
equity holders
directors by
tangible assets of the Group
of the
way of
of the Group attributable to
Company as
issuance of
attributable to equity holders
of the
at 30
shares by Estimated net equity holders
November
Luen Hing proceeds from
of the Company per
the Placing
Company
Share
2015 and Hop Fung
HK$000
HK$000
HK$000
HK$000
HK$
(Note 1)
(Note 3)
(Note 4)
(Note 5)
Based on the Placing
Price of HK$0.26 per
Share
14,696
10,400
II-1
43,562
68,658
0.06
APPENDIX II
Notes:
(1)
The unadjusted combined net tangible assets attributable to the equity holders of the Company as at
30 November 2015 is extracted from the Accountants Report in Appendix I to this prospectus, which
is based on the audited combined net assets of the Group attributable to the equity holders of the
Company of approximately HK$14,696,000.
(2)
The Groups land and buildings was revalued at 31 January 2016 by Ascent Partners Valuation
Service Limited, an independent property valuer, and relevant property valuation report is set out in
Appendix III Property Valuation. The net surplus over their carrying value amounting to
HK$3,222,000 has not been included in the combined net tangible assets of the Group attributable to
equity holders of the Company as at 30 November 2015. The above adjustment does not take into
account the above valuation surplus. Had the land and buildings been stated as such valuation, an
additional depreciation of HK$289,000 per annum in respect of revaluation surplus, before income
taxes, would be charged against the combined statement of profit or loss and other comprehensive
income.
(3)
The increase in combined net tangible assets of the Group attributable to equity holders of the
Company upon completion of share issuance of Luen Hing and Hop Fung are based on (i) 5,480,000
new shares of Luen Hing issued at a subscription price of HK$1 per share to Super Pioneer; and (ii)
4,920,000 new shares of Hop Fung issued at a subscription price of HK$1 per share to Super Pioneer
on 21 March 2016 by the way of capitalisation of amounts due to the directors. Any remaining
balances will be settled by cash.
(4)
The estimated net proceeds from the Placing are based on 208,000,000 Shares to be offered by the
Company at the Placing Price of HK$0.26 per Share, after deduction of relevant estimated
underwriting commissions and fees and other related fees expected to be incurred by the Group
subsequent to 30 November 2015.
(5)
The unaudited pro forma adjusted net tangible assets per Share are determined after the adjustments
as described in Note 3 above and on the basis that 1,248,000,000 Shares are issued and outstanding
as set out in the section headed Share Capital of this prospectus (assuming that the Placing Shares
and the Capitalisation Issue had been issued on 30 November 2015).
(6)
The unaudited pro forma combined financial information presented above does not take into account
of any trading or other transactions subsequent to the date of the financial statements included in the
unaudited pro forma financial information (i.e. 30 November 2015).
II-2
APPENDIX II
B.
INDEPENDENT REPORTING ACCOUNTANTS ASSURANCE REPORT ON

THE COMPILATION OF UNAUDITED PRO FORMA FINANCIAL
INFORMATION
The following is the text of the assurance report received from, Grant Thornton Hong
Kong Limited, Certified Public Accountants, Hong Kong, the reporting accountants of the
Company, in respect of the Groups unaudited pro forma financial information prepared for
the purpose of incorporation in this prospectus.
31 March 2016
TO THE DIRECTORS OF LUEN WONG GROUP HOLDINGS LIMITED
We have completed our assurance engagement to report on the compilation of pro
forma financial information of Luen Wong Group Holdings Limited (the Company) and its
subsidiaries (collectively referred to as the Group) by the directors of the Company (the
Directors) for illustrative purposes only. The unaudited pro forma financial information
consists of the unaudited pro forma statement of adjusted combined net tangible assets as at
30 November 2015 and related notes as set out on pages II-1 to II-2 of Appendix II to the
prospectus issued by the Company dated 31 March 2016 (the Prospectus). The applicable
criteria on the basis of which the Directors have compiled the unaudited pro forma financial
information are described on pages II-1 to II-2 of Appendix II to the Prospectus.
The unaudited pro forma financial information has been compiled by the Directors to
illustrate the impact of the proposed listing of the Companys shares on the Growth
Enterprise Market of The Stock Exchange of Hong Kong Limited by way of placing on the
Groups financial position as at 30 November 2015 as if the event had taken place at 30
November 2015. As part of this process, information about the Groups financial position
has been extracted by the Directors from the Groups financial information for the two years
ended 31 March 2015 and the eight months ended 30 November 2015, on which an
accountants report set out in Appendix I to the Prospectus has been published.
Directors Responsibilities for the Unaudited Pro Forma Financial Information
The Directors are responsible for compiling the unaudited pro forma financial
information in accordance with paragraph 7.31 of the Rules Governing the Listing of
Securities on Growth Enterprise Market of The Stock Exchange of Hong Kong Limited (the
GEM Listing Rules) and with reference to Accounting Guideline 7 Preparation of Pro
Forma Financial Information for Inclusion in Investment Circulars (AG7) issued by the
Hong Kong Institute of Certified Public Accountants (HKICPA).
II-3
APPENDIX II
Our Independence and Quality Control

We have complied with the independence and other ethical requirements of the Code of
Ethics for Professional Accountants issued by the HKICPA, which is founded on
fundamental principles of integrity, objectivity, professional competence and due care,
confidentiality and professional behavior.
The firm applies Hong Kong Standard on Quality Control 1 and accordingly maintains
a comprehensive system of quality control including documented policies and procedures
regarding compliance with ethical requirements, professional standards and applicable legal
and regulatory requirements.
Reporting Accountants Responsibilities
Our responsibility is to express an opinion, as required by paragraph 7.31(7) of the
GEM Listing Rules, on the unaudited pro forma financial information and to report our
opinion to you. We do not accept any responsibility for any reports previously given by us
on any financial information used in the compilation of the unaudited pro forma financial
information beyond that owed to those to whom those reports were addressed by us at the
dates of their issue.
We conducted our engagement in accordance with Hong Kong Standard on Assurance
Engagements 3420 Assurance Engagements to Report on the Compilation of Pro Forma
Financial Information Included in a Prospectus issued by the HKICPA. This standard
requires that the reporting accountant plan and perform procedures to obtain reasonable
assurance about whether the Directors have compiled the unaudited pro forma financial
information in accordance with paragraph 7.31 of the GEM Listing Rules and with reference
to AG 7 issued by the HKICPA.
For purposes of this engagement, we are not responsible for updating or reissuing any
reports or opinions on any historical financial information used in compiling the pro forma
financial information, nor have we, in the course of this engagement, performed an audit or
review of the financial information used in compiling the unaudited pro forma financial
information.
The purpose of unaudited pro forma financial information included in the Prospectus is
solely to illustrate the impact of a significant event or transaction on unadjusted financial
information of the Group as if the event had occurred or the transaction had been undertaken
at an earlier date selected for purposes of the illustration. Accordingly, we do not provide
any assurance that the actual outcome of the event or transaction at 30 November 2015
would have been as presented.
II-4
APPENDIX II
A reasonable assurance engagement to report on whether the unaudited pro forma

financial information has been properly compiled on the basis of the applicable criteria
involves performing procedures to assess whether the applicable criteria used by the
Directors in the compilation of the unaudited pro forma financial information provide a
reasonable basis for presenting the significant effects directly attributable to the event or
transaction, and to obtain sufficient appropriate evidence about whether:
The related unaudited pro forma adjustments give appropriate effect to those
criteria; and
The unaudited pro forma financial information reflects the proper application of
those adjustments to the unadjusted financial information.
The procedures selected depend on the reporting accountants judgment, having regard
to the reporting accountants understanding of the nature of the Group, the event or
transaction in respect of which the unaudited pro forma financial information has been
compiled, and other relevant engagement circumstances.
The engagement also involves evaluating the overall presentation of the unaudited pro
forma financial information.
We believe that the evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Opinion
In our opinion:
(a)
the unaudited pro forma financial information has been properly compiled on the
basis stated;
(b)
such basis is consistent with the accounting policies of the Group; and
(c)
the adjustments are appropriate for the purposes of the unaudited pro forma
financial information as disclosed pursuant to paragraph 7.31(1) of the GEM
Listing Rules.

Level 12
28 Hennessy Road
Wanchai
Hong Kong
Shaw Chi Kit
Practising Certificate No.: P04834
II-5
APPENDIX III
PROPERTY VALUATION
The following is the text of a letter and a valuation certificate prepared for the purpose
of incorporation in this prospectus received from Ascent Partners Valuation Service Limited,
an independent valuer, in connection with its valuation of the property interests of the
Group.
Suite 2102, Hong Kong Trade Centre
161-167 Des Voeux Road Central
Hong Kong
www.ascent-partners.com
Tel: (852) 3679 3890
Fax: (852) 3579 0884
31 March 2016
Unit 05 on 15th Floor
North Wing, Delta House
No. 3 On Yiu Street
Sha Tin, New Territories, Hong Kong
Dear Sir/Madam,
INSTRUCTIONS
In accordance with the instructions for us to value the property in which Luen Wong
Group Holdings Limited (the Company) and its subsidiaries (hereinafter together referred
to as the Group) have interests in Hong Kong, we confirm that we have carried out
property inspections, made relevant enquiries and obtained such further information as we
consider necessary for the purpose of providing you with our opinion of the market value of
the property interests as at 31 January 2016 (referred to as the Valuation Date) for the
purpose of incorporation in the prospectus of the Company dated 31 March 2016.
This letter which forms part of our valuation report explains the basis and methodology
of valuation, clarifying assumptions, valuation considerations, title investigation and limiting
conditions of this valuation.
BASIS OF VALUATION
Our valuation of the property interests represents the market value which we would
define to mean the estimated amount for which an asset or liability should exchange on the
valuation date between a willing buyer and a willing seller in an arms length transaction
after proper marketing and where the parties had each acted knowledgeably, prudently and
without compulsion.
Market Value is understood as the value of an asset or liability estimated without
regard to costs of sale or purchase (or transaction) and without offset for any associated
taxes or potential taxes.
III-1
APPENDIX III
PROPERTY VALUATION
VALUATION METHODOLOGY
We have valued the property interests which is held and occupied by the Group in
Hong Kong on market basis and the direct comparison method is adopted where comparison
based on prices realised on actual sales price of comparable property is made. Comparable
properties of similar size, character, and location are analysed and carefully weighted against
all the respective advantages and disadvantages of each property in order to arrive at a fair
comparison of values.
TITLE INVESTIGATION
We have carried out land searches at the Land Registry for the property located in
Hong Kong. We have been, in some instances, provided with the extracts of the documents
relating to the property. However, we have not verified ownership of the property to verify
the existence of any amendments which do not appear on the copies handed to us. All
documents have been used for reference only.
VALUATION ASSUMPTIONS
Our valuations have been made on the assumption that the seller sells the property
interests on the open market in their existing states without the benefit of a deferred term
contracts, leasebacks, joint ventures, management agreements or any similar arrangements,
which could serve to affect the values of the property interests.
Unless stated as otherwise, we have assumed that the property have been constructed,
occupied and used in full compliance with, and without contravention of all laws, except
only where otherwise stated. We have further assumed that, for any use of the property upon
which this report is based, all required licenses, permit, certificate and authorisations have
been obtained.
We have assumed that the owners of the property have free and uninterrupted rights to
use and dispose of the property for the whole of the unexpired term of Land Grant.
Other special assumptions of the property interests, if any, have been stated out in the
footnotes of the valuation certificate attached herewith.
SOURCE OF INFORMATION
We have relied to a considerable extent on information provided by the Group and
have accepted advice given to us on such matters, in particular, but not limited to, the sales
records, tenure, planning approvals, statutory notices, easements, particulars of occupancy,
site and floor areas and all other relevant matters in the identification of the property
interests.
III-2
APPENDIX III
PROPERTY VALUATION
We have had no reason to doubt the truth and accuracy of the information provided to
us by the Group. We have also been advised by the Group that no material factors have been
omitted from the information supplied. We consider that we have been provided with
sufficient information to reach an informed view, and we have no reason to suspect that any
material information has been withheld.
VALUATION CONSIDERATIONS
In valuing the property interests, we have complied with all the requirements contained
in Chapter 8 of the Rules Governing the Listing of Securities on the Growth Enterprise
Market issued by The Stock Exchange of Hong Kong Limited and the HKIS Valuation
Standards (2012 Edition) published by The Hong Kong Institute of Surveyors.
LIMITING CONDITIONS
We have inspected the exterior, and wherever possible, the interior of the property but
no structural survey had been made. In the course of our inspection, we did not note any
serious defects. We are not, however, able to report that the property is free from rot,
infestation or any other structural defects. Further, no test has been carried out on any of the
building services. All dimensions, measurements and areas are only approximates. We have
not been able to carry out detailed on-site measurements to verify the site and floor areas of
the property and we have assumed that the areas shown on the copies of documents handed
to us are correct.
We have not carried out any soil investigations to determine the suitability of the soil
conditions and the services etc. for any future development. Our valuations are prepared on
the assumption that these aspects are satisfactory and that no extraordinary expenses or
delays will be incurred during the construction period. We do not make any allowance for
contamination or pollution of the land, if any, which may have been caused by past usage.
No allowance has been made in our valuation for any charges, mortgages or amount
owing on any property interests nor for any expense or taxation which may be incurred in
effecting a sale. We have assumed that the property is free from encumbrances, restrictions
and outgoings of an onerous nature which could affect their values.
Liability in connection with this valuation report is limited to the client to whom this
report is addressed and for the purpose for which it is carried out only. We will accept no
liability to any other parties or any other purposes.
III-3
APPENDIX III
PROPERTY VALUATION
REMARKS
Unless otherwise stated, all monetary amounts stated in this report are in Hong Kong
Dollars (HKD).
Our valuation certificate in respect of the property interests is herewith attached.
Yours faithfully,
For and on behalf of
Ascent Partners Valuation Service Limited
Stephen Y. W. Yeung
MFin BSc(Hons) Land Adm. MHKIS MCIREA RPS(GP)
Principal
Mr. Stephen Y. W. Yeung is a Registered Professional Surveyor (General Practice Division) and a
Professional Member of The Hong Kong Institute of Surveyors with over 10 years experience in valuation of
properties in HKSAR and mainland China. Mr. Yeung is also a valuer on the List of Property Valuers for
Undertaking Valuations for Incorporation or Reference in Listing Particulars and Circulars and Valuations in
Connection with Takeovers and Mergers published by HKIS.
III-4
APPENDIX III
PROPERTY VALUATION
VALUATION CERTIFICATE
Property interests held and occupied by the Group in Hong Kong
Property
Description and Tenure
Workshop 16 on 13/F,
New Commerce Centre,
No. 19 On Sum Street,
Sha Tin, New Territories,
Hong Kong
The property comprises an

industrial unit on 13th Floor of
an 18-storey industrial building
(with 4th and 14th Floors
omitted) completed in 1994.
9/3100th equal and

undivided shares of and in
Sha Tin Town Lot No.
389
As shown on and scaled off

from the building plan, the
saleable area of the property is
about 660 sq.ft.
Market value in
existing state as at
31 January 2016
Particular of
Occupancy
The property is occupied
by the Group for storage
purpose.
HKD4,120,000
(Hong Kong Dollar
Four Million One
Hundred Twenty
Thousand)
100% interest
Attributable to the
Group: HKD4,120,000
The lot is held under New

Grant No. 12370 for a term
commencing from 18 September
1991 and expiring on 30 June
2047.
The government rent payable
for Sha Tin Town Lot No. 389
is at 3% of the rateable value of
the time being per annum.
Notes:
(1)
The registered owner of the property is Luen Hing Construction & Eng. Limited vide Memorial No.
07062801080207 dated 5 June 2007.
(2)
The property is subject to encumbrances as follows:

(i)
An Occupation Permit No. NT 84/94 vide Memorial No. ST772958 dated 13 July 1994;
(ii)
A Letter of Compliance vide Memorial No. ST783198 dated 29 September 1994;
(iii)
A Deed of Mutual Covenant and Management Agreement vide Memorial No. ST783403 dated 10
October 1994; and
(iv)
A Mortgage in favour of Bank of China (Hong Kong) Limited vide Memorial No. 13041901280310
dated 28 March 2013.
(3)
The property lies within an area zoned as Other Specified Uses (Business) under Approved Sha Tin
Outline Zoning Plan No. S/ST/32 dated 11 December 2015.
(4)
Our inspection was performed by Mr. Charles Choi, BSc (Hons) in February 2016.
III-5
APPENDIX IV
SUMMARY OF THE CONSTITUTION OF OUR

COMPANY AND CAYMAN ISLANDS COMPANY LAW
Set out below is a summary of certain provisions of the Memorandum and Articles of
Association of the Company and of certain aspects of Cayman Islands company law.
The Company was incorporated in the Cayman Islands as an exempted company with
limited liability on 16 October 2015 under the Companies Law. The Companys
constitutional documents consist of its Amended and Restated Memorandum of Association
(Memorandum) and the Amended and Restated Articles of Association (Articles).
1.
2.
MEMORANDUM OF ASSOCIATION
(a)
The Memorandum provides, inter alia, that the liability of members of the
Company is limited and that the objects for which the Company is established are
unrestricted (and therefore include acting as an investment company), and that the
Company shall have and be capable of exercising any and all of the powers at any
time or from time to time exercisable by a natural person or body corporate
whether as principal, agent, contractor or otherwise and since the Company is an
exempted company that the Company will not trade in the Cayman Islands with
any person, firm or corporation except in furtherance of the business of the
Company carried on outside the Cayman Islands.
(b)
By special resolution the Company may alter the Memorandum with respect to
any objects, powers or other matters specified therein.
ARTICLES OF ASSOCIATION
The Articles were adopted on 24 March 2016. The following is a summary of certain
provisions of the Articles:
(a)
Shares
(i)
Classes of shares
The share capital of the Company consists of ordinary shares.
(ii) Share certificates

Every person whose name is entered as a member in the register of members
shall be entitled to receive a certificate for his shares. No shares shall be issued to
bearer.
Every certificate for shares, warrants or debentures or representing any other
form 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 2
Directors, or by some other person(s) appointed by the Board for the purpose. As
regards any certificates for shares or debentures or other securities of the
Company, the Board may by resolution determine that such signatures or either of
them shall be dispensed with or affixed by some method or system of mechanical
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APPENDIX IV

signature other than autographic or may be printed thereon as specified in such

resolution or that such certificates need not be signed by any person. Every share
certificate issued shall specify the number and class of shares in respect of which
it is issued and the amount paid thereon and may otherwise be in such form as
the Board may from time to time prescribe. A share certificate shall relate to only
one class of shares, and where the capital of the Company includes shares with
different voting rights, the designation of each class of shares, other than those
which carry the general right to vote at general meetings, must include the words
restricted voting or limited voting or non-voting or some other appropriate
designation which is commensurate with the rights attaching to the relevant class
of shares. The Company shall not be bound to register more than 4 persons as
joint 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 and

Articles and without prejudice to any special rights conferred on the holders of
any shares or class of shares, any share may be issued with or have attached
thereto such rights, or such restrictions, whether with regard to dividend, voting,
return of capital, or otherwise, as the Company may by ordinary resolution
determine (or, in the absence of any such determination or so far as the same may
not make specific provision, as the Board may determine). Any share may be
issued on terms that upon the happening of a specified event or upon a given date
and either at the option of the Company or the holder thereof, they are liable to
be redeemed.
The Board may issue warrants to subscribe for any class of shares or other
securities 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 to
replace one that has been lost unless the Board is satisfied beyond reasonable
doubt that the original certificate thereof has been destroyed and the Company has
received an indemnity in such form as the Board shall think fit with regard to the
issue of any such replacement certificate.
Subject to the provisions of the Companies Law, the Articles and, where
applicable, the rules of any stock exchange of the Relevant Territory (as defined
in the Articles) and without prejudice to any special rights or restrictions for the
time being attached to any shares or any class of shares, all unissued shares in the
Company shall be at the disposal of the Board, which may offer, allot, grant
options over or otherwise dispose of them to such persons, at such times, for such
consideration and on such terms and conditions as it in its absolute discretion
thinks fit, but so that no shares shall be issued at a discount.
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APPENDIX IV

Neither the Company nor the Board shall be obliged, when making or
granting any allotment of, offer of, option over or disposal of shares, to make, or
make available, any such allotment, offer, option or shares to members or others
whose registered addresses are in any particular territory or territories where, in
the 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 member
affected as a result of the foregoing shall be, or be deemed to be, a separate class
of 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 disposal
of the assets of the Company or any of its subsidiaries, the Board may exercise
all powers and do all acts and things which may be exercised or done or approved
by the Company and which are not required by the Articles or the Companies
Law to be exercised or done by the Company in general meeting, but if such
power or act is regulated by the Company in general meeting, such regulation
shall not invalidate any prior act of the Board which would have been valid if
such regulation had not been made.
(iii) Compensation or payments for loss of office
Payments to any present Director or past Director of any sum by way of
compensation for loss of office or as consideration for or in connection with his
retirement from office (not being a payment to which the Director is contractually
or statutorily entitled) must be approved by the Company in general meeting.
(iv) Loans and provision of security for loans to Directors
There are provisions in the Articles prohibiting the making of loans to
Directors and their close associates which are equivalent to provisions of Hong
Kong law prevailing at the time of adoption of the Articles.
The Company shall not directly or indirectly make a loan to a Director or a
director of any holding company of the Company or any of their respective close
associates, enter into any guarantee or provide any security in connection with a
loan made by any person to a Director or a director of any holding company of
the Company or any of their respective close associates, or if any one or more of
the Directors hold (jointly or severally or directly or indirectly) a controlling
interest in another company, make a loan to that other company or enter into any
guarantee or provide any security in connection with a loan made by any person
to that other company.
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APPENDIX IV
(v)

Disclosure of interest in contracts with the Company or with any of its

subsidiaries
With the exception of the office of auditor of the Company, a Director may
hold any other office or place of profit with the Company in conjunction with his
office of Director for such period and, upon such terms as the Board may
determine, and may be paid such extra remuneration therefor (whether by way of
salary, commission, participation in profits or otherwise) in addition to any
remuneration provided for by or pursuant to any other Articles. A Director may be
or become a director or other officer or member of any other company in which
the Company may be interested, and shall not be liable to account to the
Company or the members for any remuneration or other benefits received by him
as a director, officer or member of such other company. The Board may also
cause the voting power conferred by the shares in any other company held or
owned by the Company to be exercised in such manner in all respects as it thinks
fit, including the exercise thereof in favour of any resolution appointing the
Directors or any of them to be directors or officers of such other company.
No Director or intended Director shall be disqualified by his office from
contracting with the Company, either as vendor, purchaser or otherwise, nor shall
any such contract or any other contract or arrangement in which any Director is in
any way interested be liable to be avoided, nor shall any Director so contracting
or being so interested be liable to account to the Company for any profit realised
by any such contract or arrangement by reason only of such Director holding that
office or the fiduciary relationship thereby established. A Director who is, in any
way, materially interested in a contract or arrangement or proposed contract or
arrangement with the Company shall declare the nature of his interest at the
earliest meeting of the Board at which he may practically do so.
There is no power to freeze or otherwise impair any of the rights attaching
to any Share by reason that the person or persons who are interested directly or
indirectly therein have failed to disclose their interests to the Company.
A Director shall not vote (nor shall he be counted in the quorum) on any
resolution of the Board in respect of any contract or arrangement or other
proposal in which he or his close associate(s) is/are materially interested, and if
he shall do so his vote shall not be counted nor shall he be counted in the quorum
for that resolution, but this prohibition shall not apply to any of the following
matters namely:
(aa) the giving of any security or indemnity to the Director or his close
associate(s) in respect of money lent or obligations incurred or
undertaken by him or any of them at the request of or for the benefit of
the Company or any of its subsidiaries;
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APPENDIX IV

(bb) the giving of any security or indemnity to a third party in respect of a

debt or obligation of the Company or any of its subsidiaries for which
the Director or his close associate(s) has/have himself/themselves
assumed responsibility in whole or in part whether alone or jointly
under a guarantee or indemnity or by the giving of security;
(cc) any proposal concerning an offer of shares or debentures or other
securities of or by the Company or any other company which the
Company may promote or be interested in for subscription or purchase,
where the Director or his close associate(s) is/are or is/are to be
interested as a participant in the underwriting or sub-underwriting of
the offer;
(dd) any proposal or arrangement concerning the benefit of employees of the
Company or its subsidiaries including (i) the adoption, modification or
operation of any employees share scheme or any share incentive or
share option scheme under which the Director or his close associate(s)
may benefit; or (ii) the adoption, modification or operation of a pension
fund or retirement, death or disability benefits scheme which relates
both to Directors, his close associates and employees of the Company
or any of its subsidiaries and does not provide in respect of any
Director or his close associate(s), as such any privilege or advantage
not generally accorded to the class of persons to which such scheme or
fund relates; or
(ee) any contract or arrangement in which the Director or his close
associate(s) is/are interested in the same manner as other holders of
shares or debentures or other securities of the Company by virtue only
of his/their interest in shares or debentures or other securities of the
Company.
(vi) Remuneration
The Directors shall be entitled to receive, as ordinary remuneration for their
services, such sums as shall from time to time be determined by the Board, or the
Company in general meeting, as the case may be, such sum (unless otherwise
directed by the resolution by which it is determined) to be divided amongst the
Directors in such proportions and in such manner as they may agree or failing
agreement, equally, except that in such event any Director holding office for only
a portion of the period in respect of which the remuneration is payable shall only
rank in such division in proportion to the time during such period for which he
has held office. The Directors shall also be entitled to be repaid all travelling,
hotel and other expenses reasonably incurred by them in attending any Board
meetings, committee meetings or general meetings or otherwise in connection
with the discharge of their duties as Directors. Such remuneration shall be in
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APPENDIX IV

addition to any other remuneration to which a Director who holds any salaried
employment or office in the Company may be entitled by reason of such
employment or office.
Any Director who, at the request of the Company performs services which in
the opinion of the Board go beyond the ordinary duties of a Director may be paid
such special or extra remuneration (whether by way of salary, commission,
participation in profits or otherwise) as the Board may determine and such extra
remuneration shall be in addition to or in substitution for any ordinary
remuneration as a Director. An executive Director appointed to be a managing
director, joint managing director, deputy managing director or other executive
officer shall receive such remuneration (whether by way of salary, commission or
participation in profits or otherwise or by all or any of those modes) and such
other benefits (including pension and/or gratuity and/or other benefits on
retirement) and allowances as the Board may from time to time decide. Such
remuneration shall be in addition to his ordinary remuneration as a Director.
The Board may establish, either on its own or jointly in concurrence or
agreement with other companies (being subsidiaries of the Company or with
which the Company is associated in business), or may make contributions out of
the Companys monies to, such schemes or funds for providing pensions, sickness
or compassionate allowances, life assurance or other benefits for employees
(which expression as used in this and the following paragraph shall include any
Director or former Director who may hold or have held any executive office or
any office of profit with the Company or any of its subsidiaries) and former
employees of the Company and their dependents or any class or classes of such
persons.
In addition, the Board may also pay, enter into agreements to pay or make
grants of revocable or irrevocable, whether or not subject to any terms or
conditions, pensions or other benefits to employees and former employees and
their dependents, or to any of such persons, including pensions or benefits
additional to those, if any, to which such employees or former employees or their
dependents are or may become entitled under any such scheme or fund as
mentioned above. Such pension or benefit may, if deemed desirable by the Board,
be granted to an employee either before and in anticipation of, or upon or at any
time after, his actual retirement.
(vii) Appointment, retirement and removal
At any time or from time to time, the Board shall have the power to appoint
any person as a Director either to fill a casual vacancy on the Board or as an
additional Director to the existing Board subject to any maximum number of
Directors, if any, as may be determined by the members in general meeting. Any
Director appointed by the Board to fill a casual vacancy shall hold office only
until the first general meeting of the Company after his appointment and be
subject to re-election at such meeting. Any Director appointed by the Board as an
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APPENDIX IV

addition to the existing Board shall hold office only until the next following
annual general meeting of the Company and shall then be eligible for re-election.
Any Director so appointed by the Board shall not be taken into account in
determining the Directors or the number of Directors who are to retire by rotation
at an annual general meeting.
At each annual general meeting, one third of the Directors for the time being
will retire from office by rotation. However, if the number of Directors is not a
multiple of three, then the number nearest to but not less than one third shall be
the number of retiring Directors. The Directors who shall retire in each year will
be those who have been longest in the office since their last re-election or
appointment but as between persons who become or were last re-elected Directors
on the same day those to retire will (unless they otherwise agree among
themselves) be determined by lot.
No person, other than a retiring Director, shall, unless recommended by the
Board for election, be eligible for election to the office of Director at any general
meeting, unless notice in writing of the intention to propose that person for
election as a Director and notice in writing by that person of his willingness to be
elected shall have been lodged at the head office or at the registration office. The
period for lodgment of such notices will commence no earlier than the day after
the despatch of the notice of the meeting appointed for such election and end no
later than 7 days prior to the date of such meeting and the minimum length of the
period during which such notices to the Company may be given must be at least 7
days.
A Director is not required to hold any shares in the Company by way of
qualification nor is there any specified upper or lower age limit for Directors
either for accession to the Board or retirement therefrom.
A Director may be removed by an ordinary resolution of the Company
before the expiration of his term of office (but without prejudice to any claim
which such Director may have for damages for any breach of any contract
between him and the Company) and the Company may by ordinary resolution
appoint another in his place. Any Director so appointed shall be subject to
retirement by rotation provisions in the articles of association. The number of
Directors shall not be less than two.
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 at
the registered office or head office of the Company for the time being
or tendered at a meeting of the Board;
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APPENDIX IV

(bb) if he dies or becomes of unsound mind as determined pursuant to an

order made by any competent court or official on the grounds that he is
or may be suffering from mental disorder or is otherwise incapable of
managing his affairs and the Board resolves that his office be vacated;
(cc) if, without special leave, he is absent from meetings of the Board for
six (6) consecutive months, and the Board resolves that his office is
vacated;
(dd) if he becomes bankrupt or has a receiving order made against him or
suspends 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 is
removed from office pursuant to the Articles;
(gg) if he has been validly required by the stock exchange of the Relevant
Territory (as defined in the Articles) to cease to be a Director and the
relevant time period for application for review of or appeal against such
requirement has lapsed and no application for review or appeal has
been filed or is underway against such requirement; or
(hh) if he is removed from office by notice in writing served upon him
signed by not less than three-fourths in number (or, if that is not a
round 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 be
managing director, joint managing director, or deputy managing director or to
hold any other employment or executive office with the Company for such period
and upon such terms as the Board may determine and the Board may revoke or
terminate any of such appointments. The Board may also delegate any of its
powers 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 delegation
or revoke the appointment of and discharge any such committees either wholly or
in part, and either as to persons or purposes, but every committee so formed shall,
in the exercise of the powers so delegated, conform to any regulations that may
from time to time be imposed upon it by the Board.
(viii) Borrowing powers
Pursuant to the Articles, the Board may exercise all the powers of the
Company to raise or borrow money, to mortgage or charge all or any part of the
undertaking, property and uncalled capital of the Company and, subject to the
Companies Law, to issue debentures, debenture stock, bonds and other securities
of the Company, whether outright or as collateral security for any debt, liability or
IV-8
APPENDIX IV

obligation of the Company or of any third party. The provisions summarized

above, in common with the Articles of Association in general, may be varied with
the 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 its
registered office a register of directors, alternate directors and officers which is
not available for inspection by the public. A copy of such register must be filed
with the Registrar of Companies in the Cayman Islands and any change must be
notified to the Registrar within 30 days of any change in such directors or
officers, 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 the
despatch of business and may adjourn and otherwise regulate its meetings as it
thinks fit. Questions arising at any meeting shall be determined by a majority of
votes. In the case of an equality of votes, the chairman of the meeting shall have
a second or casting vote.
(c)
Alterations to the constitutional documents
To the extent that the same is permissible under Cayman Islands law and subject
to the Articles, the Memorandum and Articles of the Company may only be altered or
amended, and the name of the Company may only be changed by the Company by
special 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 is
divided into different classes of shares, all or any of the special rights attached to any
class of shares may (unless otherwise provided for by the terms of issue of the shares
of that class) be varied, modified or abrogated either with the consent in writing of the
holders of not less than three-fourths in nominal value of the issued shares of that class
or with the sanction of a special resolution passed at a separate general meeting of the
holders of the shares of that class. To every such separate general meeting the
provisions of the Articles relating to general meetings shall mutatis mutandis apply, but
so that the necessary quorum (other than at an adjourned meeting) shall be not less
than two persons together holding (or in the case of a shareholder being a corporation,
by its duly authorised representative) or representing by proxy not less than one-third
in nominal value of the issued shares of that class. Every holder of shares of the class
shall be entitled on a poll to one vote for every such share held by him, and any holder
of shares of the class present in person or by proxy may demand a poll.
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APPENDIX IV

Any special rights conferred upon the holders of any shares or class of shares
shall not, unless otherwise expressly provided in the rights attaching to the terms of
issue of such shares, be deemed to be varied by the creation or issue of further shares
ranking pari passu therewith.
(e)
Alteration of capital
The Company may, by an ordinary resolution of its members, (a) increase its
share capital by the creation of new shares of such amount as it thinks expedient; (b)
consolidate or divide all or any of its share capital into shares of larger or smaller
amount than its existing shares; (c) divide its unissued shares into several classes and
attach thereto respectively any preferential, deferred, qualified or special rights,
privileges or conditions; (d) subdivide its shares or any of them into shares of an
amount smaller than that fixed by the Memorandum; and (e) cancel shares which, at
the date of the passing of the resolution, have not been taken or agreed to be taken by
any person and diminish the amount of its share capital by the amount of the shares so
cancelled; (f) make provision for the allotment and issue of shares which do not carry
any voting rights; (g) change the currency of denomination of its share capital; and (h)
reduce its share premium account in any manner authorised and subject to any
conditions prescribed by law.
Reduction of share capital subject to the Companies Law and to confirmation by
the court, a company limited by shares may, if so authorised by its Articles of
Association, 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 be

passed by a majority of not less than three-fourths of the votes cast by such members
as, being entitled so to do, vote in person or by proxy or, in the case of members
which are corporations, by their duly authorised representatives or, where proxies are
allowed, by proxy at a general meeting of which notice specifying the intention to
propose the resolution as a special resolution has been duly given.
Under Companies Law, a copy of any special resolution must be forwarded to the
Registrar of Companies in the Cayman Islands within 15 days of being passed.
An ordinary resolution, by contrast, is defined in the Articles to mean a
resolution passed by a simple majority of the votes of such members of the Company
as, being entitled to do so, vote in person or, in the case of members which are
corporations, by their duly authorised representatives or, where proxies are allowed, by
proxy at a general meeting of which not less than 14 clear days notice has been given
and held in accordance with the Articles. A resolution in writing signed by or on behalf
of all members shall be treated as an ordinary resolution duly passed at a general
meeting of the Company duly convened and held, and where relevant as a special
resolution so passed.
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APPENDIX IV
(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 time
being attached to any class or classes of shares at any general meeting on a poll every
member present in person or by proxy or, in the case of a member being a corporation,
by its duly authorised representative shall have one vote for every share which is fully
paid or credited as fully paid registered in his name in the register of members of the
Company but so that no amount paid up or credited as paid up on a share in advance
of calls or instalments is treated for the foregoing purpose as paid up on the share, on
a show of hands every member who is present in person (or, in the case of a member
being a corporation, by its duly authorised representative) or by proxy shall have one
vote. Notwithstanding anything contained in the Articles, where more than one proxy is
appointed by a member which is a Clearing House (as defined in the Articles) (or its
nominee(s)), each such proxy shall have one vote on a show of hands. On a poll, a
member entitled to more than one vote need not use all his votes or cast all the votes
he does use in the same way.
At any general meeting a resolution put to the vote of the meeting is to be
decided by poll save that the chairman of the meeting may, pursuant to the GEM
Listing Rules, allow a resolution to be voted on by a show of hands. Where a show of
hands is allowed, before or on the declaration of the result of the show of hands, a poll
may be demanded by:
(i)
at least two members present in person or, in the case of a member being a
corporation, by its duly authorised representative or by proxy for the time
being entitled to vote at the meeting; or
(ii) any member or members present in person or, in the case of a member being
a corporation, by its duly authorised representative or by proxy and
representing not less than one-tenth of the total voting rights of all the
members having the right to vote at the meeting; or
(iii) a member or members present in person or, in the case of a member being a
corporation, by its duly authorised representative or by proxy and holding
shares in the Company conferring a right to vote at the meeting being shares
on which an aggregate sum has been paid equal to not less than one-tenth of
the total sum paid up on all the shares conferring that right.
Should a Clearing House or its nominee(s), be a member of the Company, such
person or persons may be authorised as it thinks fit to act as its representative(s) at any
meeting of the Company or at any meeting of any class of members of the Company
provided that, if more than one person is so authorised, the authorisation shall specify
the number and class of shares in respect of which each such person is so authorised.
A person authorised in accordance with this provision shall be deemed to have been
duly authorised without further evidence of the facts and be entitled to exercise the
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APPENDIX IV

same rights and powers on behalf of the Clearing House or its nominee(s), as if such
person were an individual member including the right to vote individually on a show of
hands.
Where the Company has knowledge that any member is, under the GEM Listing
Rules, required to abstain from voting on any particular resolution of the Company or
restricted to voting only for or only against any particular resolution of the Company,
any votes cast by or on behalf of such member in contravention of such requirement or
restriction shall not be counted.
(h)
Annual general meetings
The Company must hold an annual general meeting each year other than the year
of the Companys adoption of the Articles. Such meeting must be held not more than
15 months after the holding of the last preceding annual general meeting, or such
longer period as may be authorised by the Stock Exchange at such time 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 money
received and expended by the Company, and the matters in respect of which such
receipt and expenditure take place, and of the assets and liabilities of the Company and
of all other matters required by the Companies Law necessary to give a true and fair
view of the state of the Companys affairs and to show and explain its transactions.
The books of accounts of the Company shall be kept at the head office of the
Company or at such other place or places as the Board decides and shall always be
open to inspection by any Director. No member (other than a Director) shall have any
right to inspect any account or book or document of the Company except as conferred
by the Companies Law or ordered by a court of competent jurisdiction or authorised by
the Board or the Company in general meeting.
The Board shall from time to time cause to be prepared and laid before the
Company at its annual general meeting balance sheets and profit and loss accounts
(including every document required by law to be annexed thereto), together with a
copy of the Directors report and a copy of the auditors report not less than 21 days
before the date of the annual general meeting. Copies of these documents shall be sent
to every person entitled to receive notices of general meetings of the Company under
the provisions of the Articles together with the notice of annual general meeting, not
less than 21 days before the date of the meeting.
Subject to the rules of the stock exchange of the Relevant Territory (as defined in
the Articles), the Company may send summarized financial statements to shareholders
who 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 financial
statements instead of the full financial statements. The summarized financial statements
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APPENDIX IV

must be accompanied by any other documents as may be required under the rules of
the stock exchange of the Relevant Territory (as defined in the Articles), and must be
sent to the shareholders not less than 21 days before the general meeting to those
shareholders that have consented and elected to receive the summarised financial
statements.
The Company shall appoint auditor(s) to hold office until the conclusion of the
next annual general meeting on such terms and with such duties as may be agreed with
the Board. The auditors remuneration shall be fixed by the Company in general
meeting or by the Board if authority is so delegated by the members.
The auditors shall audit the financial statements of the Company in accordance
with generally accepted accounting principles of Hong Kong, the International
Accounting Standards or such other standards as may be permitted by the Stock
Exchange.
(j)
Notices of meetings and business to be conducted thereat
An annual general meeting of the Company must be called by at least 21 days

notice in writing, and a general meeting of the Company, other than an annual general
meeting, shall be called by at least 14 days notice in writing. The notice shall be
exclusive of the day on which it is served or deemed to be served and of the day for
which it is given, and must specify the time, place and agenda of the meeting, and
particulars of the resolution(s) to be considered at that meeting, and, in the case of
special business, the general nature of that business.
Except where otherwise expressly stated, any notice or document (including a
share certificate) to be given or issued under the Articles shall be in writing, and may
be served by the Company on any member either personally or by sending it through
the post in a prepaid envelope or wrapper addressed to such member at his registered
address as appearing in the Companys register of members or by leaving it at such
registered address as aforesaid or (in the case of a notice) by advertisement in the
newspapers. Any member whose registered address is outside Hong Kong may notify
the Company in writing of an address in Hong Kong which for the purpose of service
of notice shall be deemed to be his registered address. Where the registered address of
the member is outside Hong Kong, notice, if given through the post, shall be sent by
prepaid airmail letter where available. Subject to the Companies Law and the GEM
Listing Rules, a notice or document may be served or delivered by the Company to any
member by electronic means to such address as may from time to time be authorised
by the member concerned or by publishing it on a website and notifying the member
concerned that it has been so published.
IV-13
APPENDIX IV

Although a meeting of the Company may be called by shorter notice than as

specified above, such meeting may be deemed to have been duly called if it is so
agreed:
(i)
in the case of a meeting called as an annual general meeting, by all members

of the Company entitled to attend and vote thereat; and
(ii) in the case of any other meeting, by a majority in number of the members
having a right to attend and vote at the meeting, being a majority together
holding not less than 95% of the total voting rights at the meeting of all the
members of the Company.
All business transacted at an extraordinary general meeting shall be deemed
special business and all business shall also be deemed special business where
it is transacted at an annual general meeting with the exception of the
following, which shall be deemed ordinary business:
(aa) the declaration and sanctioning of dividends;
(bb) the consideration and adoption of the accounts and balance sheet and
the reports of the directors and the auditors;
(cc) the election of Directors in place of those retiring;
(dd) the appointment of auditors;
(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,
grant options over, or otherwise dispose of the unissued shares of the
Company representing not more than 20% in nominal value of its
existing issued share capital (or such other percentage as may from
time to time be specified in the rules of the Stock Exchange) and the
number of any securities repurchased by the Company since the
granting of such mandate; and
(gg) the granting of any mandate or authority to the Board to repurchase
securities in the Company.
(k)
Transfer of shares
Subject to the Companies Law, all transfers of shares shall be effected by an

instrument of transfer in the usual or common form or in such other form as the Board
may approve provided always that it shall be in such form prescribed by the Stock
Exchange and may be under hand or, if the transferor or transferee is a Clearing House
or its nominee(s), under hand or by machine imprinted signature or by such other
manner of execution as the Board may approve from time to time.
IV-14
APPENDIX IV

Execution of the instrument of transfer shall be by or on behalf of the transferor

and the transferee provided that the Board may dispense with the execution of the
instrument of transfer by the transferor or transferee or accept mechanically executed
transfers in any case in which it in its discretion thinks fit to do so, and the transferor
shall be deemed to remain the holder of the share until the name of the transferee is
entered in the register of members of the Company in respect thereof.
The Board may, in its absolute discretion, at any time and from time to time
remove any share on the principal register to any branch register or any share on any
branch register to the principal register or any other branch register.
Unless the Board otherwise agrees, no shares on the principal register shall be
removed to any branch register nor shall shares on any branch register be removed to
the principal register or any other branch register. All removals and other documents of
title shall be lodged for registration and registered, in the case of shares on any branch
register, at the relevant registration office and, in the case of shares on the principal
register, at the place at which the principal register is located.
The Board may, in its absolute discretion, decline to register a transfer of any
share (not being a fully paid up share) to a person of whom it does not approve or any
share issued under any share option scheme upon which a restriction on transfer
imposed thereby still subsists, and it may also refuse to register any transfer of any
share to more than four joint holders or any transfer of any share (not being a fully
paid up share) on which the Company has a lien.
The Board may decline to recognize any instrument of transfer unless a fee of
such maximum sum as the Stock Exchange may determine to be payable or such lesser
sum as the Board may from time to time require is paid to the Company in respect
thereof, the instrument of transfer is properly stamped (if applicable), is in respect of
only one class of share and is lodged at the relevant registration office or the place at
which 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 the
transferor to make the transfer (and if the instrument of transfer is executed by some
other person on his behalf, the authority of that person so to do).
The register of members may, subject to the GEM Listing Rules (as defined in the
Articles), be closed at such time or for such period not exceeding in the whole 30 days
in each year as the Board may determine.
Fully paid shares shall be free from any restriction with respect to the right of the
holder thereof to transfer such shares (except when permitted by the Stock Exchange)
and shall also be free from all liens.
IV-15
APPENDIX IV
(l)

Power of the Company to purchase its own shares
The Company is empowered by the Companies Law and the Articles to purchase
its own shares subject to certain restrictions and the Board may only exercise this
power on behalf of the Company subject to any applicable requirement imposed from
time to time by the Articles, code, rules or regulations issued from time to time by the
Stock Exchange and/or the Securities and Futures Commission of Hong Kong.
Where the Company purchases for redemption a redeemable Share, purchases not
made through the market or by tender shall be limited to a maximum price, and if
purchases 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 the
Company by a subsidiary.
(n)
Dividends and other methods of distribution
The Company in general meeting may declare dividends in any currency to be

paid to the members but no dividend shall be declared in excess of the amount
recommended by the Board.
Except in so far as the rights attaching to, or the terms of issue of, any share may
otherwise provide:
(i)
all dividends shall be declared and paid according to the amounts paid up on
the shares in respect whereof the dividend is paid, although no amount paid
up on a share in advance of calls shall for this purpose be treated as paid up
on the share; and
(ii) all dividends shall be apportioned and paid pro rata in accordance with the
amount paid up on the shares during any portion or portions of the period in
respect of which the dividend is paid. The Board may deduct from any
dividend or other monies payable to any member all sums of money (if any)
presently payable by him to the Company on account of calls, instalments or
otherwise.
Where the Board or the Company in general meeting has resolved that a
dividend should be paid or declared on the share capital of the Company, the
Board may resolve:
(aa) that such dividend be satisfied wholly or in part in the form of an
allotment of shares credited as fully paid up, provided that the members
entitled thereto will be entitled to elect to receive such dividend (or
part thereof) in cash in lieu of such allotment; or
IV-16
APPENDIX IV

(bb) that the members entitled to such dividend will be entitled to elect to
receive an allotment of shares credited as fully paid up in lieu of the
whole or such part of the dividend as the Board may think fit.
Upon the recommendation of the Board, the Company may by ordinary resolution
in respect of any one particular dividend of the Company determine that it may be
satisfied wholly in the form of an allotment of shares credited as fully paid up without
offering any right to members to elect to receive such dividend in cash in lieu of such
allotment.
Any dividend, bonus or other sum payable in cash to the holder of shares may be
paid by cheque or warrant sent through the post addressed to the holder at his
registered address, but in the case of joint holders, shall be addressed to the holder
whose name stands first in the register of members of the Company in respect of the
shares at his address as appearing in the register, or addressed to such person and at
such address as the holder or joint holders may in writing so direct. Every such cheque
or warrant shall be made payable to the order of the person to whom it is sent and
shall be sent at the holders or joint holders risk and payment of the cheque or warrant
by the bank on which it is drawn shall constitute a good discharge to the Company.
Any one of two or more joint holders may give effectual receipts for any dividends or
other monies payable or property distributable in respect of the shares held by such
joint holders.
Whenever the Board or the Company in general meeting has resolved that a
dividend be paid or declared, the Board may further resolve that such dividend be
satisfied wholly or in part by the distribution of specific assets of any kind.
The Board may, if it thinks fit, receive from any member willing to advance the
same, and either in money or moneys worth, all or any part of the money uncalled and
unpaid or instalments payable upon any shares held by him, and in respect of all or
any of the monies so advanced may pay interest at such rate (if any) not exceeding 20
% per annum, as the Board may decide, but a payment in advance of a call shall not
entitle the member to receive any dividend or to exercise any other rights or privileges
as a member in respect of the share or the due portion of the shares upon which
payment has been advanced by such member before it is called up.
All dividends, bonuses or other distributions unclaimed for one year after having
been declared may be invested or otherwise made use of by the Board for the benefit
of the Company until claimed and the Company shall not be constituted a trustee in
respect thereof. All dividends, bonuses or other distributions unclaimed for six years
after having been declared may be forfeited by the Board and, upon such forfeiture,
shall revert to the Company.
No dividend or other monies payable by the Company on or in respect of any
share shall bear interest against the Company.
IV-17
APPENDIX IV

The Company may exercise the power to cease sending cheques for dividend
entitlements or dividend warrants by post if such cheques or warrants remain uncashed
on two consecutive occasions or after the first occasion on which such a cheque or
warrant is returned undelivered.
(o)
Proxies
Any member of the Company entitled to attend and vote at a meeting of the
Company is entitled to appoint another person as his proxy to attend and vote instead
of him. A member who is the holder of two or more shares may appoint more than one
proxy to represent him and vote on his behalf at a general meeting of the Company or
at a class meeting. A proxy need not be a member of the Company and shall be
entitled to exercise the same powers on behalf of a member who is an individual and
for whom he acts as proxy as such member could exercise. In addition, a proxy shall
be entitled to exercise the same powers on behalf of a member which is a corporation
and for which he acts as proxy as such member could exercise if it were an individual
member. On a poll or on a show of hands, votes may be given either personally (or, in
the case of a member being a corporation, by its duly authorised representative) or by
proxy.
The instrument appointing a proxy shall be in writing under the hand of the
appointor or of his attorney duly authorised in writing, or if the appointor is a
corporation, either under seal or under the hand of an officer or attorney duly
authorised. 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 it
shall not preclude the use of the two-way form. Any form issued to a member for use
by him for appointing a proxy to attend and vote at an extraordinary general meeting
or at an annual general meeting at which any business is to be transacted shall be such
as to enable the member, according to his intentions, to instruct the proxy to vote in
favour of or against (or, in default of instructions, to exercise his discretion in respect
of) each resolution dealing with any such business.
(p)
Calls on shares and forfeiture of shares
The Board may from time to time make such calls as it may think fit upon the
members in respect of any monies unpaid on the shares held by them respectively
(whether on account of the nominal value of the shares or by way of premium) and not
by the conditions of allotment thereof made payable at fixed times. A call may be made
payable either in one sum or by instalments. If the sum payable in respect of any call
or instalment is not paid on or before the day appointed for payment thereof, the
person or persons from whom the sum is due shall pay interest on the same at such
rate not exceeding 20% per annum as the Board shall fix from the day appointed for
the payment thereof to the time of actual payment, but the Board may waive payment
of such interest wholly or in part. The Board may, if it thinks fit, receive from any
member willing to advance the same, either in money or moneys worth, all or any part
IV-18
APPENDIX IV

of the money uncalled and unpaid or instalments payable upon any shares held by him,
and in respect of all or any of the monies so advanced the Company may pay interest
at such rate (if any) not exceeding 20% per annum as the Board may decide.
If a member fails to pay any call or instalment of a call on the day appointed for
payment thereof, the Board may, at any time thereafter during such time as any part of
the call or instalment remains unpaid, serve not less than 14 days notice on him
requiring payment of so much of the call or instalment as is unpaid, together with any
interest which may have accrued and which may still accrue up to the date of actual
payment. The notice will name a further day (not earlier than the expiration of 14 days
from the date of the notice) on or before which the payment required by the notice is
to be made, and it shall also name the place where payment is to be made. The notice
shall also state that, in the event of non-payment at or before the time appointed, the
shares in respect of which the call was made will be liable to be forfeited.
If the requirements of any such notice are not complied with, any share in respect
of which the notice has been given may at any time thereafter, before the payment
required by the notice has been made, be forfeited by a resolution of the Board to that
effect. Such forfeiture will include all dividends and bonuses declared in respect of the
forfeited share and not actually paid before the forfeiture.
A person whose shares have been forfeited shall cease to be a member in respect
of the forfeited shares but shall, nevertheless, remain liable to pay to the Company all
monies which, at the date of forfeiture, were payable by him to the Company in respect
of the shares together with (if the Board shall in its discretion so require) interest
thereon from the date of forfeiture until payment at such rate not exceeding 20% per
annum as the Board may prescribe.
(q)
Inspection of corporate records
Members of the Company have no general right under the Companies Law to
inspect or obtain copies of the register of members or corporate records of the
Company. However, the members of the Company will have such rights as may be set
forth in the Articles. The Articles provide that for so long as any part of the share
capital of the Company is listed on the Stock Exchange, any member may inspect any
register of members of the Company maintained in Hong Kong (except when the
register of member is closed) without charge and require the provision to him of copies
or extracts thereof in all respects as if the Company were incorporated under and were
subject to the Hong Kong Companies Ordinance.
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.
IV-19
APPENDIX IV
(r)

Quorum for meetings and separate class meetings
No business shall be transacted at any general meeting unless a quorum is present

when the meeting proceeds to business, and continues to be present until the
conclusion of the meeting.
The quorum for a general meeting shall be two members present in person (or in
the case of a member being a corporation, by its duly authorised representative) or by
proxy and entitled to vote. In respect of a separate class meeting (other than an
adjourned meeting) convened to sanction the modification of class rights the necessary
quorum shall be two persons holding or representing by proxy not less than one-third
in nominal value of the issued shares of that class.
(s)
Rights of minorities in relation to fraud or oppression
There are no provisions in the Articles concerning the rights of minority members
in relation to fraud or oppression. However, certain remedies may be available to
members 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 up

voluntarily shall be a special resolution.
Subject to any special rights, privileges or restrictions as to the distribution of
available surplus assets on liquidation for the time being attached to any class or
classes of shares:
(i)
if the Company shall be wound up and the assets available for distribution
amongst the members of the Company shall be more than sufficient to repay
the whole of the capital paid up at the commencement of the winding up,
then the excess shall be distributed pari passu amongst such members in
proportion to the amount paid up on the shares held by them respectively;
and
(ii) if the Company shall be wound up and the assets available for distribution
amongst the members as such shall be insufficient to repay the whole of the
paid-up capital, such assets shall be distributed so that, as nearly as may be,
the losses shall be borne by the members in proportion to the capital paid
up, on the shares held by them respectively.
In the event that the Company is wound up (whether the liquidation is voluntary
or compelled by the court) the liquidator may, with the sanction of a special resolution
and any other sanction required by the Companies Law divide among the members in
specie or kind the whole or any part of the assets of the Company whether the assets
shall consist of property of one kind or shall consist of properties of different kinds
IV-20
APPENDIX IV

and the liquidator may, for such purpose, set such value as he deems fair upon any one
or more class or classes of property to be divided as aforesaid and may determine how
such division shall be carried out as between the members or different classes of
members and the members within each class. The liquidator may, with the like
sanction, vest any part of the assets in trustees upon such trusts for the benefit of
members as the liquidator shall think fit, but so that no member shall be compelled to
accept 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 dividend
entitlements or dividend warrants by post if such cheques or warrants remain uncashed
on two consecutive occasions or after the first occasion on which such a cheque or
warrant is returned undelivered.
In accordance with the Articles, the Company is entitled to sell any of the shares
of a member who is untraceable if:
(i)
all cheques or warrants, being not less than three in total number, for any
sum payable in cash to the holder of such shares have remained uncashed for
a period of 12 years;
(ii) upon the expiry of the 12 years and 3 months period (being the 3 months
notice period referred to in sub-paragraph (iii)), the Company has not during
that time received any indication of the existence of the member; and
(iii) the Company has caused an advertisement to be published in accordance
with the rules of the stock exchange of the Relevant Territory (as defined in
the Articles) giving notice of its intention to sell such shares and a period of
three months has elapsed since such advertisement and the stock exchange of
the Relevant Territory (as defined in the Articles) has been notified of such
intention. The net proceeds of any such sale shall belong to the Company
and upon receipt by the Company of such net proceeds, it shall become
indebted to the former member of the Company for an amount equal to such
net proceeds.
(v)
Subscription rights reserve
Pursuant to the Articles, provided that it is not prohibited by and is otherwise in

compliance with the Companies Law, if warrants to subscribe for shares have been
issued by the Company and the Company does any act or engages in any transaction
which would result in the subscription price of such warrants being reduced below the
par value of the shares to be issued on the exercise of such warrants, a subscription
rights reserve shall be established and applied in paying up the difference between the
subscription price and the par value of such shares.
IV-21
APPENDIX IV
3.

CAYMAN ISLANDS COMPANY LAW
The Company was incorporated in the Cayman Islands as an exempted company on 16

October 2015 subject to the Companies Law. Certain provisions of Cayman Islands company
law are set out below but this section does not purport to contain all applicable
qualifications and exceptions or to be a complete review of all matters of the Companies
Law and taxation, which may differ from equivalent provisions in jurisdictions with which
interested parties may be more familiar.
(a)
Company operations
As an exempted company, the Company must conduct its operations mainly

outside the Cayman Islands. Moreover, the Company is required to file an annual
return each year with the Registrar of Companies of the Cayman Islands and pay a fee
which is based on the amount of its authorised share capital.
(b)
Share capital
In accordance with the Companies Law, a Cayman Islands company may issue
ordinary, preference or redeemable shares or any combination thereof. The Companies
Law provides that where a company issues shares at a premium, whether for cash or
otherwise, a sum equal to the aggregate amount or value of the premiums on those
shares shall be transferred to an account, to be called the share premium account. At
the option of a company, these provisions may not apply to premiums on shares of that
company allotted pursuant to any arrangements in consideration of the acquisition or
cancellation of shares in any other company and issued at a premium. The Companies
Law provides that the share premium account may be applied by the company subject
to the provisions, if any, of its memorandum and articles of association, in such manner
as the company may from time to time determine including, but without limitation, the
following:
(i)
paying distributions or dividends to members;
(ii) paying up unissued shares of the company to be issued to members as fully

paid bonus shares;
(iii) any manner provided in section 37 of the Companies 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.
IV-22
APPENDIX IV

Notwithstanding the foregoing, the Companies Law provides that no distribution

or dividend may be paid to members out of the share premium account unless,
immediately following the date on which the distribution or dividend is proposed to be
paid, the company will be able to pay its debts as they fall due in the ordinary course
of business.
It is further provided by the Companies Law that, subject to confirmation by the
court, a company limited by shares or a company limited by guarantee and having a
share capital may, if authorised to do so by its articles of association, by special
resolution reduce its share capital in any way.
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 of
the specified proportions of the holders of the issued shares of that class or the
sanction of a resolution passed at a separate meeting of the holders of those shares is
required.
(c)
Financial assistance to purchase shares of a company or its holding company
There are no statutory prohibitions in the Cayman Islands on the granting of

financial assistance by a company to another person for the purchase of, or subscription
for, its own, its holding companys or a subsidiarys shares. Therefore, a company may
provide financial assistance provided the directors of the company when proposing to
grant 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 on
an arms-length basis.
(d)
Purchase of shares and warrants by a company and its subsidiaries
A company limited by shares or a company limited by guarantee and having a

share capital may, if so authorised by its articles of association, issue shares which are
to be redeemed or are liable to be redeemed at the option of the company or a member
and, for the avoidance of doubt, it shall be lawful for the rights attaching to any shares
to be varied, subject to the provisions of the companys articles of association, so as to
provide that such shares are to be or are liable to be so redeemed. In addition, such a
company may, if authorised to do so by its articles of association, purchase its own
shares, including any redeemable shares. Nonetheless, if the articles of association do
not authorise the manner and terms of purchase, a company cannot purchase any of its
own shares without the manner and terms of purchase first being authorised by an
ordinary resolution of the company. A company may not redeem or purchase its shares
unless they are fully paid. Furthermore, a company may not redeem or purchase any of
its shares if, as a result of the redemption or purchase, there would no longer be any
issued shares of the company other than shares held as treasury shares. In addition, a
payment out of capital by a company for the redemption or purchase of its own shares
is not lawful unless immediately following the date on which the payment is proposed
to be made, the company shall be able to pay its debts as they fall due in the ordinary
course of business.
IV-23
APPENDIX IV

Under Section 37A(1) the Companies Law, shares that have been purchased or
redeemed by a company or surrendered to the company shall not be treated as
cancelled but shall be classified as treasury shares if (a) the memorandum and articles
of association of the company do not prohibit it from holding treasury shares; (b) the
relevant provisions of the memorandum and articles of association (if any) are
complied with; and (c) the company is authorised in accordance with the companys
articles of association or by a resolution of the directors to hold such shares in the
name of the company as treasury shares prior to the purchase, redemption or surrender
of such shares. Shares held by a company pursuant to section 37A(1) of the Companies
Law shall continue to be classified as treasury shares until such shares are either
cancelled or transferred pursuant to the Companies Law.
A Cayman Islands company may be able to purchase its own warrants subject to
and in accordance with the terms and conditions of the relevant warrant instrument or
certificate. Thus there is no requirement under Cayman Islands law that a companys
memorandum or articles of association contain a specific provision enabling such
purchases. The directors of a company may under the general power contained in its
memorandum of association be able to buy and sell and deal in personal property of all
kinds.
Under Cayman Islands law, a subsidiary may hold shares in its holding company
and, in certain circumstances, may acquire such shares.
(e)
Dividends and distributions
With the exception of sections 34 and 37A(7) of the Companies Law, there are no
statutory provisions relating to the payment of dividends. Based upon English case law
which is likely to be persuasive in the Cayman Islands, dividends may be paid only out
of profits. In addition, section 34 of the Companies Law permits, subject to a solvency
test and the provisions, if any, of the companys memorandum and articles of
association, the payment of dividends and distributions out of the share premium
account (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, no
dividend may be declared or paid, and no other distribution (whether in cash or
otherwise) of the companys assets (including any distribution of assets to members on
a winding up) may be made to the company, in respect of a treasury share.
(f)
Protection of minorities and shareholders suits
It can be expected that the Cayman Islands courts will ordinarily follow English
case law precedents (particularly the rule in the case of Foss v. Harbottle and the
exceptions thereto) which permit a minority member to commence a representative
action against or derivative actions in the name of the company to challenge:
(i)
an act which is ultra vires the company or illegal;
IV-24
APPENDIX IV

(ii) an act which constitutes a fraud against the minority and the wrongdoers are
themselves in control of the company; and
(iii) an irregularity in the passing of a resolution the passage of which requires a
qualified (or special) majority which has not been obtained.
Where a company (not being a bank) is one which has a share capital divided into
shares, the court may, on the application of members thereof holding not less than
one-fifth of the shares of the company in issue, appoint an inspector to examine the
affairs 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 a
winding up order if the court is of the opinion that it is just and equitable that the
company should be wound up.
In general, claims against a company by its members must be based on the
general laws of contract or tort applicable in the Cayman Islands or be based on
potential violation of their individual rights as members as established by a companys
memorandum and articles of association.
(g)
Disposal of assets
There are no specific restrictions in the Companies Law on the power of directors
to dispose of assets of a company, however the directors have certain duties of care,
diligence and skill and also fiduciary duties to act in good faith, for proper purpose and
in the best interests of the company under English common law (which the Cayman
Islands courts will ordinarily follow).
(h)
Accounting and auditing requirements
Section 59 of the Companies Law provides that a company shall cause proper
records of accounts to be kept with respect to (i) all sums of money received and
expended by the company and the matters with respect to which the receipt and
expenditure takes place; (ii) all sales and purchases of goods by the company and (iii)
the assets and liabilities of the company.
Section 59 of the Companies Law further states that proper books of account shall
not be deemed to be kept if there are not kept such books as are necessary to give a
true and fair view of the state of the companys affairs and to explain its transactions.
If the Company keeps its books of account at any place other than at its
registered office or at any other place within the Cayman Islands, it shall, upon service
of an order or notice by the Tax Information Authority pursuant to the Tax Information
Authority Law (2013 Revision) of the Cayman Islands, make available, in electronic
form or any other medium, at its registered office copies of its books of account, or
any part or parts thereof, as are specified in such order or notice.
IV-25
APPENDIX IV
(i)

Exchange control
There are no exchange control regulations or currency restrictions in effect in the

Cayman Islands.
(j)
Taxation
Pursuant to section 6 of the Tax Concessions Law (2011 Revision) of the Cayman
Islands, 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 be
levied on profits or income or gains or appreciation shall apply to the
Company or its operations; and
(ii) in addition, that no tax be levied on profits, income gains or appreciations or

which is in the nature of estate duty or inheritance tax shall be payable by
the Company:
(aa) on or in respect of the shares, debentures or other obligations of the
Company; or
(bb) by way of withholding in whole or in part of any relevant payment as
defined in section 6(3) of the Tax Concessions Law (2011 Revision).
The undertaking for the Company is for a period of twenty years from
3 November 2015.
The Cayman Islands currently levy no taxes on individuals or corporations
based upon profits, income, gains or appreciations and there is no taxation in
the nature of inheritance tax or estate duty. There are no other taxes likely to
be material to the Company levied by the Government of the Cayman
Islands save certain stamp duties which 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 of

Cayman Islands companies save for those which hold interests in land in the Cayman
Islands.
(l)
Loans to directors
The Companies Law contains no express provision prohibiting the making of

loans by a company to any of its directors. However, the Articles provide for the
prohibition of such loans under specific circumstances.
IV-26
APPENDIX IV

(m) Inspection of corporate records

The members of the company have no general right under the Companies Law to
inspect or obtain copies of the register of members or corporate records of the
company. They will, however, have such rights as may be set out in the companys
articles of association.
(n)
Register of members
A Cayman Islands exempted company may maintain its principal register of

members and any branch registers in any country or territory, whether within or outside
the Cayman Islands, as the company may determine from time to time. The Companies
Law contains no requirement for an exempted company to make any returns of
members to the Registrar of Companies in the Cayman Islands. The names and
addresses of the members are, accordingly, not a matter of public record and are not
available for public inspection. However, an exempted company shall make available at
its registered office, in electronic form or any other medium, such register of members,
including any branch register of member, as may be required of it upon service of an
order or notice by the Tax Information Authority pursuant to the Tax Information
Authority Law (2013 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 specified
circumstances including where, in the opinion of the court, it is just and equitable that
such company be so wound up.
A voluntary winding up of a company occurs where the Company so resolves by
special resolution that it be wound up voluntarily, or, where the company in general
meeting resolves that it be wound up voluntarily because it is unable to pay its debt as
they fall due; or, in the case of a limited duration company, when the period fixed for
the duration of the company by its memorandum or articles expires, or where the event
occurs on the occurrence of which the memorandum or articles provides that the
company is to be wound up. In the case of a voluntary winding up, such company is
obliged to cease to carry on its business from the commencement of its winding up
except so far as it may be beneficial for its winding up. Upon appointment of a
voluntary liquidator, all the powers of the directors cease, except so far as the company
in general meeting or the liquidator sanctions their continuance.
In the case of a members voluntary winding up of a company, one or more
liquidators shall be appointed for the purpose of winding up the affairs of the company
and distributing its assets.
IV-27
APPENDIX IV

As soon as the affairs of a company are fully wound up, the liquidator must make
a report and an account of the winding up, showing how the winding up has been
conducted and the property of the company has been disposed of, and thereupon call a
general meeting of the company for the purposes of laying before it the account and
giving an explanation thereof.
When a resolution has been passed by a company to wind up voluntarily, the
liquidator or any contributory or creditor may apply to the court for an order for the
continuation of the winding up under the supervision of the court, on the grounds that
(i) the company is or is likely to become insolvent; or (ii) the supervision of the court
will facilitate a more effective, economic or expeditious liquidation of the company in
the interests of the contributories and creditors. A supervision order shall take effect for
all purposes as if it was an order that the company be wound up by the court except
that a commenced voluntary winding up and the prior actions of the voluntary
liquidator shall be valid and binding upon the company and its official liquidator.
For the purpose of conducting the proceedings in winding up a company and
assisting the court, there may be appointed one or more persons to be called an official
liquidator or official liquidators; and the court may appoint to such office such person
or persons, either provisionally or otherwise, as it thinks fit, and if more than one
persons are appointed to such office, the court shall declare whether any act required or
authorised to be done by the official liquidator is to be done by all or any one or more
of such persons. The court may also determine whether any and what security is to be
given by an official liquidator on his appointment; if no official liquidator is appointed,
or during any vacancy in such office, all the property of the company shall be in the
custody of the court.
(p)
Reconstructions
Reconstructions and amalgamations are governed by specific statutory provisions

under the Companies Law whereby such arrangements may be approved by a majority
in number representing 75% in value of members or creditors, depending on the
circumstances, as are present at a meeting called for such purpose and thereafter
sanctioned by the courts. Whilst a dissenting member would have the right to express
to the court his view that the transaction for which approval is being sought would not
provide the members with a fair value for their shares, nonetheless the courts are
unlikely to disapprove the transaction on that ground alone in the absence of evidence
of fraud or bad faith on behalf of management and if the transaction were approved
and consummated the dissenting member would have no rights comparable to the
appraisal rights (i.e. the right to receive payment in cash for the judicially determined
value of their shares) ordinarily available, for example, to dissenting members of a
United States corporation.
IV-28
APPENDIX IV
(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 which
are the subject of the offer accept, the offeror may at any time within two months after
the expiration of the said four months, by notice require the dissenting members to
transfer their shares on the terms of the offer. A dissenting member may apply to the
court 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 its
discretion, which it will be unlikely to do unless there is evidence of fraud or bad faith
or collusion as between the offeror and the holders of the shares who have accepted the
offer as a means of unfairly forcing out minority members.
(r)
Indemnification
Cayman Islands law does not limit the extent to which a companys articles of
association may provide for indemnification of officers and directors, save to the extent
any such provision may be held by the court to be contrary to public policy, for
example, where a provision purports to provide indemnification against the
consequences of committing a crime.
4.
GENERAL
Appleby, the Companys legal adviser on Cayman Islands law, has sent to the Company
a 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 as
referred to in the paragraph headed Documents Available for Inspection in Appendix VI.
Any person wishing to have a detailed summary of Cayman Islands company law or advice
on the differences between it and the laws of any jurisdiction with which he is more familiar
is recommended to seek independent legal advice.
IV-29
APPENDIX V
A.
STATUTORY AND GENERAL INFORMATION
FURTHER INFORMATION ABOUT THE COMPANY

1.
Incorporation
Our Company was incorporated in the Cayman Islands under the Companies Law
as an exempted company with limited liability on 16 October 2015. Our Company was
registered as a non-Hong Kong company in Hong Kong under Part 16 of the
Companies Ordinance on 23 November 2015 and establishes a principal place of
business in Hong Kong at Unit 1505, 15/F, Delta House, 3 On Yiu Street, Shatin, New
Territories, Hong Kong. Mr. Woo Yuen Fai and Mr. CK Wong have been appointed as
the authorised representatives of our Company for the acceptance of service of process
and notices on behalf of our Company in Hong Kong.
As our Company is incorporated in the Cayman Islands, it is subject to the
Cayman Islands law and to its constitution, which comprises the Memorandum and the
Articles. A summary of various provisions of its constitution and relevant aspects of
the Companies Law is set out in Appendix IV Summary of the constitution of our
Company and Cayman Islands Company Law to this prospectus.
2.
Changes in share capital of our Company

(a)
As at the date of incorporation, our Company had an authorised share capital

of HK$380,000 divided into 38,000,000 Shares of HK$0.01 each. 1 Share
was allotted and issued nil-paid to the subscriber on 16 October 2015, and
was subsequently transferred to Blooming Union on the same day.
(b)
Pursuant to the Reorganisation and as consideration for the acquisition by

our Company of the entire issued share capital of Super Pioneer from
Blooming Union on 22 February 2016, (i) the 1 nil paid Share held by
Blooming Union was credited as fully paid, and (ii) 9,999 Shares, all
credited as fully paid, were allotted and issued to Blooming Union.
(c)
On 24 March 2016, our sole Shareholder resolved to increase the authorised

share capital of our Company from HK$380,000 to HK$20,000,000 by the
creation of an additional of 1,962,000,000 Shares, each ranking pari passu
with the Shares then in issue in all respects.
(d)
Immediately following completion of the Capitalisation Issue and the

Placing, and taking no account of any Share to be issued upon exercise of
any options which may be granted under the Share Option Scheme,
1,248,000,000 Shares will be issued fully paid or credited as fully paid, and
752,000,000 Shares will remain unissued.
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APPENDIX V
3.
(e)
Other than pursuant to the general mandate to issue Shares referred to in the
paragraph headed A. Further information about the Company 3. Written
resolutions of our sole Shareholder passed on 24 March 2016 in this
appendix and pursuant to the Share Option Scheme, our Company does not
have any present intention to issue any of the authorised but unissued share
capital of our Company and, without prior approval of our Shareholders in
general meeting, no issue of Shares will be made which would effectively
alter the control of our Company.
(f)
Save as disclosed in this prospectus, there has been no alteration in the

Companys share capital since its incorporation.
Written resolutions of our sole Shareholder passed on 24 March 2016
On 24 March 2016, resolutions in writing were passed by our sole Shareholder

pursuant to which, among other things:
(a)
our Company approved and adopted the Memorandum and the Articles;
(b)
conditional on the Listing Division granting the listing of, and permission to
deal in, the Shares in issue and to be issued as mentioned in this prospectus
(including any Shares to be issued upon exercise of any options which may
be granted under the Share Option Scheme) and on the obligations of the
Underwriters under the Underwriting Agreement becoming unconditional and
the Underwriting Agreement not being terminated in accordance with its
terms or otherwise, in each case on or before the date falling 30 days after
the date of the issue of this prospectus:
(i)
the Placing was approved and our Directors were authorised to allot
and issue the Placing Shares pursuant to the Placing to rank pari passu
with the then existing Shares in all respects;
(ii) the rules of the Share Option Scheme, the principal terms of which are
set out in the paragraph headed D. Share Option Scheme below in
this appendix, were approved and adopted and our Directors were
authorised, at their absolute discretion but subject to the terms and
conditions of the Share Option Scheme, to grant options to subscribe
for Shares thereunder and to allot, issue and deal with the Shares
pursuant to the exercise of subscription rights attaching to any options
which may be granted under the Share Option Scheme and to take all
such actions as they consider necessary or desirable to implement the
Share Option Scheme;
(iii) conditional further on the share premium account of our Company
being credited as a result of the Placing, the Capitalisation Issue was
approved, and our Directors were authorised to capitalise an amount of
HK$10,399,900 standing to the credit of the share premium account of
our Company and to appropriate such amount as to capital to pay up in
V-2
APPENDIX V

full at par 1,039,990,000 Shares for allotment and issue to Blooming
Union, each ranking pari passu in all respects with the then existing
issued Shares, and our Directors were authorised to give effect to such
capitalisation and distributions;
(c)
a general unconditional mandate was given to our Directors to exercise all

powers of our Company to allot, issue and deal with, otherwise than by way
of rights issue or an issue of Shares pursuant to the exercise of any options
which may be granted under the Share Option Scheme or any other share
option scheme of our Company or any Shares allotted and issued in lieu of
the whole or part of a dividend on Shares or similar arrangement in
accordance with the Memorandum and the Articles or pursuant to a specific
authority granted by our Shareholders in general meeting or pursuant to the
Placing, Shares or securities convertible into Shares or options, warrants or
similar rights to subscribe for shares or securities convertible into Shares or
options, warrants or similar rights to subscribe for Shares or such convertible
securities, and to make or grant offers, agreements or options which might
require the exercise of such power, with an aggregate nominal value not
exceeding 20% of the aggregate nominal value of the share capital of our
Company in issue immediately following completion of the Capitalisation
Issue and the Placing (excluding any Shares to be issued upon exercise of
any options which may be granted under the Share Option Scheme), such
mandate to remain in effect until the earliest of:
(i)
(ii) the expiration of the period within which the next annual general
meeting of our Company is required by the Memorandum and the
Articles or the Companies Law 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
resolution of our Shareholders in general meeting;
(d)
a general unconditional mandate was given to our Directors authorising them

to exercise all powers of our Company to repurchase on GEM or on any
other stock exchange on which the securities of our Company may be listed
and which is recognised by the SFC and the Stock Exchange for this purpose
such number of Shares as will represent up to 10% of the aggregate nominal
value of the share capital of our Company in issue immediately following
completion of the Capitalisation Issue and the Placing (excluding any Shares
to be issued upon exercise of any options which may be granted under the
Share Option Scheme), such mandate to remain in effect until the earliest of:
(i)
V-3
APPENDIX V
(ii) the expiration of the period within which the next annual general
meeting of our Company is required by the Memorandum and the
Articles or the Companies Law 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
resolution of our Shareholders in general meeting; and
(e)
4.
the general unconditional mandate mentioned in sub-paragraph (c) above was

extended by the addition to the aggregate nominal value of the share capital
of our Company which may be allotted or agreed to be allotted by our
Directors pursuant to such general mandate of an amount representing the
aggregate nominal value of the share capital of our Company repurchased by
our Company pursuant to the mandate to repurchase Shares referred to in
sub-paragraph (d) above, provided that such extended amount shall not
exceed 10% of the aggregate nominal value of the share capital of our
Company in issue immediately following completion of the Capitalisation
Issue and the Placing (excluding any Shares to be issued upon exercise of
any options which may be granted under the Share Option Scheme).
Corporate reorganisation
In preparing for the Listing, the companies comprising our Group underwent the
Reorganisation to rationalise the corporate structure of our Group and our Company
became the holding company of our Group. The Reorganisation involved the following
major steps:
(a)
On 1 July 2015, Blooming Union was incorporated in the BVI and is

authorised to issue a maximum of 50,000 shares of US$1.00 each. One share
and one share of Blooming Union (representing 50% and 50% of the entire
issued share capital of Blooming Union, respectively, at the relevant time)
were allotted and issued to Mr. CK Wong and Mr. WW Wong, respectively,
on 31 July 2015.
(b)
On 1 July 2015, Super Pioneer was incorporated in the BVI and is

authorised to issue a maximum of 50,000 shares of US$1.00 each. One share
of Super Pioneer (representing the entire issued share capital of Super
Pioneer at the relevant time) was allotted and issued to Blooming Union on
31 July 2015.
(c)
On 16 October 2015, our Company was incorporated in the Cayman Islands

with an authorised share capital of HK$380,000 divided into 38,000,000
Shares of HK$0.01 each. 1 nil-paid Share was allotted and issued to the
subscriber, and was subsequently transferred to Blooming Union on the same
day.
V-4
APPENDIX V
(d)
On 29 October 2015, Super Pioneer acquired 1,900,000 shares and 1,900,000

shares of Luen Hing (which, in aggregate, represents the entire issued shares
of Luen Hing at the relevant time) from Mr. CK Wong and Mr. WW Wong,
respectively, and in consideration, Super Pioneer issued and allotted 2 shares
in Super Pioneer, credited as fully paid, to Blooming Union. After the
aforesaid share transfer, Super Pioneer held 3,800,000 shares of Luen Hing
(representing the entire issued shares of Luen Hing at the relevant time).
(e)
On 29 October 2015, Super Pioneer acquired 10,000 shares and 10,000

shares of Hop Fung (which, in aggregate, represents the entire issued shares
of Hop Fung at the relevant time) from Mr. CK Wong and Mr. WW Wong,
respectively, and in consideration, Super Pioneer issued and allotted 2 shares
in Super Pioneer, credited as fully paid, to Blooming Union. After the
aforesaid share transfer, Super Pioneer held 20,000 shares of Hop Fung
(representing the entire issued shares of Hop Fung at the relevant time).
(f)
Pursuant to the sale and purchase agreement dated 22 February 2016 referred
to in item (1) of the paragraph headed B. Further information about the
business 1. Summary of material contracts in this appendix, our Company
agreed to acquire 5 share of Super Pioneer (representing the entire issued
shares of Super Pioneer at the relevant time) from Blooming Union, and in
consideration thereof, (i) the 1 nil-paid Share held by Blooming Union was
credited as fully paid; and (ii) 9,999 Shares were allotted and issued to
Blooming Union, and will be credited as fully paid.
(g)
On 21 March 2016, by way of loans capitalisation, Luen Hing applied

HK$280,000 owed to Mr. CK Wong and HK$5,200,000 owed to Mr. WW
Wong toward the satisfaction of the issue and allotment of 5,480,000 new
shares of Luen Hing at a subscription price of HK$1 each to Super Pioneer
(as directed by Mr. CK Wong and Mr. WW Wong, respectively). After the
aforesaid loans capitalisation and issue and allotment of shares of Luen Hing
remains a wholly-owned subsidiary of Super Pioneer.
(h)
On 21 March 2016, by way of loan capitalisation, Hop Fung applied

HK$4,920,000 owed to Mr. CK Wong toward the satisfaction of the issue
and allotment of 4,920,000 new shares of Hop Fung at a subscription price
of HK$1 each to Super Pioneer (as directed by Mr. CK Wong). After the
aforesaid loan capitalisation and issue and allotment of shares of Hop Fung
remains a wholly-owned subsidiary of Super Pioneer.
Immediately after completion of the share transfer referred to in item (f) above,
our Company then became the holding company of our Group.
5.
Changes in share capital of subsidiaries
The subsidiaries of our Company are listed in the Accountants Report of the
Company, the text of which is set out in Appendix I to this prospectus.
V-5
APPENDIX V
Save as disclosed in the paragraph headed A. Further information about the

Company 4. Corporate reorganisation in this appendix and in the section headed
History and Development in this prospectus, there has been no alteration in the share
capital of any of the subsidiaries of our Company within the two years immediately
preceding the date of this prospectus.
6.
Repurchase of Shares by our Company
This section contains information required by the Stock Exchange to be included

in this prospectus concerning the repurchase of Shares by our Company.
(a)
Provisions of the GEM Listing Rules
The GEM Listing Rules permit companies whose primary listing is on GEM
to repurchase their securities on GEM subject to certain restrictions, a summary of
which is set out below:
(i)
Shareholders approval
The GEM Listing Rules provide that all proposed repurchases of

shares, which must be fully paid up in the case of shares, by a company
with a primary listing on GEM must be approved in advance by an ordinary
resolution of the shareholders, either by way of general mandate or by
specific approval of a particular transaction.
Note: Pursuant to the written resolutions passed by our sole Shareholder on 24 March 2016, a
general unconditional mandate (the Repurchase Mandate) was given to our
Directors authorising them to exercise all powers of our Company to repurchase Shares
on GEM or on any other stock exchange on which the securities of our Company may
be listed and which is recognised by the SFC and the Stock Exchange for this purpose,
such number of Shares as will represent up to 10% of the aggregate nominal value of
the share capital of our Company in issue immediately following completion of the
Capitalisation Issue and the Placing (excluding any Shares to be issued upon exercise
of any options which may be granted under the Share Option Scheme), and the
Repurchase Mandate shall remain in effect until the earliest of the conclusion of the
next annual general meeting of our Company, or the expiration of the period within
which the next annual general meeting of our Company is required by the
Memorandum and the Articles or the Companies Law or any other applicable laws of
the Cayman Islands to be held or the time when the Repurchase Mandate is revoked or
varied by an ordinary resolution of our Shareholders in a general meeting.
(ii) Source of funds

Any repurchase by our Company must be funded out of funds legally
available for the purpose in accordance with the Articles, the applicable laws
of the Cayman Islands and the GEM Listing Rules. Our Company may not
repurchase its own Shares on GEM for a consideration other than cash or for
settlement otherwise than in accordance with the trading rules of the Stock
Exchange from time to time.
V-6
APPENDIX V
Any repurchases by our Company may be made out of profits or out of

the proceeds of a fresh issue of Shares made for the purpose of the
repurchase or, if authorised by the Articles and subject to the Companies
Law, out of capital and, in the case of any premium payable on the
repurchase, out of profits of our Company or out of our Companys share
premium account before or at the time the Shares are repurchased or, if
authorised by the Articles and subject to the Companies Law, out of capital.
(iii) Connected parties
The GEM Listing Rules prohibit our Company from knowingly
repurchasing the Shares on GEM from a core connected person (as defined
in the GEM Listing Rules), which includes a Director, chief executive or
substantial shareholder of our Company or any of its subsidiaries or a close
associate of any of them, and a core connected person shall not knowingly
sell Shares to our Company on GEM.
(b)
Exercise of the Repurchase Mandate
On the basis of 1,248,000,000 Shares in issue immediately after completion

of the Capitalisation Issue and the Placing, our Directors would be authorised
under the Repurchase Mandate to repurchase up to 124,800,000 Shares during the
period in which the Repurchase Mandate remains in force. Any Shares
repurchased pursuant to the Repurchase Mandate must be fully paid-up.
(c)
Reasons for repurchases
Our Directors believe that it is in the best interests of our Company and our
Shareholders for our Directors to have a general authority from Shareholders to
enable our Company to repurchase Shares in the market. Such repurchases may,
depending on market conditions and funding arrangements at the time, lead to an
enhancement of our Companys net asset value and/or earnings per Share and will
only be made when our Directors believe that such repurchases will benefit our
Company and our Shareholders.
(d)
Funding of repurchases
In repurchasing the Shares, our Company may only apply funds legally
available for such purpose in accordance with the Articles, the GEM Listing Rules
and the applicable laws and regulations of the Cayman Islands.
Our Directors do not propose to exercise the Repurchase Mandate to such
extent as would, in the circumstances, have a material adverse effect on the
working capital requirements of our Company or the gearing levels which in the
opinion of our Directors are from time to time appropriate for our Company.
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APPENDIX V
(e)
General
None of our Directors nor, to the best of their knowledge, having made all
reasonable enquiries, any of their close associates (as defined in the GEM Listing
Rules), has any present intention to sell any Shares to our Company or any of its
subsidiaries if the Repurchase Mandate is exercised.
Our Directors have undertaken to the Stock Exchange that, so far as the
same may be applicable, they will exercise the Repurchase Mandate in accordance
with the GEM Listing Rules, the Articles and the applicable law and regulations
from time to in force in the Cayman Islands.
If as a result of a repurchase of Shares pursuant to the Repurchase Mandate,
a Shareholders proportionate interest in the voting rights of our Company
increases, such increase will be treated as an acquisition for the purpose of the
Takeovers Code. In certain circumstances, a Shareholder or a group of
Shareholders acting in concert (as defined in the Takeovers Code) depending on
the level of increase of our Shareholders interest, could obtain or consolidate
control of our Company and may become obliged to make a mandatory offer in
accordance with Rule 26 of the Takeovers Code as a result of any such increase.
Save as disclosed above, our Directors are not aware of any consequences
which may arise under the Takeovers Code as a consequence of any repurchase of
Shares if made immediately after the Listing pursuant to the Repurchase Mandate.
At present, so far as is known to the Directors, no Shareholder may become
obliged to make a mandatory offer in accordance with Rule 26 of the Takeovers
Code in the event that our Directors exercise the power in full to repurchase the
Shares pursuant to the Repurchase Mandate.
Our Directors will not exercise the Repurchase Mandate if the repurchase
would result in the number of Shares which are in the hands of the public falling
below 25% of the total number of Shares in issue (or such other percentage as
may be prescribed as the minimum public shareholding under the GEM Listing
Rules).
No core connected person has notified our Company that he has a present
intention to sell Shares to our Company or any of its subsidiaries, or has
undertaken not to do so, if the Repurchase Mandate is exercised.
V-8
APPENDIX V
B.
FURTHER INFORMATION ABOUT THE BUSINESS

1.
Summary of material contracts
The following contracts (not being contracts entered into in the ordinary course of
business) have been entered into by our Group within the two years preceding the date
of this prospectus and are or may be material in relation to the business of our
Company taken as a whole:
(a)
a sale and purchase agreement dated 18 September 2015 entered into

between Hop Fung as vendor and an independent third party as purchaser,
pursuant to which Hop Fung agreed to dispose of its property located at Flat
C of North Court on the 5th Floor of Tower 5 of Phase 1, Festival City,
No.1 Mei Tin Road, Tai Wai, Sha Tin, New Territories, Hong Kong for an
aggregate consideration of HK$12,700,000;
(b)
a sale and purchase agreement dated 29 October 2015 entered into among
Mr. CK Wong, Mr. WW Wong and Super Pioneer, pursuant to which Super
Pioneer agreed to acquire 1,900,000 shares and 1,900,000 shares of Luen
Hing from Mr. CK Wong and Mr. WW Wong, respectively, and in
consideration thereof, Super Pioneer issued and allotted 2 shares in Super
Pioneer, credited as fully paid, to Blooming Union;
(c)
an instrument of transfer dated 29 October 2015 entered into between Super

Pioneer and Mr. CK Wong for the transfer of 1,900,000 shares of Luen Hing
as referred to item (b) above;
(d)
bought and sold notes dated 29 October 2015 executed by Super Pioneer and
Mr. CK Wong for the transfer of 1,900,000 shares of Luen Hing as referred
to item (b) above;
(e)

Pioneer and Mr. WW Wong for the transfer of 1,900,000 shares of Luen
Hing as referred to item (b) above;
(f)
Mr. WW Wong for the transfer of 1,900,000 shares of Luen Hing as referred
to item (b) above;
(g)
a sale and purchase agreement dated 29 October 2015 entered into among
Mr. CK Wong, Mr. WW Wong and Super Pioneer, pursuant to which Super
Pioneer agreed to acquire 10,000 shares and 10,000 shares of Hop Fung
from Mr. CK Wong and Mr. WW Wong, respectively, and in consideration
thereof, Super Pioneer issued and allotted 2 shares in Super Pioneer, credited
as fully paid, to Blooming Union;
V-9
APPENDIX V
(h)

Pioneer and Mr. CK Wong for the transfer of 10,000 shares of Hop Fung as
referred to item (g) above;
(i)
Mr. CK Wong for the transfer of 10,000 shares of Hop Fung as referred to
item (g) above;
(j)

Pioneer and Mr. WW Wong for the transfer of 10,000 shares of Hop Fung as
referred to item (g) above;
(k)
Mr. WW Wong for the transfer of 10,000 shares of Hop Fung as referred to
item (g) above;
(l)
a sale and purchase agreement dated 22 February 2016 entered into between
our Company and Blooming Union, pursuant to which our Company agreed
to acquire 5 shares of Super Pioneer from Blooming Union, and in
consideration thereof, (i) the 1 nil paid Share held by Blooming Union was
credited as fully paid; and (ii) 9,999 Shares, all credited as fully paid, were
allotted and issued to Blooming Union;
(m) an instrument of transfer dated 22 February 2016 entered into between our
Company and Blooming Union for the transfer of 5 shares of Super Pioneer
as referred to item (l) above;
(n)
a loan capitalisation agreement dated 21 March 2016 entered into between

Super Pioneer and Luen Hing, pursuant to which Luen Hing applied
HK$280,000 owed to Mr. CK Wong and HK$5,200,000 owed to Mr. WW
Wong, respectively, toward the satisfaction of the issue and allotment of
5,480,000 new shares of Luen Hing at a subscription price of HK$1 per
share to Super Pioneer (as directed by Mr. CK Wong and Mr. WW Wong,
respectively);
(o)
a loan capitalisation agreement dated 21 March 2016 entered into between

Super Pioneer and Hop Fung, pursuant to which Hop Fung applied
HK$4,920,000 owed by Hop Fung to Mr. CK Wong toward the satisfaction
of the issue and allotment of 4,920,000 new shares of Hop Fung at a
subscription price of HK$1 per share to Super Pioneer (as directed by Mr.
CK Wong);
(p)
the Deed of Non-competition;
(q)
the Deed of Indemnity; and
(r)
the Underwriting Agreement.
V-10
APPENDIX V
2.
Intellectual property rights of our Group

(a)
Trademark
As at the Latest Practicable Date, our Group has registered a trade mark as
follow:
Trademark
(b)
Place of
application
Application
number
Class
Hong Kong
303571065
7, 37
Date of
application/
registration
26 February
2016
Name of
applicant
Luen Hing
Domain name(s)
As at the Latest Practicable Date, our Group has registered the following
domain name:
C.
Domain name
Registrant
luenwong.hk
Luen Hing
Registration
date
Expiry date
20 November
2015
19 November
2017
FURTHER INFORMATION ABOUT SUBSTANTIAL SHAREHOLDERS,

DIRECTORS AND EXPERTS
1.
Disclosure of Interests
(a)
Interests of Directors and chief executive in shares, underlying shares and

debentures of our Company and our associated corporations
Immediately following completion of the Capitalisation Issue and the Placing

(without taking account any Shares to be issued upon exercise of any options
which may be granted under the Share Option Scheme), the interests and short
positions of our Directors or chief executive of our Company in shares,
underlying shares and debentures of our Company or any of its associated
corporations (within the meaning of Part XV of the SFO) which, once the Shares
are listed on GEM, would have to be notified to our Company and the Stock
Exchange under Divisions 7 and 8 of Part XV of the SFO (including any interests
and short positions which they are taken or deemed to have under such provisions
of the SFO) or would be required, pursuant to section 352 of the SFO, to be
entered in the register referred to therein, or would be required pursuant to the
V-11
APPENDIX V
Rules 5.46 to 5.67 of the GEM Listing Rules relating to securities transactions by
our Directors to be notified to our Company and the Stock Exchange, will be as
follows:
(i)
Capacity/nature
of interest
Name
Number of Shares
held/ interested
immediately
following
completion of the
Capitalisation
Issue and the
Placing
Percentage of
shareholding
immediately
following
completion of the
Capitalisation
Issue and the
Placing
Mr. CK Wong
Interest of a
controlled
936,000,000
75%
Mr. WW Wong
Interest of a
controlled
936,000,000
75%
Notes:
1.
The issued shares of Blooming Union are owned as to 50% by Mr. CK Wong.
Therefore, Mr. CK Wong is deemed or taken to be interested in all the Shares
held by Blooming Union for the purpose of the SFO.
2.
The issued shares of Blooming Union are owned as to 50% by Mr. WW Wong.
Therefore, Mr. WW Wong is deemed or taken to be interested in all the Shares
held by Blooming Union for the purpose of the SFO.
(ii) Long position in the share of associated corporations

Name of
associated
corporation
Capacity/
nature
Mr. CK Wong
Blooming
Union
Mr. WW Wong
Blooming
Union
Name of Director
V-12
Number of
share held/
interested
Percentage of
shareholding
Beneficial
owner
50%
Beneficial
owner
50%
APPENDIX V
(b)
Interests of substantial and other Shareholders in the Shares and

underlying Shares
So far as is known to our Directors and taking no account any Shares which
may 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 our
Company) will, immediately following completion of the Capitalisation Issue and
the Placing, have interests or short positions in Shares or underlying Shares which
would fall to be disclosed to our Company and the Stock Exchange under the
provisions of Divisions 2 and 3 of Part XV of the SFO or who will be directly or
indirectly interested in 10% or more of the nominal value of any class of share
capital carrying rights to vote in all circumstances at general meetings of our
Company or any of its subsidiaries:
Name
Capacity/nature
Number of
Shares held/
interested
Blooming Union
Beneficial owner
936,000,000
75%
Ms Law Oi Ling
Interest of spouse
936,000,000
75%
936,000,000
75%
Percentage of
shareholding
(Note 1)
Ms Lai Siu Kuen
Interest of spouse
(Note 2)
Note:
2.
1.
Ms. Law Oi Ling, the spouse of Mr. CK Wong, is deemed, or taken to be, interested in
936,000,000 Shares in which Mr. CK Wong is interested for the purpose of the SFO.
2.
Ms. Lai Siu Kuen, the spouse of Mr. WW Wong, is deemed, or taken to be, interested in
936,000,000 Shares in which Mr. WW Wong is interested for the purpose of the SFO.
Particulars of service agreements
None of our Directors has or is proposed to have any service agreement with our
Company or any of its subsidiaries (excluding contracts expiring or determinable by the
employer within one year without payment of compensation other than statutory
compensation).
V-13
APPENDIX V
3.
Remuneration of Directors
(a)
The aggregate amount of emoluments (excluding payment pursuant to any

discretionary benefits or bonus or other fringe benefits) paid by our Group to
our Directors in respect of financial year ended 31 March 2014, financial
year ended 31 March 2015 and eight months ended 30 November 2015 were
approximately
HK$3,946,000,
HK$3,934,000
and
HK$2,160,000,
respectively.
(b)
Under the arrangement currently in force, we estimate the total compensation

(including Directors fees, salaries, discretionary bonus, contributions to
retirement benefit schemes, pension), to be paid or accrued to our Directors
for the year ending 31 March 2016 to be HK$4.4 million.
(c)
Under the arrangements currently proposed, conditional upon the Listing, the
basic annual remuneration (excluding payment pursuant to any discretionary
benefits or bonus or other fringe benefits) payable by our Group to each of
our Directors will be as follows:
Executive Directors
Mr.
Mr.
Mr.
Mr.
HK$
CK Wong
WW Wong
Wong Tak Ming
Chiu Chi Wang
1,080,000
1,080,000
670,000
480,000

Mr. Wong Chi Kan
Mr. Tai Hin Henry
(d)
HK$
120,000
120,000
120,000
Each of our Directors has entered into a service contract with our Company
for a term of three years commencing from the Listing Date, which may be
terminated by not less than three months notice served by either party on
the other, and is subject to termination provisions therein and provisions on
retirement by rotation of Directors as set out in the Memorandum and the
Articles.
V-14
APPENDIX V
4.
Agency fees or commissions received
Save as disclosed in the section headed Underwriting Commission and

Expenses in this prospectus, and in the paragraph headed E. Other information 3.
Sponsor in this appendix, none of our Directors or the experts named in the paragraph
headed E. Other information 7. Consents of experts in this appendix had received
any agency fee or commissions from our Group within the two years preceding the
date of this prospectus.
5.
Related party transactions
Details of the related party transactions are set out under Note 29 to the
Accountants Report of our Company set out in Appendix I to this prospectus.
6.
Disclaimers
Save as disclosed in this prospectus:
(a)
taking no account of any Shares to be issued upon exercise of any options

which may be granted under the Share Option Scheme or repurchased by our
Company pursuant to the mandate as referred to in the paragraph headed A.
Further information about the Company in this appendix, and taking no
account of any Shares which may be issued upon the exercise of options
which may be granted under the Share Option Scheme, our Directors are not
aware of any person (not being a Director or chief executive of our
Company) who will, immediately following completion of the Capitalisation
Issue and the Placing, have an interest or short position in Shares or
underlying Shares which would fall to be disclosed to our Company and the
Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the
SFO, or who will be directly or indirectly interested in 10% or more of the
nominal value or any class of share capital carrying rights to vote in all
circumstances at general meetings of our Company or any of its subsidiaries;
(b)
taking no account of any Shares to be issued upon exercise of any options

which may be granted under the Share Option Scheme, none of our Directors
or chief executive of our Company has any interest or short position in
shares, underlying shares or debentures of our Company or any of its
associated corporations (within the meaning of Part XV of the SFO) which
would have to be notified to our Company and the Stock Exchange under
Divisions 7 and 8 of Part XV of the SFO (including any interests and short
positions which they are taken or deemed to have under such provisions of
the SFO) or would be required, pursuant to section 352 of the SFO, to be
entered in the register referred to therein, or would be required, pursuant to
Rules 5.46 to 5.67 of the GEM Listing Rules relating to securities
transactions by our Directors, to be notified to our Company and the Stock
Exchange, in each case once the Shares are listed on GEM;
V-15
APPENDIX V
D.
(c)
none of the Directors or the experts named in the paragraph headed E.

Other information 6. Qualifications of experts in this appendix is
interested in the promotion of, or in any assets which have been, within the
two years immediately preceding the issue of this prospectus, acquired or
disposed of by or leased to any member of our Group, or are proposed to be
acquired or disposed of by or leased to any member of our Group;
(d)

Other information 6. Qualifications of experts in this appendix is
materially interested in any contract or arrangement subsisting at the date of
this prospectus which is significant in relation to the business of our Group
taken as a whole;
(e)

Other information 6. Qualifications of experts in this appendix has any
shareholding in any member of our Group or the right (whether legally
enforceable or not) to subscribe for or to nominate persons to subscribe for
securities in any member of our Group;
(f)
so far as is known to our Directors, none of our Directors, their respective

close associates (as defined under the GEM Listing Rules) or Shareholders
who are interested in more than 5% of the issued share capital of our
Company has any interests in the five largest customers or the five largest
suppliers of our Group;
(g)
none of our Directors has any existing or proposed service contracts with
any member of our Group (excluding contracts expiring or determinable by
the employer within one year without payment of compensation (other than
statutory compensation)); and
(h)
no remuneration or other benefits in kind have been paid by any member of

our Group to any Director since the date of incorporation of our Company,
nor are any remuneration or benefits in kind payable by any member of our
Group to any Director in respect of the current financial year under any
arrangement in force as at the Latest Practicable Date.
SHARE OPTION SCHEME
Our Company has conditionally adopted the Share Option Scheme on 24 March 2016.
The following is a summary of the principal terms of the Share Option Scheme but does not
form part of, nor was it intended to be part of the Share Option Scheme, nor should it be
taken as affecting the interpretation of the rules of the Share Option Scheme.
The terms of the Share Option Scheme are in accordance with the provisions of
Chapter 23 of the GEM Listing Rules.
V-16
APPENDIX V
(a)
Definitions
For the purpose of this section, the following expressions have the meanings set
out below unless the context requires otherwise:
(b)
Adoption Date
24 March 2016, the date on which the Share Option

Scheme is conditionally adopted by our sole
Shareholder by way of written resolutions
Board
the board of Directors or a duly

committee of the board of Directors
Business Day
any day on which the Stock Exchange is open for

the business of dealing in securities
Group
our Company and any entity in which our Company,

directly or indirectly, holds any equity interest
Scheme Period
the period commencing on the Adoption Date and

expiring at the close of business on the Business
Day immediately preceding the tenth anniversary
thereof
authorised
Summary of terms
The following is a summary of the principal terms of the rules of the Share
Option Scheme conditionally adopted by the written resolutions of our sole Shareholder
passed on 24 March 2016:
(i)
Purpose of the Share Option Scheme
The purpose of the Share Option Scheme is to attract and retain the best
available personnel, to provide additional incentive to employees (full-time and
part-time), directors, consultants, advisers, distributors, contractors, suppliers,
agents, customers, business partners and services providers of our Group and to
promote the success of the business of our Group.
(ii) Who may join and basis of eligibility
The Board may, at its absolute discretion and on such terms as it may think
fit, grant any employee (full-time or part-time), director, consultant or adviser of
our Group, or any substantial shareholder of our Group, or any distributor,
contractor, supplier, agent, customer, business partner or services provider of our
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 the
terms of the Share Option Scheme. The basis of eligibility of any participant to
the grant of any option shall be determined by the Board (or as the case may be,
V-17
APPENDIX V
the independent non-executive Directors) from time to time on the basis of his
contribution or potential contribution to the development and growth of our
Group.
(iii) Price of Shares
The subscription price of a Share in respect of any particular option granted
under the Share Option Scheme shall be a price solely determined by the Board
and notified to a participant and shall be at least the higher of: (i) the closing
price of the Shares as stated in the Stock Exchanges daily quotations sheet on the
date of grant of the option, which must be a Business Day; (ii) the average
closing prices of the Shares as stated in the Stock Exchanges daily quotations
sheets for the five Business Days immediately preceding the date of grant of the
option; and (iii) the nominal value of a Share on the date of grant of the option.
For the purpose of calculating the subscription price, where our Company has
been listed on the Stock Exchange for less than five Business Days, the new issue
price shall be used as the closing price for any Business Day fall 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 days
inclusive of the day on which such offer was made. The amount payable by the
grantee of an option to our Company on acceptance of the offer for the grant of
an option is HK$1.
(v)
Maximum number of Shares

(aa) subject to sub-paragraphs (bb) and (cc) below, the maximum number of
Shares issuable upon exercise of all options to be granted under the
Share Option Scheme and any other share option schemes of our
Company as from the Adoption Date (excluding, for this purpose,
Shares issuable upon exercise of options which have been granted but
which have lapsed in accordance with the terms of the Share Option
Scheme or any other share option schemes of our Company) must not
in aggregate exceed 10% of all the Shares in issue as at the Listing
Date. Therefore, it is expected that our Company may grant options in
respect of up to 124,800,000 Shares (or such numbers of Shares as
shall result from a sub-division or a consolidation of such 124,800,000
Shares from time to time) to the participants under the Share Option
Scheme.
(bb) The 10% limit as mentioned above may be refreshed at any time by
obtaining approval of our Shareholders in general meeting provided that
the total number of Shares which may be issued upon exercise of all
options to be granted under the Share Option Scheme and any other
share option schemes of our Company must not exceed 10% of the
Shares in issue as at the date of approval of the refreshed limit. Options
V-18
APPENDIX V

previously granted under the Share Option Scheme and any other share
option schemes of our Company (including those outstanding, cancelled
or lapsed in accordance with the terms of the Share Option Scheme or
any other share option schemes of our Company) will not be counted
for the purpose of calculating the refreshed 10% limit. A circular must
be sent to our Shareholders containing the information as required
under the GEM Listing Rules in this regard.
(cc) our Company may seek separate approval of our Shareholders in

general meeting for granting options beyond the 10% limit provided the
options in excess of the 10% limit are granted only to grantees
specifically identified by our Company before such approval is sought.
In such event, our Company must send a circular to our Shareholders
containing a generic description of such grantees, the number and terms
of such options to be granted and the purpose of granting options to
them with an explanation as to how the terms of the options will serve
such purpose, such other information required under the GEM Listing
Rules.
(dd) The aggregate number of Shares which may be issued upon exercise of
all outstanding options granted and yet to be exercised under the Share
Option Scheme and any other share option schemes of our Company
must not exceed 30% of the Shares in issue from time to time. No
options may be granted under the Share Option Scheme or any other
share option schemes of our Company if this will result in such 30%
limit being exceeded.
(vi) Maximum entitlement of each participant
The total number of Shares issued and to be issued upon exercise of options
granted to any participant (including both exercised and outstanding options)
under the Share Option Scheme, in any 12-month period up to the date of grant
shall not exceed 1% of the Shares in issue. Any further grant of options in excess
of such limit must be separately approved by Shareholders in general meeting
with such grantee and his close associates abstaining from voting. In such event,
our Company must send a circular to our Shareholders containing the identity of
the grantee, the number and terms of the options to be granted (and options
previously granted to such grantee), and all other information required under the
GEM Listing Rules. The number and terms (including the subscription price) of
the options to be granted must be fixed before the approval of our Shareholders
and the date of the Board meeting proposing such further grant should be taken as
the date of grant for the purpose of calculating the subscription price.
V-19
APPENDIX V
(vii) Grant of options to certain connected persons

(aa) Any grant of an option to a Director, chief executive or Substantial
Shareholder (or any of their respective associates) must be approved by
the independent non-executive Directors (excluding any independent
non-executive Director who is the grantee of the option).
(bb) Where any grant of options to a substantial Shareholder or an
independent non-executive Director (or any of their respective
associates) will result in the total number of Shares issued and to be
issued upon exercise of all options already granted and to be granted to
such person under the Share Option Scheme and any other share option
schemes of our Company (including options exercised, cancelled and
outstanding) in any 12-month period up to and including the date of
grant:
(i)
representing in aggregate over 0.1% of the Shares in issue; and
(ii) having an aggregate value, based on the closing price of the

Shares at the date of each grant, in excess of HK$5,000,000, such
further grant of options is required to be approved by
Shareholders at a general meeting of our Company, with voting to
be taken by way of poll. Our Company shall send a circular to our
Shareholders containing all information as required under the
GEM Listing Rules in this regard. All core connected persons of
our Company shall abstain from voting (except where any core
connected person intends to vote against the proposed grant). Any
change in the terms of an option granted to a substantial
Shareholder or an independent non-executive Director or any of
their respective close associates is also required to be approved by
Shareholders in the aforesaid manner.
(viii) Restrictions on the times of grant of options
(aa) An offer for the grant of options may not be made after any inside
information (as defined in the SFO) has come to the knowledge of our
Company until such inside information has been announced pursuant to
the requirements of the GEM Listing Rules and the SFO. In particular,
no option may be granted during the period commencing one month
immediately before the earlier of:
(i)
the date of the Board meeting (as such date is first notified to the
Stock Exchange in accordance with the GEM Listing Rules) for
approving our Companys results for any year, half-year, quarterly
or other interim period (whether or not required under the GEM
Listing Rules); and
V-20
APPENDIX V

(iii) the deadline for our Company to announce its results for any year,
half-year or quarterly period under the GEM Listing Rules, or
other interim period (whether or not required under the GEM
Listing Rules).
(bb) Further to the restrictions in paragraph (aa) above, no option may be

granted on any day on which financial results of our Company are
published and:
(i)
during the period of 60 days immediately preceding the

publication date of the annual results or, if shorter, the period
from the end of the relevant financial year up to the publication
date of the results; and
(ii) during the period of 30 days immediately preceding the

publication date of the quarterly results and half-year results or, if
shorter, the period from the end of the relevant quarterly or
half-year period up to the publication date of the results.
(ix) Time of exercise of option
An option may be exercised in accordance with the terms of the Share
Option Scheme at any time during a period as the Board may determine which
shall not exceed ten years from the date of grant subject to the provisions of early
termination thereof.
(x)
Performance targets
Save as determined by the Board and provided in the offer of the grant of
the relevant options, there is no performance target which must be achieved
before 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 to
all the provisions of the Articles for the time being in force and will rank pari
passu in all respects with the fully paid Shares in issue on the date of allotment
and accordingly will entitle the holders to participate in all dividends or other
distributions paid or made after the date of allotment other than any dividend or
other distribution previously declared or recommended or resolved to be paid or
made with respect to a record date which shall be on or before the date of
allotment, save that the Shares allotted upon the exercise of any option shall not
carry any voting rights until the name of the grantee has been duly entered on the
register of members of our Company as the holder thereof.
V-21
APPENDIX V
(xii) Rights are personal to grantee

An option shall not be transferable or assignable and shall be personal to the
grantee of the option.
(xiii) Rights on cessation of employment by death
In the event of the death of the grantee (provided that none of the events
which would be a ground for termination of employment referred to in (xiv)
below arises within a period of 3 years prior to the death, in the case the grantee
is an employee at the date of grant), the legal personal representative(s) of the
grantee may exercise the option up to the grantees entitlement (to the extent
which has become exercisable and not already exercised) within a period of 12
months following his death provided that where any of the events referred to in
(xvii), (xviii) and (xix) occurs prior to his death or within such period of 12
months following his death, then his personal representative(s) may so exercise
the option within such of the various periods respectively set out therein.
(xiv) Rights on cessation of employment by dismissal
In the event that the grantee is an employee of our Group at the date of
grant and he subsequently ceases to be an employee of our Group on any one or
more of the grounds that he has been guilty of serious misconduct, or has
committed an act of bankruptcy or has become insolvent or has made any
arrangement or composition with his creditors generally, or has been convicted of
any criminal offence involving his integrity or honesty or (if so determined by the
Board) on any other ground on which an employer would be entitled to terminate
his employment at common law or pursuant to any applicable laws or under the
grantees service contract with our Group, his option shall lapse automatically (to
the extent not already exercised) on the date of cessation of his employment with
our Group.
(xv) Rights on cessation of employment for other reasons
In the event that the grantee is an employee of our Group at the date of
grant and he subsequently ceases to be an employee of our Group for any reason
other than his death or the termination of his employment on one or more of the
grounds specified in (xiv) above, the option (to the extent not already exercised)
shall lapse on the expiry of 3 months after the date of cessation of such
employment (which date will be the last actual working day with our Company or
the relevant member of our 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 our Company whilst
any option remains exercisable, whether by way of capitalisation of profits or
reserves, rights issue, consolidation, subdivision or reduction of the share capital
of our Company (other than an issue of Shares as consideration in respect of a
V-22
APPENDIX V
transaction to which any member of our Group is a party), such corresponding

adjustments (if any) shall be made in the number of Shares subject to the option
so far as unexercised; and/or the subscription prices, as the auditors of or
independent financial adviser to our Company shall certify or confirm in writing
(as the case may be) to the Board to be in their opinion fair and reasonable in
compliance with the relevant provisions of the GEM Listing Rules, or any
guideline or supplemental guideline issued by the Stock Exchange from time to
time (no such certification is required in case of adjustment made on a
capitalisation issue), provided that any alteration shall give a grantee the same
proportion of the issued share capital of our Company as that to which he was
previously entitled, but no adjustment shall be made to the effect of which would
be to enable a Share to be issued at less than its nominal value.
(xvii) Rights on a general offer
In the event of a general offer (whether by way of takeover offer or scheme
of arrangement or otherwise in like manner) being made to all our Shareholders
(or all such holders other than the offeror and, or any persons controlled by the
offeror and, or any person acting in association or concert with the offeror) and
such offer becoming or being declared unconditional, the grantee (or, as the case
may be, his legal personal representative(s)) shall be entitled to exercise the
option in full (to the extent not already exercised) at any time within one 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 our Company to the members to convene a
general meeting for the purposes of considering, and if thought fit, approving a
resolution to voluntarily wind-up our Company, our Company shall on the same
date as or soon after it despatches such notice to each member of our Company
give notice thereof to all grantees and thereupon, each grantee (or, as the case
may be, his legal personal representative(s)) shall be entitled to exercise all or any
of his options at any time not later than 2 Business Days prior to the proposed
general meeting of our Company by giving notice in writing to our Company,
accompanied by a remittance for the full amount of the aggregate subscription
price for the Shares in respect of which the notice is given whereupon our
Company shall as soon as possible and, in any event, no later than the Business
Day immediately prior to the date of the proposed general meeting referred to
above, allot 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 our Company and our
Shareholders or the creditors of our Company being proposed in connection with
a scheme for the reconstruction of our Company or its amalgamation with any
other company or companies pursuant to the Companies Law, our Company shall
give notice thereof to all the grantees (or, as the case may be, their legal personal
representatives) on the same day as it gives notice of the meeting to our
V-23
APPENDIX V
Shareholders or the creditors to consider such a compromise or arrangement and

the options (to the extent not already exercised) shall become exercisable in
whole or in part on such date not later than two Business Days prior to the date
of the general meeting directed to be convened by the court for the purposes of
considering such compromise or arrangement (Suspension Date), by giving
notice in writing to our Company accompanied by a remittance for the full
amount of the aggregate subscription price for the Shares in respect of which the
notice is given whereupon our Company shall as soon as practicable and, in any
event, no later than 3:00 p.m. on the Business Day immediately prior to the date
of the proposed general meeting, allot and issue the relevant Shares to the grantee
credited as fully paid. With effect from the Suspension Date, the rights of all
grantees to exercise their respective options shall forthwith be suspended. Upon
such compromise or arrangement becoming effective, all options shall, to the
extent that they have not been exercised, lapse and determine. The Board shall
endeavour to procure that the Shares issued as a result of the exercise of options
hereunder shall for the purposes of such compromise or arrangement form part of
the issued share capital of our Company on the effective date thereof and that
such Shares shall in all respects be subject to such compromise or arrangement. If
for any reason such compromise or arrangement is not approved by the court
(whether upon the terms presented to the court or upon any other terms as may be
approved by such court), the rights of grantees to exercise their respective options
shall with effect from the date of the making of the order by the court be restored
in full but only up to the extent not already exercised and shall thereupon become
exercisable (but subject to the other terms of the Share Option Scheme) as if such
compromise or arrangement had not been proposed by our Company and no claim
shall lie against our Company or any of its officers for any loss or damage
sustained by any grantee as a result of such proposal, unless any such loss or
damage shall have been caused by the act, neglect, fraud or willful default on the
part of our Company or any of its officers.
(xx) Lapse of options
An option shall lapse automatically on the earliest of:
(aa) the expiry of the period referred to in paragraph (ix) above;
(bb) the date on which the Board exercises our Companys right to cancel,
revoke or terminate the option on the ground that the grantee commits
a breach of paragraph (xii);
(cc) the expiry of the relevant period or the occurrence of the relevant event
referred to in paragraphs (xiii), (xiv), (xv), (xvii), (xviii) or (xix)
above;
(dd) subject to paragraph (xviii) above, the date of the commencement of
the winding-up of our Company;
V-24
APPENDIX V
(ee) the occurrence of any act of bankruptcy, insolvency or entering into of

any arrangements or compositions with his creditors generally by the
grantee, or conviction of the grantee of any criminal offence involving
his integrity or honesty;
(ff) where the grantee is only a substantial shareholder of any member of
our Group, the date on which the grantee ceases to be a substantial
shareholder of such member of our Group; or
(gg) subject to the compromise or arrangement as referred to in paragraph
(xix) become effective, the date on which such compromise or
arrangement becomes effective.
(xxi) Cancellation of options granted but not yet exercised
Any cancellation of options granted but not exercised may be effected on
such terms as may be agreed with the relevant grantee, as the Board may in its
absolute discretion sees fit and in manner that complies with all applicable legal
requirements for such cancellation.
(xxii) Period of the Share Option Scheme
The Share Option Scheme will remain in force for a period of ten years
commencing on the date on the Adoption Date and shall expire at the close of
business on the Business Day immediately preceding the tenth anniversary thereof
unless terminated earlier by our Shareholders in general meeting.
(xxiii) Alteration to the Share Option Scheme
(aa) The Share Option Scheme may be altered in any respect by resolution
of the Board except that alterations of the provisions of the Share
Option Scheme which alters to the advantage of the grantees of the
options relating to matters governed by Rule 23.03 of the GEM Listing
Rules shall not be made except with the prior approval of our
Shareholders in general meeting.
(bb) Any alteration to any terms of the Share Option Scheme which are of a
material nature or any change to the terms of options granted, or any
change to the authority of the Board in respect of alteration of the
Share Option Scheme must be approved by Shareholders in general
meeting except where the alterations take effect automatically under the
existing terms of the Share Option Scheme.
(cc) Any amendment to any terms of the Share Option Scheme or the
options granted shall comply with the relevant requirements of the
GEM Listing Rules or any guidelines issued by the Stock Exchange
from time to time.
V-25
APPENDIX V
(xxiv) Termination of the Share Option Scheme

Our Company by resolution in general meeting or the Board may at any time
terminate the operation of the Share Option Scheme and in such event no further
options will be offered but options granted prior to such termination shall
continue to be valid and exercisable in accordance with provisions of the Share
Option Scheme.
(xxv) Conditions of the Share Option Scheme
The Share Option Scheme is conditional on the Listing Division of the Stock
Exchange granting the listing of, and permission to deal in, the Shares may be
issued pursuant to the exercise of any options which may be granted under the
Share Option Scheme, and commencement of dealings in the Shares on the Stock
Exchange.
(c)
Present status of the Share Option Scheme
As at the date of this prospectus, no option has been granted or agreed to be

granted under the Share Option Scheme.
E.
OTHER INFORMATION
1.
Tax and other indemnities
Mr. CK Wong, Mr. WW Wong and Blooming Union (collectively, the

Indemnifiers) have, under a Deed of Indemnity referred to in paragraph (q) of the
paragraph headed B. Further Information about the Business 1. Summary of
Material Contracts in this appendix, given joint and several indemnities to our
Company for ourselves and as trustee for our subsidiaries in connection with, amongst
other things:
(a)
taxation falling on any member of our Group resulting from or by reference

to any revenue, income, profits or gains granted, earned, accrued, received or
made (or deemed to be so granted, earned, accrued, received or made) on or
before the date on which the Placing becomes unconditional and dealings in
shares of the Company first commence on the Stock Exchange (the
Effective Date) or any transactions, matters, things, event, act or omission
occurring or deemed to occur on or before such date, whether alone or in
conjunction with any other transaction, matter, thing, event, act, omission or
circumstance whenever occurring, and whether or not such taxation is
chargeable against or attributable to any other person, firm or company; and
(b)
all costs (including all legal costs), expenses, interests, penalties, fines,
charges or other liabilities which any member of our Group may properly
incur in connection with:
V-26
APPENDIX V
(i)
the investigation, assessment, the contesting of any claim under (a)

above;
(ii) the settlement of any claim under (a) above;

(iii) any legal proceedings in which any member of our Group claims under
or in respect of (a) above, and in which judgment is given for any
member of our Group; or
(iv) the enforcement of any such settlement or judgments.
The Indemnifiers have also, under the deed of indemnity abovementioned, agreed
and undertaken to each of the members of our Group that each Indemnifier shall
indemnify and at all times keep each of the member of our Group indemnified on
demand from and against any losses, damages, claims or penalties that our Group may
suffer or incur, as a result of:
(a)
our Groups non-compliance matters occurred before the Effective Date, as

more particularly set out in the paragraph headed Business
Non-Compliance in this prospectus (the Compliance Matters); and/or
(b)
the Groups outstanding litigations and potential claims arising before the
Effective Date, as more particularly set out in the paragraph headed
Business Litigation and Potential Claims of this prospectus (the
Litigations)
The Indemnifiers will, however, not be liable under the deed of indemnity for
taxation, among other:
(a)
to the extent that provision has been made for such taxation in the audited
consolidated accounts of our Group or the audited accounts of any member
of our Group for an accounting period ended on or before 30 November
2015;
(b)
falling on any member of our Group as a result of any transaction entered

into by any member of our Group on or after the Effective Date in the
ordinary course of business, or in the ordinary course of acquiring or
disposing of capital assets;
(c)
to the extent that such taxation arises or is incurred as a consequence of any

change in the law, rules or regulations, or the interpretation or practice
thereof by the Inland Revenue Department or any other statutory or
governmental authority in any part of the world having retrospective effect
coming into force after the Effective Date or to the extent that such taxation
arises or is increased by an increase in rates of taxation after the Effective
Date with retrospective effect (except the imposition of or an increase in the
rate of Hong Kong profits tax or any tax of any part of the world on the
profits of companies for the current or any earlier financial period);
V-27
APPENDIX V
(d)
to the extent that such taxation is discharged by another person who is not a
member of our Group and that none of the members of our Group is
required to reimburse such person in respect of the discharge of the taxation;
or
(e)
to the extent of any provision or reserve made for taxation in the audited
accounts referred to in sub-paragraph (a) above which is finally established
to be an over-provision or an excessive reserve, provided that the amount of
any such provision or reserve applied to reduce the liability of the
Indemnifiers or any of them in respect of taxation shall not be available in
respect of any such liability arising thereafter.
Our Directors have been advised that no material liability for estate duty under
the laws of the Cayman Islands is likely to fall on our Group, and the estate duty under
the laws of Hong Kong has been abolished.
2.
Litigation
Our Directors confirmed that save as disclosed in the section headed Business
Litigation and potential claims in this prospectus as at the Latest Practicable Date, no
member of our Group is engaged in any litigation or arbitration of material importance
and no litigation or claim of material importance is pending or threatened by or against
any member of our Group.
3.
Sponsor
The Sponsor has made an application on behalf of our Company to the Listing
Division for listing of and permission to deal in the Shares in issue and to be issued as
mentioned herein and any Shares which may fall to be issued pursuant to the exercise
of the options which may be granted under the Share Option Scheme.
Neither the Sponsor nor any of its close associates has accrued any material
benefit as a result of the successful outcome of the Placing, other than the following:
(a)
by way of sponsorship, financial advisory and documentation fee paid and to

be paid to the Sponsor for acting as the sponsor of the Placing;
(b)
certain close associates of the Sponsor whose usual and ordinary courses of
business involve trading of and dealing in securities may derive commissions
from the trading of and dealing in securities of our Company or provide
margin financing in connection thereto or purchase or sell securities of our
Company or hold securities of our Company for investment purposes after its
Listing on GEM; and
(c)
by way of compliance advisory fee to be paid to TC Capital as our

Companys compliance adviser pursuant to the requirements under Rule
6A.19 of the GEM Listing Rules
V-28
APPENDIX V
Sponsors fees
The fee payable by our Company to the Sponsor to act as sponsor in relation
to the Listing is HK$4,800,000, and the Sponsor will be reimbursed for their
expenses properly incurred in connection with the Placing.
Save as disclosed in the section headed Underwriting in this prospectus,
no commissions, discounts, brokerages or other special terms have been granted in
connection with the issue or sale of any share or loan capital of our Company or
any of our subsidiaries within the two years preceding the date of this prospectus.
4.
Preliminary expenses
The preliminary expenses relating to the incorporation of our Company are

approximately HK$42,000 and are payable by our Company.
5.
Promoter
Our Company has no promoter for the purpose of the GEM Listing Rules.
6.
Qualifications of experts
The following are the respective qualifications of the experts who have given
their opinion or advice which is contained in this prospectus:
7.
Name
Qualifications
A licensed corporation to engage in Type 1

(dealing in securities) and Type 6 (advising
on corporate finance) regulated activities
under the SFO
Grant Thornton Hong Kong

Limited
Appleby
Cayman Islands attorneys-at-law
Chan Chung
Barrister-at-law of Hong Kong, the legal

counsel of our Company
Ascent Partners Valuation Service

Limited
Property valuer
Consents of experts
Each of the experts named in the sub-paragraph headed 6. Qualification of

experts in this appendix has given and has not withdrawn its/his written consent to the
issue of this prospectus, with the inclusion of its/his letters and/or reports and/or
opinions and/or summary thereof (as the case may be) and/or references to its/his name
included herein in the form and context in which they respectively appear.
V-29
APPENDIX V
8.
Binding effect
This prospectus shall have the effect, if an application is made in pursuance

hereof, of rendering all persons concerned bound by all of the provisions (other than
the penal provisions) of sections 44A and 44B of the Companies (Winding Up and
Miscellaneous Provisions) Ordinance so far as applicable.
9.
Registration procedures
The principal register of members of our Company in the Cayman Islands will be
maintained by Appleby Trust (Cayman) Ltd. and a branch register of members of our
Company in Hong Kong will be maintained by Union Registrars Limited. Save where
our Directors otherwise agree, all transfers and other documents of title to Shares must
be lodged for registration with, and registered by, our Hong Kong Branch Share
Registrar in Hong Kong and may not be lodged in the Cayman Islands. All necessary
arrangements have been made to enable the Shares to be admitted into CCASS.
10. No material adverse change
Save as disclosed in the section headed Financial Information Material adverse
change in this prospectus, our Directors confirm that there has been no material
adverse change in the financial or trading position or prospects of our Company or our
subsidiaries since 30 November 2015 (being the date to which the latest audited
combined financial statements of our Group were made up) and up to the Latest
Practicable Date.
11.
Taxation of holders of Shares

(a)
Hong Kong
Dealings in Shares registered on our Companys Hong Kong branch register

of members will be subject to Hong Kong stamp duty.
Profits from dealings in Shares arising in or derived from Hong Kong may
also be subject to Hong Kong profits tax.
(b)
Cayman Islands
No stamp duty is payable in the Cayman Islands on transfers of shares of

Cayman Islands companies except those which hold interests in land in the
Cayman Islands.
(c)
Consultation with professional advisers
Intending holders of the Shares are recommended to consult their

professional advisers if they are in any doubt as to the taxation implications of
subscribing for, purchasing, holding or disposing of or dealing in the Shares. It is
emphasised that none of our Company, our Directors or parties involved in the
V-30
APPENDIX V
Placing accepts responsibility for any tax effect on, or liabilities of holders of
Shares resulting from their subscription for, purchase, holding or disposal of or
dealing in Shares.
13. Miscellaneous
(a)
Save as disclosed in this prospectus:

(i)
within the two years immediately preceding the date of this prospectus:
(aa) no share or loan capital of our Company or any of its subsidiaries
has been issued, agreed to be issued or is proposed or intended to
be issued fully or partly paid either for cash or for a consideration
other than cash;
(bb) no commissions, discounts, brokerages or other special terms have
been granted or agreed to be granted in connection with the issue
or sale of any share or loan capital of our Company or any of its
subsidiaries and no commission has been paid or is payable in
connection with the issue or sale of any capital of our Company
or any of its subsidiaries; and
(cc) no commission has been paid or payable (except to
sub-underwriter) for subscribing or agreeing to subscribe,
procuring or agreeing to procure subscriptions, for any shares or
debenture of our Company or any of its subsidiaries;
(ii) no founders, management or deferred shares or any debentures of our

Company have been issued or agreed to be issued;
(iii) no share or loan capital of our Company is under option or is agreed
conditionally or unconditionally to be put under option;
(iv) there has not been any interruption in the business of our Group which
may have or have had a significant effect on the financial position of
our Group in the 24 months immediately preceding the date of this
prospectus;
(v)
none of the experts named in the sub-paragraph

Qualifications of experts in this appendix:
headed
6.
(aa) is interested beneficially or non-beneficially in any securities in

any member of our Group, including the Shares; or
(bb) has any right or option (whether legally enforceable or not) to
subscribe for or to nominate persons to subscribe for any
securities in any member of our Group, including the Shares;
V-31
APPENDIX V
(vi) our Company and our subsidiaries do not have any debt securities
issued or outstanding, or authorised or otherwise created but unissued,
or any term loans whether guaranteed or secured as at the Latest
Practicable Date;
(vii) no company within our Group is presently listed on any stock exchange
or traded on any trading system;
(viii) our Group has no outstanding convertible debt securities; and
(ix) the English text of this prospectus shall prevail over the Chinese text.
14. Particulars of the Selling Shareholder
Name
Blooming Union
Place of incorporation:
BVI
Registered office:
NovaSage Chambers, P.O. Box 4389, Road

Town, Tortola, British Virgin Islands
Nature of business:
Investment holding
Number of Share to be sold:
104,000,000 Shares
15. Bilingual Prospectus

The English language and Chinese language versions of this prospectus are being
published separately in reliance upon the exemption provided in section 4 of the
Companies (Exemption of Companies and Prospectuses from Compliance with
Provisions) Notice (Chapter 32L of the Laws of Hong Kong).
V-32
APPENDIX VI
DOCUMENTS DELIVERED TO THE REGISTRAR OF

COMPANIES AND AVAILABLE FOR INSPECTION
DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES IN HONG

KONG
The documents attached to a copy of this prospectus delivered to the Registrar of
Companies in Hong Kong for registration were the written consents referred to in the
paragraph headed E. Other information 7. Consents of experts in Appendix V to this
prospectus, copies of the material contracts referred to in the paragraph headed B. Further
information about the business 1. Summary of material contracts in Appendix V to this
prospectus, and a copy of the statement of particulars of the Selling Shareholder as set out
in the paragraph headed Particulars of the Selling Shareholder in Appendix V to this
prospectus.
DOCUMENTS AVAILABLE FOR INSPECTION
Copies of the following documents will be available for inspection at the office of D.
S. Cheung & Co. at 29/F., Bank of East Asia, Harbour View Centre, 56 Gloucester Road,
Wanchai, Hong Kong, during normal business hours up to and including the date which is
14 days from the date of this prospectus:
(a)
the Memorandum and the Articles;
(b)
the Accountants Report and the report on the unaudited pro forma financial
information of our Group prepared by Grant Thornton Hong Kong Limited, the
texts of which are set out in Appendices I and II to this prospectus;
(c)
the audited combined financial statements of our Company for each of the two
years ended 31 March 2014 and 2015 and the eight months ended 30 November
2015;
(d)
the property valuation report relating to the property interests of our Group
prepared by Ascent Partners Valuation Service Limited, the text of which is set
out in Appendix III to this prospectus;
(e)
the letter of advice prepared by Appleby summarising certain aspects of

Companys Law referred to in Appendix IV to this prospectus;
(f)
the report on internal control review prepared by CT Partners Consultants

Limited;
(g)
the material contracts referred to the paragraph headed B. Further information

about the business 1. Summary of material contracts in Appendix V to this
prospectus;
(h)
the written consents referred to in the paragraph headed E. Other information

7. Consent of experts in Appendix V to this prospectus;
VI-1
APPENDIX VI
DOCUMENTS DELIVERED TO THE REGISTRAR OF

COMPANIES AND AVAILABLE FOR INSPECTION
(i)
the service contracts and letters of appointment of our Directors referred to in the
paragraph headed C. Further information about Substantial Shareholders,
Directors and Experts 2. Particulars of service agreements in Appendix V to
this prospectus;
(j)
the Companies Law;
(k)
the rules of the Share Option Scheme;
(l)
the legal opinions prepared by Mr. Chan Chung, the Legal Counsel, in respect of
certain aspects of Hong Kong law applicable to our Group;
(m) the statement of particular of the Selling Shareholder as set out in the paragraph
headed Particulars of the Selling Shareholder in Appendix V to this prospectus;
(n)
the Ipsos Report; and
(o)
the legal opinions issued by Mr. Chan Chung, the Legal Counsel.
VI-2

Stock Code: 8217
PLACING
Sponsor

Luen Wong Group Prospectus

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LUEN WONG GROUP HOLDINGS LIMITED

LUEN WONG GROUP HOLDINGS LIMITED

(Incorporated in the Cayman Islands with limited liability)

LUEN WONG GROUP HOLDINGS LIMITED

Joint Bookrunners and Joint Lead Managers

LUEN WONG GROUP HOLDINGS LIMITED

(Incorporated in the Cayman Islands with limited liability)

LISTING ON THE GROWTH ENTERPRISE MARKET OF

TC Capital Asia Limited

Announcement of the level of indication of interest

the Stock Exchanges website at www.hkexnews.hk; and

(ii) our Companys website at www.luenwong.hk

INFORMATION ABOUT THIS PROSPECTUS AND THE PLACING . . . . . . . . . .

DIRECTORS AND PARTIES INVOLVED IN THE PLACING . . . . . . . . . . . . . . . .

HISTORY AND DEVELOPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

DIRECTORS AND SENIOR MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . .

RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS . . . . . . . . . . .

STATEMENT OF BUSINESS OBJECTIVE AND USE OF PROCEEDS . . . . . . . .

STRUCTURE AND CONDITIONS OF THE PLACING . . . . . . . . . . . . . . . . . . . . .

UNAUDITED PRO FORMA FINANCIAL INFORMATION . .

APPENDIX III PROPERTY VALUATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-1

STATUTORY AND GENERAL INFORMATION . . . . . . . . . . .

APPENDIX VI DOCUMENTS DELIVERED TO

For the year ended

Well-established presence in the civil engineering construction industry in Hong

Experienced project management team

Possession of a variety of site equipment for performing different types of civil

Stable relationship with our major customers, suppliers and subcontractors

Our commitment to maintaining safety standard, quality control and environmental

Acquisition of additional site equipment

Further strengthening our manpower

Adherence to prudent financial management to ensure sustainable growth and

Eight months ended

We had a net current liabilities position of approximately HK$36,196,000 and

Eight months ended

Major financial ratios

REASONS FOR THE LISTING AND USE OF PROCEEDS

We rely on the availability of public sector civil engineering projects in Hong

the accountants report prepared by Grant Thornton

the amended and restated articles of association of our

has the meaning ascribed to it under the GEM Listing

Blooming Union Investments Limited

the board of Directors

any day (other than a Saturday, Sunday or public

the British Virgin Islands

compound annual growth rate

the issue of 1,039,990,000 Shares to be made upon

the Central Clearing and Settlement System established

a person permitted to participate in CCASS as a direct

CCASS Custodian Participant

a person permitted to participate in CCASS as a

CCASS Investor Participant

a person admitted to participate in CCASS as an

a CCASS Clearing Participant, a CCASS Custodian

China Harbour Engineering Company Limited, a

China State Construction

China State Construction Engineering (Hong Kong)

has the meaning ascribed to it under the GEM Listing

the Companies Law (as revised) of the Cayman Islands,

the Companies Ordinance (Chapter 622 of the Laws of

the Companies (Exemption of Companies and

Companies (Winding Up and

the Companies (Winding Up and Miscellaneous

Luen Wong Group Holdings Limited