E Bon : CONTINUING CONNECTED TRANSACTIONS IN RELATION TO LEASE OF PROPERTY

Premises location

Factory Units A-D on 12th-14th Floor (inclusive) of E. Tat Factory Building, No. 4 Heung Yip Road, Wong Chuk Hang, Hong Kong and Car Parking Spaces Nos. 3 and 28 of the same building

Lease term

1 year commencing from 1 April 2021 and expiring on 31 March 2022 (both days inclusive). No provision for early termination

Monthly rent

HK$400,000 exclusive of the management fee, government rates and other outgoings

Deposit

HK$1,200,000 representing three months' rental and is payable upon the signing of the New Tenancy Agreement by the Subsidiary

Annual rent payable

HK$4,800,000

Aggregate value of consideration over the entire lease term

HK$4,800,000

Rent-free period

No rent-free period

Annual cap

The annual rental payment by the Group under the New Tenancy Agreement for the year ending 31 March 2022 is expected to be no more than HK$4,800,000

Historical figures

For each of the years ended 31 March 2019 and 31 March 2020 and for the year ending 31 March 2021, the total sum of rental paid and payable by the Group to the Landlord amounted to HK$4,032,000 per year

LISTING RULES IMPLICATIONS

The Landlord is a company wholly owned by Bache Hill Group Limited. Fast Way Management Limited, Happy Voice Ltd., New Happy Times Ltd. and Universal Star Group Ltd. are holding totally 76.43% of the issued share capital of Bache Hill Group Limited.

The Company's executive Director Mr. Tse Sun Fat, Henry is a director/shareholder of Fast Way Management Limited, Mr. Tse Sun Po, Tony is a director of New Happy Times Ltd., Mr. Tse Sun Wai, Albert and Mr. Tse Hon Kit, Kevin are directors/shareholders of Universal Star Group Ltd.

2

It is further noted that Fast Way Management Limited, Happy Voice Ltd., New Happy Times Ltd. and Universal Star Group Ltd. are substantial shareholders of the Company, holding 43.75% of the issued share capital of the Company.

Therefore, the Landlord is considered as a connected person of the Company within the meaning of Chapter 14A of the Listing Rules.

Pursuant to HKFRS 16 "Leases", the Company will recognise leases that having a lease term of 12 months or less as short-term leases. Accordingly, the rental payment to be made by the Group under the New Tenancy Agreement will be recognised as expenses in the consolidated statement of profit or loss of the Group. As such, the transactions contemplated under the New Tenancy Agreement constitute continuing connected transactions for the Company under Chapter 14A of the Listing Rules.

The annual cap for the financial year ending 31 March 2022 is expected to be HK$4,800,000 which is less than 5% of all the applicable percentage ratios to continuing connected transactions as required under Rule 14A.78 of the Listing Rules and the annual consideration is less than HK$10,000,000 but is/are greater than 0.1%, the entering into the New Tenancy Agreement is therefore exempt from the independent shareholders' approval requirement but is subject to the announcement, reporting and annual review requirements according to Rule 14A.76(2) of the Listing Rules.

It is noted that Mr. Tse Sun Fat, Henry, Mr. Tse Sun Wai, Albert, Mr. Tse Sun Po, Tony and Mr. Tse Hon Kit, Kevin have interests in Negotiator Consultants Limited, having declared their interests in respect thereof, all of them abstained from voting on the board resolution.

REASONS FOR AND BENEFITS OF THE CONTINUING CONNECTED TRANSACTIONS

Since March 2000, the Landlord has been leasing the Premises to the Company and its subsidiaries as warehouse. The Previous Tenancy Agreement, at a monthly rent of HK$336,000, will expire on 31 March 2021, details of which were included in the announcement of the Company dated 22 March 2018. The Company considers it to be commercially necessary and beneficial to renew the tenancy by entering into the New Tenancy Agreement so that the Company and its subsidiaries can continue to use the Premises as warehouses.

The rent was agreed after arm's length negotiations by referring to (i) the market rate for similar premises in the vicinity based on the report from Memfus Wong Surveyors Limited dated 22 March 2021; and (ii) the previous rental payment made by the Group for renting the Premises. Memfus Wong Surveyors Limited, an independent qualified valuer appointed by the Company, has provided the Company with the current rental opinion in respect of the Premises based on market rental information of comparable properties.

3

The Board, (except Mr. Tse Sun Fat, Henry, Mr. Tse Sun Wai, Albert, Mr. Tse Sun Po, Tony and Mr. Tse Hon Kit, Kevin, being the only directors having material interests in the transactions, who had abstained from voting), noted that nothing has come to the attention that caused them to believe that the continuing connected transactions have not been entered into, in all material respects, in accordance with the existing policies of the Company and the relevant rules governing such continuing connected transactions; and that the terms of New Tenancy Agreement are (a) on normal commercial terms, (b) at 10.3% discount with reference to the market rate, (c) fair and reasonable, and (d) in the interest of the Company and its shareholders as a whole; it recommended that the Company be entered into the New Tenancy Agreement.

The rent will be paid by the Subsidiary from its internal resources.

THE VIEWS OF THE INDEPENDENT NON-EXECUTIVE DIRECTORS

Having considered the terms and conditions of the New Tenancy Agreement and the views of the Board, the Independent Non-executive Directors, in a board meeting held on 31 March 2021, opined that as nothing has come to their attention that caused them to believe that the continuing connected transactions have not been entered into, in all material respects, in accordance with the existing policies of the Company and relevant rules governing such continuing connected transactions and that based on the valuation report from Memfus Wong Surveyors Limited dated 22 March 2021, they have come to agree with the Board's recommendation that the New Tenancy Agreement is an arm's length transaction which is entered into on normal commercial terms and in the ordinary and usual course of business of the Group. They considered that the New Tenancy Agreement is fair and reasonable and of the terms no less favourable to the Group than those available from independent third parties and that it is in the interests of the Company and of the shareholders of the Company as a whole to enter into the continuing connected transactions.

GENERAL

The principal business activities of the Group are importing, wholesale, retail and installation of architectural builders' hardware, bathroom, kitchen collections and furniture in Hong Kong and the People's Republic of China.

The Landlord is engaged in investment and property holding activities.

4