Dear Shareholders,

In 2025, the Hong Kong retail market continued to face structural pressure arising from slow economic growth, frequent outbound travel by residents, intensifying cross-border shopping trends, and aggressive promotional campaigns by major Mainland competitors, leading to noticeable shifts in consumer behavior. The Group’s business performance in 2025 was inevitably affected by the abovementioned evolving consumption trends and consumer behavioral changes. Nevertheless, we firmly believe that challenges are always accompanied by opportunities. This situation bears resemblance to the long-distance telecommunications market 33 years ago. When the government introduced multiple new competitors, the entire market underwent rapid transformation, restructuring, and significant expansion. A similar dynamic is now unfolding in the retail sector and Hong Kong consumers’ habits will further evolve, accelerating the shift from physical stores to online shopping and injecting fresh momentum into the retail industry as a whole.

The Group’s total Gross Merchandise Value (“GMV”) on order intake for 2025 reached HK$8,426.1 million, maintaining a stable level. As the Group’s core business, HKTVmall delivered a solid performance, achieving an adjusted EBITDA of HK$309.3 million. Monthly active unique devices remained stable at approximately 1.6 million units. Our customer base is primarily concentrated among the middle-class segment, exhibiting exceptionally high loyalty. This provides a solid foundation for HKTVmall’s consistent and stable traffic, while further confirming that the structural shift from offline to online shopping is irreversible.

The Group has always adhered to the core principle that “long-term survival” outweighs short-term profitability. Amid an increasingly complex operating environment in Hong Kong, the timing pressure arising from seamless market integration between Mainland and Hong Kong has become our primary concern regarding future prospects. Imagine a scenario where both “people flow” and “logistics flow” can move freely between Mainland and Hong Kong without customs clearance or border checks — the entire supply chain for goods and food could be transported directly from Mainland to Hong Kong. How would HKTVmall and local retailers respond in such circumstances?

Many investors and stakeholders are curious as to why we do not fear competition from major Mainland Ecommerce platforms such as JD.com and Taobao. The advantages of these platforms primarily stem from their vast merchant networks and extensive product selections. Yet we are capable of replicating these strengths — HKTVmall has successfully recruited a large number of Mainland merchants, offering nearly 3,000,000 product choices in a wide selection of product variant. Moreover, Taobao has been operating in Hong Kong for over a decade, and we have not observed any direct impact on HKTVmall’s business. Some have also pointed to the active development of online shopping by local chain supermarkets and personal care retailers in recent years. We believe these traditional supermarkets offer limited product variety and lack automated picking and warehousing systems, resulting in losses on a per-order basis. By shifting their own customers from offline to online channels, they have not increased sales volume but have significantly raised operating costs, rendering the model unprofitable. This also explains why they had not aggressively pursued online operations for many years.

To address the pressures from seamless Mainland-Hong Kong market integration, we must adopt an attitude of “survive, innovate, and change” in seeking pathways forward and striving for endurance. Drawing on 20 years of competitive experience in the telecommunications industry, we will boldly implement a cost-unconstrained strategy of “Competing on greater product choices, lower prices and faster logistics”. Currently, the Group’s total GMV on order intake reached HK$8,426.1 million with substantial portion derived from customers of traditional supermarkets. If we capture an additional 5% to 10% of market share, we believe these competitors — with 200 to 300 physical chain stores and high fixed costs — will face even more severe challenges.

Innovative Services to Build Unique Advantages

1. 3 Hr Mart: Over the past 3 years, the Group has invested substantial resources in developing “Wet Market Express”, covering Hong Kong’s 10 major wet markets. These markets include Yau Ma Tei Wholesale Fruit Market, with over 300 stalls and more than 25,000 fresh ingredient choices. Following the launch of crossdistrict delivery, customers located anywhere in Hong Kong can enjoy same-day cross-district delivery service which has been highly welcomed by middle-class consumers. The service’s uniqueness and logistical complexity create a competitive barrier that Mainland and local rivals will find difficult to replicate in the short term. In March 2026, we have extended 3-hour delivery to supermarket products with the launch of the new “3 Hr Mart” service, covering close to 70,000 product choices from over 500 product categories. This includes fresh market ingredients, supermarket groceries, daily necessities, health and beauty products, maternity and baby items, pet supplies, and more — ensuring customers can meet most daily needs without leaving home.

2. Personalised Pricing Program: Our new Personalised Pricing Program determines the price of each product based on individual customers’ consumption patterns, meaning pricing can vary per item and per customer. Leveraging on big data and AI analytics, it precisely matches customer needs to deliver the most attractive “Exclusive Price”, thereby enhancing competitiveness.

3. CASHBACK: The Group has significantly increased investment in CASHBACK in recent years. Our customers are primarily middle-class individuals who travel frequently abroad. By using CASHBACK to book through major travel platforms (such as Trip.com, Booking.com, Klook, etc.) and shop on merchants’ official online stores, they can earn Mall Dollar rebates, with spending power ultimately flowing back to HKTVmall. At the same time, this flexible collaboration model enables HKTVmall to partner with more international and overseas brands, helping to broaden our customer base.

Talent Strategy

In response to the structural changes in Hong Kong’s population and consumption habits, we will leverage on our Ecommerce experience, big data analytics and AI applications to gain deeper insights into the preferences and shopping patterns of the “new Hong Kong people”. Currently, approximately 5% of our office Talent comes from the Mainland. We will continue to strengthen recruitment efforts, targeting an increase of Mainland Talent to 15% by the end of 2027. We believe that Mainland colleagues bring valuable knowledge in areas such as consumer behavior, warehouse operations and Ecommerce platform software systems, that worth learning from. We also plan to promote outstanding Mainland colleagues to management roles, strengthening team capabilities and preparing for future competition.

Life Science Project

The Group places the utmost importance on Life Science Project, and the management team will continue to allocate resources to it. The project has now been underway for 4 years and our research team is staffed by more than 20 professional members, including university professors, doctors and professional medical teams. The team is dedicated to developing and refining equipment designed to maintain the viability of detached body organs, such as limbs and heads. The team has conducted 38 experiments in which the animals’ limbs or heads were separated from their bodies. Based on neuromuscular responses to electrical stimulation, the detached limb remained viable for approximately 46 hours and based on electroencephalographic (EEG) recordings via surfaceelectrode and/or deep-electrode measurement, the detached heads remained viable for approximately 7 hours, that the research team believes this is the first case in the world.

Should the technologies we are developing prove successful, they could have applications in organ transplantation and potentially in extending human lifespan. However, at present, we are unable to accurately predict the project’s success rate or financial returns, nor can we reliably forecast its long-term development.

Fully Automated Retail Stores and Systems in the UK

The Fully Automated Retail Stores and Systems continue to face significant technical challenges. We have introduced additional professional Talent and are progressively optimizing system design and processes. The Group will not abandon this project, as we firmly believe this emerging technology holds immense market potential.

The Group’s ability to advance steadily amid challenging conditions stems not only from our adherence over more than 30 years to our corporate culture and core values, but also from our bold innovative spirit in exploring diverse business paths while “adapting to the prevailing trends”. Adapting to trends requires genuine action — from the inside out and from top to bottom-making comprehensive changes. Regardless of acceptance, the overall market environment, consumer behavior, and the trend of Mainland-Hong Kong integration are already irreversible. Only by proactively adapting can we continue to grow and discover new opportunities. The Group will continue to prioritize innovation, committing to developing initiatives in other areas such as Life Science Project, and persisting in pursuits that are beneficial to society and even to human history.