Trading business

In light of the unsatisfactory financial performance of the subsidiaries
disposed of by the Group, the Group has been actively exploring new
business opportunities and reallocating its resources to other business
segments. The Company reviews and adjusts its business strategies of
the trading business from time to time in response to changing market
conditions.

In the PRC, online shopping has been expanding rapidly, driven by
increasing traffic on e-commerce platforms, and is becoming an important
retail channel for both domestic and overseas customers. Against this
backdrop, the Group identified the cross-border e-commerce as a viable
opportunity and has engaged in the trading of cosmetic products. To
capture opportunities in the growing retail market, on 1 January 2024, Ka
Tung International Trading Limited (“Ka Tung”) (a wholly-owned subsidiary
of the Company) entered into the product distribution cooperation contract
(the “Product Distribution Contract”) for a term of one year with 上海
蝶翠詩商業有限公司 (Shanghai DHC Commercial Co., Ltd.*) (“Shanghai
DHC”), a wholesaler of DHC, a famous cosmetic brand. Pursuant to the
Product Distribution Contract, Ka Tung purchased the DHC cosmetic
products from Shanghai DHC and obtained the distribution rights to sell
DHC cosmetic products on cross-border e-commerce platforms in the PRC.
Ka Tung was authorized to establish retail stores for the distribution of the
products. The Product Distribution Contract expired on 31 December 2024
and was not renewed upon its expiry due to commercial considerations. In
accordance with the contractual arrangement, Ka Tung was granted a fivemonth sell-through period from 1 January 2025 to 31 May 2025 to dispose
of its remaining inventory, resulting in a substantial decline in the revenue
amounted to approximately HK$19,032,000 for the Year. The Group is actively
seeking alternative brands or products to strengthen the performance of the trading business.

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In line with evolving market demands and our commitment to sustainability,
the Company has shifted its focus towards the trading of pre-owned
electronic products since November 2025, the Group has started the trading
of pre-owned electronic products. By refreshing and reselling of the preowned
electronic products, the Group offers high-quality products at
competitive prices while meeting growing consumer demand for sustainable
and affordable alternatives to new electronic devices. The Group recognized a
revenue in the amount of approximately HK$28,033,000 for the Year from the
trading of pre-owned electronic products.

For the Year, the trading business recorded a revenue of approximately
HK$47,065,000 (Corresponding Year: approximately HK$73,613,000),
principally attributable to the trading of cosmetic products and preowned
electronic products. The revenue of the trading business in the
Corresponding Year was entirely attributable by the trading of cosmetic
products pursuant to the Product Distribution Contract.

After taking into account of the cost of revenue, selling and marketing
expenses, and administrative expenses, the trading business recorded
segment profit in the amount of approximately HK$27,415,000
(Corresponding Year: segment profit of approximately HK$33,959,000).