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1、The Stock Exchange of Hong Kong Limited and the Securities and Futures Commission take no responsibility for thecontents of this Application Proof,make no representation as to its accuracy or completeness and expressly disclaimany liability whatsoever for any loss howsoever arising from or in relian
2、ce upon the whole or any part of the contentsof this Application Proof.Application Proof ofK Cash Fintech Corporation LimitedK Cash金融科技集團有限公司(Incorporated in the Cayman Islands with limited liability)WARNINGThe publication of this Application Proof is required by The Stock Exchange of Hong Kong Limi
3、ted(the“StockExchange”)and the Securities and Futures Commission(the“Commission”)solely for the purpose of providinginformation to the public in Hong Kong.This Application Proof is in draft form.The information contained in it is incomplete and is subject to change whichcan be material.By viewing th
4、is document,you acknowledge,accept and agree with K Cash Fintech CorporationLimited(the“Company”),its joint sponsors,overall coordinators,advisors or members of the underwritingsyndicate that:(a)this document is only for the purpose of providing information about the Company to the public in Hong Ko
5、ngand not for any other purposes.No investment decision should be based on the information contained in thisdocument;(b)the publication of this document or supplemental,revised or replacement pages on the Stock Exchanges websitedoes not give rise to any obligation of the Company,its joint sponsors,o
6、verall coordinators,advisors or membersof the underwriting syndicate to proceed with an offering in Hong Kong or any other jurisdiction.There is noassurance that the Company will proceed with the offering;(c)the contents of this document or supplemental,revised or replacement pages may or may not be
7、 replicated in fullor in part in the actual final listing document;(d)this Application Proof is not the final listing document and may be updated or revised by the Company from timeto time in accordance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong KongLimited;(e)t
8、his document does not constitute a prospectus,offering circular,notice,circular,brochure or advertisementoffering to sell any securities to the public in any jurisdiction,nor is it an invitation to the public to make offersto subscribe for or purchase any securities,nor is it calculated to invite of
9、fers by the public to subscribe for orpurchase any securities;(f)this document must not be regarded as an inducement to subscribe for or purchase any securities,and no suchinducement is intended;(g)neither the Company nor any of its affiliates,its joint sponsors,advisors or underwriters is offering,
10、or issoliciting offers to buy,any securities in any jurisdiction through the publication of this document;(h)no application for the securities mentioned in this document should be made by any person nor would suchapplication be accepted;(i)the Company has not and will not register the securities ref
11、erred to in this document under the United StatesSecurities Act of 1933,as amended,or any state securities laws of the United States;(j)as there may be legal restrictions on the distribution of this document or dissemination of any informationcontained in this document,you agree to inform yourself a
12、bout and observe any such restrictions applicable toyou;and(k)the application to which this document relates has not been approved for listing and the Stock Exchange and theCommission may accept,return or reject the application for the subject public offering and/or listing.If an offer or an invitat
13、ion is made to the public in Hong Kong in due course,prospective investors are reminded tomake their investment decisions solely based on the Companys prospectus registered with the Registrar ofCompanies in Hong Kong,copies of which will be distributed to the public during the offer period.IMPORTANT
14、:If you are in any doubt about any of the contents of this document,you should obtain independent professional advice.K Cash Fintech Corporation LimitedK Cash金融科技集團有限公司(Incorporated in the Cayman Islands with limited liability)REDACTEDNumber of REDACTED under theREDACTED:REDACTED Shares(subject to t
15、heREDACTED)Number of REDACTED:REDACTED Shares(subject to REDACTED)Number of REDACTED:REDACTED Shares(subject to REDACTEDand the REDACTED)Maximum REDACTED:HK$REDACTED per REDACTED plusbrokerage of 1.0%,SFC transaction levy of0.0027%,AFRC transaction levy of 0.00015%and Stock Exchange trading fee of0.
16、00565%(payable in full on application in HongKong dollars and subject to refund)Nominal value:HK$0.0001 per ShareREDACTED:Joint SponsorsPING AN OF CHINA CAPITAL(HONG KONG)REDACTEDHong Kong Exchanges and Clearing Limited,The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Compan
17、y Limited take no responsibilityfor the contents of this document,make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoeverarising from or in reliance upon the whole or any part of the contents of this document.A copy of this doc
18、ument,having attached thereto the documents specified in“Appendix V Documents Delivered to the Registrar of Companies and Available onDisplay”has been registered by the Registrar of Companies in Hong Kong as required by Section 342C of the Companies(Winding Up and Miscellaneous Provisions)Ordinance(
19、Chapter 32 of the Laws of Hong Kong).The Securities and Futures Commission of Hong Kong and the Registrar of Companies in Hong Kong take noresponsibility for the contents of this document or any of the other documents referred to above.The REDACTED is expected to be determined by agreement between t
20、he REDACTED(for themselves and on behalf of the REDACTED)and our Company onor about REDACTED and,in any event,not later than REDACTED.The REDACTED will be not more than HK$REDACTED per REDACTED Share and iscurrently expected to be not less than HK$REDACTED per REDACTED,unless otherwise announced.RED
21、ACTED applying for the REDACTED must pay,onapplication,the maximum REDACTED of HK$REDACTED per REDACTED,together with brokerage of REDACTED,SFC transaction levy of 0.0027%,AFRC transaction levy of 0.00015%and Stock Exchange trading fee of 0.00565%,subject to refund if the REDACTED is less than HK$RE
22、DACTED perREDACTED.If,for any reason,the REDACTED is not agreed between our Company and the REDACTED(for themselves and on behalf of the REDACTED)on or before REDACTED(Hong Kong time),the REDACTED(including the REDACTED)will not proceed and will lapse.The REDACTED(for themselves and on behalf of the
23、 REDACTED),with the consent of our Company,may reduce the indicative REDACTED stated in thisdocument and/or reduce the number of REDACTED being REDACTED pursuant to the REDACTED at any time on or prior to the morning of the last day forlodging applications under the REDACTED.In such a case,notices o
24、f the reduction of the indicative REDACTED and/or the number of REDACTED will bepublished on the websites of the Stock Exchange at www.hkexnews.hk and our Company at www.kcash.hk as soon as practicable following the decision to make suchreduction,and in any event not later than the morning of the la
25、st day for lodging applications under the REDACTED.Further details are set forth in the sections headed“Structure of the REDACTED”and“How to Apply for REDACTED”in this document.Prior to making an REDACTED decision,REDACTED should consider carefully all of the information set out in this document,inc
26、luding the risk factors set outin“Risk Factors”.The obligations of the REDACTED under the REDACTED to subscribe for,and to procure subscribers for,the Hong Kong REDACTED,aresubject to termination by the REDACTED(for themselves and on behalf of the REDACTED)if certain events occur prior to 8:00 a.m.o
27、n the REDACTED.Suchgrounds are set out in“REDACTED Grounds for termination”.It is important that you refer to that section for further details.The REDACTED have not been and will not be registered under the REDACTED or any state securities law in the United States and may not be REDACTED,sold,pledge
28、d or transferred within the United States.The REDACTED may be REDACTED and sold outside the United States in offshore transactions inaccordance with REDACTED under the REDACTED.REDACTEDTHIS DOCUMENT IS IN DRAFT FORM,INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUSTBE READ IN CONJUNCTION
29、 WITH THE SECTION HEADED“WARNING”ON THE COVER OF THIS DOCUMENT.IMPORTANTREDACTEDREDACTEDIMPORTANTTHIS DOCUMENT IS IN DRAFT FORM,INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUSTBE READ IN CONJUNCTION WITH THE SECTION HEADED“WARNING”ON THE COVER OF THIS DOCUMENT.REDACTEDIMPORTANTTHIS DOC
30、UMENT IS IN DRAFT FORM,INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUSTBE READ IN CONJUNCTION WITH THE SECTION HEADED“WARNING”ON THE COVER OF THIS DOCUMENT.REDACTEDEXPECTED TIMETABLETHIS DOCUMENT IS IN DRAFT FORM,INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUSTBE READ IN
31、CONJUNCTION WITH THE SECTION HEADED“WARNING”ON THE COVER OF THIS DOCUMENT.i REDACTEDEXPECTED TIMETABLETHIS DOCUMENT IS IN DRAFT FORM,INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUSTBE READ IN CONJUNCTION WITH THE SECTION HEADED“WARNING”ON THE COVER OF THIS DOCUMENT.ii REDACTEDEXPECTED
32、TIMETABLETHIS DOCUMENT IS IN DRAFT FORM,INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUSTBE READ IN CONJUNCTION WITH THE SECTION HEADED“WARNING”ON THE COVER OF THIS DOCUMENT.iii This document is issued by our Company solely in connection with the REDACTED and theREDACTED and does not co
33、nstitute an REDACTED to sell or a solicitation of anREDACTED to buy any security other than the REDACTED by this document pursuant to theREDACTED.This document may not be used for the purpose of,and does not constitute,anREDACTED or invitation in any other jurisdiction or in any other circumstances.
34、No action hasbeen taken to permit a REDACTED of the REDACTED in any jurisdiction other than HongKong and no action has been taken to permit the distribution of this document in any jurisdictionother than Hong Kong.The distribution of this document and the REDACTED of theREDACTED in other jurisdictio
35、ns are subject to restrictions and may not be made except aspermitted under the applicable securities laws of such jurisdictions pursuant to registration with orauthorization by the relevant securities regulatory authorities or an exemption therefrom.You should rely only on the information contained
36、 in this document and the REDACTED tomake REDACTED decision.The REDACTED is made solely on the basis of the informationcontained and the representations made in this document.We have not authorized anyone to provideyou with information that is different from what is contained in this document.Any in
37、formation orrepresentation not made in this document must not be relied on by you as having been authorized byus,the Joint Sponsors,the REDACTED,the REDACTED,the REDACTED,theREDACTED,the REDACTED,any of our or their respective directors,officers,representatives,affiliates,employees,agents or any oth
38、er person or party involved in the REDACTED.Informationcontained in our website,located at www.kcash.hk,does not form part of this document.PageExpected Timetable.iContents.ivSummary.1Definitions.15Glossary of Technical Terms.27Forward-looking Statements.31Risk Factors.32Waiver from Compliance with
39、the Listing Rules.51Information about this Document and the REDACTED.52Directors and Parties Involved in the REDACTED.55Corporate Information.58Industry Overview.60CONTENTSTHIS DOCUMENT IS IN DRAFT FORM,INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUSTBE READ IN CONJUNCTION WITH THE SEC
40、TION HEADED“WARNING”ON THE COVER OF THIS DOCUMENT.iv PageRegulatory Overview.76History,Reorganization and Corporate Structure.85Business.92Notifiable Transactions.182Relationship with our Controlling Shareholders.183Connected Transaction.203Directors and Senior Management.208Substantial Shareholders
41、.225Share Capital.227Financial Information.230Future Plans and REDACTED.273REDACTED.279Structure of the REDACTED.289How to Apply for REDACTED.298Appendix IAccountants Report.I-1Appendix IIUnaudited REDACTED Financial Information.II-1Appendix IIISummary of the Constitution of our Company andCayman Is
42、lands Company Law.III-1Appendix IVStatutory and General Information.IV-1Appendix VDocuments Delivered to the Registrar of Companies andAvailable on Display.V-1CONTENTSTHIS DOCUMENT IS IN DRAFT FORM,INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUSTBE READ IN CONJUNCTION WITH THE SECTION
43、HEADED“WARNING”ON THE COVER OF THIS DOCUMENT.v This summary aims to give you an overview of the information contained in this document.Asit is a summary,it does not contain all the information that may be important to you.You should readthe whole document before you decide to REDACTED in the REDACTE
44、D.There are risks associated with any REDACTED.For more details,see“Risk Factors”.Youshould read that section carefully before you decide to REDACTED in the REDACTED.OVERVIEWWe are a licensed money lender in Hong Kong focusing on providing unsecured loans throughfintech while offering a convenient c
45、ustomer experience.Our mission is to empower digital finance andmake unsecured money lending accessible to anyone who lacks access to traditional mainstream creditproducts in Hong Kong.We started our journey in 2006,and since then,we have fostered creativity and innovation in ourentrepreneurial ende
46、avors.In 2015,we introduced Video Teller Machines or VTMs,which are digitalteller machines that provide loan drawdown and repayment services.In the following years,weconstantly upgraded the functions of our VTMs by adopting various technologies.We also launched ouronline lending portal,and are commi
47、tted to maintaining high ethical standards and technologicallyadvanced credit assessment models and risk management systems through fintech application.We believe that traditional lending process are cumbersome,inaccessible and heavily reliant ontraditional credit assessment that focuses solely on a
48、n individual borrowers credit history.However,intodays connected world,where information exchange is seamless,we believe that traditional moneylender businesses are struggling to keep pace with the speed of technological advancements in adigitalized world,resulting in the need for smart lending busi
49、nesses supported by fintech applications.Our loan products are tailored to meet the needs of underserved borrowers who face financialhardships,emergencies or unexpected expenses.We offer unsecured credit access through fintech,including loan application,credit assessment,drawdown and loan repayment.
50、Our loan products can beclassified into three categories:Unsecured Property Owner Loans:unsecured loans offered to borrowers who are propertyowners in Hong Kong,including owners of HOS Properties,without the need to provide anycollaterals;Personal Loans:unsecured loans offered to individuals,includi
51、ng“7x24 AI Loans”;andSME Loans:unsecured loans offered to SMEs,with a personal guarantee typically providedby a director or a shareholder of the SME borrower.The market share of licensed money lenders as a percentage of the entire unsecured loan market inHong Kong is approximately 4.1%as in 2022.In
52、terms of the entire unsecured loan market(comprisingof authorised institutions and licensed money lenders)and the licensed unsecured money lenders marketin Hong Kong,our market share in terms of revenue is approximately 0.15%and 3.6%in 2022,respectively.Further,the licensed unsecured financing marke
53、t is relatively concentrated with top threemarket participants accounting for 79.2%of the overall market share by revenue in 2022.Our loan receivables amounted to HK$986.0 million,HK$844.5 million,HK$913.8 million andHK$948.2 million as of December 31,2020,2021 and 2022 and May 31,2023,respectively.
54、In addition,our net interest income was HK$267.7 million,HK$234.1 million,HK$211.0 million and HK$95.0million in 2020,2021 and 2022 and May 31,2023,respectively.We pride ourselves on providing highly automated,transparent,efficient,and digital borrowingexperiences to our borrowers.We strive to make
55、credit accessible to all,and we are dedicated to ensuringthat our borrowers receive the best experience when borrowing from us.SUMMARYTHIS DOCUMENT IS IN DRAFT FORM,INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUSTBE READ IN CONJUNCTION WITH THE SECTION HEADED“WARNING”ON THE COVER OF TH
56、IS DOCUMENT.1 Our business is built on fintech and deep industry expertise in Hong Kongs licensed money lendingmarket and risk management.We provide a range of unsecured loans to borrowers who have beenunderserved by authorized institutions.We implement a comprehensive credit risk managementmethodol
57、ogy to control our credit risk exposure throughout the loan cycle of our loan products.We have also integrated various fintech into our business operation.On the front-end,we leveragevarious fintech tools to automate and digitalize our credit cycle from loan application to loan repayment,which conti
58、nuously enhance user experience.Meanwhile,on the back-end,we use fintech applications toleverage established technologies,such as AI,blockchain and business process automation technology,toautomate and streamline our risk management systems and business process.Our K Cash GO Platform isbuilt on a hy
59、brid cloud environment which supports all these technologies,allowing us to achieve optimaloperational efficiency.We are able to position our business ahead of the market by embedding various fintech in ourlending process.This approach enables us to achieve digitalization and automation across the l
60、endingprocess,including loan application,credit review and approval,drawdown and post-drawdown.Webelieve our fintech advantages set us apart from traditional licensed money lenders and enable us toachieve more comprehensive credit assessment,higher efficiency,more precise risk management andcontrols
61、,as well as lower overhead and operating expenses.OUR COMPETITIVE STRENGTHSWe believe that the following competitive strengths contribute to our success and differentiate usfrom our competitors:We are a licensed money lender in Hong Kong.We provide cost-effective money lending services through our a
62、dopted fintech applications.We possess comprehensive credit risk management capability enhanced by technology andindustry experience.We deploy our online plus offline lending platform effectively and set up branchesstrategically,adopt diverse and effective marketing measures to more efficiently focu
63、s on ourtarget customers.We have a dedicated and experienced management and fintech team.OUR BUSINESS STRATEGIESWe will execute the following strategies to further expand our business:We plan to continuously enhance our customers borrowing experience and streamline ourworkflow through fintech,includ
64、ing enhancing our K Cash GO Platform and launching ourCustomer Data Platform.We intend to further expand our existing loan portfolio and expand our business with ouradoption of fintech.For example,we intend to expand our business scope to provide“BuyNow,Pay Later”services,and collaborated with River
65、 Square on a blockchain technologyplatform.SUMMARYTHIS DOCUMENT IS IN DRAFT FORM,INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUSTBE READ IN CONJUNCTION WITH THE SECTION HEADED“WARNING”ON THE COVER OF THIS DOCUMENT.2 REDACTEDWe estimate that we will receive REDACTED from the REDACTED of
66、 approximatelyHK$REDACTED million(after deducting REDACTED and other estimated expenses in connectionwith the REDACTED),assuming an REDACTED of HK$REDACTED per Share,being themid-point of the REDACTED,and that the REDACTED is not exercised.We intend to use theREDACTED from the REDACTED for the follo
67、wing purposes:approximately REDACTED or approximately HK$REDACTED million,will be used toenrich our fintech capabilities;approximately REDACTED or approximately HK$REDACTED million,will be used toexpand our loan portfolio;andnot more than REDACTED or approximately HK$REDACTED million,will be used fo
68、rgeneral working capital and general corporate purposes.For details,see“Future Plans and REDACTED”.RISK FACTORSOur operations and the REDACTED involve certain risks and uncertainties,some of which arebeyond our control and may affect your decision to invest in us or the value of your investment.See“
69、RiskFactors”for details,which we strongly urge you to read in full before making an investment in ourShares.Some of the major risks we face include the following:We are exposed to credit risks of our customers who may default on their loans.If we fail to promote our financial technology-based servic
70、es to a satisfactory level of marketacceptance,or if we fail to continuously enhance our technologies at a competitive pace,wemay lose certain businesses and not be able to recover our investment on adopting relevanttechnologies.If the credit or other information of a prospective borrower we receive
71、 from other parties isinaccurate or unreliable,the accuracy or effectiveness of our credit assessment and risk-basedpricing may be compromised.If we fail to control our credit risk exposure,our bad debt ratio may increase,and our businessand results of operations may be adversely affected.We are in
72、a highly competitive industry.If we are not able to compete effectively,it couldimpact our profitability.Our provision for expected credit losses may not be adequate to cover actual credit losses.Our future expansion plans are subject to uncertainties and risks.We may not be able to obtain sufficien
73、t funding on terms acceptable to us to finance ouroperation;we may not be able to comply with covenants in our borrowings,and our lendersmay request loan repayment without prior notice.SUMMARYTHIS DOCUMENT IS IN DRAFT FORM,INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUSTBE READ IN CONJ
74、UNCTION WITH THE SECTION HEADED“WARNING”ON THE COVER OF THIS DOCUMENT.3 OUR CONTROLLING SHAREHOLDERSMr.Steven Lee through Lee Trust,Chairman Lee,Mrs.Lee and Mr.Edwin Lee will own 28.5%,25.0%,25.0%,and 21.5%respectively of the issued share capital of Konew Group which in turnindirectly holds REDACTED
75、 of the issued capital of our Company through its wholly-ownedsubsidiary,Konew Fintech,immediately following the completion of the REDACTED and theREDACTED(without taking into account any Shares which may be allotted and issued pursuant to theexercise of the REDACTED or options which may be granted
76、under the Share Option Scheme).Chairman Lee and Mrs.Lee are spouses and the parents of Mr.Steven Lee and Mr.Edwin Lee.Accordingly,Konew Group,Konew Fintech,Chairman Lee,Mrs.Lee,Mr.Steven Lee and Mr.Edwin Leeare regarded as a group of Controlling Shareholders of our Company.To avoid any actual or pot
77、ential competition between the business of the Controlling Shareholdersand our Company,our Controlling Shareholders have provided non-competition undertakings to us to theeffect that each of them shall not,and shall procure its close associates not to,directly or indirectly,engage in,invest in,parti
78、cipate in,or attempt to participate in,whether on its own account or with eachother or in conjunction with or on behalf of any person or company,any business directly or indirectly incompetition with or likely to be in competition with the Unsecured Loan Business.KEY OPERATIONAL DATALoan Receivables
79、The following table sets forth a breakdown of our loan receivables by loan type as of the datesindicated.As of December 31,As of May 31,2020202120222023(HK$million)Loan receivables Unsecured Property Owner Loans713.4634.9730.0737.8 Personal Loans320.1259.7234.5261.5 SME Loans58.749.654.357.0 Others(
80、1)2.41.91,094.6946.11,018.81,056.3Less:Provision for impairment(108.6)(101.6)(105.0)(108.1)986.0844.5913.8948.2Expected loss rates9.9%10.8%10.3%10.2%(1)Others comprise of subordinated mortgage loan business prior to the REDACTED.We have already ceased toprovide any new loans under subordinated mortg
81、age business and will only focus on providing unsecured loans.SUMMARYTHIS DOCUMENT IS IN DRAFT FORM,INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUSTBE READ IN CONJUNCTION WITH THE SECTION HEADED“WARNING”ON THE COVER OF THIS DOCUMENT.4 Interest IncomeOur principal source of revenue is i
82、nterest income generated from the loans provided to ourborrowers.The following table sets out the breakdown of the interest income from our loan products andits percentage of our relevant interest income during the Track Record Period:Year ended December 31,Five months ended May 31,Loan Product(1)20
83、202021202220222023HK$million%HK$million%HK$million%HK$million%HK$million%(Unaudited)Unsecured Property OwnerLoans186.661.3169.662.8146.862.762.562.969.666.5 HOS Property176.758.1161.359.7140.159.959.560.065.462.5 Private Property9.93.28.33.16.72.83.02.94.24.0Personal Loans106.435.087.132.274.631.932
84、.032.230.028.7SME Loans10.53.412.94.812.15.24.74.75.14.8Total304.3100.0270.1100.0234.0100.099.5100.0104.7100.0(1)Our interest income also comprises income from subordinated mortgage loans,which were insignificant and such loanportfolio were transferred to the Excluded Group as of December 31,2022 an
85、d excluded from this table.We havealready ceased to provide any new loans under subordinated mortgage loans and will only focus on providingunsecured loans.For details,see“Financial Information Principal Components of Our Consolidated Statement ofComprehensive Income Interest income”.Among the recei
86、vables of loan principal of HK$912.6 million as of December 31,2022,on December 31,2022,weacquired a loan portfolio from the Excluded Group at carrying amount of approximately HK$150.1 million.Fordetails,see“Business Key Financial and Operating Metrics Receivables of Loan Principal and Loan Accounts
87、 Loans Assignment and Transfer”.Net Interest MarginOur profitability is affected by the net interest margins of our loan products.The table below setsforth the net interest margin of our loan products during the Track Record Period:Year ended December 31,Five months ended May 31,Loan Product(1)20202
88、02120222022(2)2023(2)(Unaudited)Unsecured Property Owner Loans22.8%21.6%21.6%8.9%8.6%HOS Property22.7%21.5%21.5%8.8%8.6%Private Property24.5%25.8%24.1%10.4%8.3%Personal Loans26.6%26.5%27.9%11.7%11.2%SME Loans18.2%20.3%20.7%8.1%8.2%Overall23.8%22.9%23.3%9.6%9.2%(1)Our loan products also comprise subo
89、rdinated mortgage loan business prior to the REDACTED,which wereexcluded from this table.We have already ceased to provide any new loans under subordinated mortgage loan businessand will only focus on providing unsecured loans.On December 31,2022,we acquired a loan portfolio from the Excluded Group
90、at its carrying amount of approximatelyHK$150.1 million.The net interest margin in the table did not take into account the loan portfolio transferred to us.For details,see“Business Key Financial and Operating Metrics Receivables of Loan Principal and LoanAccounts Loans Assignment and Transfer”.(2)Th
91、e figures for the five months ended May 31,2022 and 2023 were not annualized.SUMMARYTHIS DOCUMENT IS IN DRAFT FORM,INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUSTBE READ IN CONJUNCTION WITH THE SECTION HEADED“WARNING”ON THE COVER OF THIS DOCUMENT.5 Bad Debt RatioWe classify certain lo
92、an receivables as bad debt when they have become irrecoverable.Our bad debtratio is calculated by dividing the amount of bad debt by the aggregate amount of loan receivables andsuch bad debt as of the relevant year-end dates.The table below sets forth the bad debt ratio of for eachof our loan produc
93、ts as of the dates indicated:As of December 31,As of May 31,Loan Product(1)20202021202220222023(Unaudited)Unsecured Property OwnerLoans0.6%0.5%0.3%0.0%0.1%HOS property0.6%0.4%0.3%0.0%0.1%Private property1.4%1.1%0.1%0.0%0.0%Personal Loans12.8%15.4%12.7%5.3%5.8%SME Loans1.7%7.3%5.3%4.0%Overall4.5%5.1%
94、3.8%1.8%1.8%Average Loan SizeThe tables below sets out the average loan size(4)of our loan products during the Track RecordPeriod:Year ended December 31,Five monthsendedMay 31,Loan Product(1)2020202120222023(HK$000)Unsecured Property Owner Loans287.1304.0321.7321.0 HOS property310.7327.5343.2351.2 P
95、rivate property118.0125.4138.6148.1Personal Loans66.667.665.066.5SME Loans1,707.11,116.6899.4976.7Overall144.2147.7141.1151.1SUMMARYTHIS DOCUMENT IS IN DRAFT FORM,INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUSTBE READ IN CONJUNCTION WITH THE SECTION HEADED“WARNING”ON THE COVER OF THIS
96、 DOCUMENT.6 Average Loan TenorThe following tables provide an overview of our loan products by average loan tenor as of therespective dates as indicated:As of December 31,As ofMay 31,Loan Product(1)2020202120222023(months)Unsecured Property Owner Loans56.057.159.258.7 HOS property58.559.562.262.6 Pr
97、ivate property34.735.937.537.5Personal Loans27.825.923.323.2SME Loans29.129.027.528.0Overall37.536.435.535.1Average Effective Interest RateThe table below sets out the average effective interest rate(2)of our loan products during the TrackRecord Period:Year ended December 31,Five monthsendedMay 31,L
98、oan Product(1)2020202120222023(per annum)Unsecured Property Owner Loans31.3%30.6%29.9%29.2%HOS property30.6%30.1%29.4%28.7%Private property36.1%35.0%34.6%32.0%Personal Loans42.0%41.8%41.9%40.0%SME Loans24.1%24.1%23.9%24.0%Overall38.5%38.2%38.5%36.6%Interest SpreadThe table below sets out the interes
99、t spread(3)of our loan products during the Track Record Period:Year ended December 31,Five monthsendedMay 31,Loan Product(1)2020202120222023(%)Unsecured Property Owner Loans25.324.723.020.4 HOS property24.624.122.519.9 Private property30.129.127.723.2Personal Loans36.035.835.031.2SME Loans18.018.217
100、.115.3Overall32.532.331.727.9SUMMARYTHIS DOCUMENT IS IN DRAFT FORM,INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUSTBE READ IN CONJUNCTION WITH THE SECTION HEADED“WARNING”ON THE COVER OF THIS DOCUMENT.7 Notes:(1)Our loan portfolio also comprises a residual subordinated mortgage loan bus
101、iness which were transferred to theExcluded Group at December 31,2022 and excluded from this table.We have already ceased to provide any new loansunder subordinated mortgage loan business and will only focus on providing unsecured loans.On December 31,2022,we acquired the Transferred Loans at the ca
102、rrying amount of approximately HK$150.1million.(2)Average effective interest rate represents the average of effective interest rates in respect of the existing loanagreements during the year or period.(3)Our interest spread is calculated based on average effective interest rate less weighted average
103、 cost of borrowings.(4)Average loan size represents the arithmetic average of loan principal originally granted by us for loans whichgenerated interest income during each year or period of the Track Record Period.The decrease in net interest margin from 23.2%in 2022 to 22.0%(annualized)for the five
104、monthsended May 31,2023 was due to the decrease in the average effective interest rate of loans we granted andthe increase in effective interest rate of our borrowings as a result of interest rate hikes.The increase inbad debt ratio from 3.8%in 2022 to 4.2%(annualized)for the five months ended May 3
105、1,2023 was dueto the increase in proportion of Personal Loans in our loan portfolio,which had a higher chance to bewritten off as compared to our other loan products.The decrease in average effective interest rate from38.5%in 2022 to 36.6%for the five months ended May 31,2023 was due to the decrease
106、 in the proportionof loans with interest rate over 36%per annum in our portfolio as we temporarily withhold granting newloans with interest rate over 36%per annum in 2023.SUMMARY OF FINANCIAL INFORMATIONThe following tables set forth summary of our financial data during the Track Record Period,which
107、are extracted from the Accountants Report set out in“Appendix I Accountants Report”.The summaryfinancial data set forth below should be read together with our consolidated financial statements and theaccompanying notes,as well as“Financial Information”.Consolidated statements of comprehensive income
108、Year ended December 31,Five months ended May 31,20202021202220222023(HK$million)(Unaudited)Interest income304.3270.1234.099.5104.7Interest expenses(36.6)(36.0)(23.0)(9.3)(9.7)Net interest income267.7234.1211.090.295.0Other income5.73.910.13.81.1Other(losses)/gains,net(0.3)0.2(0.2)0.10.8Selling expen
109、ses(39.9)(35.1)(34.4)(9.5)(12.1)General and administrative expenses(57.7)(68.4)(66.1)(27.6)(33.5)Expected credit losses,net(69.7)(41.9)(37.7)(17.7)(21.3)Operating profit105.892.882.739.330.0Other finance cost(0.3)(0.5)(0.8)(0.3)(0.2)Profit before income tax105.592.381.939.029.8Income tax expenses(14
110、.5)(15.2)(14.0)(6.5)(6.9)Profit and total comprehensive incomefor the year/period91.077.167.932.522.9SUMMARYTHIS DOCUMENT IS IN DRAFT FORM,INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUSTBE READ IN CONJUNCTION WITH THE SECTION HEADED“WARNING”ON THE COVER OF THIS DOCUMENT.8 Non-HKFRS Me
111、asureWe believe the non-HKFRS measure set out below provides useful information to investors aboutour operating performance,and enhances the overall understanding of our past performance and futureprospects in the same manner as our management.We define adjusted net profit(non-HKFRS measure)asprofit
112、 for the year or period adjusted by expenses for the REDACTED.Given such expenses wereincurred for the purpose of the REDACTED,the adjustment has been consistently made during theTrack Record Period.The non-HKFRS measure shall not be considered in isolation from,or as substitute for analysis of,our
113、consolidated statement of profit or loss or financial condition as reported under HKFRS.In addition,the non-HKFRS measure may be defined separately from similar terms used by other companies andtherefore may not be comparable to similar measures presented by other companies.The table below sets fort
114、h our adjusted net profit(non-HKFRS measure)during the Track RecordPeriod:Year ended December 31,Five months ended May 31,20202021202220222023(HK$million)(Unaudited)Profit for the year/period91.077.167.932.522.9Adjustment for:REDACTEDREDACTEDREDACTEDAdjusted net profitfor the year/period(non-HKFRS m
115、easure)91.077.173.232.534.1Our adjusted net profit(non-HKFRS measures)increased by approximately HK$1.6 million fromapproximately HK$32.5 million for the five months ended May 31,2022 to approximately HK$34.1million for the five months ended May 31,2023 primarily due to the growth of our loan portfo
116、lio as aresult of the gradual recovery of economy after COVID-19.Nonetheless,the growth is rather stagnantdue to the cautious market sentiment in the property market,price pressures on major goods and servicesas a result of inflation and increase in pressure faced by our SME borrowers due to increas
117、e in domesticbusiness cost.Our profit and total comprehensive income decreased from HK$91.0 million in 2020 to HK$77.1million in 2021 as a result of the decrease in interest income because as compared to the pre-COVIDperiod(i.e.before the Track Record Period commenced),we were(i)more conservative in
118、 granting loans,and(ii)there was an increase in early redemption by our borrowers in 2020 which reduced our interestincome and thus,affected our profit in subsequent years.Our profit and total comprehensive incomedecreased from HK$77.1 million in 2021 to HK$67.9 million in 2022 as our credit approva
119、l policyremained tightened as a result of COVID-19s persistent impact on Hong Kongs economy,which led toa decrease in the actual size of our loan portfolio(without taking into account the Transferred Loans)andinterest income derived from our loans.Our profit and total comprehensive income decreased
120、from HK$32.5 million for the five monthsended May 31,2022 to HK$22.9 million for the five months ended May 31,2023 as a result of theincrease in REDACTED and net expected credit losses due to increase in loan receivables,which hasoffset the increase in interest income as we gradually grow our loan p
121、ortfolio.SUMMARYTHIS DOCUMENT IS IN DRAFT FORM,INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUSTBE READ IN CONJUNCTION WITH THE SECTION HEADED“WARNING”ON THE COVER OF THIS DOCUMENT.9 Consolidated Balance SheetsThe following table sets forth line items from our consolidated balance sheet
122、s as of the datesindicated:As of December 31,As of May 31,2020202120222023(HK$million)Total assets1,265.11,309.11,087.31,043.6Total liabilities671.7656.4366.8400.2Total equity593.4652.7720.5643.4Our total equity increased from HK$593.4 million as of December 31,2020 to HK$652.7 million asof December
123、 31,2021,mainly due to profit for the year of HK$77.1 million which was offset bydividends of HK$17.8 million distributed in 2021.Our total equity further increased from HK$652.7million as of December 31,2021 to HK$720.5 million as December 31,2022,mainly due to profit for theyear of HK$67.9 million
124、.Our total equity decreased to approximately HK$643.4 million as of May 31,2023 mainly due to the distribution of a special dividend of HK$100.0 million in 2023.Consolidated statements of cash flowYear ended December 31,Five months ended May 31,20202021202220222023(HK$million)(Unaudited)Net cash gen
125、erated fromoperating activities164.5207.0169.364.90.4Net cash used in investing activities(316.4)(162.0)(111.4)(10.1)(6.5)Net cash generated from/(used in)financing activities160.3(45.3)(62.7)(17.5)16.5Net increase/(decrease)in cashand cash equivalents8.4(0.3)(4.8)37.310.4Cash and cash equivalentsat
126、 the beginning of year/period20.829.228.928.924.1Cash and cash equivalentsat the end of year/period29.228.924.166.234.5SUMMARYTHIS DOCUMENT IS IN DRAFT FORM,INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUSTBE READ IN CONJUNCTION WITH THE SECTION HEADED“WARNING”ON THE COVER OF THIS DOCUM
127、ENT.10 SELECTED FINANCIAL RATIOSThe following table sets forth our selected financial ratios during the Track Record Period.As of/year ended December 31,As of/five months endedMay 31,20202021202220222023(Unaudited)Gearing ratio(1)1.060.960.470.500.54Return on Assets(2)7.0%6.0%5.7%2.4%2.2%Return on E
128、quity(3)14.8%12.4%9.9%4.7%2.2%Interest coverage ratio(4)3.9 times3.6 times4.6 times5.2 times4.1 times(1)Gearing ratio is calculated by dividing net debts(being total debt including borrowings,amounts due to the ultimateholding company,the immediate holding company and related parties and lease liabi
129、lities less cash and cashequivalents)by total equity as of the respective year-end or period-end dates.(2)Return on assets is calculated by dividing net profit for the year or period by the average total assets as of the beginningand end of the corresponding year/period.(3)Return on equity is calcul
130、ated by dividing net profit for the year or period by the average total equity as of thebeginning and end of the corresponding year/period.(4)Interest coverage ratio is calculated by dividing profit before tax and interest(excluding interest expenses on leaseliabilities)by the interest expenses for
131、the corresponding year or period.Our Source of FundsOur primary funding channels mainly include:(i)cash flows from our operating activities;(ii)funding from loans or facilities from local banks and other authorized institution;and(iii)ConnectedAdvances.Certain portion of the Connected Advances we re
132、ceived was non-interest bearing,which mayhave affected our financial performance(such as net profit)and key financial ratios(such as return onequity)if interest expenses shall be borne by us.For an illustration of how non-interesting bearingConnected Advances might have impacted us if they were inte
133、rest-bearing,see“Business Our Sourceof Funds Our major fund providers Connected Advances”.Prior to our REDACTED,existing Connected Advances(if any)owed to our connected persons orrelated parties shall also be settled by cash,and financial assistance provided to us after ourREDACTED shall also comply
134、 with the Listing Rules.Any potential changes in our funding channelsmay affect our results of operations and financial condition.For details,see“Risk factors Ourfinancial performance may be adversely affected as we shift away from obtaining financing from relatedparties to financing from independen
135、t fund providers.”RECENT DEVELOPMENTSOur loan receivables has increased from HK$1,056.3 million as of May 31,2023 to HK$1,106.5million as of August 31,2023,and the number of our loan accounts increased from 7,629 as of May 31,2023 to 8,233 as of August 31,2023 which was primarily due to recovery of
136、the economy from therelaxation of restrictions on travel and social distancing in Hong Kong in relation to the COVID-19pandemic and the loosening of our credit assessment policy,which led to the growth of our loan portfolio.SUMMARYTHIS DOCUMENT IS IN DRAFT FORM,INCOMPLETE AND SUBJECT TO CHANGE AND T
137、HAT THE INFORMATION MUSTBE READ IN CONJUNCTION WITH THE SECTION HEADED“WARNING”ON THE COVER OF THIS DOCUMENT.11 Our expected loss rate,90+delinquency ratio and bad debt ratio was 10.2%,16.3%and 4.2%(annualized)as of May 31,2023 and 10.1%,15.9%and 4.3%(annualized)as of August 31,2023.Due to increase
138、in our REDACTED,we expect a decrease in the forecast profit for the year endingDecember 31,2023.Subsequent to the Track Record Period and up to the Latest Practicable Date,as part of theimplementation of our development strategies,we have entered into the following initiatives.Loan Participation Sch
139、emeAs of the Latest Practicable Date,we are negotiating with a subsidiary of a Japanese financialinstitution to establish a loan participation scheme.Under the proposed loan participation scheme,wewill act as a grantor and our partner acts as the sole participant who participate in loans granted by
140、us,andthey are entitled to a certain portion of economic interest under the participation arrangement so that weare able to utilize the capital contribution of our partner,to provide loans as the sole lender to grant loanto borrowers.Our business partner could participate in our loans which have and
141、 receive certain extent ofinterest income based on the participation arrangement.We believe we can leverage this opportunity toexpand our business and to diversify our risk exposure.We will retain control over the credit assessment process and negotiate terms of the loans withborrowers directly,henc
142、e the loans under the loan participation scheme will be approved by us based onour own assessment model and loans will be disbursed to the borrowers using our own funds before ourpartner is invited to participate.After the disbursement of the loan to the borrower,we will invite ourpartner for fund c
143、ontribution.According to the External Legal Counsel,our business partner will be inthe position of a money lender and be subject to the regulatory regime of money lenders in Hong Kong.Itis observed by the External Legal Counsel that the intended arrangement has not violated the regulatoryscheme appl
144、icable in Hong Kong and there is no reason at this negotiation stage,to suspect our businesspartner would not abide by the relevant laws and regulations had the loan participation scheme come intooperation.Collaboration of blockchain technology platform with New WorldIn February 2023,we entered into
145、 a platform collaboration agreement with River Square CompanyLimited(“River Square”),a subsidiary wholly owned by New World Development Company Limited(“New World”),a leading conglomerate in Hong Kong,whereby we will join the Riverchain,ablockchain platform built by River Square.We are the first lic
146、ensed money lender invited to join thisblockchain platform.The Riverchain is expected to be in operation in 2023.Through this platform,we would be able toreview certain information and documents of the subcontractors necessary for our loan approval purpose.In addition,the Riverchain can decentralize
147、 certain subcontractorsdata by use of blockchain technologyand make the data storage more secure.The platform facilitates our access to subcontractorsinformationand documents,which provides the background information for us to conduct our own comprehensivecredit analysis to evaluate the creditworthi
148、ness of these subcontractors and monitor their financial status.Note:Bad debt ratio for the five months ended May 31,2023 and six months ended June 30,2023 are annualized based on baddebt for the period,as a percentage of the arithmetic mean of the opening and closing balances of our loan receivable
149、s.SUMMARYTHIS DOCUMENT IS IN DRAFT FORM,INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUSTBE READ IN CONJUNCTION WITH THE SECTION HEADED“WARNING”ON THE COVER OF THIS DOCUMENT.12 Through Riverchain,subcontractors of New Worlds property development projects can obtainborrowings from us(apa
150、rt from traditional authorized institutions)if they have financing needs.Giventhat the loan principal requested by subcontractors would generally be larger to meet their cash flowneeds,and the default risk of these subcontractors are perceived to be lower as their participation inproperty developmen
151、t projects of New World can be ascertained through Riverchain,we believe thatRiverchain will help us target more subcontractors for property development projects which are morecapital intensive and grow our SME Loans portfolio in the long run.NO MATERIAL ADVERSE CHANGEOur Directors have confirmed th
152、at,up to the date of this document,there has been no materialadverse change in our financial or trading position or prospects since May 31,2023,being the latestperiod reported on in the Accountants Report,and there has been no event since May 31,2023 that wouldmaterially affect the information shown
153、 in the Accountants Report set out in Appendix I.REDACTEDBased on an REDACTED ofHK$REDACTEDper REDACTEDHK$REDACTEDper REDACTEDREDACTED(1)HK$REDACTED millionHK$REDACTED millionREDACTED adjusted consolidated net tangibleassets of the Group attributable to the ownersof the Company per Share(2)HK$REDACT
154、EDHK$REDACTED(1)The calculation of REDACTED is based on REDACTED shares expected to be in issue immediately uponcompletion of the REDACTED(assuming the REDACTED is not exercised).(2)See“Appendix II REDACTED Financial Information REDACTED Statement of Adjusted Consolidated NetTangible Assets”for furt
155、her details regarding the assumptions used and the calculations method.DIVIDENDSIn 2020,2021 and 2022 and five months ended May 31,2023,we declared a dividend of HK$121.0million,HK$17.8 million,nil and HK$100.0 million,respectively.The dividends were non-cashtransactions settled through current acco
156、unt with related parties.Following completion of the REDACTED,our Shareholders will be entitled to receive dividendsonly when declared by our Board.The payment and amount of dividends declared by our Board willdepend on our(i)overall results of operation;(ii)financial position;(iii)capital requireme
157、nts;(iv)Shareholdersinterests;(v)prospects;and(vi)other factors which our Board deems relevant.We cannotassure our Shareholders that we will be able to declare or distribute dividends in any amount each year orin any year.Any declaration and payment as well as the amount of dividends will be subject
158、 to ourconstitutional documents and Companies Act,including,among others,the approval of the Shareholders.The dividend distribution record in the past may not be used as a reference or basis to determine the levelof dividends that may be declared or paid by us in the future.SUMMARYTHIS DOCUMENT IS I
159、N DRAFT FORM,INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUSTBE READ IN CONJUNCTION WITH THE SECTION HEADED“WARNING”ON THE COVER OF THIS DOCUMENT.13 REDACTEDThe REDACTED primarily represent fees paid to professional parties for our REDACTED.Based on the mid-point REDACTED of HK$REDACTE
160、D and assuming REDACTED notexercised,the total estimated REDACTED in relation to the REDACTED is HK$REDACTEDmillion including estimated REDACTED expenses of HK$REDACTED million,and REDACTEDexpenses consisting of(i)estimated fees and expenses of legal advisor(s)and accountant(s)of HK$17.3million,(ii)
161、estimated other fees and expenses of HK$16.0 million,and(iii)miscellaneous fees ofHK$0.4 million.During the Track Record Period,REDACTED of HK$REDACTED million wereincurred of which HK$REDACTED million were charged to our consolidated statement ofcomprehensive income and HK$REDACTED million were rec
162、ognized to our consolidated balancesheet.We estimate that we will further incur REDACTED of HK$REDACTED million of whichHK$REDACTED million will be charged to our consolidated statement of comprehensive income andHK$REDACTED million,which mainly includes REDACTED,is expected to be accounted for as a
163、deduction from equity upon the completion of REDACTED and the REDACTED.OurREDACTED as a percentage of gross REDACTED is REDACTED,assuming an REDACTED ofHK$REDACTED per Share and that the REDACTED is not exercised.IMPACT OF OUTBREAK OF COVID-19 ON OUR BUSINESSThe COVID-19 outbreak had extensive and l
164、ong-lasting impact on Hong Kongs economy and localbusiness,and it may pose uncertainty for our business performance.In view of such emerging risks,wehave adopted stringent credit risk policy.For details,see“Business Risk Management and InternalControl Credit risk management Credit Risk Management fo
165、r COVID-19 Outbreak”.In addition to the above,we also implemented certain other measures in response to the COVID-19outbreak during the Track Record Period.For example,to comply with the Hong Kong Governmentsregulations on the prevention and control of COVID-19(including prohibitions on gathering)im
166、posedfrom time to time,we shortened our operating hours following the social distancing measuresimplemented by the Hong Kong government at different stages.From mid-February to end of February2022,the opening hours of our headquarters was shortened by 1.25 hours on business days and fromMarch to mid
167、-April 2022,our opening hours was further shortened by an hour on business days.Ourheadquarters remained closed on Saturdays throughout the same period.This affected our on-site loanapplication and drawdown process,and potential borrowers may opt for other financing options if theyare unable to comp
168、lete the loan application process with us.We continued to apply our IDCM risk-basedpricing model while being highly cautious of loan applications from applicants involved in industriesaffected by COVID-19 outbreak.On the other hand,we put more emphasis on alternative data such aspayroll method and c
169、onsumption habits,in addition to attributes generated by a credit reference agency.In February 2022,in the face of the fifth wave of COVID-19 in Hong Kong,we became moreprudent in handling the risk of defaults and suspended our 7x24 AI Loans for applicants working in thecatering,retail,hotel or tour
170、ism sectors and manually reviewed such loan applications.For details,see“Risk Factors Risks relating to our business and industry We face certain risks associated with theoutbreak of COVID-19”.As of the Latest Practicable Date,notwithstanding as discussed herein and“Financial Information”,we did not
171、 experience material business disruptions or operating difficulties due to the COVID-19outbreak.We believe the impact of COVID-19 outbreak on our operations is temporary in nature,has notmaterially affected our business in the Track Record Period,and is not expected to have a materialadverse impact
172、on us in the long run.Nevertheless,the impact of COVID-19 remains an evolvingsituation,and there remain uncertainties as to the future development of the pandemic,which is beyondour control.If there are further waves of large-scale outbreaks,social distancing measures or travelrestrictions might be
173、imposed by the Hong Kong Government which would affect the overall economyand the demand for financing.In such circumstances,our operations and financial performance maybeadversely affected.Please also see“Risk factors Risks relating to our business and industry We facecertain risks associated with
174、the outbreak of COVID-19”in this document.SUMMARYTHIS DOCUMENT IS IN DRAFT FORM,INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUSTBE READ IN CONJUNCTION WITH THE SECTION HEADED“WARNING”ON THE COVER OF THIS DOCUMENT.14 In this document,unless the context otherwise requires,the following t
175、erms shall have the meaningsset out below.“affiliate”any other person,directly or indirectly,controlling or controlledby or under direct or indirect common control with such specifiedperson“AFRC”the Accounting and Financial Reporting Council“AQ Communications”AQ Communications Limited,a company inco
176、rporated under thelaws of Hong Kong with limited liability on August 23,2000wholly-owned by Ms.Amy Lee and is a connected person of ourCompany“Articles”or“Articles ofAssociation”the amended and restated articles of association of ourCompany conditionally,adopted on effective upon theREDACTED and as
177、amended from time to time a summary ofwhich is set out in“Appendix III Summary of the Constitutionof our Company and Cayman Islands Company Law”“Big Development”Big Development Asset Management Limited(大展資產管理有限公司),a company incorporated under the laws of Hong Kongwith limited liability on July 18,19
178、95 wholly-owned by Ms.AmyLee and is a connected person of our Company“Board”or“Board of Directors”the board of directors of our Company“business day”or“Business Day”any day(other than a Saturday,Sunday or public holiday)onwhich banks in Hong Kong are generally open for business“BVI”the British Virgi
179、n IslandsREDACTED“Cayman Islands Companies Act”or“Companies Act”the Companies Act Cap.22 of the Cayman Islands and anyamendments thereto or re-enactments thereof for the time beingin force and includes every other law incorporated therewith orsubstituted thereforREDACTEDDEFINITIONSTHIS DOCUMENT IS I
180、N DRAFT FORM,INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUSTBE READ IN CONJUNCTION WITH THE SECTION HEADED“WARNING”ON THE COVER OF THIS DOCUMENT.15 REDACTED“Chairman Lee”Mr.Lee Sheung Shing(李常盛),the chairman of our Board,anon-executive Director and one of our Controlling Shareholders“
181、China”or“the PRC”the Peoples Republic of China excluding,for the purpose of thisdocument,Hong Kong,Macau and Taiwan“Companies Ordinance”the Companies Ordinance(Chapter 622 of the Laws of HongKong),as amended or supplemented or otherwise modified fromtime to time“Companies(Winding Up andMiscellaneous
182、 Provisions)Ordinance”the Companies(Winding Up and Miscellaneous Provisions)Ordinance(Chapter 32 of the Laws of Hong Kong),as amended orsupplemented or otherwise modified from time to time“Company”,“our Company”or“K Cash Fintech”K Cash Fintech Corporation Limited(K Cash 金融科技集團有限公司),theholdingcompany
183、ofourGroupaftertheReorganization and the REDACTED for the REDACTED,which is an exempted company with limited liability incorporatedon October 25,2022 in the Cayman Islands and the Shares ofwhich are to be REDACTED on the REDACTED of theREDACTEDDEFINITIONSTHIS DOCUMENT IS IN DRAFT FORM,INCOMPLETE AND
184、 SUBJECT TO CHANGE AND THAT THE INFORMATION MUSTBE READ IN CONJUNCTION WITH THE SECTION HEADED“WARNING”ON THE COVER OF THIS DOCUMENT.16“Controlling Shareholders”has the meaning ascribed thereto in the Listing Rules,and unlessthe context otherwise requires,collectively refers to,Mr.StevenLee,Chairman
185、 Lee,Mrs.Lee,Mr.Edwin Lee,Konew Group andKonew Fintech(for more details,see the section headed“Relationship with our Controlling Shareholders”in thisdocument);and“Controlling Shareholder”means any one ofthem“COVID-19”a novel strain of coronavirus“Director(s)”the director(s)of our Company“Duplicated
186、Loan Range”the loan range from HK$200,000,being the lowest loan principalgenerally granted under the Secured Loan Business of theExcluded Group and to HK$400,000,being the highest loanprincipal generally granted for our Unsecured Private PropertyOwner Loans“ESG”environmental,social and governance“Ex
187、cluded Group”Konew Group,and together with its operating subsidiaries(excluding our Group)which are principally engaged in theSecured Loan Business“External Legal Counsel”Mr.Matthew Ho,barrister-at-law,our Hong Kong legal advisorwith respect to regulatory and compliance matters“External Legal Counse
188、l to theJoint Sponsors”Ms.Queenie Ng,barrister-at-law,the legal adviser to the JointSponsors with respect to certain matters concerning the MLO“Extreme Conditions”extreme weather conditions caused by a super typhoon asannounced by the Hong Kong government“First Mortgage LoanApplicant(s)”the applican
189、t(s)for the First Mortgage Loan(s)“First Mortgage Loan(s)”the loan(s)offered by the Excluded Group to borrowers which aresecured by first mortgage charged on the relevant property“Frost&Sullivan”Frost&Sullivan Limited,our industry consultant and anIndependent Third Party“Frost&Sullivan Report”an ind
190、ependent market research report commissioned by us andprepared by Frost&SullivanREDACTEDDEFINITIONSTHIS DOCUMENT IS IN DRAFT FORM,INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUSTBE READ IN CONJUNCTION WITH THE SECTION HEADED“WARNING”ON THE COVER OF THIS DOCUMENT.17 REDACTED“Group”,“our
191、 Group”,“we”,“our”or“us”our Company and our subsidiaries or,where the context sorequires,in respect of the period before our Company became theholding company of our present subsidiaries,the businessoperated by such subsidiaries or their predecessors(as the casemay be)“HIBOR”Hong Kong Inter-bank Off
192、ered RateREDACTED“HK$”,“Hong Kong dollars”,“HK dollars”,“HKD”or“cents”Hong Kong dollars and cents respectively,the lawful currency ofHong Kong“HKFRS”Hong Kong Financial Reporting Standards issued by the HongKong Institute of Certified Public Accountants“HKMA”Hong Kong Monetary Authority“HKMA Guideli
193、ne”the Guideline on Anti-Money Laundering and Counter-TerroristFinancing(For Authorized Institutions)issued by the HKMAREDACTED“Hong Kong”or“HK”the Hong Kong Special Administrative Region of the PRCREDACTEDDEFINITIONSTHIS DOCUMENT IS IN DRAFT FORM,INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORM
194、ATION MUSTBE READ IN CONJUNCTION WITH THE SECTION HEADED“WARNING”ON THE COVER OF THIS DOCUMENT.18 REDACTED“Hong Kong Takeovers Code”or“Takeovers Code”The Codes on Takeovers and Mergers and Share Buy-backs issuedby the SFC,as amended,supplemented or otherwise modifiedfrom time to timeREDACTED“Honip C
195、redit”Honip Credit Limited(康業信貸有限公司)(formerly known asEker Limited(業凱有限公司),a company incorporated under thelaws of Hong Kong with limited liability on January 10,2001 andwholly-owned by Konew Credit“HOS”the Home Ownership Scheme“HOS Property”the properties acquired under the HOS“HOS Property Owner(s
196、)”the owner(s)of property(ies)acquired under the HOS“Housing Authority”the Hong Kong Housing Authority,a statutory body establishedunder the Housing Ordinance“Housing Department”the Hong Kong Housing Department,an executive arm of theHousing Authority which is responsible for the management ofpublic
197、 housing in Hong Kong“Housing Ordinance”the Housing Ordinance(Chapter 283 of the Laws of Hong Kong)as amended,supplemented or otherwise modified from time totime“Independent Third Party(ies)”person(s)or company(ies)and their respective ultimate beneficialowner(s),who/which,to the best of our Directo
198、rs knowledge,information and belief,having made all reasonable enquiries,is/are not our connected persons as defined under the ListingRulesREDACTEDDEFINITIONSTHIS DOCUMENT IS IN DRAFT FORM,INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUSTBE READ IN CONJUNCTION WITH THE SECTION HEADED“WA
199、RNING”ON THE COVER OF THIS DOCUMENT.19 REDACTED“K Cash”K Cash Limited(formerly known as Ever Concept HoldingsLimited(永協集團有限公司),Maxcolm Credit Limited(尚誠信貸有限公司)and mtree.money Limited(金錢樹有限公司),acompany incorporated under the laws of Hong Kong with limitedliability on March 4,2008 and wholly-owned by
200、K Cash(BVI),and is therefore an indirect wholly-owned subsidiary of ourCompany after the Reorganization“K Cash(BVI)”K Cash(BVI)Limited,a company incorporated under the laws ofthe BVI with limited liability on December 9,2019 and is awholly-ownedsubsidiaryofourCompanyaftertheReorganization“K Cash Exp
201、ress”K Cash Express Limited(formerly known as Konew FinancialExpress Limited(康業信貸快遞有限公司),Konew BusinessDevelopment Limited(康業企業拓展有限公司)and WinstonCredit Limited(康業貸款有限公司),a company incorporatedunder the laws of Hong Kong with limited liability on February24,1999 and wholly-owned by K Cash Express(BVI
202、),and istherefore an indirect wholly-owned subsidiary of our Companyafter the Reorganization“K Cash Express(BVI)”K Cash Express(BVI)Limited,a company incorporated under thelaws of the BVI with limited liability on October 28,2022 andwholly-owned by our CompanyDEFINITIONSTHIS DOCUMENT IS IN DRAFT FOR
203、M,INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUSTBE READ IN CONJUNCTION WITH THE SECTION HEADED“WARNING”ON THE COVER OF THIS DOCUMENT.20“Konew Capital”Konew Capital International Limited(康業資本國際有限公司)(formerly known as Maxcolm Industrial Limited(尚誠實業有限公司)and Konew Capital International
204、Limited(康業資融國際有限公司),a company incorporated under the laws of Hong Kongwith limited liability on February 25,2011 and wholly-owned byKonew Credit“Konew Credit”Konew Credit Corporation Limited(康業信貸集團有限公司)(formerly known as Ever Loyal International Limited(旺信國際有限公司)and Konew International Group Limited
205、(康業國際集團有限公司),a company incorporated under the laws of HongKong with limited liability on December 31,1992 andwholly-owned by Konew Fintech“Konew Fintech”Konew Fintech Corporation Limited(康業金融科技集團有限公司),an exempted company incorporated under the laws of theCayman Islands with limited liability on Dece
206、mber 6,2019 andwholly-owned by Konew Group and one of our ControllingShareholders“Konew Group”Konew Group Limited,a company incorporated under the laws ofthe BVI with limited liability on November 28,2019 and ownedas to 28.5%,25%,25%and 21.5%by Mr.Steven Lee through LeeTrust,Chairman Lee,Mrs.Lee and
207、 Mr.Edwin Lee,respectively,and one of our Controlling Shareholders“KPIs”key performance indicators“Latest Practicable Date”October 2,2023,being the latest practicable date prior to theprinting of this document for the purpose of ascertaining certaininformation contained in this document“Lees Family”
208、collectively,Chairman Lee,Mrs.Lee,Mr.Steven Lee and Mr.Edwin Lee“Lee Trust”a discretionary trust established by Mr.Steven Lee(as the settlor)and East Asia International Trustees Limited(as the trustee),forthe benefit of Mr.Steven Lee and his family“Legislative Council”the Legislative Council of Hong
209、 Kong“Licensing Court”a magistrate sitting alone in a MagistratesCourt in Hong KongREDACTEDDEFINITIONSTHIS DOCUMENT IS IN DRAFT FORM,INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUSTBE READ IN CONJUNCTION WITH THE SECTION HEADED“WARNING”ON THE COVER OF THIS DOCUMENT.21 REDACTED“Listing
210、Rules”the Rules Governing the Listing of Securities on The StockExchange of Hong Kong Limited,as amended or supplementedfrom time to time“Main Board”the stock market(excluding the option market)operated by theStock Exchange which is independent from and operated inparallel with the GEM of the Stock
211、Exchange“Maxcolm Finance”Maxcolm Finance Limited(尚誠融資有限公司)(formerly knownas Eagle Finance Limited(鷹財務有限公司),Eagle FinanceLimited(易高信貸有限公司),Konew Credit Limited(康業貸款有限公司)and Konew Capital International Limited(康業資融國際有限公司),a company incorporated under the laws of HongKong with limited liability on Apri
212、l 16,2008 and wholly-ownedby Konew Credit“Memorandum”or“Memorandum of Association”the memorandum of association of our Company adopted onOctober 25,2022 and as amended from time to time a summary ofwhich is set out in“Appendix III Summary of the Constitutionof our Company and Cayman Islands Company
213、Law”“Modern Creative”Modern Creative(HK)Limited(現創（香港）有限公司),acompany incorporated under the laws of Hong Kong with limitedliability on July 8,2016 and is owned in equal shares by Mr.ChanKa Lok and Ms.Wong Kwan Ying,the brother and mother,respectively,of Ms.Chan Wing Sze,our non-executive Director,an
214、d therefore is a connected person of our Company“MoneySQ”Moneysq Limited(錢匯有限公司)(formerly known as Money.Money Limited(錢匯有限公司),a company incorporated underthe laws of Hong Kong with limited liability on April 28,2015and is indirectly owned by Mr.Steven Lee,Chairman Lee andMrs.Lee,and therefore is a
215、connected person of our Company“money lender(s)”has the same meaning ascribed thereto under the Money LendersOrdinance“Money Lenders License”the money lenders license issued by the Licensing Court pursuantto the Money Lenders Ordinance and Money Lenders Regulationsfor carrying on money lending busin
216、ess in Hong Kong“Money Lenders Ordinance”the Money Lenders Ordinance(Chapter 163 of the Laws of HongKong)as amended,supplemented or otherwise modified fromtime to timeDEFINITIONSTHIS DOCUMENT IS IN DRAFT FORM,INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUSTBE READ IN CONJUNCTION WITH T
217、HE SECTION HEADED“WARNING”ON THE COVER OF THIS DOCUMENT.22“Money Lenders Regulations”the Money Lenders Regulations(Chapter 163A of the Laws ofHong Kong),as amended,supplemented or otherwise modifiedfrom time to time“MPF”mandatory provident fund“Mr.Edwin Lee”Mr.Lee Edwin Kan Hing(李根興),one of our Cont
218、rollingShareholders,the son of Chairman Lee and Mrs Lee,and thebrother of Mr.Steven Lee“Mr.Steven Lee”Mr.Lee Kun Tai Steven(李根泰),the chief executive officer ofour Company,an executive Director and one of our ControllingShareholders,and the son of Chairman Lee and Mrs.Lee,and thebrother of Mr.Edwin L
219、ee and Ms.Amy Lee“Mrs.Lee”Ms.Lee Pik Tsong(李碧葱),the vice-chairlady of our Board,anon-executive Director and one of our Controlling Shareholders,and the spouse of Chairman Lee“Ms.Amy Lee”Ms.LeeYu Han Amy(李鈺涵),the daughter of Chairman Lee andMrs.Lee,and the sister of Mr.Steven Lee and Mr.Edwin LeeREDA
220、CTED“PCPD”the office of the Privacy Commissioner for Personal Data“PDPO”Personal Data(Privacy)Ordinance(Chapter 486 of the Laws ofHong Kong)DEFINITIONSTHIS DOCUMENT IS IN DRAFT FORM,INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUSTBE READ IN CONJUNCTION WITH THE SECTION HEADED“WARNING”O
221、N THE COVER OF THIS DOCUMENT.23“Personal Loan(s)”the unsecured loan(s)offered by our Group to individuals withoutany collateralsREDACTED“Private Property”the properties not acquired under the HOSREDACTED“Regulation S”Regulation S under the U.S.Securities Act“Reorganization”the reorganization of our
222、Group in preparation of theREDACTED.For more details,see“History,Reorganizationand Corporate Structure”“Restricted HOS Properties”properties subject to alienation restrictions,as stipulated in theHousing Ordinance“RMB”or“Renminbi”Renminbi,the lawful currency of the PRC“Secured HOS Loan”the secured l
223、oan granted by the Excluded Group to the HOSProperty Owner“Secured Loan Applicant(s)”the applicant(s)for the Secured Loan(s)“Secured Loan Business”the principal business engaged by the Excluded Group“Secured Loan(s)”including the First Mortgage Loan(s)and the SubordinatedMortgage Loan(s)offered by t
224、he Excluded Group“SFC”the Securities and Futures Commission of Hong Kong“SFC Guidelines”the Guideline on Anti-Money Laundering and Counter-TerroristFinancing together with the Prevention of Money Laundering andTerrorist Financing Guideline issued by the SFC“SFO”or“Securities and FuturesOrdinance”the
225、 Securities and Futures Ordinance(Chapter 571 of the Laws ofHong Kong),as amended or supplemented from time to timeDEFINITIONSTHIS DOCUMENT IS IN DRAFT FORM,INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUSTBE READ IN CONJUNCTION WITH THE SECTION HEADED“WARNING”ON THE COVER OF THIS DOCUM
226、ENT.24“Share Option Scheme”our share option scheme conditionally adopted pursuant toresolutions passed by our Shareholders at an extraordinarygeneral meeting held on.For details,see“Appendix IV Statutory and General Information D.Other Information 1.Share Option Scheme”“Shareholder(s)”holder(s)of Sh
227、ares“Shares”ordinary shares in the capital of our Company with nominal valueof HK$0.0001 each“smartME”smartME Corporation Limited(智能合約有限公司),a companyincorporated under the laws of Hong Kong with limited liabilityon November 21,2018 and Chairman Lee and Mrs.Lee areindirectly interested in 56.8%of its
228、 shares,and therefore is aconnected person of our Company“SME(s)”small and medium enterprises.Manufacturing enterprises withfewer than 100 employees and non-manufacturing enterpriseswith fewer than 50 employees are regarded SMEs in Hong Kong“SME Loan(s)”the unsecured loan(s)offered by our Group to S
229、ME(s)withoutsecurity,subject to a personal guarantee typically provided by adirector or shareholder of the SME borrowerREDACTED“Stock Exchange”The Stock Exchange of Hong Kong Limited“Subordinated Mortgage LoanApplicant(s)”the applicant(s)for the Subordinated Mortgage Loan(s)“Subordinated Mortgage Lo
230、an(s)”the loan(s)offered by the Excluded Group to individuals andcorporate property owner borrowers and secured by mortgageswhich are subordinated to the first or higher ranking mortgagescharged on the relevant property“subsidiary(ies)”has the meaning ascribed thereto under the Listing Rules“SW Lee
231、Limited”SW Lee Limited,a company incorporated under the laws of theBVI with limited liability on January 24,2022 and all its issuedshares are held by World Wealth Investment DevelopmentLimited“Track Record Period”the years ended December 31,2020,2021 and 2022 and fivemonths ended May 31,2023DEFINITI
232、ONSTHIS DOCUMENT IS IN DRAFT FORM,INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUSTBE READ IN CONJUNCTION WITH THE SECTION HEADED“WARNING”ON THE COVER OF THIS DOCUMENT.25“Transferred Loans”the unsecured loan portfolio we acquired from the ExcludedGroup on December 31,2022 which involved
233、 458 loan accountsand had an aggregate carrying amount of approximatelyHK$150.1 million“trustME”Trustme Chain Corporation Limited,a company incorporatedunder the laws of Hong Kong with limited liability on April 30,2018 and is indirectly owned by Mr.Steven Lee,Chairman Leeand Mrs.Lee,and therefore i
234、s a connected person of ourCompanyREDACTED“Unsecured HOS Property OwnerLoan(s)”the Unsecured Property Owner Loan(s)that is/are granted to theHOS Property Owners“Unsecured Loan Business”the principal business engaged by our Group“Unsecured Loan(s)”including the Personal Loan(s),Unsecured Property Own
235、erLoan(s),and SME Loan(s)offered by our Group“Unsecured Private PropertyOwner Loan(s)”the Unsecured Property Owner Loan(s)that is/are granted to thegroup of owners of property acquired in the free real estate marketfrom a private property developer“Unsecured Property OwnerLoan(s)”the unsecured loan(
236、s)offered by our Group to borrowers who areowners of properties but who do not provide any collaterals forthe loan(s)“U.S.”or“United States”the United States of America,its territories,its possessions andall areas subject to its jurisdiction“U.S.Securities Act”the United States Securities Act of 193
237、3,as amended andsupplemented or otherwise modified from time to time,and therules and regulations promulgated thereunder“US$”,“USD”or“U.S.dollars”United State dollars,the lawful currency for the time being of theUnited StatesIn this document,the terms“associate”,“close associate”,“connected person”,
238、“connectedtransaction”,“core connected person”,“controlling shareholder”,“subsidiary”and“substantialshareholder”shall have the meanings given to such terms in the Listing Rules,unless the contextotherwise requires.DEFINITIONSTHIS DOCUMENT IS IN DRAFT FORM,INCOMPLETE AND SUBJECT TO CHANGE AND THAT TH
239、E INFORMATION MUSTBE READ IN CONJUNCTION WITH THE SECTION HEADED“WARNING”ON THE COVER OF THIS DOCUMENT.26 This glossary of technical terms contains explanations of certain technical terms used in thisdocument.As such,these terms and their meanings may not correspond to standard industrymeanings or u
240、sage of these terms.“AQM Score”the credit score generated by the AQM System“AQM System”the credit scoring system which generates a credit score based onthe external credit data“ATMs”automatedtellermachines,whichrefertoelectronictelecommunications devices that allow customers to performfinancial serv
241、ices,such as cash withdrawal,deposit,or inquiriesof account information,at any time and without the aid of abranch representative or teller“AVS Methodology”or“AVS”the asset valuation methodology to assist us with assets valuationby referencing latest publicly available market data and markettrends“b
242、ad debt”doubtful debt for which loan receivables are irrecoverable“bad debt ratio”the ratio calculated by dividing the amount of bad debt by theaggregate amount of loan receivables and such bad debt as of therelevant year-end or period-end dates“blockchain”or“blockchaintechnology”a series of time-st
243、amped and immutable data records,and ismanaged by a cluster of computers not owned by any single entity“business process automationtechnology”an emerging form of business process automation technologybased on metaphorical software robots and artificial intelligenceworkers“business risk engine”our pr
244、oprietary&litigation risk business engine,which is used toassist us monitoring the creditability change of our customersbased on monitoring their latest litigation record in local courtand the latest encumbrance of the underlying assets registered inlocal land registry“Buy Now,Pay Later”or“BNPL”a ty
245、pe of short-term financing that allows consumers to makepurchases and pay for them at a future date“CAGR”compound annual growth rate,is the annualized average rate ofgrowth over a specific periodGLOSSARY OF TECHNICAL TERMSTHIS DOCUMENT IS IN DRAFT FORM,INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE I
246、NFORMATION MUSTBE READ IN CONJUNCTION WITH THE SECTION HEADED“WARNING”ON THE COVER OF THIS DOCUMENT.27“CDP”customer data platform,a platform designed for managingcustomer data“cloud computing”delivery of computing services over the Internet,includingservers,storage,databases,networking,software,anal
247、ytics,andintelligence“Credit Modeling System”the credit modeling system that we engaged a global technologyservices provider to develop,which generates a machinelearning-based credit score,based on our industry-specificknowledge and experience,for our consideration in our loanapproval process“CRP”th
248、e Credit Reference Platform,which was launched by HKMA onNovember 28,2022“data analytics”the process of exploring and analyzing large datasets“data visualization”the process of translating information into a visual context tomake data easier for comprehension“debt service ratio”the ratio of an appli
249、cants aggregate monthly debt obligations as apercentage of their aggregate monthly income“eAML”a system adopted by the Company to perform assessment onmoney laundering and terrorism financing risks“E-contract”electronic contract,which is an agreement that is drafted andexecuted completely online“ECL
250、 model”the expected credit losses(ECL)model,which adopts aforward-looking approach to estimation of impairment losses“eKYC”electronic Know Your Client,which is an electronic process toverify the identity of prospective borrowers through mobile app“facial recognition”a technology which is capable of
251、matching a human face in avideo in real time against the image of his or her Hong Kongidentity card“finger vein”a technology adopted by our VTMs for biometric authentication“FPS”faster payment system,which is a method for drawdown“high value loans”loans with a loan principal of over HK$700,000,and t
252、heaggregate receivables of loan principal for such loans accountedfor approximately 25%of our loan receivables in each year orperiod of the Track Record PeriodGLOSSARY OF TECHNICAL TERMSTHIS DOCUMENT IS IN DRAFT FORM,INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUSTBE READ IN CONJUNCTIO
253、N WITH THE SECTION HEADED“WARNING”ON THE COVER OF THIS DOCUMENT.28“hybrid cloud”a mixed computing environment including on-premise data centerand public cloud“IDCM”intelligent dynamic credit matrix,which consists of the AQMScore and MLC Score“K Cash GO Platform”our hybrid cloud loan application plat
254、form and loan managementplatform“Loan Application System”a customized loan application system built on our K Cash GOPlatform for loan application purpose“Loan Management System”a customized loan management system built on our K Cash GOPlatform for loan management purpose“machine learning”an underlyi
255、ng technology through our Credit Modeling System toanalyze borrowers credit data and behavior patterns according tocertain pre-set parameters“MCRA platform”a financial infrastructure launched in November 2022 to facilitatethe transmission of consumer credit information in encryptedform between credi
256、t providers and credit rating agencies“MLC Score”the machine learning-based credit score generated by our CreditModeling System,enabling us to classify loan applicants intodifferent risk categories“net interest margin”for each loan type,interest income generated(net of interestexpenses)divided by th
257、e average of the opening and closingmonthlybalanceofthegrossloanreceivablesofthecorresponding loan type during the year or period.Interestexpenses for each loan type are allocated based on the ratioderived from dividing the average of the opening and closingmonthlybalanceofthegrossloanreceivablesoft
258、hecorresponding loan type by the average of the opening and closingbalance of the gross loan receivables of all loan types during theyear or period“Presumed Extortionate Rate”the interest rate stipulated in the Money Lenders Ordinance,whereby loan transactions exceeding such interest rate may becons
259、idered extortionate“POS system”point of sale system,which consists of hardware and software thatworks together to process sales and payment transactions at thepoint of purchase“QR code”quick response code,which is a type of matrix barcode ortwo-dimensional barcodeGLOSSARY OF TECHNICAL TERMSTHIS DOCU
260、MENT IS IN DRAFT FORM,INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUSTBE READ IN CONJUNCTION WITH THE SECTION HEADED“WARNING”ON THE COVER OF THIS DOCUMENT.29“SME dashboard”small and medium enterprises business dashboard service,asystem connected to the POS system of the SME borrower wh
261、ichpresents SME borrowers key financial performance in charts andsummaries via an interactive data visualization software“Statutory Limit”the interest rate stipulated in the MLO,whereby loan transactionsexceeding such interest rate will be unenforceable“turned down loan applications”collectively,loa
262、n applications rejected by us outright,and loanapplications approved by us whereby loan offers had beenprovided to prospective borrowers which were subsequently notaccepted by them“VTMs”video teller machines are evolved ATMs with video collaboration,remote transaction processing technology and other
263、 technologiesGLOSSARY OF TECHNICAL TERMSTHIS DOCUMENT IS IN DRAFT FORM,INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUSTBE READ IN CONJUNCTION WITH THE SECTION HEADED“WARNING”ON THE COVER OF THIS DOCUMENT.30 This document contains certain forward-looking statements and information relat
264、ing to ourCompany and our subsidiaries that are based on the beliefs of our management as well as assumptionsmade by and information currently available to our management.When used in this document,the words“aim”,“anticipate”,“believe”,“could”,“expect”,“going forward”,“intend”,“may”,“might”,“oughtto
265、”,“plan”,“potential”,“predict”,“project”,“seek”,“should”,“will”,“would”and the negative of thesewords and other similar expressions,as they relate to our Group or our management,are intended toidentify forward-looking statements.Such statements reflect the current views of our management withrespect
266、 to future events,operations,liquidity and capital resources,some of which may not materialize ormay change.These statements are subject to certain risks,uncertainties and assumptions,including theother risk factors as described in this document.You are strongly cautioned that reliance on anyforward
267、-looking statements involves known and unknown risks and uncertainties.The risks anduncertainties facing our company which could affect the accuracy of forward-looking statements include,but are not limited to,the following:our operations and business prospects;future developments,trends and conditi
268、ons in the industry and markets in which we operate;our business strategies and plans to achieve these strategies;general economic,political and business conditions in the markets in which we operate;changes to the regulatory environment and general outlook in the industry and markets inwhich we ope
269、rate;the effects of the global financial markets and economic crisis;our ability to control or reduce costs;our dividend policy;the amount and nature of,and potential for,future development of our business;capital market developments;the actions and developments of our competitors;certain statements
270、 in“Business”and“Financial Information”with respect to trends in prices,operations,margins,overall market trends,and risk management;andchange or volatility in interest rates,foreign exchange rates,operations,margins,riskmanagement and overall market trends.Subject to the requirements of applicable
271、laws,rules and regulations,we do not have any andundertake no obligation to update or otherwise revise the forward-looking statements in this document,whether as a result of new information,future events or otherwise.As a result of these and other risks,uncertainties and assumptions,the forward-look
272、ing events and circumstances discussed in this documentmight not occur in the way we expect or at all.Accordingly,you should not place undue reliance on anyforward-looking information.In this document,statements of or references to our intentions or those of the Directors are made asof the date of t
273、his document.Any such information may change in light of future developments.All forward-looking statements contained in this document are qualified by reference to thecautionary statements set out in this section.FORWARD-LOOKING STATEMENTSTHIS DOCUMENT IS IN DRAFT FORM,INCOMPLETE AND SUBJECT TO CHA
274、NGE AND THAT THE INFORMATION MUSTBE READ IN CONJUNCTION WITH THE SECTION HEADED“WARNING”ON THE COVER OF THIS DOCUMENT.31 REDACTED in our REDACTED involves risks.Before deciding to REDACTED in theREDACTED,you should carefully consider all of the information in this document,includingthe following ris
275、k factors,in light of the circumstances and your own investment objectives.Theoccurrence of any of the following events could materially and adversely affect our business,financial condition and results of operations,in which case the REDACTED of our Shares couldalso decline,and you could lose part
276、or all of REDACTED.You should pay particular attentionto the fact that we are a company incorporated in the Cayman Islands and that our principaloperations are conducted in Hong Kong and are governed by a legal and regulatory environmentthat may differ significantly from that of other countries.Ther
277、e are certain risks involved in our operations,and many of these risks are beyond our control.These risks can be characterized as:(i)risks relating to our business and industry;and(ii)risks relatingto the REDACTED and our Shares.You should consider our business and prospects in light of thechallenge
278、s we face,including those discussed in this section.RISKS RELATING TO OUR BUSINESS AND INDUSTRYWe are exposed to credit risks of our customers who may default on their loans.We engage in the money lending business where we provide financing to customers on the premisethat such loans will be repaid t
279、ogether with interest.Our business is therefore subject to risks that ourcustomers may fail to perform their contractual obligations and default on payment of interest and/or theprincipal.As of December 31,2020,2021 and 2022 and May 31,2023,our loan receivables beforeprovision for impairment amounte
280、d to approximately HK$1,094.6 million,HK$946.1 million,HK$1,018.8 million and HK$1,056.3 million,respectively,of which we made approximately HK$108.6million,HK$101.6 million,HK$105.0 million and HK$108.1 million,respectively,of provision forimpairment.In 2020,2021 and 2022 and five months ended May
281、31,2023,we recorded net expectedcredit losses of approximately HK$69.7 million,HK$41.9 million,HK$37.7 million and HK$21.3million,respectively.We remind borrowers of their late payments.Where the customer does not repay the outstandingamounts,we may consider commencing legal proceedings or engage ou
282、r debt collection agent to recoveroutstanding loans.If our customers delay or default on their payments,we may incur additional legalcosts and expenses in order to enforce the guarantee(for SME Loans),execute the order for sale(forUnsecured Property Owner Loans)and/or make provision for impairment o
283、r write-off the relevant loansand interest receivables,which will have a material adverse effect on our business,results of operations,financial condition and prospects.We do not obtain collaterals from our borrowers,hence the outstandingamount may not be recovered even if legal proceedings are brou
284、ght against defaulting borrowers.During the Track Record Period,we initiated 556 legal proceedings,and among these,we obtainedcourt judgments against 335 overdue loans.As of May 31,2023,we engaged our debt collection agent in917 out of 1,982 overdue loans.Nevertheless,we have still written-off an ag
285、gregate loan and interestreceivables of approximately HK$40.2 million and HK$19.3 million during the year ended December 31,2022 and five months ended May 31,2023.During the Track Record Period,we enforced order for saleagainst ten properties which we have obtained charging orders against overdue Un
286、secured PropertyOwner Loans.For details of the enforcement procedures,please see“Business Risk management andinternal control Credit risk management Enforcement of judgment”.However,the value of one ofthe properties sold was insufficient to fully cover the outstanding amount,which led to a repossess
287、edassets written-off of approximately HK$86,000 during the Track Record Period.During the Track RecordPeriod,we obtained one bankruptcy order against a defaulting borrower and the realization of assets fromthe defaulting borrower was unable to cover his debt to all creditors including us,which led t
288、o anaggregate loss of approximately HK$0.5 million.We may incur this kind of loss in the future in therecovery of overdue loans,which could materially and adversely affect our business,results ofoperations,financial condition and prospects.RISK FACTORSTHIS DOCUMENT IS IN DRAFT FORM,INCOMPLETE AND SU
289、BJECT TO CHANGE AND THAT THE INFORMATION MUSTBE READ IN CONJUNCTION WITH THE SECTION HEADED“WARNING”ON THE COVER OF THIS DOCUMENT.32 If we fail to control our credit risk exposure,our bad debt ratio may increase,and our business andresults of operations may be adversely affected.As of December 31,20
290、20,2021 and 2022 and May 31,2023,our overall bad debt ratio wasapproximately 4.5%,5.1%,3.8%and 1.8%,respectively.In 2020,2021 and 2022 and five months endedMay 31,2023,our overall bad debt was approximately HK$51.3 million,HK$51.0 million,HK$40.2million and HK$19.3 million,respectively.As of Decembe
291、r 31,2020,2021,2022 and May 31,2023,our90+delinquency ratio was approximately 7.9%,11.3%,15.6%and 16.3%,respectively.We deployvarious fintech to assist us in our credit assessment and develop our risk management model.Thesefintech tools assist us in categorizing them into different risk groups and r
292、eaching credit decisions basedon credit score results to establish a risk profile for each of them.For a discussion of our adoption andapplication of fintech,see“Business Our Fintech Application on the Loan Process”and“Business Our Fintech Application on our Back-end Operation”.We cannot assure you
293、that our fintech will continueto be effective without disruption.If we fail to continuously enhance any of these technologies at acompetitive pace,our risk-based pricing capabilities could be negatively affected,which may result inmispriced loans or incorrect approvals or denials of loans.If we are
294、unable to precisely assess the creditprofiles of our borrowers,our bad debt ratios may increase and our business,results of operations,financial condition and prospects may be materially and adversely affected.Our provision for expected credit losses may not be adequate to cover actual credit losses
295、.We make provision for expected credit losses on our loan receivables in accordance with HKFRS.As of December 31,2020,2021 and 2022 and May 31,2023,our provision for impairment of loanreceivables was approximately HK$108.6 million,HK$101.6 million,HK$105.0 million and HK$108.1million,respectively,re
296、presenting expected loss rates of approximately 9.9%,10.8%,10.3%and 10.2%,respectively.For details,see“Appendix I Accountants Report II.Notes to the Historical FinancialInformation Note 14”and“Financial Information Principal Components of our ConsolidatedStatement of Comprehensive Income Reversal of
297、 credit losses/(expected credit losses),net”.Inaddition,in 2020,2021 and 2022 and five months ended May 31,2023,we recorded net expected creditlosses of approximately HK$69.7 million,HK$41.9 million,HK$37.7 million and HK$21.3 million,respectively.The determination of provision for impairment losses
298、 involves accounting judgment andestimates,and the expected credit losses are a probability-weighted estimate of credit losses.Ourprovision may prove to be inadequate if unforeseen adverse changes occur in Hong Kongs economy,orif other events adversely affect specific customers such that the amount
299、of loan we recovered is less thanour net expected credit loss.Under such circumstances,we may need to make additional provisions,which could significantly reduce our profit and may materially and adversely affect our business,resultsof operations,financial condition and prospects.We are in a highly
300、competitive industry.If we are not able to compete effectively,it could impact ourprofitability.Hong Kongs lending market is intensely competitive and rapidly evolving.According to the Frost&Sullivan Report,there were 2,414 licensed money lenders in Hong Kong as of December 31,2022 and thelicensed u
301、nsecured financing market is relatively concentrated with top three market participantsaccounting for 79.2%of the overall market share by revenue in 2022.These licensed money lendersoperate under various scales and conditions,some of which may or may not be our direct competitors.Our competitors ope
302、rate with different business models,have different cost structures or participateselectively in different market segments.They may ultimately prove to be more successful or moreadaptable to new regulatory,technologies and other developments.Some of our current and potentialcompetitors may have signi
303、ficantly more financial,technical,marketing and other resources than us andmay be able to devote greater resources to the development,promotion,sale and support of theirproducts.Our competitors may also have longer operating histories,more extensive borrower or lenderbases,greater brand recognition,
304、brand loyalty and broader partner relationships than us.RISK FACTORSTHIS DOCUMENT IS IN DRAFT FORM,INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUSTBE READ IN CONJUNCTION WITH THE SECTION HEADED“WARNING”ON THE COVER OF THIS DOCUMENT.33 In response to competition and in order to gain or
305、maintain market share,we may have to chargelower interest rate and bear higher marketing fees,which could materially and adversely affect ourbusiness and results of operations.Failure to(i)maintain or enhance our competitiveness in the moneylending industry,(ii)maintain our customer base with good c
306、redit standing or(iii)adapt to cutting-edgefintech may result in a decrease in profit and loss of market share,which may materially and adverselyaffect our business,results of operations,financial condition and prospects.If we fail to promote our financial technology-based services to a satisfactory
307、 level of marketacceptance,or if we fail to continuously enhance our technologies at a competitive pace,we may losecertain businesses and may not be able to recover our investment on adopting the relevanttechnologies.The fintech lending industry is characterized by rapidly changing technology,new se
308、rvice andproduct introductions and changing customer demands.Our competitors are constantly developinginnovations in technology online marketing,communications,social networking and other services toenhance borrowers lending experience.We continue to invest resources in enhancing our fintech toprovi
309、de cost-effective lending services.The success of any new services or current services that we offerwould depend on our ability to promote relevant services,to raise our customersawareness of the newtechnologies,and to encourage the use of relevant technologies.If we are unable to promote ourtechnol
310、ogy-based services successfully to achieve a satisfactory level of market acceptance,or if we haveto phase out certain services due to lack of popularity among our targeted customers,we may not be ableto recover the investment that we have made in the adoption of relevant technologies.During 2020,20
311、21 and 2022 and five months ended May 31,2023,our fintech and technologysupport related expenses was approximately HK$7.8 million,HK$6.8 million,HK$7.1 million andHK$3.4 million,respectively.However,our competitors may be able to provide services that better caterto market demand and customers accep
312、tance than ours through more advanced or appropriatetechnologies,which may result in our loss of business and a substantial decline of revenue.If we fail tokeep up with the rapid development of technology and its application in the money lending market,wemay lose our competitive advantage and market
313、 share,and our business,results of operations,financialcondition and prospects may be materially and adversely affected.If the credit or other information of a prospective borrower we receive from other parties isinaccurate or unreliable,the accuracy or effectiveness of our credit assessment and ris
314、k-basedpricing may be compromised.We perform credit assessment based on,to a significant extent,information provided by loanapplicants and data provided by a credit reference agency and other third parties.The informationprovided by loan applicants to us may be inaccurate or fraudulent,and the data
315、provided by a creditreference agency or third parties may be inaccurate or unreliable.Moreover,credit information andanalysis provided by third parties may be falsified or tainted in the collection process and may beproduced based on assumptions and methodologies undisclosed to us,which would limit
316、our ability toproperly use such data inputs in our credit assessment and risk-based pricing.In addition,historical dataand analysis may not provide a reliable basis to assess an applicants credit profile where the economicconditions have changed or the financial conditions of such applicant deterior
317、ate after the loan has beenfunded.Our risk-based pricing is made by taking into consideration various variables.If the underlyingdata is outdated,incomplete,inaccurate or otherwise not indicative of the creditworthiness of theborrowers,the accuracy or effectiveness of our credit assessment and risk-
318、based pricing may becompromised,in which case we may approve less creditworthy borrowers from whom we are unable torecoup funds or effectively control our bad debt ratios,which may materially and adversely affect ourbusiness,results of operations,financial condition and prospects.RISK FACTORSTHIS DO
319、CUMENT IS IN DRAFT FORM,INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUSTBE READ IN CONJUNCTION WITH THE SECTION HEADED“WARNING”ON THE COVER OF THIS DOCUMENT.34 Our future expansion plans are subject to uncertainties and risks.We intend to further expand our existing loan portfolio and
320、diversify our product offerings with ourfintech capability.In particular,we intend to introduce“Buy Now Pay Later”services in response to theevolving market trend.Further information on our future plans is set out in the section headed“Futureplans and REDACTED”of this document.Whether or not our bus
321、iness expansion plan can be implemented successfully depends on variousfactors which may be beyond our control,such as additional compliance expenses due to regulatorychange and delays in obtaining the necessary licenses and approvals from the government.There is noassurance that our business expans
322、ion plans may be implemented successfully.If we fail to projectaccurately the time,labor and costs required for implementing our expansion plans,or if we fail tocomply with the new regulatory requirements or secure sufficient number of customers or at all after theexpansion,our business,results of o
323、perations and prospects may be materially and adversely affected.In addition,our business expansion plan may place substantial demands on our managerial,operational,technological,financial and other resources.All of these endeavors will require substantialattention and time from our management and s
324、ignificant additional expenditures.We cannot assure youthat we will be able to manage any future business expansion effectively and efficiently,and our ability tocapitalize on new business opportunities may be materially and adversely affected if we fail to do so,which could in turn materially adver
325、sely affect our business,results of operations,financial condition andprospects.We may not be able to obtain sufficient funding on terms acceptable to us to finance our operation;we may not be able to comply with covenants in our borrowings,and our lenders may request loanrepayment without prior not
326、ice.During the Track Record Period,our money lending business was primarily financed by(i)fundingprovided by banks(excluding tax loans);(ii)loans from Controlling Shareholders and their closeassociates;and(iii)cash flow from our operating activities.The growth and success of our future operations de
327、pend on the availability of adequate lendingcapital to meet borrowers demands for loans.To maintain sufficient and sustainable funding to meetborrower demands,we need to keep expanding the funding base and securing a stable stream of fundsfrom our funding resources.There is no assurance that we will
328、 generate sufficient cash flow from ouroperating activities for our intended expansion and growth plans.In the event that we do not have suchoperating cash flow,we may need to obtain alternative financing.There is no assurance that we will beable to obtain adequate financing from other sources on ac
329、ceptable terms or at all.If we are unable toobtain financing from banks and authorized institution in the near future,we may be required to seekmore expensive financing alternatives,which may result in an increase in our finance costs and adverselyaffect our business,results of operations,financial
330、condition and prospects.We are subject to and restricted by restrictive covenants in our borrowings.For example,weundertook that the facilities will not be used for property acquisition or investment purposes.DuringTrack Record Period,we did not breach any restrictive covenant in our loan facilities
331、.There is noassurance that we will always be able to comply with the restrictions and covenants in our current orfuture debt obligations and other agreements in the future.In the event of a default under suchagreements,the lenders could terminate their commitments to us,accelerate the debt or declar
332、e allborrowed amounts due and payable.If we default under our debts,there can be no assurance that ourworking capital would be sufficient to repay those debts in full as they become due,or that we would beable to find alternative financing on terms that are acceptable to us or at all.In addition,all
333、 of our bankingRISK FACTORSTHIS DOCUMENT IS IN DRAFT FORM,INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUSTBE READ IN CONJUNCTION WITH THE SECTION HEADED“WARNING”ON THE COVER OF THIS DOCUMENT.35 facilities give the banks an unconditional right to call the loan at any time.In the event that the banksexercise their right to request us to repay the bank loans without prior notice,or if t
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