{"url_path":"/sec/mb/10-k/2026/item-5","section_key":"item-5","section_title":"Item 5 OPERATING AND FINANCIAL REVIEW AND PROSPECTS**","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-15","source_url":"https://www.sec.gov/Archives/edgar/data/2027265/0001493152-26-023479-index.html","accession_number":"0001493152-26-023479","cik":"0002027265","ticker":"MB","issuer_name":"MASTERBEEF GROUP","edgar_url":"https://www.sec.gov/Archives/edgar/data/2027265/0001493152-26-023479-index.html","primary_entity_key":"0002027265","primary_entity_name":"MASTERBEEF GROUP"},"word_count":10427,"has_tables":true,"body_markdown":"**ITEM\n5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS**\n\n \n\n*The\nfollowing discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated\nfinancial statements and related notes included elsewhere in this Annual Report. This discussion and analysis and other parts of this\nAnnual Report contain forward-looking statements based upon current beliefs, plans and expectations that involve risks, uncertainties\nand assumptions. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking\nstatements as a result of several factors, including those set forth under “Risk Factors” and elsewhere in this Annual Report.\nYou should carefully read the “Risk Factors” section of this Annual Report to gain an understanding of the important factors\nthat could cause actual results to differ materially from our forward-looking statements. Our historical results are not necessarily\nindicative of the results that may be expected for any period in the future. Except as otherwise noted, all references to 2025 refer\nto the year ended December 31, 2025, all references to 2024 refer to the year ended December 31, 2024 and all references to 2023 refer\nto the year ended December 31, 2023.*\n\n \n\n**OVERVIEW**\n\n** **\n\nWe\nare a full-service restaurant group in Hong Kong, specializing in Taiwanese hotpot and Taiwanese barbecue. As of the date of this Annual\nReport, we, through our Hong Kong Operating Subsidiaries, operate 12 restaurant outlets under our Master Beef and Anping Grill brands.\nOur mission is to serve quality and value-for-money Taiwanese cuisine to our customers. Our Group’s revenue is primarily generated\nfrom the Hong Kong Operating Subsidiaries’ operation of our Master Beef and Anping Grill restaurant outlets in Hong Kong. According\nto the Frost & Sullivan Report, in 2023, our Master Beef brand ranked first among the specialty hotpot restaurant chain brands and\nTaiwanese hotpot restaurant chain brands in Hong Kong in terms of revenue, and our Group comprising our Master Beef and Anping Grill\nbrands ranked first in the overall Taiwanese cuisine market in Hong Kong with a market share of approximately 9.7% in terms of revenue.\n\n \n\nWe\nfirst established our semi-self-service hotpot brand “Master Beef Taiwanese Hotpot All You Can Eat” (or “Master Beef”)\nin 2019 and subsequently expanded during the COVID-19 pandemic period and established multiple brands, namely Anping Grill, Chubby Bento,\nChubby Noodles and Bao Pot, diversifying its operations into Taiwanese grill, Taiwanese bento, Taiwanese noodles and Taiwanese stone\npot. To streamline the corporate structure and recalibrate business strategies and resources, on May 14, 2024, the Group disposed of\nits operations in Chubby Bento, Chubby Noodles and Bao Pot to Galaxy Shine Company Limited and Thrivors Holdings Limited, our principal\nshareholders and related parties. Immediately prior to the disposal, we were operating three Chubby Bento outlets, two Chubby Noodles\noutlets and one Bao Pot outlet in Hong Kong.\n\n \n\n**Results\nof Operations**\n\n \n\nFor\nthe years ended December 31, 2025, 2024 and 2023, our Group’s revenue amounted to approximately HK$459.1 million (approximately\nUS$59.0 million), HK$504.0 million and HK$532.3 million, respectively. We recorded a loss of approximately HK$52.5 million (approximately\nUS$6.7 million) for the year ended December 31, 2025 as compared to a profit of approximately HK$32.9 million for the year ended December\n31, 2024. We recorded a loss of approximately HK$37.4 million for the year ended December 31, 2023.\n\n \n\nLoss\nfor the year ended December 31, 2025 was primarily attributable to (i) the decrease in revenue by approximately HK$44.9 million from\nyear to year; and (ii) the absence of the one-time gain on disposal of subsidiaries of approximately HK$58.7 million arising from\nthe disposal of the entire issued share capital of Chubby Bento Limited and Bao Pot Taiwanese Claypot Limited and their respective\nsubsidiaries incorporated in Hong Kong operating the Chubby Bento, Chubby Noodles and Bao Pot restaurant outlets on May 14, 2024,\nwhich are partially off-set by the decrease in staff costs by approximately HK$19.4 million during the year.\n\n \n\n58\n\n \n\n \n\nProfit\nfor the year ended December 31, 2024 was primarily attributable to (i) the above-mentioned one-time gain on disposal of subsidiaries\nof approximately HK$58.7 million; and (ii) the absence of impairment loss in respect of assets held for sale of approximately HK$23.5\nmillion in 2024 compared to that in 2023, which are off-set by listing expenses of approximately HK$8.4 million in 2024 and the impairment\nof property, plant and equipment and right-of-use assets of approximately HK$9.6 million of certain underperformed restaurant outlets\nin 2024.\n\n** **\n\n**Key\nFactors Affecting the Results of Our Group’s Operations**\n\n \n\nOur\nfinancial condition and results of operation have been and will continue to be affected by a number of factors, many of which may be\nbeyond our control, including those factors set out in the section headed ‘‘Risk Factors’’ and those set out\nbelow:\n\n \n\n**Macroeconomic\nConditions**\n\n** **\n\nMacroeconomic\nfactors could affect the disposable income and spending power of our customers and the ability of our suppliers to remain in business\nto support our business. Under stronger economic conditions, consumers tend to allocate higher spending to food outside their homes.\nDuring weaker economies, consumers tend to be more cautious and rational on spending on dining out. When the COVID-19 pandemic was at\nits peak, our Hong Kong Operating Subsidiaries recorded lower revenue due to reduced customer traffic, shortened operating hours, occupancy\nrestrictions, and temporary closures of our restaurant outlets. In mid-2022, our operating results started to recover with the improvement\nin the public health conditions and the easing of social distancing measures. In 2023, customer traffic further improved due to the opening\nof new restaurant outlets and the further easing of social distancing measures.\n\n \n\nIf\ninflation or other factors were to significantly increase our business costs, our Operating Subsidiaries may be unable to pass through\nprice increases to their customers. Our Operating Subsidiaries are impacted by inflationary increases in wages, benefits and other costs.\nIf they are not able to pass increased wage and other costs resulting from inflation onto the clients our profitability may decline.\nThere can be no assurance that future cost increases can be offset by increased menu prices or that increased menu prices will be fully\nabsorbed by the customers without resulting in any change to their visit frequencies or spending patterns.\n\n \n\n**Customer\nDemand for Quality Taiwanese Cuisine and Related Products**\n\n \n\nOur\nresults of operations have been and will continue to be influenced by consumer spending on Taiwanese cuisine and related products, especially\nfor Taiwanese hotpot, which is largely affected by the continuous improvements in living standards and Taiwanese food consumption behavior\nin Hong Kong. As a result of economic growth, Hong Kong has experienced an increase in per capita disposable income, which drives the\ngrowth in Hong Kong’s Taiwanese food market. Our Operating Subsidiaries have in the past benefitted from the growth of the industry,\nand we believe that the macro-economy in Hong Kong and its growth will continue to drive the growth of the Taiwanese food market as well\nas our business. However, the growth of the Chinese economy and the Taiwanese food market may slow down in the future due to factors\nbeyond our control.\n\n \n\nCustomer\ndemand is also affected by a number of other factors, including product quality, safety, product innovation and customer experience.\nAs an iconic hotpot brand in Hong Kong, we believe that our strong brand values, popular and high-quality products, competitive pricing,\nand ability to innovate and adapt to changing customer preferences position us well to grow in Hong Kong’s restaurant chain market.\n\n \n\n**Our\nAbility to Grow Our Customer Base and Drive Customer Engagement**\n\n \n\nOur\nOperating Subsidiaries’ revenue growth depends largely on our ability to grow our customer base and drive customer engagement,\nincluding through our brands’ membership schemes. The number of our members increased by approximately 5.5% from approximately\n566,000 as at December 31, 2024 to 597,000 members as at December 31, 2025. Our Operating Subsidiaries focus on promoting our homegrown\nbrands, showcasing their signature soup bases and food products while constantly innovating their menus, and offering an enjoyable customer\nexperience in our restaurant outlets. There can be no assurance that we will be successful in further growing our customer base or\nthe number of our brands’ members.\n\n \n\n59\n\n \n\n \n\n**Efficient\nRestaurant Operations**\n\n \n\nWe\nhave historically focused on driving high revenue growth through expansion. Our Operating Subsidiaries costs and expenses primarily consist\nof food, payroll and employee benefits, occupancy, and other operating expenses. Going forward, as we work to continue to expand our\nGroup’s restaurant outlet network, our Operating Subsidiaries’ profitability will largely depend on our ability to effectively\ncontrol these expenses by implementing various measures such as leveraging our scale to negotiate more favorable supply and occupancy\nterms, increasing our staff’s efficiency, and implementing technology to further automate and streamline our operations. In the\nlong run, we expect our restaurant outlet level operating costs as a percentage of our revenues will continue to decrease; however,\nthere can be no assurance that this will occur.\n\n \n\n**Seasonality**\n\n \n\nWe\nexperience seasonal fluctuations in our Hong Kong Operating Subsidiaries’ revenue. In general, our Hong Kong Operating Subsidiaries\nachieved the highest customer traffic and revenue from our restaurant operations in December due to more customers dining out for hot\nmeals in typically colder weather, and lower customer traffic and spending in September when school reopens after the summer vacation.\n\n \n\n**Key\nPerformance Indicators**\n\n \n\nIn\nassessing the performance of our business, our management team also considers a variety of other key performance indicators. Such other\nkey performance indicators include average spending per customer, average seat turnover rate, total customer visits, and average daily\nrevenue per restaurant.\n\n \n\nWe\nbelieve that these indicators provide useful information in understanding and evaluating our results of operations. The presentation\nof key performance indicators is not intended to be considered in isolation or as a substitute for, or superior to, the financial information.\nThe following table sets forth our key performance indicators for the years presented:\n\n \n\n  \n\n**For the years ended**\n\n**December 31,**\n \n\n  \n2025  \n2024  \n2023 \n\n  \n   \n   \n  \n\nApproximate average spending per customer(1) *(HK$)* \n 299.7  \n 265.1  \n 265.9 \n\nApproximate average seat turnover rate(2) *(times/day)* \n 1.4  \n 1.7  \n 2.0 \n\nApproximate total customer visits \n 1,432,000  \n 1,773,000  \n 1,931,000 \n\nApproximate average daily revenue per restaurant(3) *(HK$)* \n 99,000  \n 93,000  \n 105,000 \n\n* *\n\n(1)\nCalculated by dividing catering income generated from restaurant operations (excluding takeaway orders) for the corresponding year by\ntotal customers served for the corresponding year. Chubby Bento and Chubby Noodles restaurants adopted the self-service business model\nfor dine-in service, and therefore we use the number of boxes of bento or bowls of noodles sold as a proxy for the total customers served\nat the Chubby Bento and Chubby Noodles restaurants for the years and periods before\nthey were sold.\n\n \n\n(2)\nCalculated by dividing the total number of customers served for the corresponding year by the product of the total restaurant operation\ndays and the average seat count during the corresponding year.\n\n \n\n(3)\nCalculated by dividing the catering income generated from restaurant operation (excluding takeaway orders) for the corresponding year\nby the total restaurant operation days of the corresponding year.\n\n \n\n60\n\n \n\n \n\n**RESULTS\nOF OPERATIONS**\n\n** **\n\n**Description\nand Analysis of Principal Components of Our Results of Operations**\n\n \n\nThe\nfollowing table sets forth a summary of our consolidated results of operations for the years presented, both in absolute amount and as\npercentages of our revenue. This information should be read together with our consolidated financial statements and related notes included\nelsewhere in this Annual Report. The following discussion is based on our Company’s historical results of operations and may not\nbe indicative of our Company’s future operating performance.\n\n \n\n**Results\nof Operations**\n\n \n\n  \nFor the years ended December 31, \n\n  \n2025  \n2025  \n2024  \n2023 \n\n  \nUS$  \nHK$  \nHK$  \nHK$ \n\n  \n   \n   \n   \n  \n\nRevenue \n 58,985,525  \n 459,102,040  \n 503,975,453  \n 532,286,102 \n\nOther income and gains \n 403,158  \n 3,137,903  \n 2,575,532  \n 1,191,524 \n\nRaw materials and consumables used \n (21,413,932) \n (166,671,052) \n (162,919,358) \n (173,923,946)\n\nDepreciation of property, plant and equipment \n (3,549,440) \n (27,626,357) \n (34,038,855) \n (35,795,951)\n\nAmortisation of right-of-use assets \n (5,006,718) \n (38,968,788) \n (44,562,079) \n (48,467,296)\n\nStaff costs \n (19,299,674) \n (150,215,156) \n (169,577,298) \n (177,874,361)\n\nUtilities expenses \n (2,331,496) \n (18,146,730) \n (19,133,238) \n (19,896,742)\n\nImpairment of property, plant and equipment \n (241,205) \n (1,877,371) \n (4,549,381) \n - \n\nImpairment of right-of-use assets \n (527,031) \n (4,102,040) \n (5,013,080) \n - \n\nImpairment loss in respect of assets held for sale \n -  \n -  \n -  \n (23,545,499)\n\nGain on disposal of subsidiaries \n -  \n -  \n 58,678,325  \n - \n\nOther expenses \n (11,624,683) \n (90,478,393) \n (79,631,075) \n (72,312,851)\n\nFinance costs \n (1,246,913) \n (9,705,101) \n (10,190,795) \n (11,449,103)\n\n(Loss)/profit before tax \n (5,852,409) \n (45,551,045) \n 35,614,151  \n (29,788,123)\n\nIncome tax expenses \n (896,366) \n (6,976,688) \n (2,713,707) \n (7,657,988)\n\n(Loss)/profit for the year \n (6,748,775) \n (52,527,733) \n 32,900,444  \n (37,446,111)\n\nOther comprehensive loss that may be reclassified subsequently to profit or loss in subsequent periods: \n    \n    \n    \n   \n\n- Exchange difference on translation of foreign operation \n 3,390\n 26,382 \n (28,025) \n (3,475)\n\nTotal comprehensive (loss)/income for the year \n (6,745,385) \n (52,501,351) \n 32,872,419  \n (37,449,586)\n\n  \n    \n    \n    \n   \n\n(Loss)/profit per share attributable to owners of the Company \n    \n    \n    \n   \n\n(Loss)/Earnings per share \n    \n    \n    \n   \n\n- Basic \n (0.41) \n (3.17) \n 2.56  \n (3,745)\n\n- Diluted \n (0.41) \n (3.17) \n 2.56  \n (3,745)\n\n \n\n61\n\n \n\n \n\n**Comparison\nof the Year Ended December 31, 2025 and Year Ended December 31, 2024**\n\n** **\n\n**Revenue** \n\n \n\nWe\nprimarily derived our revenue from the provision of catering services at our Master Beef and Anping Grill restaurant outlets in Hong\nKong through our Hong Kong Operating Subsidiaries during the years ended December 31, 2025 and 2024. The following table sets out the\nbreakdown of our Hong Kong Operating Subsidiaries’ revenue for the periods indicated:\n\n \n\n  \nFor the years ended December 31, \n\n  \n2025  \n2024 \n\n  \nUS$  \nHK$  \nHK$ \n\n  \n   \n   \n  \n\nRevenue from contract with customers within the scope of IFRS 15 \n    \n    \n   \n\nCatering income \n    \n    \n   \n\n- Master Beef \n 48,090,525  \n 374,302,983  \n 397,855,205 \n\n- Anping Grill \n 7,385,698  \n 57,485,103  \n 63,023,166 \n\n- Chubby Bento and Chubby Noodles \n -  \n -  \n 14,130,373 \n\n- Bao Pot \n -  \n -  \n 3,084,496 \n\n  \n 55,476,223  \n 431,788,086  \n 478,093,240 \n\nSales of goods \n 1,606,382  \n 12,502,954  \n 12,083,213 \n\nManagement fee income \n 1,902,920  \n 14,811,000  \n 13,799,000 \n\n  \n    \n    \n   \n\nTotal Revenue \n 58,985,525  \n 459,102,040  \n 503,975,453 \n\n \n\nOur total revenue decreased by approximately HK$44.9 million or 8.9% from\napproximately HK$504.0 million for the year ended December 31, 2024 to approximately HK$459.1 million (approximately US$59.0 million)\nfor the year ended December 31, 2025. The decrease in total revenue was mainly due to (i) a decline in customer visits at our major revenue\ncontributors, Master Beef and Anping Grill restaurant outlets, as a result of the prolonged slow economic recovery in Hong Kong, the increasing\ntrend of northbound spending from Hong Kong to cities on mainland China proximate to the Hong Kong border, the continued shift in local\nconsumption habits and preferences among local customers reshaping the catering industry in Hong Kong, and the escalating competition\nin the hot pot market; and (ii) the disposal of the entire issued share capital of Chubby Bento Limited and Bao Pot Taiwanese Claypot\nLimited and their respective subsidiaries incorporated in Hong Kong operating the Chubby Bento, Chubby Noodles and Bao Pot restaurant\noutlets since May 14, 2024, which was partially offset by the increase in income derived from the sales of food ingredients and the provision\nof human resource management services to Chubby Bento Limited’s operating subsidiaries, which are our related parties, during the\nyear ended December 31, 2025.\n\n \n\n**Other\nIncome and Gains**\n\n \n\nOur\nother income and gains primarily comprised bank interest income, rental income mainly from a related party, government grants and\nsundry income. Our other income and gains increased by approximately HK$0.6 million or 21.8% from approximately HK$2.6 million for\nthe year ended December 31, 2024 to approximately HK$3.1 million (approximately US$0.4 million) for the year ended December 31,\n2025. The increase in other income and gains was primarily attributable to the increase in government grant and rental income mainly\nderived from the sublease of a restaurant outlet to related parties operating the Chubby Bento restaurant outlets after the disposal\nof the Disposal Groups, which was partially offset by a decrease in sponsorship income and bank interest income.\n\n \n\n**Raw\nMaterials and Consumables Used**\n\n \n\nOur\nraw materials and consumables used mainly represent the cost of our food ingredients and beverages and other consumables used in our\noperations. Our raw materials and consumables used increased by approximately HK$3.8 million or 2.3% from approximately HK$162.9 million\nfor the year ended December 31, 2024 to approximately HK$166.7 million (approximately US$21.4 million) for the year ended December 31,\n2025, primarily attributable to (i) the inclusion of premium, high-cost Japanese Black Wagyu beef and selected renowned frozen dessert\nbrands into our “all-you-can-eat” menu to enhance customer appeal and retention, (ii) the higher consumption of higher-priced\npremium Australian beef following menu restructuring in the second quarter of 2024, (iii) higher\naverage unit costs of beef, our core hotpot food ingredient, and (iv) a promotional campaign launched in April\n2025 in connection with the Group’s listing on Nasdaq stock exchange as a gesture of appreciation for customer support, which was\npartially offset by the decrease in the consumption of raw materials owing to the decline in customer visits at our major revenue contributors.\nAs a percentage of revenue, raw materials and consumables used increased to approximately 36.3% in the year ended December 31, 2025 as\ncompared to approximately 32.3% in the year ended December 31, 2024. The increase in such costs as a percentage of revenue was primarily\ndriven by the combined effect of the increase in raw materials and consumables used by 2.3% and the decrease in revenue by 8.9% from year to year.\n\n \n\n62\n\n \n\n \n\n**Depreciation\nof Property, Plant and Equipment**\n\n \n\nOur\ndepreciation of property, plant and equipment decreased by approximately HK$6.4 million or 18.8% from approximately HK$34.0 million for\nthe year ended December 31, 2024 to approximately HK$27.6 million (approximately US$3.5 million) for the year ended December 31, 2025,\nprimarily because the leasehold improvements of certain restaurant outlets had been fully depreciated or fully impaired. As a percentage\nof revenue, depreciation of property, plant and equipment decreased to approximately 6.0% in the year ended December 31, 2025 as compared\nto approximately 6.8% in the year ended December 31, 2024. The decrease is primarily driven by the combined effect of the decrease in\ndepreciation of property, plant and equipment by 18.8% and the decrease in revenue by 8.9% from year to year.\n\n \n\n**Amortisation\nof Right-of-use Assets**\n\n \n\nOur\namortisation of right-of-use assets decreased by approximately HK$5.6 million or 12.6% from approximately HK$44.6 million for year ended\nDecember 31, 2024 to approximately HK$39.0 million (approximately US$5.0 million) for the year ended December 31, 2025, primarily because\nthe right-of-use assets of certain restaurant outlets had been fully amortized or fully impaired in 2024. As a percentage of revenue,\namortisation of right-of-use assets decreased to approximately 8.5% in the year ended December 31, 2025 as compared to approximately\n8.8% in the year ended December 31, 2024. The decrease is largely driven by the combined effect of the decrease in amortisation of right-of-use\nassets by 12.6% and the decrease in revenue by 8.9% from year to year.\n\n \n\n**Staff\nCosts**\n\n \n\nOur staff costs decreased by\napproximately HK$19.4 million or 11.4% from approximately HK$169.6 million for the year ended December 31, 2024 to approximately HK$150.2\nmillion (approximately US$19.3 million) for the year ended December 31, 2025, primarily attributable to a decrease in the number of full-time\nand part-time employees mainly engaged in the provision of our catering services to retail customers in our restaurant outlets and the\nprovision of human resource management services to our related companies owing to our management’s ongoing implementation of stringent cost-control measures in response to the prolonged slow economic\nrecovery in Hong Kong. As a percentage of revenue, staff costs decreased to approximately 32.7% in the year ended December 31, 2025 as\ncompared to approximately 33.6% in the year ended December 31, 2024. The decrease in staff costs as a percentage of revenue was primarily\ndriven by the combined effect of the decrease in our staff costs by 11.4 % and the decrease in revenue by 8.9% from year to year.\n\n \n\n**Utilities\nExpenses**\n\n \n\nOur\nutilities expenses decreased by approximately HK$1.0 million or 5.2% from approximately HK$19.1 million for the year ended December 31,\n2024 to approximately HK$18.1 million (approximately US$2.3 million) for the year ended December 31, 2025, primarily attributable to\nthe disposal of the entire issued share capital of Chubby Bento Limited and Bao Pot Taiwanese Claypot Limited and their respective subsidiaries\nincorporated in Hong Kong operating the Chubby Bento, Chubby Noodles and Bao Pot restaurant outlets since May 14, 2024. As a percentage\nof revenue, utilities expenses increased slightly to approximately 4.0% in the year ended December 31, 2025 as compared to approximately\n3.8% in the year ended December 31, 2024. The increase in utilities expenses as a percentage of revenue was primarily driven by the combined\neffect of the decrease in utilities expenses by 5.2% and the decrease in revenue by 8.9% from year to year.\n\n \n\n**Impairment\nof Property, Plant and Equipment and Right-of-use Assets**\n\n \n\nOur\nimpairment of property, plant and equipment and impairment of right-of-use assets decreased by approximately HK$2.7 million or 58.7%\nand approximately HK$0.9 million or 18.2%, respectively, from approximately HK$4.5 million and HK$5.0 million, respectively, for the\nyear ended December 31, 2024 to approximately HK$1.9 million (approximately US$0.2 million) and approximately HK$4.1 million (approximately\nUS$0.5 million), respectively, primarily attributable to the impairment on the non-current assets of certain underperforming restaurant\noutlets during the years.\n\n \n\n**Gain\non Disposal of Subsidiaries**\n\n \n\nWe\nrecorded a gain on disposal of subsidiaries of approximately HK$58.7 million for the year ended December 31, 2024, primarily attributable\nto the disposal of the entire issued share capital of Chubby Bento Limited and Bao Pot Taiwanese Claypot Limited and their respective\nsubsidiaries incorporated in Hong Kong operating the Chubby Bento, Chubby Noodles and Bao Pot restaurant outlets to Galaxy Shine Company\nLimited and Thrivors Holdings Limited, our principal shareholders and related parties on May 14, 2024. We did not record any material\ngain or loss on the disposal of subsidiaries during the year ended December 31, 2025.\n\n \n\n63\n\n \n\n \n\n**Other\nExpenses**\n\n \n\nOur\nother expenses increased by approximately HK$10.8 million or 13.6% from approximately HK$79.6 million for the year ended December\n31, 2024 to approximately HK$90.5 million (approximately US$11.6 million) for the year ended December 31, 2025, primarily due to (i)\nthe recognition of a share-based payment expense to an advisor in connection with a share option equivalent to 2.5% of the total\nnumber of issued shares of the Company immediately prior to the listing of the Company on the Nasdaq Stock Exchange with no vesting\nperiod, (ii) additional administrative costs required for the Group’s post-listing compliance, (iii) travelling and other\nexpenses incurred for investor relations activities, and (iv) the listing expenses associated with achieving the dual listing of the\nCompany’s shares on the Quotation Board of the Frankfurt Stock Exchange in September 2025, which were partially offset by the\ndecrease in other expenses following the disposal of the entire issued share capital of Chubby Bento Limited and Bao Pot Taiwanese\nClaypot Limited and their respective subsidiaries incorporated in Hong Kong operating the Chubby Bento, Chubby Noodles and Bao Pot\nrestaurant outlets since May 14, 2024 and the decrease in listing expenses incurred for the initial public offering of the\nCompany’s shares on the Nasdaq Stock Exchange. (As the grant of the share option to the advisor was contingent upon the\nsuccessful completion of our initial public offering, it was not recognised until the performance condition became probable in\naccordance with IFRS 2 Share-based Payment.)\n\n \n\n**Finance\nCosts**\n\n \n\nOur\nfinance costs decreased by approximately HK$0.5 million or 4.8% from approximately HK$10.2 million for the year ended December 31, 2024\nto approximately HK$9.7 million (approximately US$1.2 million) for the year ended December 31, 2025, primarily due to the decrease in\ninterest on bank loans.\n\n \n\n**(Loss)/Profit\nbefore Tax**\n\n \n\nAs\na result of the foregoing, we recorded a loss before tax of approximately HK$45.6 million (approximately US$5.9 million) for the\nyear ended December 31, 2025 compared to a profit before tax of approximately HK$35.6 million for the year ended December 31, 2024.\n\n \n\n**Income\nTax Expenses**\n\n \n\nOur\nincome tax expenses increased by approximately HK$4.3 million or 157.1% from approximately HK$2.7 million for the year ended December\n31, 2024 to approximately HK$7.0 million (approximately US$0.9 million) for the year ended December 31, 2025, primarily due to the tax\nimpact arising from the movements in deferred tax.\n\n \n\n**(Loss)/Profit\nfor the Year**\n\n \n\nAs\na result of the foregoing, we recorded a net loss of approximately HK$52.5 million (approximately US$6.7 million) for the year ended\nDecember 31, 2025 and a net profit of approximately HK$32.9 million for the year ended December 31, 2024.\n\n \n\n64\n\n \n\n \n\n**Comparison\nof the Year Ended December 31, 2024 and Year Ended December 31, 2023**\n\n** **\n\n**Revenue** \n\n \n\nWe\nprimarily derived our revenue from the provision of catering services at our Master Beef and Anping Grill restaurant outlets in Hong\nKong through our Hong Kong Operating Subsidiaries during the year ended December 31, 2024 and 2023. The following table sets out the\nbreakdown of our Hong Kong Operating Subsidiaries’ revenue for the periods indicated:\n\n \n\n  \nFor the years ended December 31, \n\n  \n2024  \n2023 \n\n  \nUS$  \nHK$  \nHK$ \n\n  \n   \n   \n  \n\nRevenue from contract with customers within the scope of IFRS 15 \n    \n    \n   \n\nCatering income \n    \n    \n   \n\n- Master Beef \n 51,219,178  \n 397,855,205  \n 425,061,901 \n\n- Anping Grill \n 8,113,491  \n 63,023,166  \n 73,967,729 \n\n- Chubby Bento and Chubby Noodles \n 1,819,119  \n 14,130,373  \n 28,758,389 \n\n- Bao Pot \n 397,093  \n 3,084,496  \n 3,991,021 \n\n  \n 61,548,881  \n 478,093,240  \n 531,779,040 \n\nSales of goods \n 1,555,571  \n 12,083,213  \n 507,062 \n\nManagement fee income \n 1,776,459  \n 13,799,000  \n - \n\n  \n    \n    \n   \n\nTotal Revenue \n 64,880,911  \n 503,975,453  \n 532,286,102 \n\n \n\nOur total revenue decreased by approximately HK$28.3 million or 5.3% from\napproximately HK$532.3 million for the year ended December 31, 2023 to approximately HK$504.0 million (approximately US$64.9 million)\nfor the year ended December 31, 2024. The decrease in total revenue was mainly due to (i) a decline in customer visits at our major revenue\ncontributors, Master Beef and Anping Grill restaurant outlets, as a result of the slow economic recovery in Hong Kong, the northbound\nspending trend from Hong Kong to cities on mainland China proximate to the Hong Kong border, and the shift in local consumption habits\namong local customers and (ii) the disposal of the entire issued share capital of Chubby Bento Limited and Bao Pot Taiwanese Claypot Limited\nand their respective subsidiaries incorporated in Hong Kong operating the Chubby Bento, Chubby Noodles and Bao Pot restaurant outlets\nsince May 14, 2024, which was partially offset by the income derived from the sales of food ingredients and the provision of human resource\nmanagement services to related parties.\n\n \n\n**Other\nIncome and Gains**\n\n \n\nOur\nother income and gains primarily comprise bank interest income, government grants and sundry income. Our other income and gains\nincreased by approximately HK$1.4 million or 116.2% from approximately HK$1.2 million for the year ended December 31, 2023 to\napproximately HK$2.6 million (approximately US$0.3 million) for the year ended December 31, 2024. The increase in other income and\ngains was primarily attributable to the increase in bank interest income, the subsidies granted by an electricity supplier to replace\nelectrical equipment with more energy efficient models, the rental income derived from the sublease of a restaurant outlet to\nrelated parties operating the Chubby Bento restaurant outlets after the disposal thereof and sundry income generated from sales at a\npop-up brand promotion event in Hong Kong.\n\n \n\n**Raw\nMaterials and Consumables Used**\n\n \n\nOur\nraw materials and consumables used mainly represent the cost of our food ingredients and beverages and other consumables used in our\noperations. Our raw materials and consumables used decreased by approximately HK$11.0 million or 6.3% from approximately HK$173.9\nmillion for the year ended December 31, 2023 to approximately HK$162.9 million (approximately US$21.0 million) for the year ended\nDecember 31, 2024, primarily attributable to the decrease in food ingredients and beverage items and other consumables purchased and\nconsumed driven by a decline in customer visits at our major revenue contributors, Master Beef and Anping Grill restaurant outlets\nfor the reasons explained above and the stringent cost management measures implemented by our management on the combination of food\ningredients to lower the costs, which was partially offset by the increase in unit prices of certain major food ingredients and\nbeverages used from year to year. As a percentage of revenue, raw materials and consumables used decreased to approximately 32.3% in\nthe year ended December 31, 2024 as compared to approximately 32.7% in the year ended December 31, 2023. The decrease in such costs\nas a percentage of revenue was primarily driven by the decrease in raw materials and consumables used by 6.3% and the decrease in\nrevenue by 5.3% due to a decline in customer visits at our Master Beef and Anping Grill restaurant outlets from year\nto year.\n\n \n\n65\n\n \n\n \n\n**Depreciation\nof Property, Plant and Equipment**\n\n \n\nOur\ndepreciation of property, plant and equipment decreased by approximately HK$1.8 million or 4.9% from approximately HK$35.8 million for\nthe year ended December 31, 2023 to approximately HK$34.0 million (approximately US$4.4 million) for the year ended December 31, 2024,\nprimarily attributable to the reduction in property, plant and equipment as a result of the transfer of property, plant and equipment\nin Chubby Bento and Bao Pot restaurant outlets to assets of the Disposal Groups classified as held for sale since December 2023, which\nwas partially offset by the additions of property, plant and equipment as a result of the opening of two new restaurant outlets (including\none Master Beef restaurant and one Anping Grill restaurant) in the second half of 2023. As a percentage of revenue, depreciation of property,\nplant and equipment remained stable and slightly increased to approximately 6.8% in the year ended December 31, 2024 as compared to approximately\n6.7% in the year ended December 31, 2023. The slight increase is largely driven by the decrease in depreciation of property, plant and\nequipment by 4.9% and the decrease in revenue by 5.3% from year to year.\n\n \n\n**Amortisation\nof Right-of-use Assets**\n\n \n\nOur\namortisation of right-of-use assets decreased by approximately HK$3.9 million or 8.1% from approximately HK$48.5 million for year ended\nDecember 31, 2023 to approximately HK$44.6 million (approximately US$5.7 million) for the year ended December 31, 2024, primarily attributable\nto a decrease in lease arrangements for lease assets as a result of the transfer of the lease arrangements related to Chubby Bento and\nBao Pot restaurant outlets to assets of the Disposal Groups classified as held for sale since December 2023, which was partially offset\nby the additions in lease arrangements for lease assets in relation to the opening of two new restaurant outlets (including one Master\nBeef restaurant and one Anping Grill restaurant) in the second half of 2023. As a percentage of revenue, amortisation of right-of-use\nassets decreased slightly to approximately 8.8% in the year ended December 31, 2024 as compared to approximately 9.1% in the year ended\nDecember 31, 2023. The decrease is largely driven by the decrease in amortisation of right-of-use assets by 8.1% and the decrease in\nrevenue by 5.3% from year to year.\n\n \n\n**Staff\nCosts**\n\n \n\nOur\nstaff costs decreased by approximately HK$8.3 million or 4.7% from approximately HK$177.9 million for the year ended December 31, 2023\nto approximately HK$169.6 million (approximately US$21.8 million) for the year ended December 31, 2024, primarily attributable to the\ndecrease in the number of full-time and part-time employee as our management continued to implement stringent cost management measures\nto cope with the slow economic recovery in Hong Kong, which was partially offset by the increase in the average staff wage of our full-time\nfrom year to year. As a percentage of revenue, staff costs increased slightly to approximately 33.6% in the year ended December 31, 2024,\nas compared to approximately 33.4% in the year ended December 31, 2023. The increase in staff costs as a percentage of revenue was primarily\ndriven by the combined effect of the decrease in the number of our staff, which was partially offset by the increase in average staff\nwage of our full-time staff and the decrease in revenue from year to year.\n\n \n\n**Utilities\nExpenses**\n\n \n\nOur\nutilities expenses decreased by approximately HK$0.8 million or 3.8% from approximately HK$19.9 million for the year ended December 31,\n2023 to approximately HK$19.1 million (approximately US$2.5 million) for the year ended December 31, 2024, primarily attributable to\nthe disposal of the entire issued share capital of Chubby Bento Limited and Bao Pot Taiwanese Claypot Limited and their respective subsidiaries\nincorporated in Hong Kong operating the Chubby Bento, Chubby Noodles and Bao Pot restaurant outlets since May 14, 2024, which was partially\noffset by the opening of two new restaurant outlets (including one Master Beef restaurant and one Anping Grill restaurant) in the second\nhalf of 2023 and two new restaurant outlets (including two Chubby Noodles restaurants) in January 2024. As a percentage of revenue, utilities\nexpenses increased slightly to approximately 3.8 % in the year ended December 31, 2024 as compared to approximately 3.7% in the year\nended December 31, 2023. The increase in utilities expenses as a percentage of revenue was primarily driven by the decrease in revenue from year to year.\n\n \n\n66\n\n \n\n \n\n**Impairment\nLoss in respect of Assets Held for Sale**\n\n \n\nWe\nrecorded an impairment loss in respect of assets held for sale of approximately HK$23.5 million for the year ended December 31, 2023,\nprimarily attributable to the loss on the underperforming Chubby Bento, Chubby Noodles and Bao Pot restaurant outlets of which our Board\nresolved to dispose in December 2023. We did not record any impairment loss in respect of assets held for sale for the year ended December\n31, 2024.\n\n \n\n**Impairment\nof Property, Plant and Equipment and Right-of-use Assets**\n\n \n\nWe\nrecorded an impairment of property, plant and equipment of approximately HK$4.5 million and an impairment of right-of-use assets of approximately\nHK$5.0 million for the year ended December 31, 2024, primarily attributable to the impairment on the relevant non-current assets of the\nunderperforming restaurant outlets. No impairment of property, plant and equipment and impairment of right-of-use assets was recorded\nfor the year ended December 31, 2023.\n\n \n\n**Gain\non Disposal of Subsidiaries**\n\n \n\nWe\nrecorded a gain on disposal of subsidiaries of approximately HK$58.7 million for the year ended December 31, 2024, primarily attributable\nto the disposal of the entire issued share capital of Chubby Bento Limited and Bao Pot Taiwanese Claypot Limited and their respective\nsubsidiaries incorporated in Hong Kong operating the Chubby Bento, Chubby Noodles and Bao Pot restaurant outlets to Galaxy Shine Company\nLimited and Thrivors Holdings Limited, our principal shareholders and related parties on May 14, 2024.\n\n \n\n**Other\nExpenses**\n\n \n\nOur\nother expenses increased by approximately HK$7.3 million or 10.1% from approximately HK$72.3 million for the year ended December 31,\n2023 to approximately HK$79.6 million (approximately US$10.3 million) for the year ended December 31, 2024, primarily due to the listing\nexpenses incurred for the initial public offering of the Company’s shares.\n\n \n\n**Finance\nCosts**\n\n \n\nOur\nfinance costs decreased by approximately HK$1.3 million or 11.0% from approximately HK$11.4 million for the year ended December 31, 2023\nto approximately HK$10.2 million (approximately US$1.3 million) for the year ended December 31, 2024, primarily due to the decrease in\ninterest on bank loans and loans from related companies.\n\n \n\n**Profit/(loss)before\nTax**\n\n \n\nAs\na result of the foregoing, we recorded a profit before tax of approximately HK$35.6 million (approximately US$4.6 million) for the year\nended December 31, 2024 and a loss before tax of approximately HK$29.8 million for the year ended December 31, 2023.\n\n \n\n**Income\nTax Expenses**\n\n \n\nOur\nincome tax expenses decreased by approximately HK$4.9 million or 64.6% from approximately HK$7.7 million for the year ended December\n31, 2023 to approximately HK$2.7 million (approximately US$0.3 million) for the year ended December 31, 2024, primarily due to the due\nto the tax impact arising from the movements in deferred tax.\n\n \n\n**Profit/(loss)\nfor the Year**\n\n \n\nAs\na result of the foregoing, we recorded a net profit of approximately HK$32.9 million (approximately US$4.2 million) for the year ended\nDecember 31, 2024 and a net loss of approximately HK$37.4 million for the year ended December 31, 2023.\n\n** **\n\n**Liquidity\nand Capital Resources**\n\n \n\nOur\nliquidity and working capital requirements are primarily related to our operating expenses. Historically, we have met our working capital\nand other liquidity requirements primarily through cash generated from operating activities and other available sources of financing\nfrom banks, related parties and other financial institutions to our Company. Apart from its cash and cash equivalents, our Group currently does not have\nany material unused sources of liquid assets. Going forward, we expect to fund our working capital and other liquidity requirements from\nvarious sources, including cash generated from operations, loans from banking facilities, the remaining net proceeds from our IPO and\nother equity and debt financings as and when appropriate.\n\n \n\n67\n\n \n\n \n\n**Material\nCash Requirements**\n\n \n\nOur\ncash requirements consist primarily of day-to-day operating expenses, capital expenditures, repayment of bank loan and loans from related\nparties, and contractual obligations mainly with respect to operating leases of our restaurant outlets, central kitchen and warehouse.\nWe expect to make future payments on existing leases from cash generated from operations.\n\n \n\nThe\nfollowing table details the Group’s remaining contractual maturity for its financial liabilities as at December 31 2025. The\ntable has been drawn up based on the contracted undiscounted payments of financial liabilities based on the earliest date on which\nthe Group can be required to pay.\n\n \n\n  \nWithin\n1 year  \n2 to 5\nyears  \nOver 5 years  \nTotal \n\n  \nHK$  \nHK$  \nHK$  \nHK$ \n\n  \n   \n   \n   \n  \n\nDecember 31, 2025 \n    \n    \n    \n   \n\n  \n    \n    \n    \n   \n\nBank loans \n 9,929,265  \n 39,717,059  \n 18,665,748  \n 68,312,072 \n\nLoans from related companies \n -  \n 42,066,921  \n 7,203,202  \n 49,270,123 \n\nLoan from Directors \n -  \n \n48,854,141\n  \n -  \n 48,854,141 \n\nAmounts due to related companies \n 402,561  \n -  \n -  \n 402,561 \n\nLease liabilities \n 34,049,654  \n 29,626,146  \n -  \n 63,675,800 \n\nTrade payables \n 12,567,498  \n -  \n -  \n 12,567,498 \n\nOther payables \n 9,533,568  \n -  \n -  \n 9,533,568 \n\n  \n    \n    \n    \n   \n\n  \n 66,482,546  \n 160,264,267  \n 25,868,950  \n \n252,615,763\n \n\n  \n    \n    \n    \n   \n\nUS$ \n 8,541,691  \n 20,590,786  \n 3,323,648  \n 32,456,125 \n\n \n\n**Working\nCapital**\n\n \n\nWe\nbelieve that we have sufficient working capital for our requirements for at least the next 12 months from the date of this Annual Report,\nin the absence of unforeseen circumstances, taking into account the financial resources presently available to us, including its current\nlevel of cash and cash generated from, including but not limited to, its operations.\n\n \n\nThe\nfollowing table sets forth our assets, liabilities and shareholders’ equity/(deficit) as at December 31, 2025 and December 31,\n2024 in:\n\n \n\n  \nAs at December 31,  \nAs at\nDecember 31, \n\n  \n2025  \n2025  \n2024 \n\n  \nUS$(1)  \nHK$  \nHK$ \n\n  \n   \n   \n  \n\nCash and cash equivalents \n 18,978,470  \n 147,715,125  \n 117,336,010 \n\nWorking capital \n 9,617,185  \n 74,853,442  \n (36,332,594)\n\nTotal assets \n 39,061,730  \n 304,029,162  \n 308,315,006 \n\nTotal liabilities \n 32,968,805  \n 256,606,093  \n 279,771,542 \n\nTotal shareholders’ equity \n 6,092,925  \n 47,423,069  \n 28,543,464 \n\n* *\n\n(1)\nCalculated at the rate of US$1 = HK$7.7833, the prevailing exchange rate as set forth in the statistical release of the Federal Reserve\nSystem as at December 31, 2025\n\n** **\n\n****\n\n68\n\n \n\n** **\n\n**Cash\nFlows**\n\n \n\nThe\nfollowing table summarizes our cash flows for the fiscal years ended December 31, 2025, 2024 and 2023:\n\n \n\n  \nYears ended December 31, \n\n  \n2025  \n2025  \n2024  \n2023 \n\n  \nUS$(1)  \nHK$  \nHK$  \nHK$ \n\nCash and cash equivalents as at beginning of the year \n 15,075,355  \n 117,336,010  \n 146,213,744  \n 196,296,774 \n\nOperating activities \n    \n    \n    \n   \n\nNet (loss)/income before tax \n (5,852,409) \n (45,551,045) \n 35,614,151  \n (29,788,123)\n\nNon-cash adjustments \n 12,027,831  \n 93,616,224  \n 39,519,735  \n 125,444,050 \n\nChanges in operating assets and liabilities \n (6,669,483) \n (51,910,601) \n (5,541,551) \n (4,749,185)\n\nInterest received \n 62,215  \n 484,236  \n 682,409  \n 515,980 \n\nIncome tax paid \n (1,190,398) \n (9,265,222) \n (10,108,560) \n (7,598,311)\n\nNet cash (used in)/generated from operating activities \n (1,622,244) \n (12,626,408) \n 60,166,184  \n 83,824,411 \n\nNet cash used in investing activities \n (168,660) \n (1,312,732) \n (12,181,442) \n (44,450,865)\n\nNet cash generated from/(used in) financing activities \n 5,694,827  \n 44,324,542  \n (76,834,451) \n (81,568,286)\n\nNet change in cash and cash equivalents \n 3,903,923  \n 30,385,402  \n (28,849,709) \n (42,194,740)\n\nEffect of foreign exchange rate changes \n (808) \n (6,287) \n (28,025) \n (3,475)\n\nBank balances and cash transfer to assets classified as held for sale \n -  \n -  \n -  \n (7,884,815)\n\nCash and cash equivalents as at end of the year \n 18,978,470  \n 147,715,125  \n 117,336,010  \n 146,213,744 \n\n \n\n(1)\nCalculated at the rate\nof US$1 = HK$7.7833, the prevailing exchange rate as set forth in the statistical release of the Federal Reserve System as at December\n31, 2025.\n\n** **\n\n**Cash\nFlow from Operating Activities**\n\n \n\nFor\nthe year ended December 31, 2025, the Group had net cash used in operating activities of approximately HK$12.6 million, primarily\nattributable to: (i) loss before tax of approximately HK$45.6 million; (ii) decrease in amounts due to directors of approximately\nHK$42.6 million; and (iii) income tax paid of approximately HK$9.3 million, partially offset by (i) adjustment for depreciation of\nproperty, plant and equipment of approximately HK$27.6 million; (ii) adjustment for amortisation of right-of-use assets of\napproximately HK$39.0 million; (iii) adjustment for share-based payment of approximately HK$11.7 million; (iv) adjustment for\nimpairment of property, plant and equipment of approximately HK$1.9 million; and (v) adjustment for impairment of right-of-use\nassets of approximately HK$4.1 million.\n\n \n\nFor\nthe year ended December 31, 2024, the Group had net cash generated from operating activities of approximately HK$60.2 million, primarily\nattributable to (i) profit before tax of approximately HK$35.6 million, (ii) adjustment for depreciation of property, plant and equipment\nof approximately HK$34.0 million, (iii) adjustment for amortisation of right-of-use assets of approximately HK$44.6 million, (iv) adjustment\nfor impairment of property, plant and equipment of approximately HK$4.5 million, (v) adjustment for impairment of right-of-use assets\nof approximately HK$5.0 million, and (vi) changes in accruals and other payables of approximately HK$8.7 million, partially offset by\n(i) adjustment for gain on disposal of subsidiaries of approximately HK$58.7 million, and (ii) income tax paid of approximately HK$10.1\nmillion.\n\n \n\nFor\nthe year ended December 31, 2023, the Group had net cash generated from operating activities of approximately HK$83.8 million, primarily\nattributable to (i) adjustment for depreciation of property, plant and equipment of approximately HK$35.8 million, and (ii) adjustment\nfor amortisation of right-of-use assets of approximately HK$48.5 million, partially offset by (i) loss before tax of approximately HK$29.8\nmillion, (ii) changes in trade receivables of approximately HK$5.1 million, (iii) changes in deposits, prepayments and other receivables\nof approximately HK$5.7 million, and (iv) adjustment for income tax paid of approximately HK$7.6 million.\n\n \n\n**Cash\nFlow from Investing Activities**\n\n \n\nFor\nthe year ended December 31, 2025, the Group had net cash used in investing activities of approximately HK$1.3 million, primarily attributable\nto investments made in leasehold improvements of our restaurant outlets and addition in plant and machinery.\n\n \n\nFor\nthe year ended December 31, 2024, the Group had net cash used in investing activities of approximately HK$12.2 million, primarily attributable\nto investments made in leasehold improvements for renovation of our restaurant outlets of approximately HK$12.0 million.\n\n \n\nFor\nthe year ended December 31, 2023, the Group had net cash used in investing activities of approximately HK$44.5 million, primarily attributable\nto investments made in leasehold improvements for renovation of our restaurant outlets.\n\n \n\n69\n\n \n\n \n\n**Cash\nFlow from Financing Activities**\n\n \n\nFor\nthe year ended December 31, 2025, the Group had net cash generated from financing activities of approximately HK$44.3 million,\nprimarily attributable to gross proceeds from the initial public offering of the Company’s shares of approximately HK$67.3\nmillion and the proceeds from loans from directors of approximately HK$42.5 million, partially offset by (i) repayment of principal portion of bank loans of approximately HK$8.0 million; (ii) repayment\nof principal portion of lease liabilities of approximately HK$42.9 million; and (iii) listing expenses paid in relation to issuance of new ordinary shares of approximately HK$7.6 million.\n\n \n\nFor\nthe year ended December 31, 2024, the Group had net cash used in financing activities of approximately HK$76.8 million, primarily attributable\nto (i) repayment of principal portion of loans from related companies of approximately HK$10.2 million; (ii) repayment of principal portion\nof bank loans of approximately HK$7.6 million; and (iii) repayment of principal portion of lease liabilities of approximately HK$48.9\nmillion.\n\n \n\nFor\nthe year ended December 31, 2023, the Group had net cash used in financing activities of approximately HK$81.6 million, primarily attributable\nto (i) repayment of principal portion of loans from related companies of approximately HK$14.0 million; and (ii) repayment of principal\nportion of lease liabilities of approximately HK$47.7 million.\n\n \n\n**Deposits,\nPrepayments and Other Receivables**\n\n \n\nThe\nfollowing table sets forth our deposits, prepayments and other receivables as at December 31, 2025 and 2024:\n\n \n\n  \nAs at December 31, \n\n  \n2025  \n2025  \n2024 \n\n  \nUS$  \nHK$  \nHK$ \n\n  \n   \n   \n  \n\nDeposits - non-current \n 1,617,174  \n 12,586,949  \n 10,898,645 \n\nDeposits - current \n 1,512,245  \n 11,770,255  \n 12,564,617 \n\nPrepayments \n 782,760  \n 6,092,454  \n 5,428,473 \n\nOther receivables \n 901  \n 7,017  \n 7,017 \n\nTotal \n 3,913,080  \n 30,456,675  \n 28,898,752 \n\n \n\nOur\nnon-current deposits increased by approximately HK$1.7 million or 15.5% from approximately HK$10.9 million as at December 31, 2024 to\napproximately HK$12.6 million (approximately US$1.6 million) as at December 31, 2025, primarily due to increases in rental deposits,\nmanagement fee deposits and air conditioning deposits, as a result of the renewal of the tenancy agreements for certain existing restaurant\noutlets, partially offset by the reclassification of non-current deposits of certain existing\nrestaurant outlets to current deposits given that the remaining tenancy periods of those restaurant outlets were less than one year as\nat December 31, 2025.\n\n \n\nOur\ncurrent deposits decreased by approximately HK$0.8 million or 6.3% from approximately HK$12.6 million as at December 31, 2024 to approximately\nHK$11.8 million (approximately US$1.5 million) as at December 31, 2025, primarily due to the refund of deposits from landlords to the\nGroup upon the expiry of the tenancy agreements of certain existing restaurant outlets, partially offset by the above-mentioned reclassification\nof non-current deposits, including but not limited to rental deposits, management fee deposits and air conditioning deposits, of certain\nrestaurant outlets to current deposits.\n\n \n\nOur\nprepayments increased by approximately HK$0.7 million or 12.2% from approximately HK$5.4 million as at December 31, 2024 to approximately\nHK$6.1 million (approximately US$0.8 million) as at December 31, 2025, primarily due to prepayments for insurance policies.\n\n \n\nOur\nother receivables as at December 31, 2025 and 2024 remained stable.\n\n \n\n70\n\n \n\n \n\n**Inventories**\n\n \n\nThe\nfollowing table sets forth our inventories as at December 31, 2025 and 2024:\n\n \n\n  \nAs at December 31, \n\n  \n2025  \n**2025**\n  \n**2024**  \n\n  \nUS$  \n**HK$**  \n**HK$**  \n\nFood and beverage and other operating items for restaurant operations \n 3,013,723  \n 23,456,709  \n 20,351,116 \n\n \n\nOur\ninventories for restaurant operations increased by approximately HK$3.1 million or 15.3% from approximately HK$20.4 million as at December\n31, 2024 to approximately HK$23.5 million (approximately US$3.0 million) as at December 31, 2025, primarily due to an increase in inventory\nto meet the heightened customer traffic typically seen during cold weather towards the year-end through to the first quarter of the next\nyear.\n\n \n\n**Trade\nPayables, Accruals and Other Payables**\n\n \n\nThe\nfollowing table sets forth our trade payables, accruals and other payables as at December 31, 2025 and 2024:\n\n \n\n  \nAs at December 31, \n\n  \n2025  \n2025  \n2024 \n\n  \nUS$  \nHK$  \nHK$ \n\n  \n   \n   \n  \n\nTrade payables \n 1,614,675  \n 12,567,498  \n 16,656,904 \n\nAccruals \n 2,266,537  \n 17,641,133  \n 19,335,471 \n\nOther payables \n 1,224,874  \n 9,533,568  \n 5,740,176 \n\nTotal \n 5,106,086  \n 39,742,199  \n 41,732,551 \n\n \n\nWe\nhave trade payables of approximately HK$12.6 million (approximately US$1.6 million) and HK$16.7 million as at December 31, 2025 and December\n31, 2024, respectively. Our trade payables primarily comprised of amounts due to our suppliers for purchase of food ingredients.\n\n \n\nOur\naccruals decreased by approximately HK$1.7 million or 8.8% from approximately HK$19.3 million as at December 31, 2024 to approximately\nHK$17.6 million (approximately US$2.3 million) as at December 31, 2025, primarily due to a reduction in staff cost accrual as a result\nof the decrease in the number of staff.\n\n \n\nOur\nother payables for restaurant operations increased by approximately HK$3.8 million or 66.1% from approximately HK$5.7 million as at December\n31, 2024 to approximately HK$9.5 million (approximately US$1.2 million) as at December 31, 2025, primarily due to the design and renovation\ncosts incurred for a restaurant outlet of the Group.\n\n \n\n**Capital\nExpenditures and Commitments**\n\n \n\nOur\ncapital expenditures during the years ended December 31, 2025 and 2024 represent the addition to our property, plant and equipment. For\nthe year ended December 31, 2025 and 2024, we incurred capital expenditures of approximately HK$1.4 million (approximately US$0.2 million)\nand HK$12.0 million, respectively, primarily used for the leasehold improvements for renovation of our restaurant outlets and central\nkitchen.\n\n \n\nOur\ncapital expenditures during the years ended December 31, 2023 and 2022 represent the addition to our property, plant and equipment. For\nthe years ended December 31, 2023 and 2022, we incurred capital expenditures of approximately HK$44.5 million (approximately US$5.7 million)\nand HK$32.5 million, respectively, primarily used for the leasehold improvements for renovation of our restaurant outlets.\n\n \n\nAs\nat December 31, 2025 and 2024, we had no material capital commitments.\n\n \n\n71\n\n \n\n \n\n**Related\nParty Transactions**\n\n \n\nFor\nfurther information on our related party transactions during the years ended December 31, 2025, 2024 and 2023, please refer to the section\nheaded “Item 7. Major Shareholders and Related Party Transactions”.\n\n \n\n**CRITICAL\nACCOUNTING ESTIMATES**\n\n \n\n**Significant\nAccounting Policies and Estimates**\n\n \n\nOur\nfinancial statements and accompanying notes have been prepared in accordance with the International Financial Reporting Standards (“IFRS”)\nas issued by the International Accounting Standards Board (“IASB”). The preparation of these financial statements and accompanying\nnotes requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and\nrelated disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions\nthat are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying\nvalues of assets and liabilities that are not readily apparent from other sources. We have identified certain accounting policies that\nare significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial\ncondition and results of operation. Critical accounting policies are those that are most important to the portrayal of our financial\nconditions and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of\nthe need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting\nestimates are particularly sensitive because of their significance to financial statements and because of the possibility that future\nevents affecting the estimate may differ significantly from management’s current judgments. While our significant accounting policies\nare more fully described in Note 2.5 to the consolidated financial statements included elsewhere in this Annual Report, we believe the\nfollowing critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial\nstatements.\n\n \n\nWe\nare an “emerging growth company” as defined under the U.S. federal securities laws and, as such, will be subject to reduced\npublic company reporting requirements. Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage\nof the extended transition period provided in Section 7(a)(2)(B) of the Securities Act, for complying with new or revised accounting\nstandards. We have elected to take advantage of the extended transition period for complying with new or revised accounting standards\nand acknowledge such election is irrevocable pursuant to Section 107 of the JOBS Act. As a result of our election, our financial statements\nmay not be comparable to those of companies that comply with public company effective dates.\n\n \n\n**Use\nof Estimates and Assumptions**\n\n \n\nSignificant\naccounting estimates reflected in our financial statements include the useful lives for property, plant and equipment, assumptions used\nin assessing right-of-use assets, and uncertain tax position. Economic conditions may increase the inherent uncertainty in the estimates\nand assumptions indicated above. Actual results may differ from previously estimated amounts, and such differences may be material to\nour financial statements. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected prospectively\nin the period they occur. We continue to evaluate these estimates and assumptions that we believe to be reasonable under the circumstances.\nWe rely on these evaluations as the basis for making judgments about the carrying values of assets and liabilities that are not readily\napparent from other sources. Since the use of estimates is an integral component of the financial reporting process, actual results could\ndiffer from these estimates. Some of our accounting policies require higher degrees of judgment than others in their application. We\nbelieve critical accounting policies as disclosed in this Report reflect the more significant judgments and estimates used in preparation\nof our consolidated financial statements.\n\n** **\n\n**Revenue\nRecognition**\n\n \n\nUnder\nIFRS 15, we recognize our revenue when (or as) a performance obligation is satisfied, i.e. when “control” of the goods or\nservices underlying the particular performance obligation is transferred to the customer. A performance obligation represents a good\nor service (or a bundle of goods or services) that is distinct or a series of distinct goods or services that are substantially the same.\nControl is transferred over time and revenue is recognised over time by reference to the progress towards complete satisfaction of the\nrelevant performance obligation if one of the following criteria is met:\n\n \n\n \n●\nthe customer\nsimultaneously receives and consumes the benefits provided by the group’s performance as the group performs;\n\n \n●\nthe group’s performance\ncreates and enhances an asset that the customer controls as the group performs; or\n\n \n●\nthe group’s performance\ndoes not create an asset with an alternative use to the group and the group has an enforceable right to payment for performance completed\nto date.\n\n \n\n72\n\n \n\n \n\nOtherwise,\nrevenue is recognised at a point in time when the customer obtains control of the distinct good or service. A contract liability represents\nthe group’s obligation to transfer goods or services to a customer for which the group has received consideration (or an amount\nof consideration is due) from the customer.\n\n \n\n*Catering\nincome*\n\n \n\nRevenue\nfrom restaurant operation is recognised at the point in time when the catering services to the customers are completed.\n\n \n\n*Loyalty\nprogramme*\n\n \n\nThe\nGroup operates a loyalty programme where customers accumulate reward points from qualified purchases. The reward points earned\nthrough qualified purchases entitle the customers to discount for future purchases and are considered as a separate performance\nobligation arising from transactions with customers. The Group estimates the value of the future redemption obligation based on the\nestimated value of the products or services for which the reward points are expected to be redeemed based on the historical\nredemption pattern, including an estimate of the lapse of reward points that will not be redeemed. Subsequently, the contract\nliability is recognised as revenue at the point in time when the customers redeem the reward points in future purchases, or when the\nGroup is legally released from its obligation upon the expiry of the reward points, which occurs 12 to 15 months after the initial\nsale.\n\n \n\n*Sales\nof goods*\n\n \n\nRevenue\nfrom the sale of goods is recognised at the point in time when control of the asset is transferred to the customer.\n\n \n\n*Management\nfee income*\n\n \n\nWe\nprovide consultancy and management services to customers. Revenue from providing services is recognised in the accounting period in which\nthe services are rendered. The control of the services is transferred to the customer when the customer simultaneously receives and consumes\nthe benefits of the services as our Group performs, therefore, revenue is recognised progressively over time.\n\n \n\n*Interest\nincome*\n\n \n\nInterest\nincome is recognised on an accrual basis using the effective interest method by applying the rate that discounts the estimated future\ncash receipts through the expected life of the financial instrument to the net carrying amount of the financial asset.\n\n** **\n\n**Property,\nplant and equipment**\n\n \n\nOur\nmanagement determines the estimated useful lives and the related depreciation charge for our property, plant and equipment. This estimate\nis based on the historical experience of the actual useful lives of property, plant and equipment of similar nature and functions. Our\nmanagement will increase the depreciation charge where useful lives are less than previously estimated lives, or will write off or write\ndown technically obsolete or non-strategic assets that have been abandoned or sold. Actual economic lives may differ from estimated useful\nlives. Periodic review could result in a change in depreciable lives and therefore depreciation charge in the future periods.\n\n \n\n**Impairment\nof long-lived assets**\n\n \n\nOur\nCompany evaluates its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount\nof an asset may no longer be recoverable. When these events occur, our Company measures impairment by comparing the carrying value of\nthe long-lived assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual\ndisposition. If the sum of the expected undiscounted cash flow is less than the carrying amount of the assets, our Company would recognize\nan impairment loss, which is the excess of carrying amount over the fair value of the assets, using the expected future discounted cash\nflows.\n\n \n\n73\n\n \n\n \n\nOnce\nan impairment is determined, the actual impairment recognised is the difference between the carrying amount and the fair value as estimated\nusing one of the following approaches: income, cost and/or market. Assets which are to be disposed of are reported at the lower of the\ncarrying amount or fair value less costs to sell.\n\n \n\nThe\ncarrying amount of a long-lived asset or asset group is considered impaired when the anticipated undiscounted cash flows from such asset\nor asset group are less than its carrying amount. In that event, a loss is recorded in “Impairment of long-lived assets”\non our Statements of Operations and Comprehensive Income (Loss) based on the amount by which the carrying amount exceeds the fair value\nof the long-lived asset or asset group. Fair value, using the income approach, is determined primarily using a discounted cash flow model\nthat uses the estimated cash flows associated with the asset or asset group under review, discounted at a rate commensurate with the\nrisk involved. Fair value, utilizing the cost approach, is determined based on the replacement cost of the asset reduced for, among other\nthings, depreciation and obsolescence. Fair value, utilizing the market approach, benchmarks the fair value against the carrying amount.\n\n \n\n**Provisions**\n\n \n\nProvisions\nare recognised when our Company has a present obligation, legal or constructive, as a result of a previous event, if it is probable that\nour Company will be required to settle the obligation and a reliable estimate can be made of the obligation. The amount recognised is\nthe best estimate of the expenditure required to settle the present obligation at the end of the reporting period, taking into account\nthe risks and uncertainties surrounding the obligations. Provisions are reviewed at the end of each reporting period and adjusted to\nreflect the current best estimate of the expected future cash flows.\n\n** **\n\n**Liquidity\nRisk**\n\n \n\nLiquidity\nrisk is the risk that our Company will not be able to meet its financial obligations as they become due. Our Company’s policy is\nto ensure that it has sufficient cash to meet its liabilities when they become due, under both normal and stressed conditions, without\nincurring unacceptable losses or risking damage to our Company’s reputation. A key risk in managing liquidity is the degree of\nuncertainty in the cash flow projections. If future cash flows are fairly uncertain, the liquidity risk increases.\n\n \n\n**Impact\nof Inflation**\n\n \n\nOur\nOperating Subsidiaries are impacted by inflationary increases in wages, benefits and other costs. If inflation or other factors were\nto significantly increase our Operating Subsidiaries’ business costs, they may be unable to pass through price increases to their\ncustomers. If our Operating Subsidiaries are not able to pass increased wage and other costs resulting from inflation onto their clients\nour profitability may decline. There can be no assurance that future cost increases can be offset by increased menu prices or that increased\nmenu prices will be fully absorbed by our Operating Subsidiaries customers without resulting in any change to their visit frequencies\nor spending patterns.\n\n \n\n**Seasonality**\n\n \n\nWe\nexperience seasonal fluctuations in our Hong Kong Operating Subsidiaries’ revenue. In general, our Hong Kong Operating Subsidiaries\nachieved the highest customer traffic and revenue from our restaurant operations in December due to more customers dining out for hot\nmeals in typically colder weather, and lower customer traffic and spending in September when school reopens after the summer vacation.\n\n** **\n\nThe\nDirectors of the Company have considered the development, selection and disclosure of the Group’s critical accounting judgments\nand estimates.\n\n** **\n\n****\n\n74\n\n \n\n** **\n\n**Quantitative\nand Qualitative Disclosures about Market Risk**\n\n \n\n**Credit\nRisk**\n\n \n\nCredit\nrisk is the potential financial loss to our Company resulting from the failure of a customer or a counterparty to settle its financial\nand contractual obligations to our Company, as and when they fall due. As our Company does not hold any collateral, the maximum exposure\nto credit risk is the carrying amounts of trade and other receivables presented on the consolidated statements of financial position.\nOur Company has no other financial assets which carry significant exposure to credit risk.\n\n \n\n**Currency\nRisk**\n\n \n\nCurrency\nrisk refers to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign\nexchange rate. Our functional currency and presentation currency is the Hong Kong dollar, and almost all our Operating Subsidiaries’\nrevenues and other expenses are denominated in Hong Kong dollar currency. Management believes that we are not exposed to significant\ncurrency risk.\n\n \n\n**Interest\nRate Risk**\n\n \n\nInterest\nrate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market\ninterest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s cash\ndeposits, bank loans and loans from related companies with floating interest rates.\n\n \n\nAt\nDecember 31, 2025, it is estimated that a general increase or decrease of 100 basis points in interest rates, with all other variables\nheld constant, would decrease or increase the Group’s profit after tax by approximately HK$496,000 (approximately US$64,000).\n\n \n\n**Impact\nof Inflation**\n\n \n\nOur\nOperating Subsidiaries are impacted by inflationary increases in wages, benefits and other costs. If inflation or other factors were\nto significantly increase our Operating Subsidiaries’ business costs, they may be unable to pass through price increases to their\ncustomers. If our Operating Subsidiaries are not able to pass increased wage and other costs resulting from inflation onto their clients\nour profitability may decline. There can be no assurance that future cost increases can be offset by increased menu prices or that increased\nmenu prices will be fully absorbed by our Operating Subsidiaries customers without resulting in any change to their visit frequencies\nor spending patterns.\n\n \n\n**Seasonality**\n\n** **\n\nWe\nexperience seasonal fluctuations in our Hong Kong Operating Subsidiaries’ revenue. In general, our Hong Kong Operating Subsidiaries\nachieved the highest customer traffic and revenue from our restaurant operations in December due to more customers dining out for hot\nmeals in typically colder weather, and lower customer traffic and spending in September when school reopens after the summer vacation.\n\n \n\n**Trend\nInformation**\n\n \n\nOther\nthan as disclosed elsewhere in this Annual Report, we are not aware of any trends, uncertainties, demands, commitments, or events that\nare reasonably likely to have a material effect on our profitability, liquidity, or capital resources, or that would cause reported financial\ninformation not necessarily indicative of future operating results or financial condition.\n\n \n\n**Foreign\nExchange Risk**\n\n \n\nOur\nfunctional currency and presentation currency is the Hong Kong dollar, and almost all of our Operating Subsidiaries’ revenues and\nother expenses are denominated in Hong Kong dollar currency.\n\n \n\n**Economic\nand Political Risk**\n\n \n\nOur\noperations are conducted in Hong Kong. Accordingly, the political, economic, and legal environments in Asia, as well as the general state\nof the economy in the region may influence our Company’s business, financial condition and results of operations.\n\n \n\n**Recent\nAccounting Pronouncements**\n\n \n\nSee\nthe discussion of the recent accounting pronouncements contained in Note 2.2 to the consolidated financial statements, “Application\nof amendments to IFRS.”\n\n \n\n75"}