Dear Shareholders,

In the first half of 2026, competition in Hong Kong’s retail market continued to intensify. Over the past two years, traditional large-scale chain supermarkets and chain personal care retailers adopted an aggressive stance with frequent discount promotions. Major Mainland competitors, leveraging their supply chain advantages, also pursued assertive pricing strategies, further heightening market competition.

Starting from late April 2026, HKTVmall under the Group launched “15% Discount Campaign”, offering 15% off discounts on supermarket products, personal care items, pet food, infant formula and diapers during selected weekends and public holidays. Facing discount and price wars from all sides, adopting a conservative, profit-focused strategy would reduce the sales for HKTVmall as a shopping mall and adversely affect the 6,000 merchants partnering with us. Therefore, we must take the initiative — participate in, and even lead, the discount trend. When chain supermarkets offer 12% off, HKTVmall offers 15% off, aiming to drive higher sales volume on discount days to offset the impact on margins through a thin-margin, high-volume approach.

We fully recognised that initiating a price war is not an easy decision. However, earlier market rumors suggested a potential merger between two supermarket chains. Should only one major supermarket remain, its market share could reach as high as 65%. Such a scenario would be detrimental to suppliers, consumers and all large and small competitors, and would seriously disrupt the overall retail market ecosystem. To address this challenge, the Group must rapidly increase HKTVmall’s supermarket market share from the current approximately 10% to a target of 15% to 20%.

Looking ahead to the second half of 2026, the Group will further focus on price competitiveness, to establish and reinforce the image that “HKTVmall. Always Low Prices”. We have already launched a new “Daily Price Check” feature on HKTVmall App homepage, tracking the supermarket prices of over 1,000 popular best-selling products. This allows customers to clearly see HKTVmall’s price advantages at a glance, significantly enhancing price transparency. Customers no longer need to visit different supermarkets in person to compare prices — one App provides access to the most competitive prices, effectively saving time and optimising the shopping experience.

During the year, the Group had also reviewed various services and projects under HKTVmall, consolidating resources to allow greater flexibility for future competition and development. This included terminating or adjusting the direction and scale of certain services, with the aim of reducing costs, and concentrating resources on the development of the Group’s core Ecommerce business, HKTVmall.

At the same time, in response to evolving consumer preferences, we continuously review our business direction and the operational efficiency of different services to ensure more targeted resource allocation and improve overall effectiveness. Over the past six months, the Group had strongly encouraged all departments to enhance operational efficiency through artificial intelligence, while exploring how AI agents can enable new workflows and models. These arrangements are not limited to the Group’s technical teams, but apply equally to non-technical and support functions. Management hopes that the entire team will study, understand, and apply technological trends, elevating their skills to the next level.

Fully Automated Retail Store and System in the UK

The Group’s research and development team based in the United Kingdom has completed technical testing of the Fully Automated Retail Store and System. The In:Five App and the related stores in the UK have now ceased operations. Having overcome most of the known technical challenges, the Group will continue to invest in the related technology, with further development led by the Hong Kong team. The target is to open the first fully automated retail store in Hong Kong by the end of 2027.

The Group has always adhered to the core principle that “Taking the long view; Pursuing long-term survival” outweighs “short-term profitability”. Facing intense competition and structural market changes in Hong Kong retail industry, we continue to seek solutions with an attitude of “Survive, Innovate and Change.” The price war is challenging, yet it is a path we must take when there is no other alternative. We will continue to adapt to the broader trend, making changes from the inside out, working hand in hand with merchants to provide customers with more affordable and convenient shopping options, while creating long-term value for shareholders.