Yangtzekiang Group and YGM Group have been carrying out certain transactions in relation to the sales and purchases of garment products and the licensing of warehouse and office space. As the Chan Family is beneficially interested in shares representing approximately 50.61% and approximately 53.69% he total issued shares of Yangtzekiang and YGM, respectively, each of Yangtzekiang and YGM is a connected person of the other for the purpose of the Listing Rules. Accordingly, the Garment Transactions and the Licence Arrangement constitute continuing connected transactions or connected transactions for Yangtzekiang and YGM under the Listing Rules.

As disclosed in the joint announcement of the Companies dated 25 March 2020 (as supplemented by YGM's supplemental announcement dated 27 March 2020), Yangtzekiang and YM entered into, among other things, a master agreement in respect of the purchases of garment products by YGM Group from Yangtzekiang Group on 25 March 2020. Since such master agreement will expire on 31 March 2023, the Companies entered into the Garment Master Agreement on 29 March 2023 for renewing the terms and conditions in respect of the Garment Transactions during the period commencing on 1 April 2023 and ending on 31 March 2025. The Companies currently estimate that the annual trading volume of garment products under the Garment Master Agreement will not exceed the maximum annual cap of HKD 9 million for each of the two financial years ending 31 March 2025.

As the annual cap in relation to the Garment Transactions represents more than 0.1% but less than 5% of the applicable percentage ratios (as defined in the Listing Rules) of the Companies and the Garment Transactions will be conducted on normal commercial terms, the Garment Transactions are only subject to the reporting, announcement and annual review requirements but are exempt from the independent shareholders' approval requirements under Chapter 14A of the Listing Rules for each of the Companies. As disclosed in the joint announcement of the Companies dated 25 March 2020 (as supplemented by YGM's supplemental announcement dated 27 March 2020), YGM has been licensing from Yangtzekiang to occupy certain premises including the Premises and the Companies have entered into relevant licence agreements since 31 March 2001. As the prevailing licence agreement will expire on 31 March 2023, Yangtzekiang and YGM Marketing entered into the Licence Agreement on 29 March 2023 and agreed to continue the Licence Arrangement between the Groups until 31 March 2025.

The annual licence fee and the annual building management fee payable by YGM Marketing to Yangtzekiang under the Licence Agreement will not exceed the maximum annual cap of HK$4.32 million and HK$130,000, respectively. For Yangtzekiang as licensor, the Licence Arrangement will be regarded as a continuing connected transaction. As the aggregate amount of the annual caps in relation to the Licence Arrangemen represents more than 0.1% but less than 5% of the applicable percentage ratios (as defined in the Listing Rules) for Yangtzekiang and the Licence Arrangement will be conducted on normal commercial terms the Licence Arrangement is only subject to the reporting, announcement and annual review requirements but is exempt from the independent shareholders' approval requirements under Chapter 14A of the Listing Rules for Yangtzekiang.

For YGM Marketing as licensee, the entering into of the Licence Agreement by YGM Marketing will require YGM Group to recognise the exclusive rights as right-of-use asset in the consolidated financial statements of YGM under HKFRS 16 with a cost of approximately HK$8.6 million at initial recognition and a corresponding lease liability which represents the present value of the future licence fee payments. As such, under the Listing Rules, the entering into of the Licence Agreement by YGM Marketing will be regarded by YGM as an one-off acquisition of asset and a connected transaction. As the value of the right-of-use asset in relation to the Licence Arrangement represents more than 0.1% but less than 5% of the applicable percentage ratios (as defined in the Listing Rules) for YGM and the Licence Arrangement will be conducted on normal commercial terms, the Licence Arrangement is only subject to the reporting and announcement requirements but is exempt from the independent shareholders' approval requirements under Chapter 14A of the Listing Rules for YGM.