On 24 October 2022, Kidsland LCS (an indirect wholly-owned subsidiary of the Company) as the tenant entered into the Tenancy Agreement with the Landlord (the counterpart of the Tenancy Agreement signed by the Landlord was received by the Group on 10 November 2022) in respect of the Premises for a term of 3 years from 16 November 2022 to 15 November 2025 (both days inclusive). The unaudited value of the right-of-use asset recognised by the Company under the Tenancy Agreement amounts to approximately HKD 6.3 million, which is the present value of the total basic rent payable during the term of the Tenancy Agreement plus estimated reinstatement cost with the lease at the inception of the lease term under the Tenancy Agreement in accordance with HKFRS 16. A discount rate of 5.85% per annum is applied to compute the present value of the total basic rent payable under the Tenancy Agreement.

The Company is an investment holding company and its subsidiaries are principally engaged in the trading and sale of toys and related lifestyle products in Mainland China, Hong Kong and Macau. Kidsland LCS is a company incorporated under the laws of Hong Kong with limited liability and an indirect wholly-owned subsidiary of the Company. Kidsland LCS is primarily engaged in retail sale of toys and related lifestyle products in Hong Kong.

MTR Corporation is a company incorporated under the laws of Hong Kong with limited liability and whose issued shares are listed and traded on the Main Board of the Stock Exchange (stock code: 66). One of the principal activities of MTR Corporation is property business including property development and investment, management and leasing management of investment properties (including shopping malls and offices) in Hong Kong and Mainland China. To the best of the Directors' knowledge, information and belief, and having made all reasonable enquiries, MTR Corporation and its ultimate beneficial owner(s) thereof are third parties independent of the Company and its connected persons.

As part of the Group's strategy to expand its retail network, the Group intends to use the leased Premises for the operations of its new LEGO Certified Store. The Directors believe that the Premises is located at a prime location in Hong Kong. The terms of the Tenancy Agreement are arrived at after arm's length negotiation and the rental is determined with reference to the prevailing market rental of similar property in the nearby locations.

The Directors consider that the Tenancy Agreement has been entered into in the ordinary and usual course of business of the Group and believe that the terms of the Tenancy Agreement are fair and reasonable and in the interest of the Company and its Shareholders as a whole.