B S International Holdings Ltd. to raise a maximum of approximately HK$100 million by way of public offer and placing

HONG KONG, CHINA - Media OutReach - 26 February 2018 - B & S International Holdings Ltd. ("B & S International", together with its subsidiaries, the "Group"; HKSE: 1705), a food and beverage company, announces the details of its plan to list on the Main Board of The Stock Exchange for Hong Kong Limited ("SEHK") today.

A total of 100,000,000 shares will be offered under the Share Offer, of which 90,000,000 Shares, or 90%, subject to re-allocation, will be offered by way of Placing; while the remaining 10%, or 10,000,000 Shares, subject to re-allocation, will be offered under the Public Offer. The Offer Price per Offer Share is expected to be not less than HK$0.80 and not more than HK$1.00. The Public Offer will commence on 26 February 2018 (Monday) and close at 12:00 noon on6 March 2018 (Tuesday). The allotment result is expected to be announced on 13 March 2018 (Tuesday). Dealings in B & S International's shares on the Main Board of the SEHK are expected to commence on 14 March 2018 (Wednesday).

Assuming an Offer Price of HK$0.90 per Offer Share (being the midpoint of the Offer Price range), the aggregated net proceeds from the Share Offer, after deducting related expenses, will be approximately HK$62.8 million. B & S International intends to use these net proceeds for the following purposes: 1) approximately 65.6% for opening of new retail outlets; 2) approximately 17.2% for leasing and setting up new warehouse facilities of a gross floor area of approximately 30,000 sq.ft. in aggregate; 3) approximately 5.1% for upgrading its ERP system; 4) approximately 3.5% for recruitment of three additional marketing sales personnel for the Distribution Business; 5) approximately 8.6% for general working capital purposes.

Lego Corporate Finance Limited is the Sole Sponsor. Lego Securities Limited is the Sole Global Coordinator and one of the Joint Bookrunners. Kingsway Financial Services Group Limited is one of the Joint Bookrunners and one of the Lead Managers. China Galaxy International Securities (Hong Kong) Co., Limited and Brilliant Norton Securities Company Limited are Joint Lead Managers.

Business Overview

The Group is a well-established food and beverage company with over 27 years of operating history in Hong Kong. It has two business segments, namely the distribution business and the retail business.

For the distribution business, it distributes and markets a diversified portfolio of overseas branded food and beverage products through its supply chain solutions to overseas brand owners and local retailers. These products include sweets and candies, biscuits, cakes and pastries, instant drink powders, dried meat products, tea leaves, pasta, fresh eggs and condiments, etc., which are sourced from Japan, Taiwan, Malaysia, Argentina, the PRC, Turkey and brands the United Kingdom, etc. The Group was able to offer a total of approximately 7,000 SKUs of food and beverage products from over 100 brands during the three years ended 31 March 2017 and the five months ended 31 August 2017. Its top include "UHA" (味覺糖) and "Hsin Tung Yang" (新東陽).

For the retail business, the Group is licenced to set up and self-operate retail outlets for a few overseas food and beverage brands in Hong Kong. As at 17 February 2018, it had set up 42 self-operated retail outlets and it managed one retail outlet pursuant to a management agreement. It was licenced by several brand owners, including "TenRen" (天仁茗茶) (a premier brand for Taiwanese tea-based drinks) and "Uncle Tetsu" (徹思叔叔) (a prominent brand for Japanese cheesecake). "TenRen" (天仁茗茶) is the top retail brand which ranked first in the tea drinks chain market in Hong Kong by revenue for the period from 1 November 2016 to 31 October 2017, with a market share of approximately 24.3% according to an industry research report.

Competitive Strengths

1)    Supply chain solutions to attract overseas brand owners and local retailers.

The Group is able to build up a track record of attracting various overseas brand owners with high popularity as well as local retailers with wide retail distribution networks in Hong Kong to work with it primarily due to the supply chain solutions the Group is able to offer.

2)    An established customer network to distribute products widely in Hong Kong.

With its long operating history in the distribution business, the Group has established a strong customer network comprising supermarkets, pharmacies, convenience stores, department stores, bakeries, confectionery stores and trading companies, etc. As at 31 October 2017, its five largest customers had over 2,500 retail outlets in Hong Kong in total, most of which are retail chains, and some of which are household names with retail outlets almost all over Hong Kong. The management believes that this strong customer network serves as an effective distribution and marketing platform for the Group to launch new brands/products.

3)    A fast-growing retail network in Hong Kong with strong growth potentials.

The Group believes the management possess in-depth knowledge on how to set up and operate retail outlets successfully in Hong Kong, as evidenced by the growth in the number of its retail outlets at a CAGR of approximately 128.0% from 2012 to 2016, and the growth in its retail gross profits at a CAGR of approximately 139.8% during the three years ended 31 March 2017. Since the retail business is still in its early stage of development, the Group believes there are strong growth potentials driven by new outlet opening and introduction of new retail brands. The retail business currently relies on a few brands only, yet its strong performance and growth will allow the Group to attract other high quality brands with potential for setting up and operating retail chains in Hong Kong, thereby expanding its Retail Business.

4)    Synergy in its integrated and self-operated business model.

The Distribution Business and the retail business are complementary with each other. Taking "TenRen" (天仁茗茶) operations as an example, the Group obtained a licence to set up and operate its first retail outlet in Hong Kong in 2012, attributable to the Group's established relationship in distributing and marketing its loose-leaf tea bags from the distribution business. Reversely, the successful launch of the "TenRen" (天仁茗茶) retail chain in Hong Kong effectively has raised the brand awareness of "TenRen" (天仁茗茶) and other Taiwanese food and beverage products in Hong Kong, which in turn is beneficial to the distribution business.

5)    Stringent quality control and assurance systems.

Both of the distribution business and the Retail Business rely on the Group's stringent quality control and assurance systems. It has a designated quality assurance department to ensure that there are no restricted substances in the products sold by the Group in accordance with the Hong Kong laws and consumers' perception. Its quality assurance team works closely with ingredient and product suppliers to understand and regularly check the ingredient contents, and when the circumstances require, obtain third-party testing reports to counter-check the results. Its quality assurance team members, each of whom has over three years of related working experience, is designated for food safety matters and throughout the years, have accumulated practical knowledge and experience on food safety laws and consumer perception in Hong Kong.

6)    Experienced management team with a proven track record of growth, leadership, and execution.

The management team has extensive experience in the food and beverage industry. The stability of the management team is evidenced by the majority of its key management having served with the Group for over 26 years.

BUSINESS STRATEGIES

1)    Expand the Retail Business by opening new outlets and introducing new retail brands.

The Retail Business is the emerging and fast-growing business segment. The Group intends to capture the strong growth potentials by expanding the retail network for its existing licenced brands, particularly "TenRen" (天仁茗茶), and sourcing and obtaining licences from other brands to launch new retail chains in Hong Kong. The Group will remain prudent when expanding its retail business by continuing to adopt the self-operated model. The Group plans to open around 8 new retail outlets under the brand of "TenRen" (天仁茗茶), 5 retail outlets under the brand of ''Jiu Tang Wu" (九湯屋)and 1new retail outlet under the brand of ''Uncle Tetsu" (徹思叔叔)for each of the years ending 31 March 2019 and 2020, respectively.

2)    Further develop the Distribution Business by enlarging the brand/product portfolio.

To remain competitive in the market and to ensure a wider selection for its customers, the Group is in the constant search of high quality products that can be fit into the Hong Kong market. To allow the management to identify more potential brands, the Group intends to expand its sales and marketing department for the distribution business by hiring three additional staff members with experience in the food and beverage industry in Hong Kong. The sales and marketing team will be primarily responsible for conducting market research so as to monitor market trends and customer preferences to improve its product portfolio. The sales and marketing team would also conduct feasibility assessments on the potential brand or product based on criteria such as the popularity, quality, pricing, brand image and logistics requirements.

3)    Increase warehouse facilities to expand storage capacity.

The aggregate utilisation rates of the Group's warehouses were approximately 111.9%, 95.9%, 114.8% and 114.6% for the years ended 31 March 2015, 2016 and 2017 and the five months ended 31 August 2017, respectively, which reached its maximum designated storage capacity. The Group intends to increase its storage capacity by leasing additional warehouses facilities with a gross floor area of approximately 30,000 sq.ft with designated storage capacity of approximately 1,941 CBM. The Group prefers locations either in the same building of or in close proximity to its existing warehouse facilities in Yau Tong, Hong Kong, in order to centralise resources, improve operational efficiency and save costs.

4)    Upgrade its ERP system to enhance operation efficiency.

To cope with the expansion of the business resulting in a larger flow of products under both distribution business and retail business, the Group plans to upgrade its existing ERP system to enhance operating efficiency. The new ERP system will allow the Group to enhance coordination and management across different aspects of its operations, including inventory control, logistics arrangement, as well as internal administrative matters such as accounting, financial information, information technology and human resources management. The management believes that the new ERP system will strengthen its supply chain management and enhance its customer relationship management, and allow the Group to work with its suppliers and customers more efficiently and effectively.

About the Group

The Group is a well-established food and beverage company, with over 27 years of operating history in Hong Kong. The Group has two business segments, namely the distribution business and the retail business. The Group offers various food and beverage products from over 100 brands during the past three years, including top brands such as "UHA" (味覺糖) under its distribution business. Currently, the Group operates 42 retail outlets and manages one retail outlet under its retail business, including top retail brand "TenRen" (天仁茗茶), which ranked first in the tea drinks chain market in Hong Kong by revenue for the period from 1 November 2016 to 31 October 2017.