HomesToLife Ltd

The services rendered to our Group are charged on a cost-recovery basis with a mark-up that was agreed between the parties with reference to the guidelines on transfer pricing applicable under PRC and Singapore tax laws and regulations, or were considered to be in line with market rates and independently reviewed by the former CFO of our Company. The mark-up in relation to each purchase order is a specified percentage, as determined with reference to transfer pricing guidelines applicable under the relevant laws and regulations, and based on the anticipated costs of production. The mark-ups are however subject to adjustments from time to time, as they are dependent on the prevailing costs of production or costs of services.

The mark-up applied on a cost-recovery basis is not a fixed percentage as it may be adjusted from time to time for the following reasons:

Further, HTL Marketing was only acquired by our Group in FY2025 and was not an entity at risk for FY2023 and FY2024. As such, the arrangement was entered into on an arm’s length basis and on normal commercial terms and are not prejudicial to the interests of our Group and our minority shareholders.

Such services are not undertaken by our Group directly, given that the existing arrangements with the GHC Group afford cost efficiencies, as the negotiated terms reflect the economies of a long-standing engagement and obviate the need for our Group to recruit and maintain a full in-house financial management team at comparable cost.

It is envisaged that we will continue the above transactions with the interested persons in the ordinary course of our business in the future. Upon the completion of the Listing, we will comply with the methods and procedures set out under the section entitled “Interested Person Transactions – General Mandate for Interested Person Transactions” of this Introductory Document.

The financial data processing services relate to a team of approximately 30 finance personnel who are directly employed by entities within the GHC Group, whose services are provided to our Group under services contracts for corporate support services. They assist our CFO, Mr. Jeff Chai, and provide the finance and accounting function exclusively for our Group, and do not undertake similar responsibilities for the GHC Group. The arrangement arose for historical reasons: prior to the Company’s acquisition of HTL Marketing in May 2025, these personnel provided finance and accounting services to all relevant companies within the broader GHC Group, which included HTL Marketing. Following the acquisition of HTL Marketing by the Company, our Group inherited these legacy employment arrangements, and the 30 finance personnel have since provided their services exclusively to our Group and do not undertake similar responsibilities for the GHC Group. Following the acquisition, the existing service arrangement was retained to preserve operational continuity and cost efficiency as the personnel engaged under this arrangement had already acquired a longstanding familiarity with HTL Marketing’s financial systems, reporting requirements and internal controls. The relevant staff are based in the PRC and are employed by the GHC Group’s PRC entities for PRC employment law reasons, including in order to comply with requirements relating to employees’ social insurance and housing fund contributions, which cannot be replicated by a foreign entity under a direct employment arrangement. As our Group does not have any entities incorporated in the PRC, establishing new PRC subsidiaries and transferring the relevant personnel would have involved unnecessary disruption, administrative burden and transition costs. Accordingly, in these circumstances, our Company considered it appropriate to retain this arrangement, while maintaining the following internal controls and oversight measures to ensure appropriate checks and balances:

Please also refer to the section entitled “Interested Person Transactions and Potential Conflicts of Interest – General Mandate for Interested Person Transactions – Rationale for and Benefits of the IPT General Mandate – In relation to the procurement of services by our Group from Mandated Interested Persons” of this Introductory Document for further details.

The combination of exclusive service obligations, IT access controls, confidentiality protections, and CFO supervision creates multiple layers of oversight that ensure the finance personnel operate as a functionally dedicated team within our Group’s governance framework, notwithstanding their formal employment by GHC Group entities. The role-based access restrictions and routine system access log reviews mitigate the risk of unauthorised access to or misuse of our Group’s confidential financial data. The direct reporting line to the CFO and, in turn, to the Audit Committee, ensures that the Board retains effective oversight over our Group’s finance function.

Nevertheless, our Group has been evaluating and may explore alternatives to this arrangement as part of its long-term plan to enhance its financial management team.

For completeness, our Group’s offices, financial and IT systems are independent and separate from that of the GHC Group, save that our Group has entered into a shared office space agreement whereby a licence has been granted by our Group to the GHC Group to use part of an office space located at 12 Tai Seng Link, #03-01A, GRC Centre, Singapore 534233, as disclosed in the section entitled “Interested Person Transactions and Potential Conflicts of Interest – Present and Ongoing Interested Person Transactions – Receipt of licence fees, for licence of premises to interested persons”. To maintain confidentiality of our Group’s data, our Group maintains its own enterprise resource planning system, financial accounting databases and IT infrastructure, which are not shared with or accessible by the GHC Group, and the work stations and IT systems used by employees of our Group and the GHC Group are physically segregated. Our Group has also implemented access controls, including restricted user permissions and password-protected systems, to ensure that confidential financial and business data is accessible only to authorised Group personnel. As at the Latest Practicable Date, the GRC Centre premises are used by the GHC Group solely for the storage of documents, and the GHC Group has no employees based in Singapore. With respect to the approximately 30 finance personnel employed by the GHC Group which provide the finance and accounting function exclusively for our Group, they are granted role-based, restricted and password-protected user access permissions to our Group’s relevant systems, and are subject to our Group’s routine review of system access logs. The services contract also contains confidentiality undertakings to ensure that our Group’s data is protected.

The quality control consulting services received from the GHC Group relate to the provision of quality assurance guidance (including development of quality standards, inspection protocols and product testing methodologies) that is applied during the manufacturing process. This embedded quality assurance is supplementary to, and does not replace, our Group’s own quality assessment. Our Group’s own quality assurance processes include: (i) our Group ensuring that site visits of third party suppliers of raw leather hides in Brazil are conducted; (ii) sampling inspections at our Group’s warehouses before products are delivered to customers; and (iii) close monitoring of customer feedback and product returns, with root cause investigation and corrective action for recurring issues, with further details of our Group’s quality control processes set out at the section entitled “Business – Quality Assurance” of this Introductory Document. Our Board is of the view that, taken together, the combination of embedded quality control at the manufacturing stage and our Group’s independent quality assessment processes provides appropriate oversight of the quality of products purchased from the GHC Group. Our Board further notes that the Contract Manufacturing Agreements contain indemnification provisions requiring the GHC Group manufacturers to indemnify our Group for claims arising from product defects and delivery delays, which provides an additional layer of protection, details of which are set out in the section entitled “Business – Quality Assurance – Warranty Policy” of this Introductory Document.