Confidence Intelligence Holdings Limited — Capital/Financing Update 2021

Nov 26, 2021

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

CONFIDENCE INTELLIGENCE HOLDINGS LIMITED 信懇智能控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1967)

CHANGE IN USE OF PROCEEDS FROM THE SHARE OFFER

References are made to the prospectus of Confidence Intelligence Holdings Limited (the “Company” , together with its subsidiaries, the “Group” ) dated 28 September 2019 ( “Prospectus” ) in relation to the offer of the shares of the Company ( “Share Offer” ) on the Stock Exchange of Hong Kong Limited, the allotment results announcement of the Company in relation to the Share Offer dated 17 October 2019, the annual report 2019 of the Company for the financial year ended 31 December 2019, the interim report 2020 of the Company for the six months ended 30 June 2020, the annual report 2020 of the Company for the financial year ended 31 December 2020 and the interim report 2021 of the Company for the six months ended 30 June 2021 (the “Reports” ).

The net proceeds received by the Company from the Share Offer (the “Net Proceeds” ), after deducting the underwriting fees and commissions and other expenses payable by the Company in connection with the Share Offer, were approximately HK$91.9 million. It was disclosed in the Prospectus and the Reports that the Company intended to apply the Net Proceeds for (i) enhancing the Group’s production capacity and efficiency; (ii) enhancing the level of automation in the Group’s quality control and packaging system; (iii) strengthening the Group’s product design and enhancement capabilities in respect of the Group’s Printed Circuit Board Assembly (the “PCBAs” ) applicable to telecommunication devices and internet of things ( “loT” ) devices PCBA; (iv) further strengthening the Group’s research and development capabilities; (v) strengthening the Group’s product testing capabilities for loT products by setting up a cloud-based simulation platform; (vi) upgrading the Group’s Manufacturing Execution System ( “MES” ) system and enhancing the Group’s capabilities in information technology; (vii) upgrading the Group’s existing intelligent warehouse; (viii) repayment of bank loan and other borrowings; and (ix) working capital.

– 1 –

As at the date of this announcement, approximately HK$7.2 million of the Net Proceeds remained unutilised. For reasons set out in the paragraph headed “Reasons for and Benefit of the Change in Use of Proceeds” of this announcement below, the board ( “Board” ) of directors of the Company ( “Directors” ) has resolved to change the use of the Net Proceeds as follows:

					Expected
					timeline for
					fully utilizing
					the remaining
					Net Proceeds
		Utilised Net		Proposed	(taking into
		Proceeds up to		application of	account of the
	Planned use of	the date of this	Unutilised	the unutilised	new allocation)
	Net Proceeds	announcement	Net Proceeds	Net Proceeds	(Note)
	HK$ million	HK$ million	HK$ million	HK$ million
	(approximately)	(approximately)	(approximately)	(approximately)
Enhancing the Group’s production
capacity and efficiency	49.9	49.9	–	–	–
Enhancing the level of automation
in the Group’s quality control
and packaging system	7.6	7.6	–	–	–
Strengthening the Group’s product
design and enhancement
capabilities in respect of the
Group’s PCBAs applicable to
telecommunication devices and
loT devices PCBA	5.9	0.8	5.1	–	–
Further strengthening the Group’s
research and development
capabilities	3.1	3.1	–	–	–
Strengthening the Group’s product
testing capabilities for loT
products by setting up a cloud-
based simulation platform	2.1	2.1	–	–	–
Upgrading the Group’s MES
system and enhancing the
Group’s capabilities in
information technology	3.1	2.0	1.1	–	–

– 2 –

==> picture [489 x 332] intentionally omitted <==

----- Start of picture text ----- Expectedtimeline forfully utilizingthe remainingNet ProceedsUtilised Net Proposed (taking intoProceeds up to application of account of thePlanned use of the date of this Unutilised the unutilised new allocation)Net Proceeds announcement Net Proceeds Net Proceeds (Note)HK$ million HK$ million HK$ million HK$ million (approximately) (approximately) (approximately) (approximately)Upgrading the Group’s existingintelligent warehouse 2.5 1.5 1.0 – –Repayment of bank loan and otherborrowings 8.6 8.6 – – –Working capital 9.1 9.1 – 7.2 For thesix months ended30 June 2022Total 91.9 84.7 7.2 7.2----- End of picture text -----

Note: The expected timeline for utilsing the remaining Net Proceeds was based on the best estimation of the future market conditions made by the Group. It would be subject to change based on the current and future development of market conditions.

REASONS FOR AND BENEFIT OF THE CHANGE IN USE OF PROCEEDS

The Group is an electronics manufacturing services ( “EMS” ) provider offering comprehensive assembling and production services of PCBAs in the People’s Republic of China ( “PRC” ) that integrate research and design, selection and procurement of raw materials, assembling of PCBAs, quality control, testing, logistics and aftersales services.

The outbreak and the spread of the coronavirus disease (COVID-19) (the “Novel Coronavirus Outbreak” ) throughout the world has imposed different degrees of impact on various industries. Since the Novel Coronavirus Outbreak, a number of provinces and municipalities in the PRC have taken emergency public health measures and various actions to prevent the spread of the coronavirus disease (COVID-19), including imposing restriction on the resumption of operation of production plants after the statutory holidays for Chinese New Year. The Group suspended the operation of the Group’s production plant in Shenzhen after the statutory holidays for Chinese New Year and gradually resumed its operation starting from the end of February 2020. After the Group resumed the operation, late delivery of materials and lack of labor also have adverse effect on the Group’s efficiency to some extent. With the spread of the coronavirus disease (COVID-19) throughout the world and lockdown measures imposed by many countries, business and economic environment in China and the world

– 3 –

became worse, which also has an adverse impact on the Group’s business. Even though the coronavirus disease (COVID-19) was under controlled in China in the second half year of 2020, domestic demand in China continued slowing down. Further, as disclosed in the interim report 2021 of the Company, in 2021 it is expected the COVID-19 pandemic may still be fluctuating in China and the world, and the economy environment in China and the world remains uncertain and challenging, as reflected by the decrease in gross profit margin of the Group from 20.0% for the six months ended 30 June 2020 to 15.5% for the corresponding period in 2021. The Group plans to take proactive measures and make active responses in an effort to sustain the business and diversify business risk, and keep more cautious on its spending and expansion to reduce finance risk. In view of the above, the Board considers that instead of perusing growth by strengthening the Group’s product design and enhancement capabilities and upgrading the Group’s system and information technology which could be uncertain, it is in the interest of the Group to change the use of the Net Proceeds to better meet the current economic climate and it is more beneficial to the Group’s operational needs to combatting the challenges brought by the Novel Coronavirus Outbreak. The Board will closely monitor the utilisation of the unutilised Net Proceeds with the interests of the Company and its shareholders in mind. The Board confirms that there is no material change in the business nature of the Group as set out in the Prospectus and the Reports. The Board considers that the proposed change in use of Net Proceeds will not have any material adverse impact on the operations of the Group and is in the best interest of the Company and its shareholders as a whole.

By order of the Board Confidence Intelligence Holdings Limited Li Hao Chairman

Hong Kong, 26 November 2021

As at the date of this announcement, the executive Directors are Mr. Li Hao, Mr. Zhang Bizhong, Mr. Xu Shizhen and Ms. Li Biqiong, the non-executive Director is Mr. Yuan Shuntang, and the independent non-executive Directors are Mr. Chen Zhong, Mr. Wong Chun Sek Edmund and Ms. Mu Lingxia.

– 4 –