Prime Intelligence Solutions Group Limited — Annual Report 2023

Jun 21, 2023

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.

PRIME INTELLIGENCE SOLUTIONS GROUP LIMITED 懶豬科技集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 08379)

ANNUAL RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 31 MARCH 2023

CHARACTERISTICS OF GEM OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE “STOCK EXCHANGE”)

GEM has been positioned as a market designed to accommodate small and midsized companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration.

Given that the companies listed on GEM are generally small and mid-sized companies, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board of the Stock Exchange and no assurance is given that there will be a liquid market in the securities traded on GEM.

Hong Kong Exchanges and Clearing Limited and the Stock Exchange 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.

This announcement, for which the directors (the “ Directors ”) of Prime Intelligence Solutions Group Limited (the “ Company ”) collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on GEM of the Stock Exchange for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this announcement is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this announcement misleading.

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ANNUAL RESULTS FOR THE YEAR ENDED 31 MARCH 2023

The board of Directors (the “ Board ”) is pleased to present the consolidated results of the Company and its subsidiaries (collectively referred to as the “ Group ”) for the year ended 31 March 2023, together with the comparative figures for the preceding year ended 31 March 2022, as follows:

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the year ended 31 March 2023

Note Revenue 6 Cost of sales and services rendered Gross profit Other income 7 Selling and distribution costs Administrative and other operating expenses Impairment loss of trade receivables Loss from operation Finance costs 8 Loss before tax 9 Income tax expense 10 Loss for the year attributable to equity owners of the Company Other comprehensive income for the year, net of tax: Item that may be reclassified to profit or loss: Exchange differences on translating foreign operations Total comprehensive income for the year attributable to equity owners of the Company Loss per share (HK cents) — Basic and diluted 12	2023 HK$’000 43,151 (30,143) 13,008 1,497 (9,639) (28,675) (96) (23,905) (119) (24,024) (132) (24,156) (406) (24,562) (3.0)	2022 HK$’000 48,952 (32,284) 16,668 122 (7,158) (32,521) (46) (22,935) (106) (23,041) (146) (23,187) 141 (23,046) (2.9)

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 31 March 2023

Note Non-current assets Property, plant and equipment Right-of-use assets Intangible assets Current assets Inventories Trade receivables 13 Other receivables, prepayments and deposits Tax recoverable Bank and cash balances Current liabilities Trade payables 14 Other payables and accrued expenses Lease liabilities Contract liabilities Net current assets Total assets less current liabilities Non-current liabilities Lease liabilities Contract liabilities NET ASSETS Capital and reserves Share capital 15 Reserves TOTAL EQUITY	2023 HK$’000 556 – – 556 22,535 10,580 3,421 69 17,868 54,473 2,384 5,138 2,075 7,938 17,535 36,938 37,494 1,977 921 2,898 34,596 8,000 26,596 34,596	2022 HK$’000 – – –
		–
		21,961 11,403 2,427 348 36,879
		73,018
		791 4,010 1,268 7,147
		13,216
		59,802
		59,802
		122 522
		644
		59,158
		8,000 51,158
		59,158

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 March 2023

					Foreign	Retained
					currency	profits/
	Share	Share	Merger	Legal	translation	(accumulated	Total	Total
	capital	premium	reserve	reserve	reserve	losses)	reserve	equity
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
At 1 April 2021	8,000	51,682	17,079	12	(151)	5,582	74,204	82,204
Loss and total comprehensive
income and changes in equity
for the year	–	–	–	–	141	(23,187)	(23,046)	(23,046)
At 31 March 2022 and 1 April 2022	8,000	51,682	17,079	12	(10)	(17,605)	51,158	59,158
Loss and total comprehensive
income and changes in equity
for the year	–	–	–	–	(406)	(24,156)	(24,562)	(24,562)
At 31 March 2023	8,000	51,682	17,079	12	(416)	(41,761)	26,596	34,596

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NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31 March 2023

1. GENERAL INFORMATION

The Company was incorporated in the Cayman Islands as an exempt company with limited liability under the Companies Law (as revised) of the Cayman Islands on 16 October 2015. The address of its registered office is P.O. Box 1350, Clifton House, 75 Fort Street, Grand Cayman, KY1-1108, Cayman Islands. The address of its principal place of business is located at Unit A, 6/F, TLP132, Nos. 132-134 Tai Lin Pai Road, Kwai Chung, New Territories, Hong Kong. The Company’s shares are listed on GEM of The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”) since 14 February 2018 (the “ Listing ”).

The Company is an investment holding company. The principal activities of its subsidiaries are sales of biometrics identification devices and other devices and accessories and provision of auxiliary and other services.

2. BASIS OF PREPARATION

These consolidated financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards (“ HKFRSs ”), which in collective term includes all Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (“ HKASs ”) and Interpretations issued by the Hong Kong Institute of Certified Public Accountants (the “ HKICPA ”) and accounting principles generally accepted in Hong Kong. These consolidated financial statements also comply with the applicable disclosure provisions of the Rules Governing the Listing of Securities on GEM of the Stock Exchange (the “ GEM Listing Rules ”) and with the disclosure requirements of the Hong Kong Companies Ordinance (Cap. 622). Significant accounting policies adopted by the Group are discussed below.

The HKICPA has issued certain new and revised HKFRSs that are first effective or available for early adoption for the current accounting period of the Group. Note 3 below provides information on any changes in accounting policies resulting from initial application of these developments to the extent that they are relevant to the Group for the current and prior accounting periods reflected in these consolidated financial statements.

3. ADOPTION OF NEW AND REVISED HKFRSs

(a) Application of new and revised HKFRSs

The Group has applied the following amendments to HKFRSs issued by the HKICPA for the first time, which are mandatorily effective for the annual period beginning on or after 1 April 2022 for the preparation of the consolidated financial statements:

Amendments to HKAS 16	Property, Plant and Equipment: Proceeds before Intended Use
Amendments to HKAS 37	Onerous Contracts — Cost of Fulfilling a Contract
Amendments to HKFRS 3	Reference to the Conceptual Framework
Annual Improvements Project	Annual Improvements to HKFRS Standards 2018–2020
Amendments to Accounting	Merger Accounting for Common Control Combinations
Guideline 5

The above amendments to HKFRSs effective for the financial year beginning on 1 April 2022 do not have a material impact on the Group’s consolidated financial statement.

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(b) New and revised HKFRSs in issue but not yet effective

The Group has not early applied any new and revised HKFRSs that have been issued but are not yet effective for the financial year beginning 1 April 2022. These new and revised HKFRSs include the following which may be relevant to the Group.

	Effective for
	accounting periods
	beginning on
	or after
Amendments to HKAS 1 — Classification of Liabilities as	1 January 2024
Current or Non-current
Amendments to HKAS 1 — Non-current Liabilities with Covenants	1 January 2024
Amendments to HKAS 1 and HKFRS Practice Statement 2	1 January 2023
— Disclosure of Accounting Policies
Amendments to HKAS 8 — Definition of Accounting Estimates	1 January 2023
Amendments to HKAS 12 — Deferred Tax Related to Assets and	1 January 2023
Liabilities Arising from a Single Transaction
Amendments to HKFRS 16 — Lease Liability in a Sales and Leaseback	1 January 2024
Amendments to HKFRS 10 and HKAS 28 — Sale or Contribution	To be determined
of Assets between an Investor and its Associate or Joint Venture
Hong Kong Interpretation 5 (2020) Presentation of Financial Statements	1 January 2024
— Classification by the Borrower of a Term Loan that Contains
a Repayment on Demand Clause

The Group is in the process of making an assessment of what the impact of these amendments and new standards is expected to be in the period of initial application. So far it has concluded that the adoption of them is unlikely to have a significant impact on the consolidated financial statements.

4. SIGNIFICANT ACCOUNTING POLICIES

These financial statements have been prepared under the historical cost convention. Historical cost is generally based on the fair value of the consideration given in exchange for assets.

5. SEGMENT INFORMATION

The Group has two reportable segments as follows:

• Sales of biometrics identification devices, security products and other accessories

• Provision of auxiliary and other services includes (i) maintenance, installation and solution services; and (ii) software licensing.

The Group’s reportable segments are strategic business units that offer different products and services. They are managed separately because each business requires different technology and marketing strategies.

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The accounting policies of the operating segments are the same as those described in note 4 to the consolidated financial statements. Segment profits or losses do not include other income, finance costs, unallocated costs, which comprise selling and distribution expenses, corporate administrative and other operating expenses, impairment loss of trade receivables and income tax expense.

Segment assets and liabilities are not presented in the consolidated financial statements as they are not regularly reviewed by the Group’s directors.

(a) Operating segment of the Group

Information about reportable segment profit or loss:

Year ended 31 March 2023 Revenue from external customers Segment profit Year ended 31 March 2022 Revenue from external customers Segment profit	Sales of biometrics identification devices, security products and other accessories HK$’000 27,737 12,296 32,391 10,863	Provision of auxiliary and other services HK$’000 15,414 712 16,561 5,805	Total HK$’000 43,151 13,008
			48,952 16,668

Reconciliations of reportable segment and profit or loss:

Profit or loss: Total profit of reportable segments Other income Selling and distribution costs Corporate administrative and other operating expenses Impairment loss of trade receivables Finance costs Income tax expense Consolidated loss for the year	2023 HK$’000 13,008 1,497 (9,639) (28,675) (96) (119) (132) (24,156)	2022 HK$’000 16,668 122 (7,158) (32,521) (46) (106) (146)
		(23,187)

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(b) Geographical information

Information about the Group’s non-current assets based on the geographical location is presented as follows:

	2023	2022
	HK$’000	HK$’000
Hong Kong	556	–

Non-current assets include property, plant and equipment, right-of-use assets and intangible assets.

Information about the Group’s revenue from external customers presented based on the geographical location where the Group operates is as follows:

Hong Kong PRC Macau Consolidated total	2023 HK$’000 39,740 3,179 232 43,151	2022 HK$’000 44,486 3,982 484
		48,952

(c) Information about major customers

Information about major customers whom transactions have exceeded 10% of revenue of the Group during the years ended 31 March 2023 and 2022 is as follows:

	2023	2022
	HK$’000	HK$’000
Customer A_(note)_	N/A	5,775

Note: Customer A did not contribute over 10% of the revenue of the Group for the year ended 31 March 2023. For the year ended 31 March 2022, both reportable segments of the Group reported revenue from Customer A.

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6. REVENUE

Revenue represents the invoiced values of goods sold and service rendered, after allowances for returns and discounts. An analysis of the Group’s revenue for the year is as follows:

Sales of biometrics identification devices, security products and other accessories Provision of auxiliary and other services Revenue from contracts with customers within the scope of HKFRS 15 Recognised at a point in time Recognised over time	2023 HK$’000 27,737 15,414 43,151 2023 HK$’000 32,651 10,500 43,151	2022 HK$’000 32,391 16,561
		48,952
		2022 HK$’000 36,445 12,507
		48,952

The transaction price allocated to the remaining performance obligations (unsatisfied or partially unsatisfied) as at 31 March 2023 and the expected period of recognising revenue as follows:

		2023	2022
		HK$’000	HK$’000
	Provision of auxiliary and other services
	Within one year	7,938	7,147
	More than one year but not more than two years	921	522
		8,859	7,669
7.	OTHER INCOME
		2023	2022
		HK$’000	HK$’000
	Interest income	82	33
	Government grants*	822	–
	Gain on disposals of property, plant and equipment	35	–
	Foreign exchange gains, net	556	–
	Others	2	89
		1,497	122

• Government grants represent subsidies from the Government of the Hong Kong Special Administrative Region under the Employment Support Scheme. At the end of the reporting period, there is no unfulfilled conditions nor other contingencies attached to the government grants.

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8. FINANCE COSTS

	2023	2022
	HK$’000	HK$’000
Effective interest expenses on lease liabilities	119	106

9. LOSS BEFORE TAX

The Group’s loss before tax is stated after charging/(crediting) the following:

		2023	2022
	Note	HK$’000	HK$’000
Amortisation of intangible assets		–	21
Depreciation
— Owned assets	(a)	272	743
— Right-of-use assets		–	1,016
Staff costs (including directors’ emoluments)	(b)
— Salaries, bonus, allowances and other benefits in kind		28,818	26,331
— Commission		508	629
— Retirement benefits scheme contributions		1,442	1,350
		30,768	28,310
Gain on disposals of property, plant and equipment		(35)	–
Cost of inventories sold		14,284	16,162
Foreign exchange (gains)/losses, net		(556)	191
Operating lease charges in respect of premises under
short-term lease arrangements		1,800	2,100
Auditors’ remuneration		550	550
Impairment loss of trade receivables		96	46
Impairment loss on property, plant and equipment		742	5,499
Impairment loss on right-of-use assets		4,601	825
Allowance for inventories (included in costs of
sales and services rendered)		1,884	2,492

Notes:

(a) Depreciation on owned assets of approximately HK$54,000 for the year ended 31 March 2023 (2022: HK$117,000) is included in costs of sales and services rendered.

• (b) Staff cost of approximately HK$6,024,000 for the year ended 31 March 2023 (2022: HK$5,042,000) are included in cost of sales and services rendered.

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10. INCOME TAX EXPENSE

Current tax — Hong Kong Profits Tax Provision for the year Over-provision in prior years Total tax charge for the year	2023 HK$’000 152 (20) 132	2022 HK$’000 166 (20) 146

The Group is not subject to taxation in the Cayman Islands and the British Virgin Islands.

Under the two-tiered Profits Tax Regime, one of the Company’s Hong Kong subsidiaries is subjected to Hong Kong Profits Tax at the rate of 8.25% (2022: 8.25%) for the first HK$2 million of its estimated assessable profits and at 16.5% (2022:16.5%) on its estimated assessable profits above HK$2 million. Other Hong Kong subsidiaries not qualifying for the two-tiered Profit Tax Regime are subjected to Hong Kong Profits Tax at the rate of 16.5% (2022:16.5%) for the year ended 31 March 2023.

For the Group’s subsidiary established and operated in the PRC is subject to PRC Enterprise Income Tax at the rate of 25% (2022: 25%) during the year. No PRC Enterprise Income Tax has been provided for the years ended 31 March 2023 and 2022 as the Group’s PRC subsidiary either did not generate any assessable profits or has sufficient tax losses forward to set off against its assessable profit for the years ended 31 March 2023 and 2022.

For the Group’s subsidiary established and operated in Macau is subject to Macao Complementary Tax, under which taxable income of up to MOP600,000 (2022: MOP600,000) is exempted from taxation with taxable income beyond this amount to be taxed at the rate of 12% (2022: 12%) for the year ended 31 March 2023.

No provision for UK Corporation tax is required as the UK subsidiary did not generate any assessable profits for the year ended 31 March 2023.

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The reconciliation between the income tax expense and the product of loss before tax multiplied by the Hong Kong Profits Tax rate of the Group is as follows:

Loss before tax Tax at the domestic tax rate of 16.5% (2022: 16.5%) Tax effect of income that is not taxable Tax effect of expenses that are not deductible Tax effect of temporary differences not recognised Tax effect of tax losses not recognised Over-provision in prior years Effect of different tax rates of subsidiaries Tax effect of preferential tax rate Income tax expense for the year	2023 HK$’000 (24,024) (3,964) (144) 2,460 (25) 1,989 (20) (12) (152) 132	2022 HK$’000 (23,041) (3,801) (4) 1,855 829 1,411 (20) (4) (120) 146

11. DIVIDENDS

No dividend had been paid or declared by the Company during the year (2022: Nil).

12. LOSS PER SHARE

(a) Basic loss per share

The calculation of basic loss per share is based on the following:

Loss Loss for the purpose of calculating basic loss per share Number of shares Weighted average number of ordinary shares for the purpose of calculating basic loss per share	2023 HK$’000 (24,156) 2023 ’000 800,000	2022 HK$’000 (23,187) 2022 ’000 800,000

(b) Diluted loss per share

Diluted loss per share was the same as the basic loss per share for the years ended 31 March 2023 and 2022 as there were no dilutive potential ordinary shares.

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13. TRADE RECEIVABLES

From third parties Less: allowance for doubtful debts	2023 HK$’000 11,277 (697) 10,580	2022 HK$’000 12,004 (601
		11,403

The Group’s trading terms with customers are mainly on credit. The credit period granted to the customers generally range from 30 to 90 days. The Group seeks to maintain strict control over its outstanding receivables. Overdue balances are reviewed regularly by the directors.

An ageing analysis of the Group’s trade receivables, net of allowance for doubtful debts and based on the invoice date is as follows:

0–90 days 91–180 days 181–365 days Over 365 days	2023 HK$’000 6,173 759 1,500 2,148 10,580	2022 HK$’000 6,153 2,040 3,106 104
		11,403

As of 31 March 2023, trade receivables of approximately HK$5,960,000 (2022: HK$8,779,000) were past due but not considered as default. These trade receivables related to customers for whom are mainly listed companies or large property developers with no recent history of default. The ageing analysis of these trade receivables, net of allowance for doubtful debts and based on due date, is as follows:

1–90 days 91–180 days Over 180 days	2023 HK$’000 1,718 936 3,306 5,960	2022 HK$’000 3,389 1,626 3,764
		8,779

The Group does not charge interest over these balances.

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The carrying amounts of the Group’s trade receivables at the end of reporting period, net of allowance for doubtful debts, are denominated in the following currencies:

HK$ RMB MOP	2023 HK$’000 10,497 65 18 10,580	2022 HK$’000 11,076 127 200
		11,403

14. TRADE PAYABLES

An ageing analysis of the Group’s trade payables at the end of reporting period, based on the invoice date is as follows:

0–30 days 31–60 days Over 60 days	2023 HK$’000 221 150 2,013 2,384	2022 HK$’000 171 81 539
		791

The carrying amounts of the Group’s trade payables at the end of reporting period are denominated in the following currencies:

HK$ RMB US$ EURO	2023 HK$’000 548 72 1,631 133 2,384	2022 HK$’000 744 15 7 25
		791

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15. SHARE CAPITAL

Authorised: Ordinary shares of HK$0.01 each At 1 April 2021, 31 March 2022, 1 April 2022 and 31 March 2023 Issued and fully paid: Ordinary shares of HK$0.01 each At 1 April 2021, 31 March 2022, 1 April 2022 and 31 March 2023	Number of shares ’000 5,000,000 Number of shares ’000 800,000	Amount HK$’000 50,000
		Amount HK$’000 8,000

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern and to maximise the return to the shareholders through the optimisation of the debt and equity balance. The capital structure of the Group comprises all components of shareholders’ equity.

The Group reviews the capital structure frequently by considering the cost of capital and the risks associated with each class of capital. The Group will balance its overall capital structure through the payment of dividends, new share issues and share buy-backs as well as the issue of new debts, redemption of existing debts or selling assets to reduce debts. No changes were made in the objectives, policies or processes for managing capital during the years ended 31 March 2023 and 2022.

The only externally imposed capital requirement for the Group is that to maintain its listing on the Stock Exchange it has to have a public float of at least 25% of the shares. Based on the information that is publicly available to the Company and within the knowledge of the directors, the Company has maintained a sufficient public float of at least 25% throughout the year ended 31 March 2023. As of 31 March 2023, 77.61% (2022: 74.25%) of the shares were in public hands.

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MANAGEMENT DISCUSSION AND ANALYSIS

OVERVIEW

The Group is a provider of biometrics identification solutions in Hong Kong, Macau and the PRC. The Group derives revenue from the following business activities: (i) sales of biometrics identification devices, security products, and other accessories; and (ii) provision of auxiliary and other services. The Group’s biometrics identification devices have one or more of the following functions: (i) face identification; (ii) fingerprint identification; (iii) finger vein identification; (iv) hand geometry identification; and (v) iris identification. The revenue of the Group for the year ended 31 March 2023 was approximately HK$43.2 million, representing a decrease by approximately 11.8% from approximately HK$49.0 million for the year ended 31 March 2022. The decrease in revenue was mainly attributable to (i) decrease in sales of biometrics identification devices, security products and other accessories by approximately HK$4.7 million (or 14.4%) as compared with the corresponding period in 2022; and (ii) decrease in revenue derived from provision of auxiliary and other services by approximately HK$1.1 million (or 6.9%) as compared with the corresponding period in 2022.

Revenue represents the invoiced values of goods sold and services rendered, after allowances for returns and discounts during the reporting periods.

Sales of biometrics identification devices, security products and other accessories Provision of auxiliary and other services	For the year ended 31 March 2023 2022 HK$’000 HK$’000 27,737 32,391 15,414 16,561 43,151 48,952	For the year ended 31 March 2023 2022 HK$’000 HK$’000 27,737 32,391 15,414 16,561 43,151 48,952
		48,952

Cost of Sales and Gross Profit

The majority of the Group’s cost of sales and services rendered was costs of inventories sold. The Group’s costs of inventories sold decreased by approximately 11.7% to approximately HK$14.3 million for the year ended 31 March 2023 (2022: approximately HK$16.2 million). The gross profit margin dropped from approximately 34.1% for the year ended 31 March 2022 to approximately 30.2% for the year ended 31 March 2023. The gross profit also dropped from approximately HK$16.7 million for the year ended 31 March 2022 to approximately HK$13.0 million for the year ended 31 March 2023. The decrease in gross profit was mainly due to (i) the increase in direct cost incurred by the operation of the software development centre in the PRC; and (ii) the decrease in sales of biometrics identification devices, security products and other accessories.

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Expenses

Staff costs for the year ended 31 March 2023 was approximately HK$30.8 million (2022: approximately HK$28.3 million), representing an increase by approximately HK$2.5 million as compared with that of last corresponding period, which was mainly due to the increase in the number of employees and salary increment during the period.

Administrative expenses for the year ended 31 March 2023 were approximately HK$28.7 million (2022: approximately HK$32.5 million), representing a decrease of approximately HK$3.8 million as compared with the last corresponding period, which was mainly due to the decrease impairment loss on property, plant and equipment.

Taxes

The income tax expense comprised Hong Kong Profits Tax, Macau Complementary Tax and PRC Enterprise Income Tax for the year. The income tax expense for the year ended 31 March 2023 was approximately HK$132,000 (2022: approximately HK$146,000.

Under the two-tiered Profits Tax Regime, one of the Company’s Hong Kong subsidiaries is subject to Hong Kong Profits Tax at the rate of 8.25% for the year ended 31 March 2023 (2022: 8.25%) for the first HK$2 million of its estimated assessable profits and at 16.5% for the year ended 31 March 2023 (2022: 16.5%) on its estimated assessable profits above HK$2 million. Other Hong Kong subsidiaries not qualifying for the twotiered Profit Tax Regime are subject to Hong Kong Profits Tax at the rate of 16.5% for the year ended 31 March 2023 (2022: 16.5%).

The Group’s subsidiary established and operated in the PRC is subject to PRC Enterprise Income Tax at the rate of 25% for the year ended 31 March 2023 (2022: 25%). No PRC Enterprise Income Tax has been provided for the year ended 31 March 2023 (2022: Nil) as the Group’s PRC subsidiary did not generate any assessable profits during the reporting periods.

The Group’s subsidiary established and operated in the Macau Special Administrative Region (“ Macau ”) of the PRC is subject to Macau Complementary Tax, under which taxable income of up to Macau Pataca (“ MOP ”) 600,000 for the year ended 31 March 2023 (2022: MOP600,000) is exempted from taxation with taxable income beyond this amount to be taxed at the rate of 12% for the year ended 31 March 2023 (2022: 12%).

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Loss for the Year

The Group incurred a net loss of approximately HK$24.2 million for the year ended 31 March 2023, as compared with a net loss of approximately HK$23.2 million for the year ended 31 March 2022. The increase in net loss was mainly due to (i) the increase in selling and distribution costs; (ii) the increase in impairment loss on right-of-use assets; and (iii) the decrease in gross profit margin and gross profit.

Liquidity, Financial Resources and Capital Structure

Historically, the Group has funded the liquidity and capital requirements primarily through operating cash flows, bank borrowings and proceeds from Listing. The Directors believe that with the new capital from Listing, the Group is in a healthy financial position to expand its core business and to achieve its business objectives. As at 31 March 2023, the Group had no bank borrowings (31 March 2022: Nil). The Group requires cash primarily for working capital needs. As at 31 March 2023, the Group had approximately HK$17.9 million in bank and cash balances (31 March 2022: approximately HK$36.9 million).

Gearing Ratio

As at 31 March 2023 and 2022, the Group has no outstanding borrowings, accordingly there is no gearing ratio.

Note: Gearing ratio is calculated as the total debt divided by total equity.

OPERATION REVIEW

Outlook

The ordinary shares of HK$0.01 each (the “ Shares ”) of the Company have been successfully listed on GEM on 14 February 2018. The Board considers that such public listing status will allow the Company to gain access to the capital market for corporate finance exercise, assist the Company in the future business development, enhance the Group’s corporate profile and recognition and strengthen its competitiveness.

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Considering the decrease in market demand and the uncertainties brought by the development of the novel coronavirus disease (COVID-19) in the PRC, the Group has decided to suspend the plan to launch affordable locally manufactured fingerprint identification devices as part of the expansion plan of the business in the Southern China, and has planned to reallocate part of the utilised net proceeds from the Listing to other business plans, namely (i) enhancement of the quality of after-sales services and strengthening of the operation support; (ii) improving the information technology system; (iii) research and development on touchless biometrics identification devices and AIoT; and (iv) working capital.

The Group has observed that there has been a change of market trend from touch biometrics identification devices to touchless biometrics identification devices due to increased public health awareness under the COVID-19 pandemic. As such, the Group plans to apply part of the utilised net proceeds from the Listing for research and development on touchless biometrics identification devices and AIoT. The Group plans to diversify the functions of its touchless biometrics identification devices and their applications by utilizing AIoT in order to capture the market of touchless biometrics identification devices with healthcare-related functions. Looking forward, the Board takes the view that AIoT and its functions can be applied in many different scenarios that the Group’s biometrics identification devices can be involved. The Group plans to capture and develop new markets in light of the growing popularity and application of AIoT in daily life.

Employees and Remuneration Policies

As at 31 March 2023, the Group had a total of 77 employees. The Group’s staff cost for the year ended 31 March 2023 amounted to approximately HK$30.8 million (2022: approximately HK$28.3 million). The Group’s remuneration policies are in line with the prevailing market practise and are determined on the basis of performance, qualification and experience of individual employee. The Group recognises the importance of a good relationship with its employees. The remuneration payable to its employees includes salaries and allowances. Other benefits and incentives include training and share option.

In Hong Kong, the Group’s employees have participated in the mandatory provident fund prescribed by the Mandatory Provident Fund Schemes Ordinance (Chapter 485 of the Laws of Hong Kong). In the PRC, the Group’s employees have participated in the basic pension insurance, basic medical insurance, unemployment insurance, occupational injury insurance, maternity insurance prescribed by the Social Insurance Law of the PRC 《中華人民共和國社會保險法》( ), and housing fund prescribed by the Regulations on the Administration of Housing Fund (《住房公積金管理條例》). All PRC based employees have the right to participate in the social insurance and housing provident fund schemes.

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Capital Expenditure

The Group purchased property, plant and equipment amounting to approximately HK$1.6 million for the year ended 31 March 2023 (2022: approximately HK$5.1 million).

Capital Commitments

The Group did not have any significant capital commitments as at 31 March 2023 (2022: Nil).

Foreign Currency Risk

The Company does not have significant exposure on foreign currency risk.

The functional currency of the Group’s entities are principally denominated in HK$, Renminbi (“ RMB ”), MOP and Great British Pound. The Group has certain exposure to foreign currency risk as some of its business transactions, assets and liabilities are denominated in currencies other than the functional currencies of respective Group entities such as United Stated dollars (“ US$ ”), RMB and EURO. The Group currently does not have a foreign currency hedging policy in respect of foreign currency transactions, assets and liabilities.

The Group did not engage in any derivatives agreement and did not commit to any financial instruments to hedge its foreign exchange exposure during the year ended 31 March 2023.

Significant Investments held, Material Acquisitions and Disposals of Subsidiaries, and Future Plans for Material Investments or Capital Assets

During the year ended 31 March 2023, the Group did not have any significant investment, material acquisition or disposal of subsidiaries or any plan for material investments or capital assets.

Charges over Assets of the Group

As at 31 March 2023 and 2022, there were no charges over assets of the Group.

Dividend

The Directors do not recommend payment of a final dividend for the year ended 31 March 2023.

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Use of proceeds and actual progress of the Group’s business objectives

The net proceeds from the Listing (after deducting the underwriting fees and other related expenses paid by the Company in connection with the share offer) which amounted to approximately HK$44.5 million will be used for the intended purposes as set out in the section headed “ Statement of Business Objectives and Strategies ” of the Prospectus. Among the Net Proceeds, a sum of approximately HK$15.8 million (the “ Remaining Net Proceeds ”) was originally planned for launching affordable locally manufactured fingerprint identification devices as part of the expansion plan of the business in the Southern China. However, such Remaining Net Proceeds have not been utilised and the Group has decided to suspend the plan to launch affordable locally manufactured fingerprint identification devices as part of the expansion plan of the business in the Southern China, and has planned to reallocate the relevant utilised net proceeds to other business plans, namely (i) enhancement of the quality of after-sales services and strengthening of the operation support; (ii) improving the information technology system; (iii) research and development on touchless biometrics identification devices and AIoT; and (iv) working capital. For details of the change in use of proceeds, please refer to the announcement of the Company dated 2 December 2022 (the “ Announcement ”). Set out below is the actual usage of net proceeds up to the date of this announcement:

				Revised
	Original	Utilised	Unutilised	allocation of	Unutilised
	allocation of	Net Proceeds	Net Proceeds	the unutilised	Net Proceeds
	Net Proceeds	as at the	as at the	according	as at the
	as stated in	date of the	date of the	to the	date of this
	the Prospectus	Announcement	Announcement	Announcement	announcement
	HK$ million	HK$ million	HK$ million	HK$ million	HK$ million
Expanding the business in Southern China
— launch of affordable locally manufactured
fingerprint identification devices	15.8	–	15.8	–	–
— enhancement of the quality of after-sales services
and strengthening of the operation support	5.1	(5.1)	–	3.0	2.4
Improving the information technology system	5.0	(5.0)	–	3.0	2.1
Setting up a new and separate software
development center in the PRC to further
enhance and develop the Group’s software	15.2	(15.2)	–	–	–
Research and development on touchless
biometrics identification devices and
Artificial Intelligence & Internet of Things
(“AIoT”)	–	–	–	6.8	5.9
Working capital	3.4	(3.4)	–	3.0	–
	44.5	(28.7)	15.8	15.8	10.4

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As disclosed in the Prospectus, the Group’s business objectives are to further its growth in existing business by strengthening marketing capabilities and expanding product portfolio through enhancing software development, in order to further enlarge its market share in Hong Kong and Macau and to become one of the active biometrics identification solutions providers in the PRC. The Directors intend to achieve the objectives by (i) enhancing the quality of aftersales services and strengthening the operation support as part of the expansion plan of the business in the Southern China; (ii) improving the information technology system; (iii) setting up a new and separate software development centre in the PRC to further enhance and develop the Group’s software; and (iv) research and development on touchless biometrics identification devices and AIoT.

The Group had planned to use approximately HK$15.8 million of net proceeds to launch affordable locally manufactured fingerprint identification devices as part of the expansion plan of the business in the Southern China to other business plans of the Company. As disclosed in this announcement and the Announcement, due to the reasons disclosed in the Announcement, the Group has decided to suspend the plan to launch affordable locally manufactured fingerprint identification devices as part of the expansion plan of the business in the Southern China, and has planned to reallocate the relevant utilised net proceeds to other business plans.

The Group had planned to use approximately HK$8.1 million of net proceeds to enhance the quality of after-sales services and to strengthen the operation support as part of the expansion plan of the business in the Southern China. As at 31 March 2023, a total of approximately HK$5.7 million was spent on enhancing the quality of after-sales services and strengthening the operation support as part of the expansion plan of the business in the Southern China.

The Group had planned to use approximately HK$8.0 million of net proceeds to improve the information technology system. As at 31 March 2023, a total of approximately HK$5.9 million was spent on improving the information technology system.

The Group had planned to use approximately HK$15.2 million of net proceeds to set up a new and separate software development centre in the PRC to further enhance and develop the Group’s software. As at 31 March 2023, a total of approximately HK$15.2 million was spent on setting up a new and separate software development centre in the PRC to further enhance and develop the Group’s software.

The Group had planned to use approximately HK$6.8 million of net proceeds to research and development on touchless biometrics identification devices and AloT. As at 31 March 2023, a total of approximately HK$0.9 million was spent on research and development on touchless biometrics identification devices and AloT.

The Group had planned to use approximately HK$6.4 million of net proceeds to working capital. As at 31 March 2023, a total of approximately HK$6.4 million was spent on working capital.

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Purchases, Sales or Redemption of Listed Securities of the Company

Neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company’s listed securities during the year ended 31 March 2023.

Share Option Schemes

The share option scheme of the Company (the “ Share Option Scheme ”) was adopted pursuant to a resolution passed by the then shareholders of the Company (the “ Shareholders ”) on 18 January 2018 for the primary purpose to attract, retain and motivate talented participants, to strive for future developments and expansion of the Group. Eligible participants of the Share Option Scheme include any employees, executive Directors, non-executive Directors (including independent non-executive Directors), advisers, consultants of the Company or any of its subsidiaries.

The Share Option Scheme will remain valid and effective for a period of 10 years commencing on the date on which the Share Option Scheme is adopted, after which no further share options will be granted but the provisions of the Share Option Scheme shall in all other respects remain in full force and effect and share options which are granted during the life of the Share Option Scheme may continue to be exercisable in accordance with their terms of issue. The principal terms of the Share Option Scheme were summarized in the paragraph headed “Share Option Scheme” in Appendix IV to the prospectus (the “ Prospectus ”) published by the Company in relation to the Listing. No share option has been granted, exercised, expired, cancelled or lapsed under the Share Option Scheme since its adoption and up to the date of this announcement.

Competing Interests

During the year ended 31 March 2023, none of the Directors, the Controlling Shareholders and their respective associates (as defined in the GEM Listing Rules) as at 31 March 2023 had any interest in any business which competes or is likely to compete, directly or indirectly, with the business of the Group or any other conflicts of interest with the Group.

Compliance with the Required Standard of Dealings in Securities Transactions by Directors

The Company has adopted a code of conduct regarding securities transactions by Directors (the “ Model Code ”) on terms no less exacting than the required standard of dealings (the “ Required Standard of Dealings ”) as set out in Rules 5.48 to 5.67 of the GEM Listing Rules. Further, the Company had made specific enquiry with all Directors and each of them has confirmed his/her compliance with the Model Code and the Required Standard of Dealings since the date of Listing and up to the date of this announcement.

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Corporate Governance Practices

The Company has committed to upholding high standard of corporate governance for the enhancement of shareholders’ value and provide transparency, accountability and independence. Except for the deviation from code provision C.2.1, the Company had complied with the required code provisions set out in the Corporate Governance Code contained in Appendix 15 to the GEM Listing Rules (the “ CG Code ”) since the Listing and up to the date of this announcement.

Code provision C.2.1 of the CG Code stipulates that the roles of chairman and chief executive officer should be separate and should not be performed by the same individual. Mr. Yuen Kwok Wai, Tony (“ Mr. Tony Yuen ”) is the chairman and the chief executive officer of the Company. In view that Mr. Tony Yuen is one of the founders of the Group and has been operating and managing the Group since June 1999, the Board believes that it is in the best interest of the Group to have Mr. Tony Yuen taking up both roles for effective management and business development. Therefore the Board considers that the deviation from the code provision C.2.1 of the CG Code is appropriate in such circumstances.

Change of Company Name and Stock Short Name

Pursuant to a special resolution passed at the extraordinary general meeting held on 16 May 2022, the Shareholders have approved to change of the dual foreign name in Chinese of the Company from “匯安智能科技集團有限公司” to “懶豬科技集團有限公 司”. The English stock short name of the Company for trading in the Shares on the Stock Exchange will remain unchanged as “PRIME INTEL” and the Chinese stock short name of the Company will be changed from “匯安智能” to “懶豬科技” for trading in the Shares on the Stock Exchange with effect from 9:00 a.m. on 27 June 2022. The stock code of the Company on the Stock Exchange remains unchanged as “8379”. Details of the above are set out in the Company’s announcement in relation to the change of company name and change of stock short name dated 22 June 2022.

Amendments to Constitutional Documents

The second amended and restated memorandum and articles of association of the Company was adopted by way of a special resolution passed by the shareholders of the Company at the annual general meeting held on 10 August 2022. The second amended and restated memorandum and articles of association of the Company is available on the website of the Stock Exchange and the Company.

– 24 –

Events after the Reporting Period

Delighting View Global Limited, a substantial shareholder of the Company, and Primary Group International Limited entered into a sale and purchase agreement on 19 April 2023 for the sale and purchase of 206,000,000 Shares (the “ Transaction ”). As at the date of this announcement, the sale and purchase of 66,000,000 Shares has been completed. For details of the Transaction, please refer to the Company’s announcements dated 21 April 2023 and 12 June 2023.

On 11 May 2023, the Company entered into a strategic cooperation agreement (the “ Strategic Cooperation Agreement ”) with Yidian Chengpin (Nantong) Network Co., Limited ( 億點誠品（南通）網絡有限公司 ) (“ Yidian Chengpin ”), a company established under the laws of the People’s Republic of China (“ PRC* ”) which mainly operates the business of e-commerce platform. Pursuant to Strategic Cooperation Agreement, the Company and Yidian Chengpin will cooperate on various matters including but not limited to research and development on application of biometric identification technology, artificial intelligence technology, and trading and logistic supply chain. The Strategic Cooperation Agreement shall be effective for a term of one year. Details of the above are set out in the Company’s announcement dated 11 May 2023.

Auditor

McMillan Woods (Hong Kong) CPA Limited (“ McMillan Woods ”) has been appointed as the auditor of the Company following the resignation of World Link CPA Limited due to its reorganisation under which the audit engagement director and the audit engagement team joined another professional accounting firm with effect from 10 February 2020 and McMillan Woods was appointed to fill the casual vacancy. A resolution to re-appoint McMillan Woods as auditor of the Company will be proposed at the forthcoming annual general meeting.

Scope of work of McMillan Woods (Hong Kong) CPA Limited

The figures in respect of the preliminary announcement of the Group’s results for the year ended 31 March 2023 have been agreed by the Group’s auditor, McMillan Woods, to the amounts set out in the Group’s consolidated financial statements for the year ended 31 March 2023. The work performed by McMillan Woods in this respect did not constitute an assurance engagement in accordance with Hong Kong Standards on Auditing, Hong Kong Standards on Review Engagements or Hong Kong Standards on Assurance Engagements issued by the HKICPA and consequently no assurance has been expressed by McMillan Woods on the preliminary announcement.

– 25 –

Audit Committee

The Company has established an audit committee (the “ Audit Committee ”) with written terms of reference (revised pursuant to a board resolution on 30 December 2022) in conformity of the CG Code which are available on the websites of the Stock Exchange and the Company. The primary duties of the Audit Committee are, among others, to review and supervise the financial reporting process and internal control systems of the Group. The Audit Committee comprises three independent non-executive Directors, namely Mr. Chung Billy (chairman of the Audit Committee), Mr. Poon Wai Hung Richard and Mr. Wong Ching Wan.

The Audit Committee has reviewed the audited financial statements of the Group for the year ended 31 March 2023 and recommended approval to the Board.

By Order of the Board Prime Intelligence Solutions Group Limited 懶豬科技集團有限公司 Mr. Yuen Kwok Wai, Tony Chairman

Hong Kong, 21 June 2023

As at the date of this announcement, the executive Directors are Mr. Yuen Kwok Wai, Tony, Ms. Yuen Mei Ling, Pauline, Mr. Mui Pak Kuen and Mr. Hui Cho Lung; the nonexecutive Directors are Mr. Yam Chiu Fan, Joseph and Ms. Leung Wai Hing Ella; and the independent non-executive Directors are Mr. Poon Wai Hung Richard, Mr. Chung Billy and Mr. Wong Ching Wan.

This announcement will remain on the “Latest Listed Company Information” page of the Stock Exchange’s website at http://www.hkexnews.hk for at least seven days from the date of its publication. This announcement will also be published on the Company’s website at www.primeintelligence.com.hk.

– 26 –