Prime Intelligence Solutions Group Limited — Interim / Quarterly Report 2018

Feb 13, 2018

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 匯安智能科技集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 8379)

THIRD QUARTERLY RESULTS ANNOUNCEMENT FOR THE NINE MONTHS ENDED 31 DECEMBER 2017

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

GEM has been positioned as a market designed to accommodate 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. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors.

Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board and no assurance is given that there will be a liquid market in the securities traded on GEM.

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 the GEM of the Stock Exchange (the “ GEM Listing Rules ”) 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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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

The board of Directors (the “ Board ”) is pleased to present the unaudited condensed consolidated results of the Company and its subsidiaries (collectively referred to as the “ Group ”) for the three and nine months ended 31 December 2017, together with the comparative figures for the corresponding periods in 2016, as follows:

Notes Revenue 3 Cost of sales Gross profit Other income 4 Selling and distribution costs Administrative and other expenses Profit from operation Finance costs Profit before tax Income tax expense 5 Profit for the period 6 Other comprehensive income for the period, net of tax: Item that may be reclassified to profit or loss: Exchange difference on translating foreign operations Total comprehensive income for the period attributable to owners of the Company Earnings per share (cents) 8	Three months ended 31 December 2017 2016 HK$’000 HK$’000 (unaudited) (unaudited) 18,866 16,096 (8,266) (6,173) 10,600 9,923 20 1 (1,408) (1,405) (5,327) (4,503) 3,885 4,016 (15) (39) 3,870 3,977 (710) (595) 3,160 3,382 201 (315) 3,361 3,067 0.53 0.56	Nine months ended 31 December 2017 2016 HK$’000 HK$’000 (unaudited) (unaudited) 54,224 49,071 (21,831) (19,577) 32,393 29,494 236 94 (3,902) (3,504) (17,026) (13,253) 11,701 12,831 (71) (113) 11,630 12,718 (2,652) (2,165) 8,978 10,553 434 (488) 9,412 10,065 1.50 1.76

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Balance at 1 April 2016 (audited) Total comprehensive income for the period (unaudited) Dividends paid_(note 7)_ (unaudited) Balance at 31 December 2016 (unaudited) Balance at 1 April 2017 (audited) Total comprehensive income for the period (unaudited) Balance at 31 December 2017 (unaudited)		Equity attributable to owners of the Company	Equity attributable to owners of the Company	Equity attributable to owners of the Company	Equity attributable to owners of the Company	Equity attributable to owners of the Company	Total equity HK$’000 29,105 10,065 (8,000) 31,170 34,229 9,412 43,641
	Share capital HK$’000 – – – – – – –	Merger reserve HK$’000 17,079 – – 17,079 17,079 – 17,079	Legal reserve HK$’000 12 – – 12 12 – 12	Foreign currency translation reserve HK$’000 (288) (488) – (776) (688) 434 (254)	Retained profits HK$’000 12,302 10,553 (8,000) 14,855 17,826 8,978 26,804	Total reserve HK$’000 29,105 10,065 (8,000) 31,170 34,229 9,412 43,641

* Represents amount less than HK$1,000

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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. GENERAL INFORMATION

The Company was incorporated and registered as an exempt company in the Cayman Islands 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 1, 13/F Asia Trade Centre, 79 Lei Muk Road, Kwai Chung, New Territories, Hong Kong. The Company’s shares have been listed on the GEM since 14 February 2018 (the “ Listing ”).

Pursuant to a reorganisation (the “ Reorganisation ”) of the Company and its subsidiaries now comprising the Group to rationalise the Group’s structure in preparation for the Listing, the Company became the holding company of the Group as set out in the paragraph headed “Reorganisation” of the section headed “History, Development and Reorganisation” of the prospectus of the Company dated 30 January 2018 (“ Prospectus ”).

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

In the opinion of the Directors of the Company, as at 31 December 2017, Delighting View Global Limited (“ Delighting View ”), a company incorporated in the British Virgin Islands is the immediate and ultimate holding parent of the Company and Mr. Yuen Kwok Wai, Tony (“ Mr. Tony Yuen ”) and Ms. Yuen Mei Ling, Pauline (“ Ms. Pauline Yuen ”) (collectively known as the “ Controlling Party Group ”) is the ultimate controlling party of the Company.

2. BASIS OF PRESENTATION AND PREPARATION OF FINANCIAL STATEMENTS

The unaudited condensed consolidated financial statements of the Group for the three and nine months ended 31 December 2017 are unaudited but have been reviewed by the audit committee of the Company (the “ Audit Committee ”). The unaudited condensed consolidated financial statements were approved for issue by the Directors on 13 February 2018. The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in Hong Kong and comply with Hong Kong Financial Reporting Standards (“ HKFRSs ”) issued by Hong Kong Institute of Certified Public Accountants (the “ HKICPA ”) and the applicable disclosure requirements of the Rules Governing the Listing of Securities on the GEM of the Stock Exchange.

The unaudited condensed consolidated results 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. The unaudited condensed consolidated results of the Group for the three and nine months ended 31 December 2017 do not include all the information and disclosures required in the annual financial statements of the Group and should be read in conjunction with the Prospectus. The accounting policies and methods of computation used in the preparation of the unaudited condensed consolidated results are consistent with those used in the annual combined financial statements of the Group for the year ended 31 March 2017 as set out in the Prospectus.

In the current period, the Group has adopted all the new and revised HKFRSs, which collective term includes all applicable Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards and interpretations issued by the HKICPA that are relevant to its operation and effective for its accounting period beginning on 1 April 2017. The adoption of these new and revised HKFRSs had no significant effects on the results of the Group for the current and prior periods.

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A number of new standards and amendments to standards are effective for annual periods beginning after 1 April 2017 and earlier application is permitted. However, the Group has not early adopted these new or amended standards in preparing the unaudited condensed consolidated financial statements. The Group is continuing to assess the implications of the adoption of these standards. Based on preliminary assessment, the Group has provided details below about the standards issued but not yet effective and applied by the Group.

		Effective for
		accounting periods
		beginning on
		or after
HKFRS 9	Financial Instruments	1 January 2018
HKFRS 15	Revenue from Contracts with Customers	1 January 2018
Amendments to HKFRS 15	Revenue from Contracts with Customers:	1 January 2018
	Clarifications
Amendments to HKFRS 2	Share-based Payment: Classification and	1 January 2018
	measurement of share-based payment
	transactions
Amendments to HKFRS 4	Insurance Contracts: Applying HKFRS 9	1 January 2018
	Financial Instruments with HKFRS 4
HKFRS 16	Leases	1 January 2019
Amendments to HKFRS 10	Consolidated Financial Statements and Investments	To be determined
and HKAS 28	in Associates and Joint Ventures: Sale or
	contribution of assets between an investor and
	its associate or joint venture
Annual Improvements to	Annual Improvements to HKFRSs 2014–2016	1 January 2018
HKFRSs	Cycle
Annual Improvements to	Annual Improvements to HKFRSs 2015–2017	1 January 2019
HKFRSs	Cycle
Amendments to HKAS 40	Investment Property: Transfers of investment	1 January 2018
	property
HK(IFRIC) — Int 22	Foreign Currency Transactions and Advance	1 January 2018
	Consideration
HK(IFRIC) — Int 23	Uncertainty Over Income Tax Treatment	1 January 2019
HKFRS 17	Insurance Contracts	1 January 2021

The directors of the Company anticipate that, except as described below, the application of other new and revised HKFRSs will not have material impact on the Group’s financial performance and financial position.

HKFRS 9 Financial Instruments

The standard replaces HKAS 39 Financial Instruments: Recognition and Measurement.

The standard introduces a new approach to the classification of financial assets which is based on cash flow characteristics and the business model in which the asset is held. A debt instrument that is held within a business model whose objective is to collect the contractual cash flows and that has contractual cash flows that are solely payments of principal and interest on the principal outstanding is measured at amortised cost. A debt instrument that is held within a business model whose objective is achieved by both collecting the contractual cash flows and selling the instruments and that has contractual cash flows that are solely payments of principal and interest on the principal outstanding is measured at fair value through other comprehensive income. All other debt instruments are measured at fair value through profit or loss. Equity instruments are generally measured at fair value through profit or loss. However, an entity may make an irrevocable election on an instrument-by-instrument basis to measure equity instruments that are not held for trading at fair value through other comprehensive income.

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The requirements for the classification and measurement of financial liabilities are carried forward largely unchanged from HKAS 39 except that when the fair value option is applied changes in fair value attributable to changes in own credit risk are recognised in other comprehensive income unless this creates an accounting mismatch.

HKFRS 9 introduces a new expected-loss impairment model to replace the incurred-loss impairment model in HKAS 39. It is no longer necessary for a credit event or impairment trigger to have occurred before impairment losses are recognised. For financial assets measured at amortised cost or fair value through other comprehensive income, an entity will generally recognise 12-month expected credit losses. If there has been a significant increase in credit risk since initial recognition, an entity will recognise lifetime expected credit losses. The standard includes a simplified approach for trade receivables to always recognise the lifetime expected credit losses.

The de-recognition requirements in HKAS 39 are carried forward largely unchanged.

HKFRS 9 substantially overhauls the hedge accounting requirements in HKAS 39 to align hedge accounting more closely with risk management and establish a more principle based approach.

The Group is in the process of assessing the potential impact on the financial performance resulting from the adoption of HKFRS 9. So far it has concluded that the new expected credit loss impairment model in HKFRS 9 may result in the earlier recognition of impairment losses on the Group’s trade receivables and other financial assets. For instance, the Group will be required to replace the incurred loss impairment model in HKAS 39 with the expected loss impairment model that will apply to various exposures to credit risk. The Group anticipates that the adoption of HKFRS 9 in the future may not have other significant impact on amounts reported in respect of the Group’s financial assets and liabilities based on an analysis of the Group’s financial instruments as at 31 December 2017.

HKFRS 15 Revenue from Contracts with Customers

HKFRS 15 will supersede all existing revenue recognition guidance including HKAS 18, HKAS 11 Construction Contracts and related interpretation when it becomes effective.

The core principle of the standard is that an entity recognises revenue to depict the transfer of goods and services to customers in an amount that reflects the consideration to which the entity expects to become entitled in exchange for those goods and services.

An entity recognises revenue in accordance with the core principle by applying a 5-step model:

1. Identify the contract with a customer

2. Identify the performance obligations in the contract

3. Determine the transaction price

4. Allocate the transaction price to the performance obligations in the contract

5. Recognise revenue when or as the entity satisfies a performance obligation

The standard also includes comprehensive disclosure requirements relating to revenue which aim to enable users of financial statements to understand the nature, timing and uncertainty of revenue and cash flow arising from contracts with customers.

The Group anticipates that the application of HKFRS 15 in the future may have resulted in the identification of separate performance obligations which could affect the timing of the recognition of revenue. Certain costs incurred in fulfilling a contract which are currently expensed may need to be recognised as an asset under HKFRS15. More disclosures of revenue are also required. However, the Group anticipates that the application of HKFRS 15 will not have a material impact on the timing and amounts in revenue recognition.

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HKFRS 16 Leases

HKFRS 16 replaces HKAS 17 Leases and related interpretations. The new standard introduces a single accounting model for lessees. For lessees the distinction between operating and finance leases is removed and lessees will recognise right-of-use assets and lease liabilities for all leases (with optional exemptions for short-term leases and leases of low value assets). HKFRS 16 carries forward the accounting requirements for lessors in HKAS 17 substantially unchanged. Lessors will therefore continue to classify leases as operating or finance leases.

The Group’s leases of office premises and staff quarters are currently classified as operating leases and the lease payments (net of any incentives received from the lessor) are recognised as an expense on a straightline basis over the lease term. Under HKFRS 16 the Group may need to recognise and measure a liability at the present value of the future minimum lease payments and recognise a corresponding right-of-use asset for these leases. The interest expense on the lease liability and depreciation on the right-of-use asset will be recognised in profit or loss. The Group’s assets and liabilities will increase and the timing of expense recognition will also be impacted as a result.

The Group had future minimum lease payments under non-cancellable operating leases for its office premises and a staff quarters as at 31 December 2017. A preliminary assessment indicated that the new requirement will result in recognise a right-of-use asset and a related lease liability in respect of these leases unless they qualify for low value or short-term leases upon the application of HKFRS 16. In addition, the Group does not expect the adoption of HKFRS 16 would result in significant impact on the Group’s result but may result changes in measurement, presentation and disclosure as indicated above.

3. REVENUE

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

	Three months ended	Three months ended	Nine months	ended	ended
	31 December		31 December
	2017	2016	2017		2016
	HK$’000	HK$’000	HK$’000	HK$’000
	(unaudited)	(unaudited)	(unaudited)	(unaudited)
Sales of biometrics identification
devices, security products and
other accessories	13,064	10,266	36,542		32,168
Provision of auxiliary and other
services	5,802	5,830	17,682		16,903
	18,866	16,096	54,224		49,071

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4. OTHER INCOME

	Three months ended	Three months ended	Nine months	ended
	31 December		31 December
	2017	2016	2017	2016
	HK$’000	HK$’000	HK$’000	HK$’000
	(unaudited)	(unaudited)	(unaudited)	(unaudited)
Interest income	1	1	3	2
Gain on disposals of property,
plant and equipment	1	–	211	67
Others	18	–	22	25
	20	1	236	94
INCOME TAX EXPENSE
	Three months ended		Nine months	ended
	31 December		31 December
	2017	2016	2017	2016
	HK$’000	HK$’000	HK$’000	HK$’000
	(unaudited)	(unaudited)	(unaudited)	(unaudited)
Provision for the period:
Hong Kong Profits Tax	635	587	2,486	2,122
Macao Complementary Tax	75	8	166	43
	710	595	2,652	2,165

5. INCOME TAX EXPENSE

Hong Kong Profits Tax is provided at 16.5% (three and nine months ended 31 December 2016: 16.5%) based on the estimated assessable profits arising in or derived from Hong Kong.

For the Group’s subsidiary established and operated in the PRC is subject to PRC Enterprise Income Tax at the rate of 25.0% (three and nine months ended 31 December 2016: 25.0%). No PRC Enterprise Income Tax has been provided for the three and nine months ended 31 December 2017 (three and nine months ended 31 December 2016: Nil) as the Group’s PRC subsidiary either did not generate any assessable profits or has sufficient tax losses brought forward to offset against its assessable profits generated during the reporting periods.

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 is exempted from taxation with taxable income beyond this amount to be taxed at the rate of 12.0% for the three and nine months ended 31 December 2016. For the three and nine months ended 31 December 2017, Macao Complementary Tax has been provided at the rate of 12.0% on the estimated taxable income of the Group’s Macau subsidiary.

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6. PROFIT FOR THE PERIOD

The Group’s profit is stated after charging/(crediting) the following:

	Three months ended	Three months ended	Nine months ended	Nine months ended	Nine months ended
	31 December		31 December
	2017	2016	2017		2016
	HK$’000	HK$’000	HK$’000	HK$’000
	(unaudited)	(unaudited)	(unaudited)	(unaudited)
Depreciation of property, plant
and equipment	143	107	441		311
Foreign exchange losses, net	42	110	68		125
Staff cost (including Directors’
emoluments)
— Salaries, bonus, allowances and
other benefits in kind	4,334	4,070	12,892		11,703
— Commission	77	197	926		652
— Retirement benefits scheme
contributions	272	225	778		689
	4,683	4,492	14,596		13,044
Cost of inventories sold	6,613	5,153	17,228		16,469
Gain on disposals of property, plant
and equipment	(1)	–	(211)		(67)
Listing expenses	1,114	433	4,913		1,294
Auditor’s remuneration	125	125	375		375
Reversal of allowance for inventories	–	–	(41)		–

7. DIVIDENDS

No dividends was declared during the three and nine months ended 31 December 2017 (three and nine months ended 31 December 2016: HK$4,000,000 and HK$8,000,000).

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8. EARNINGS PER SHARE

The calculation of basic and diluted earnings per share is based on the following data:

(a) Basic earnings per share

Earnings for the purpose of calculating basic earnings per share_(HK$’000) Number of shares for the purpose of basic earnings per share Weighted average number of ordinary shares for the purpose of basic earnings per share(Note)_	Three months ended 31 December 2017 2016 (unaudited) (unaudited) 3,160 3,382 600,000,000 600,000,000	Nine months ended 31 December 2017 2016 (unaudited) (unaudited) 8,978 10,553 600,000,000 600,000,000	Nine months ended 31 December 2017 2016 (unaudited) (unaudited) 8,978 10,553 600,000,000 600,000,000
			600,000,000

Note: The calculation of basic earnings per share for three and nine months ended 31 December 2016 and 2017 are based on the unaudited consolidated profit of the Group for the period attributable to owners of the Company for the three and nine months ended 31 December 2016 and 2017 and on the assumption that 600,000,000 shares of the Company are in issue and issuable, comprising 2,000 shares in issue at 16 October 2015 and 599,998,000 shares to be issued pursuant to the capitalisation issue as if the shares were outstanding since 1 April 2016.

(b) Diluted earnings per share

No diluted earnings per share to be presented as the Company did not have any dilutive potential ordinary shares outstanding during the three and nine months ended 31 December 2016 and 2017.

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MANAGEMENT DISCUSSION AND ANALYSIS

BUSINESS REVIEW

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 products which include biometrics identification devices, and other devices and 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 nine months ended 31 December 2017 was approximately HK$54.2 million, representing an increase of approximately 10.5% from approximately HK$49.1 million for the nine months ended 31 December 2016. The increase in revenue was mainly contributed by an increase in the sales of handheld devices as a result of the implementation of the Construction Workers Registration System (“ CWRS ”) in Hong Kong.

FINANCIAL REVIEW

Revenue

The sales of biometrics identification devices, security products and other accessories increased by approximately HK$4.4 million or approximately 13.6% to approximately HK$36.5 million for the nine months ended 31 December 2017 compared with the same period last year. The increase was mainly contributed by an increase in the sales of handheld devices of approximately 360.2% as a result of the implementation of CWRS that more android mobile devices were required by the construction customers so as to access CWRS. Compared with the nine months ended 31 December 2016, the sales from the provision of auxiliary and other services increased slightly by approximately HK$0.8 million or approximately 4.6% to approximately HK$17.7 million for the nine months ended 31 December 2017.

Cost of Sales and Gross Profit

The majority of the Group’s cost of sales was costs of inventories sold. The Group’s costs of inventories sold increased by approximately 4.6% to approximately HK$17.2 million for the nine months ended 31 December 2017 as compared to the same period last year. The gross profit increased from approximately HK$29.5 million for the nine months ended 31 December 2016 to approximately HK$32.4 million for the nine months ended 31 December 2017. The gross profit margin remained stable as compared with the last corresponding period. During the nine months ended 31 December 2016 and 2017, the gross profit margins were approximately 60.1% and approximately 59.7% respectively.

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Expenses

Staff costs for the nine months ended 31 December 2017 were approximately HK$14.6 million (nine months ended 31 December 2016: approximately HK$13.0 million), representing an increase of approximately HK$1.6 million, which was mainly due to the salary increment during the period.

Administrative expenses for the nine months ended 31 December 2017 were approximately HK$17.0 million (nine months ended 31 December 2016: approximately HK$13.3 million), representing an increase of approximately HK$3.8 million as compared with the last corresponding period, which was mainly due to the increase in staff costs and listing expenses.

Profits for the Period

The Group incurred a net profit of approximately HK$9.0 million for the nine months ended 31 December 2017, as compared with a net profit of approximately HK$10.6 million for the nine months ended 31 December 2016. The decrease of net profit was primarily due to recognition of listing expenses.

The Board does not recommend the payment of dividends for the nine months ended 31 December 2017.

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 the Group’s competitiveness.

Looking forward, the Group plans to further its growth in existing business by strengthening its marketing capabilities and expanding its product portfolio through enhancing software development, with a view to further enlarging its market share in Hong Kong and Macau and becoming one of the active biometrics identification solutions providers in the PRC. As such, the Group plans to utilise the net proceeds from the initial public offering of the Share by way of share offer (the “ Share Offer ”) pursuant to the Prospectus on (i) expanding the business in Southern China; (ii) improving its information technology system; and (iii) setting up a new and separate software development center in the PRC to further enhance and develop the Group’s software.

Directors’ and Chief Executives’ Interests and Short Positions in Shares, Underlying Shares and Debentures of the Company or any Associated Corporation

Since the Company’s shares were not listed on the Stock Exchange as at 31 December 2017, Divisions 7 and 8 of Part XV of the Securities and Futures Ordinance (the “ SFO ”) and section 352 of the SFO were not applicable to the Company, the Directors and chief executive of the Company as at 31 December 2017.

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As at the date of this announcement, the interest and short position of the Directors and chief executive of the Company in the shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) as recorded in the register maintained by the Company pursuant to Section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the required standard of dealings by directors of listed issuers as referred to in Rules 5.46 to 5.67 of the GEM Listing Rules were as follows:

Ordinary shares of the Company

			Percentage of
		Number of	the Company’s
	Capacity and	shares	issued share
Name	nature of interest	(note 1)	capital
Mr. Tony Yuen_(note 2)_	Interest of a controlled	366,000,000 (L)	45.75%
	corporation
Ms. Pauline Yuen_(note 2)_	Interest of a controlled	366,000,000 (L)	45.75%
	corporation

Notes:

1. The letter “L” denotes a long position in the shareholder’s interest in the share capital of the Company.

2. Delighting View directly holds 366,000,000 Shares. As Delighting View is beneficially owned as to 85% and 15% by Mr. Tony Yuen and Ms. Pauline Yuen respectively and Mr. Tony Yuen and Ms. Pauline Yuen are parties acting in concert, each of Mr. Tony Yuen and Ms. Pauline Yuen is deemed to be interested in all the Share held by Delighting View under the SFO.

Save as disclosed above, as at date of this announcement, none of the Directors and chief executive of the Company had any interests or short positions in any shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) as recorded in the register required to be kept by the Company pursuant to Section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the required standard of dealings by directors of listed issuers as referred to in Rule 5.46 to 5.67 of the GEM Listing Rules.

Substantial Shareholders’ and Other Persons’ Interests and Short Positions in the Shares and Underlying Shares of the Company

Since the Company’s shares were not listed on the GEM as at 31 December 2017, Divisions 2 and 3 of Part XV of the SFO and section 336 of the SFO were not applicable to the Company, the Directors and the substantial shareholders of the Company as at 31 December 2017.

– 13 –

As at the date of this announcement, the following persons (other than a Director or chief executive of the Company) had interests or short positions in the shares and underlying shares of the Company as recorded in the register required to be kept under section 336 of the SFO:

Ordinary shares of the Company

			Percentage of
		Number of	the Company’s
	Capacity and	shares	issued share
Name	nature of interest	(note 1)	capital
Delighting View	Beneficial owner_(Note 2)_	366,000,000 (L)	45.75%
Super Arena Limited	Beneficial owner_(Note 3)_	234,000,000 (L)	29.25%
(“Super Arena”)
Mr. Kor Sing Mung	Interest of a controlled	234,000,000 (L)	29.25%
Michael (“Mr. Kor”)	corporation_(Note 3)_

Notes:

1. The letter “L” denotes a long position in the shareholder’s interest in the share capital of the Company.

2. As Delighting View is beneficially owned as to 85% and 15% by Mr. Tony Yuen and Ms. Pauline Yuen respectively and Mr. Tony Yuen and Ms. Pauline Yuen are parties acting in concert, each of Mr. Tony Yuen and Ms. Pauline Yuen is deemed to be interested in all the Shares held by Delighting View under the SFO.

3. Super Arena directly holds 234,000,000 Shares. As Super Arena is beneficially owned as to 70% by Mr. Kor, Mr. Kor is deemed to be interested in all the Shares held by Super Arena under the SFO.

Save as disclosed above, as at the date of this announcement, no other interests or short positions in the shares or underlying shares of the Company were recorded in the register required to be kept by the Company under section 336 of the SFO.

Purchase, Sale or Redemption of Listed Securities of the Company

Neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the Company’s listed securities after the Listing and up to the date of this announcement.

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Compliance Adviser’s Interests

As at the date of this announcement, save and except for (i) the participation of Ample Capital Limited (the “ Compliance Adviser ”) as the sponsor and Ample Orient Capital Limited as one of the underwriters and joint lead managers in relation to the Listing; and (ii) the compliance adviser’s agreement entered into between the Company and the Compliance Adviser dated 25 January 2018, neither the Compliance Adviser, nor any of its directors, employees or close associates (as defined in the GEM Listing Rules) had any interests in the securities of the Company or any other companies of the Group (including options or rights to subscribe for such securities) which is required to be notified to the Company pursuant to rule 6A.32 of the GEM Listing Rules.

Competing Interests

The Directors confirm that as at 31 December 2017, none of the controlling shareholders of the Company or Directors and their respective close associates (as defined in the GEM Listing Rules) had any interest in any business apart from the business operated by the Group which competed or is likely to compete, either directly or indirectly, with the Group’s business.

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

The Company has adopted the required standard of dealings (the “ Required Standard of Dealings ”) as the code for securities transactions by the Directors on the guidelines 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 Required Standard of Dealings since the Listing up to the date of this announcement.

Corporate Governance Practices

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

Code provision A.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. Tony Yuen is the chairman and the chief executive officer of the Company. In view of 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 A.2.1 of the CG Code is appropriate in such circumstances.

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Audit Committee

The Company has established the Audit Committee with written terms of reference in compliance with rules 5.28 and 5.29 of the GEM Listing Rules and code provisions C.3.3 and C.3.7 of the CG Code. The primary duties of the Audit Committee are 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. Hui Man Ho, Ivan and Mr. Mui Pak Kuen.

The unaudited condensed consolidated financial statements of the Company for the nine months ended 31 December 2017 has been reviewed by the Audit Committee. The Audit Committee is of the opinion that such financial information complies with the applicable accounting standards, the GEM Listing Rules and legal requirements, and that adequate disclosure have been made.

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

Hong Kong, 14 February 2018

As at the date of this announcement, the executive Directors are Mr. Yuen Kwok Wai, Tony, Ms. Yuen Mei Ling, Pauline, and Ms. Sun Ngai Chu, Danielle; the non-executive Director is Mr. Yam Chiu Fan, Joseph; and the independent non-executive Directors are Mr. Hui Man Ho, Ivan, Mr. Chung Billy and Mr. Mui Pak Kuen.

This announcement will appear on the GEM website (www.hkgem.com) for at least seven days after the date of publication and on the website of the Company (www.sebiotec.com).

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