Prime Intelligence Solutions Group Limited — Interim / Quarterly Report 2022

Nov 8, 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.

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: 08379)

INTERIM RESULTS ANNOUNCEMENT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2021

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 mid-sized 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.

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.

– 1 –

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

The Board (the “ Board ”) of Directors (the “ Director(s) ”) of Prime Intelligence Solutions Group Limited (the “ Company ”) 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 six months ended 30 September 2021 together with the unaudited and audited comparative figures for the corresponding period in 2020 as follows:

Notes Revenue 4 Cost of sales and services rendered Gross profit Other income 5 Selling and distribution costs Administrative and other operating expenses Reversal/(provision) of impairment losses on trade receivables Loss from operation Finance costs Loss before tax Income tax expense 6 Loss for the period 7 Other comprehensive income for the period, net of tax: Item that may be reclassified to profit or loss: Exchange differences on translating foreign operations Total comprehensive income for the period attributable to the owners of the Company Loss per share (HK cents) — Basic and diluted 9	Three months ended 30 September 2021 2020 HK$’000 HK$’000 (unaudited) (unaudited) 12,422 12,432 (7,379) (7,586) 5,043 4,846 35 769 (1,999) (1,105) (6,125) (5,807) (96) 110 (3,142) (1,187) (27) (52) (3,169) (1,239) (116) (37) (3,285) (1,276) – – (3,285) (1,276) (0.41) (0.16)	Six months ended 30 September 2021 2020 HK$’000 HK$’000 (unaudited) (unaudited) 25,854 22,853 (15,168) (12,851) 10,686 10,002 38 1,341 (3,082) (2,035) (12,425) (10,687) (96) 110 (4,879) (1,269) (60) (93) (4,939) (1,362) (340) (277) (5,279) (1,639) – – (5,279) (1,639) (0.66) (0.20)

– 2 –

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Notes Non-current assets Property, plant and equipment Right-of-use assets Intangible assets Current assets Inventories Trade receivables 10 Other receivables, prepayments and deposits Tax recoverable Bank and cash balances Current liabilities Trade payables 11 Other payables and accrued expenses Lease liabilities Contract liabilities Current tax liabilities Net current assets Total assets less current liabilities Non-current liabilities Lease liabilities Contract liabilities NET ASSETS Capital and reserves Share capital 12 Reserves TOTAL EQUITY	30 September 2021 HK$’000 (unaudited) 1,182 1,147 – 2,329 22,790 12,150 5,882 – 48,891 89,713 1,131 5,662 1,420 5,515 313 14,041 75,672 78,001 598 478 1,076 76,925 8,000 68,925 76,925	31 March 2021 HK$’000 (audited) 1,095 1,704 21 2,820 22,979 9,547 2,493 85 59,172 94,276 499 3,667 1,597 7,681 118 13,562 80,714 83,534 1,285 45 1,330 82,204 8,000 74,204 82,204

– 3 –

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Balance at 1 April 2020 (audited) Total comprehensive income for the period (unaudited) Balance at 30 September 2020 (unaudited) Balance at 1 April 2021 (audited) Total comprehensive income for the period (unaudited) Balance at 30 September 2021 (unaudited)	Share capital HK$’000 8,000 – 8,000 8,000 – 8,000	Share premium HK$’000 51,682 – 51,682 51,682 – 51,682	Merger reserve HK$’000 17,079 – 17,079 17,079 – 17,079	Legal reserve Foreign currency translation reserve HK$’000 HK$’000 12 (689) – – 12 (689) 12 (151) – – 12 (151)	Retained profits HK$’000 12,683 (1,639) 11,044 5,582 (5,279) 303	Total reserve HK$’000 80,767 (1,639) 79,128 74,204 (5,279) 68,925	Total equity HK$’000 88,767 (1,639) 87,128 82,204 (5,279) 76,925

– 4 –

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Net cash (used in)/generated from operating activities Purchases of property, plant and equipment Other investing cash flows (net) Net cash (used in)/from investing activities Net cash used in financing activities Net (decrease)/increase in cash and cash equivalent Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period Analysis of cash and cash equivalents consist of Bank and cash balances

Six months ended 30 September 2021 2020 HK$’000 HK$’000 (unaudited) (unaudited) (8,007) 1,222 (279) (117) 3 131 (276) 14 (1,998) (1,138) (10,281) 98 59,172 65,147 48,891 65,245 48,891 65,245

– 5 –

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 Windward 3, Regatta Office Park, P.O. Box 1350, Grand Cayman, KY1-1108, Cayman Islands. Subsequent to the end of reporting period, 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 (“ 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 PRESENTATION AND PREPARATION OF FINANCIAL STATEMENTS

The unaudited condensed consolidated financial statements of the Group have been prepared in accordance with Hong Kong Accounting Standard 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants (the “ HKICPA ”) and the applicable disclosures required by the Rules Governing the Listing of Securities on GEM of the Stock Exchange (the “ GEM Listing Rules ”).

The unaudited condensed consolidated financial statements of the Group are presented in Hong Kong dollars (“ HK$ ”), which is the functional currency of the Company.

The unaudited condensed consolidated results of the Group for the three and six months ended 30 September 2021 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 consolidated financial statements of the Group for the year ended 31 March 2021 (the “ 2021 Consolidated Financial Statements ”). Except as described in paragraph headed “Changes in accounting policies and disclosures” below, the accounting policies and methods of computation used in the preparation of the unaudited condensed consolidated results are consistent with those used in the 2021 Consolidated Financial Statements.

Changes in accounting policy and disclosures

The adoption of these new and amended HKFRSs had no significant effects on the results and financial position of the Group for the current and prior periods.

3. 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 including (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.

– 6 –

4. REVENUE

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 Revenue from contracts with customers within the scope of HKFRS 15 Recognised at a point in time Recognised over time OTHER INCOME Interest income Government subsidies Others	Three months ended 30 September 2021 2020 HK$’000 HK$’000 (unaudited) (unaudited) 8,656 8,994 3,766 3,438 12,422 12,432 Three months ended 30 September 2021 2020 HK$’000 HK$’000 (unaudited) (unaudited) 9,697 9,747 2,725 2,685 12,422 12,432 Three months ended 30 September 2021 2020 HK$’000 HK$’000 (unaudited) (unaudited) – 8 – 829 35 (68) 35 769	Six months ended 30 September 2021 2020 HK$’000 HK$’000 (unaudited) (unaudited) 17,752 15,763 8,102 7,090 25,854 22,853 Six months ended 30 September 2021 2020 HK$’000 HK$’000 (unaudited) (unaudited) 19,832 17,125 6,022 5,728 25,854 22,853 Six months ended 30 September 2021 2020 HK$’000 HK$’000 (unaudited) (unaudited) 1 131 – 1,149 37 61 38 1,341	Six months ended 30 September 2021 2020 HK$’000 HK$’000 (unaudited) (unaudited) 17,752 15,763 8,102 7,090 25,854 22,853 Six months ended 30 September 2021 2020 HK$’000 HK$’000 (unaudited) (unaudited) 19,832 17,125 6,022 5,728 25,854 22,853 Six months ended 30 September 2021 2020 HK$’000 HK$’000 (unaudited) (unaudited) 1 131 – 1,149 37 61 38 1,341
			1,341

5. OTHER INCOME

– 7 –

6. INCOME TAX EXPENSES

Provision for the period: Hong Kong Special Administrative Region (“Hong Kong”) of the People’s Republic of China (“PRC”) Profits Tax	Three months ended 30 September 2021 2020 HK$’000 HK$’000 (unaudited) (unaudited) 116 37 116 37	Six months ended 30 September 2021 2020 HK$’000 HK$’000 (unaudited) (unaudited) 340 277 340 277	Six months ended 30 September 2021 2020 HK$’000 HK$’000 (unaudited) (unaudited) 340 277 340 277
			277

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 subject to Hong Kong Profits Tax at the rate of 8.25% (three and six months ended 30 September 2020: 8.25%) for the first HK$2 million of its estimated assessable profits and at 16.5% (three and six months ended 30 September 2020: 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 subject to Hong Kong Profits Tax at the rate of 16.5% for the three and six months ended 30 September 2021 (three and six months ended 30 September 2020: 16.5%).

The Group’s subsidiary established and operated in the PRC is subject to PRC Enterprise Income Tax at the rate of 25% (three and six months ended 30 September 2020: 25%). No PRC Enterprise Income Tax has been provided for the three and six months ended 30 September 2021 (three and six months ended 30 September 2020: 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 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 (three and six months ended 30 September 2020: MOP600,000) is exempted from taxation with taxable income beyond this amount to be taxed at the rate of 12% for the three and six months ended 30 September 2021 (three and six months ended 30 September 2020: 12%).

– 8 –

7. LOSS FOR THE PERIOD

	Three months ended	Three months ended		Six months ended	Six months ended
	30 September			30 September
	2021	2020		2021	2020
	HK$’000	HK$’000		HK$’000	HK$’000
	(unaudited)	(unaudited)		(unaudited)	(unaudited)
Depreciation
— Owned assets	103		141	195	293
— Right of use assets	797		659	1,147	1,060
Staff costs (including Directors’
emoluments)
— Salaries, bonus and allowances
and other benefits in kind	6,806	5,729		12,343	11,063
— Commission	153		142	317	254
— Retirement benefits scheme contributions	350		220	665	411
	7,309	6,091		13,325	11,728
Cost of inventories sold	4,245	4,269		8,992	8,146
(Reversal)/provision of impairment on
trade receivable	96	(110)		96	(110)
Foreign exchange losses, net	62		99	91	23
Auditor’s remuneration	175		156	303	285

8. DIVIDEND

No dividend was declared or paid during the six months ended 30 September 2021 (six months ended 30 September 2020: Nil).

9. LOSS PER SHARE

(a) Basic loss per Share

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

	Three months ended	Three months ended	Six months ended	Six months ended
	30 September		30 September
	2021	2020	2021	2020
	HK$’000	HK$’000	HK$’000	HK$’000
	(unaudited)	(unaudited)	(unaudited)	(unaudited)
Loss for the purpose of calculating
basic loss per Share	(3,285)	(1,276)	(5,279)	(1,639)
Number of Shares
Weighted average number of ordinary
Shares for the purpose of
calculating basic loss per Share	800,000,000	800,000,000	800,000,000	800,000,000

(b) Diluted loss per Share

No diluted loss per Share was presented as the Company did not have any dilutive potential ordinary Shares outstanding during the three and six months ended 30 September 2021 and 2020.

– 9 –

10. TRADE RECEIVABLES

From third parties Less: allowance for doubtful debts From related parties Analysis of trade receivables due from related parties: Long Yield Company Limited (“Long Yield’) SoHo Business Center Limited (“SoHo’)	As at 30 September 2021 HK$’000 (unaudited) 12,772 (652) 12,120 30 12,150 As at 30 September 2021 HK$’000 (unaudited) 6 24 30	As at 31 March 2021 HK$’000 (audited) 10,102 (555
		9,547 –
		9,547
		As at 31 March 2021 HK$’000 (audited) – –
		–

Mr. Yuen Kwok Wai, Tony (“ Mr. Tony Yuen ”) and Ms. Yuen Mei Ling, Pauline (“ Ms. Pauline Yuen ”) are able to exercise significant influence over Long Yield and SoHo (both are incorporated in Hong Kong).

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 based on the invoice date is as follows:

0 to 90 days 91 to 180 days 181 to 365 days Over 365 days	As at 30 September 2021 HK$’000 (unaudited) 7,602 3,208 934 406 12,150	As at 31 March 2021 HK$’000 (audited) 7,733 771 1,033 10
		9,547

– 10 –

11. TRADE PAYABLES

An ageing analysis of the Group’s trade payables based on the invoice date is as follows:

0 to 30 days 31 to 60 days Over 60 days SHARE CAPITAL Authorised: Ordinary Shares of HK$0.01 each As at 31 March 2021 (audited), 1 April 2021 and 30 September 2021 (unaudited) Issued and fully paid: As at 31 March 2021 (audited), 1 April 2021 and 30 September 2021 (unaudited)	As at As at 30 September 31 March 2021 2021 HK$’000 HK$’000 (unaudited) (audited) 662 152 299 75 170 272 1,131 499 Number of ordinary Shares Per share HK$’000 5,000,000,000 50,000 800,000,000 8,000	As at 31 March 2021 HK$’000 (audited) 152 75 272
		499
		8,000

12. SHARE CAPITAL

13. 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 was 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 summarised 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.

14. CONTINGENT LIABILITIES

At 30 September 2021, the Group did not have any contingent liabilities.

– 11 –

15. RELATED PARTY TRANSACTIONS

Other than those balances of related parties disclosed elsewhere in the consolidated financial statements, the Group had the following material transactions with its related parties during the period.

(a) Transactions with related parties

		Three months ended	Three months ended	Six months	ended
		30 September		30 September
		2021	2020	2021	2020
		HK$’000	HK$’000	HK$’000	HK$’000
	Note	(unaudited)	(unaudited)	(unaudited)	(unaudited)
Sales of goods to related
companies:
— Long Yield	(i)	20	8	20	26
— SoHo	(i),(ii)	–	–	–	3
		20	8	20	29
Services rendered to related
companies:
— Long Yield	(i)	24	29	48	54
— SoHo	(i),(ii)	24	24	56	56
		48	53	104	110
Rental expenses paid to
a related company:
— Global Technology
Corporation Limited
(“Global Technology”)	(i),(ii)	225	225	450	450
— Brilliant Capital
Resources Limited
(“Brilliant”)	(i),(iii)	450	–	900	–
		675	225	1,350	450

Notes:

• (i) The pricing of the related party transactions are mutually agreed by the Group and related companies.

• (ii) Mr. Tony Yuen and Ms. Pauline Yuen are able to exercise significant influence over SoHo and Global Technology.

• (iii) Mr. Tony Yuen and Ms. Pauline Yuen are able to exercise control over Brilliant.

– 12 –

(b) Key management compensation

Key management mainly represents the Directors. Remuneration for key management personnel of the Group is as follows:

	Three months ended	Three months ended	Six months	ended
	30 September		30 September
	2021	2020	2021	2020
	HK$’000	HK$’000	HK$’000	HK$’000
	(unaudited)	(unaudited)	(unaudited)	(unaudited)
Salaries, bonus and allowances
and other benefits in kind	1,116	1,116	2,232	2,232
Retirement benefits scheme
contributions	18	18	36	36
	1,134	1,134	2,268	2,268

– 13 –

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 the six months ended 30 September 2021 was approximately HK$25.9 million, representing an increase by approximately 13.1% from approximately HK$22.9 million for the six months ended 30 September 2020. The increase in revenue was mainly attributable to the net effect of (i) increase in sales of biometrics identification devices and other accessories by approximately HK$2.0 million (or 12.6%) as compared with the corresponding period in 2020; and (ii) increase in revenue derived from provision of auxiliary and other services by approximately HK$1.0 million (or 14.3%) as compared with the corresponding period in 2020.

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 six months ended 30 September 2021 2020 HK$’000 HK$’000 17,752 15,763 8,102 7,090 25,854 22,853	For the six months ended 30 September 2021 2020 HK$’000 HK$’000 17,752 15,763 8,102 7,090 25,854 22,853
		22,853

– 14 –

Outlook

The ordinary Shares of HK$0.01 each have been successfully listed on GEM on 14 February 2018. The Board considers that such public listing status allows the Company to gain access to the capital market for corporate finance exercise, assists the Company in the future business development, enhances the Group’s corporate profile and recognition and strengthens the Group’s competitiveness.

Looking forward, the Group plans to generate further 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 Listing on (i) launching affordable locally manufactured fingerprint identification devices as part of the expansion plan of the business in the Southern China; (ii) enhancing the quality of aftersales services and strengthening the operation support as part of the expansion plan of the business in the Southern China; (iii) improving its information technology system; and (iv) setting up a new and separate software development centre in the PRC to further enhance and develop the Group’s software.

With the latest spread of novel coronavirus disease (COVID-19) in Hong Kong, the Group plans to diversify its business to maintain a healthy portfolio. Leveraging on the experience of the Directors, the Group considers setting up new business lines including artificial intelligence technology solutions, catering management and trade services.

On 27 October 2021, The Board proposes to change 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 “ Proposed Change of Company Name ”). The English name of the Company will remain unchanged. The Board considers the name “懶豬科技” to be distinctive and humorous. It signifies the Group’s ambition to provide smart technology solutions that help people to accomplish mundane tasks with ease. The Proposed Change of Company Name is conditional upon the passing of a special resolution approving the Proposed Change of Company Name by the Shareholders at an extraordinary general meeting and the approval being granted by the Registrar of Companies in the Cayman Islands for the Proposed Change of Company Name.

– 15 –

FINANCIAL REVIEW

Cost of sales and services rendered 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 increased by approximately 11.1% to approximately HK$9.0 million for the six months ended 30 September 2021 (six months ended 30 September 2020: approximately 8.1 million). The gross profit margin dropped from approximately 43.8% for the six months ended 30 September 2020 to approximately 41.3% for the six months ended 30 September 2021. The gross profit also raised from approximately HK$10.0 million for the six months ended 30 September 2020 to approximately HK$10.7 million for the six months ended 30 September 2021. The increase in gross profit was mainly due to (i) the increase in sales of biometrics identification devices and other accessories; and (ii) the increase in provision of auxiliary and other services.

Expenses

Staff costs for the six months ended 30 September 2021 was approximately HK$13.3 million (six months ended 30 September 2020: approximately HK$11.7 million), representing an increase by approximately HK$1.6 million as compared with that of last corresponding period, which was mainly due to the salary increment during the period.

Administrative expenses for the six months ended 30 September 2021 was approximately HK$12.4 million (six months ended 30 September 2020: approximately HK$10.7 million), representing an increase by approximately HK$1.7 million as compared with the last corresponding period, which was mainly due to the increase in staff costs and legal and professional expenses.

Loss for the period

The Group incurred a net loss of approximately HK$5.3 million for the six months ended 30 September 2021, as compared with a net loss of approximately HK$1.6 million for the six months ended 30 September 2020. The increase in net loss was mainly due to (i) an increase in administrative expenses mainly from the increase in staff costs and legal and professional expenses; and (ii) the measures implemented by the governments of the PRC and Macau including locking down to control the rapid spread and reduce the scale of infection of COVID-19, which have affected the usual business activities of the areas and disrupted the daily operations of the Group.

The Board does not recommend the payment of dividends for the six months ended 30 September 2021.

– 16 –

Liquidity, financial resources and capital structure

Historically, the Group has funded the liquidity and capital requirements primarily through operating cash flows and bank borrowings. The Directors believe that with the new capital from the Listing, the Group is in a healthy financial position to expand its core business and to achieve its business objectives. As at 30 September 2021, the Group had no bank borrowings (as at 30 September 2020: Nil). The Group requires cash primarily for working capital needs. As at 30 September 2021, the Group had approximately HK$48.9 million in bank and cash balances (as at 31 March 2021: approximately HK$59.2 million).

Capital expenditure

The Group purchased property, plant and equipment amounting to approximately HK$0.3 million for the six months ended 30 September 2021 (six months ended 30 September 2020: approximately HK$0.1 million.

Capital commitments

The Group did not have any significant capital commitments as at 30 September 2021 (as at 31 March 2021: Nil).

Gearing ratio

As at 30 September 2021, the Group had no outstanding borrowings, accordingly there was no gearing ratio (as at 31 March 2021: HK$Nil).

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

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 ”) and MOP. 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 States dollars, RMB and EURO. As at the date of this announcement, the Group 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 six months ended 30 September 2021.

– 17 –

Significant investments held, material acquisitions and disposals of subsidiaries, and future plans for material investments or capital assets

There were neither significant investments held as at 30 September 2021 nor material acquisitions and disposals of subsidiaries during the six months ended 30 September 2021. There is no plan for material investments or capital assets as at the date of this announcement.

Charges over assets of the Group

As at 30 September 2021, there was no charge over assets of the Group (as at 31 March 2021: HK$Nil).

Interim dividend

The Board does not recommend the payment of an interim dividend for the six months ended 30 September 2021 (six months ended 30 September 2020: Nil).

Employees and remuneration policies

As at 30 September 2021, the Group had a total of 70 employees. The Group’s staff costs for the six months ended 30 September 2021 amounted to approximately HK$13.3 million (six months ended 30 September 2020: approximately HK$11.7 million). The Group’s remuneration policies are in line with the prevailing market practice 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.

Share Option Schemes

The Share Option Scheme was adopted pursuant to a resolution passed by the then 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, nonexecutive Directors (including independent non-executive Directors), advisers, consultants of the Company or any of its subsidiaries.

– 18 –

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 was 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 summarised in the paragraph headed “Share Option Scheme” in Appendix IV to the Prospectus. 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.

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. Set out below is the actual usage of net proceeds up to the date of this announcement:

	Net proceeds	Utilised	Unutilised
	HK$ million	HK$ million	HK$ million
Expanding the business
in the 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)	–
Improving the information technology
system	5.0	(5.0)	–
Setting up a new and separate software
development centre in the PRC
to further enhance and develop
the Group’s software	15.2	(15.2)	–
Working capital	3.4	(3.4)	–
	44.5	(28.7)	15.8

– 19 –

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) launching affordable locally manufactured fingerprint identification devices as part of the expansion plan of the business in the Southern China; (ii) 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; (iii) improving the information technology system; and (iv) 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$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. The Group has not yet launched affordable locally manufactured fingerprint identification devices. The Group is reviewing the needs and timeframe for launch of affordable locally manufactured fingerprint identification devices so as to capture the above-mentioned low-end market in the PRC.

The Group had planned to use approximately HK$5.1 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 30 September 2021, a total of approximately HK$5.1 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$5.0 million of net proceeds to improve the information technology system. As at 30 September 2021, a total of approximately HK$5.0 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 30 September 2021, 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$3.4 million of net proceeds to working capital. As at 30 September 2021, a total of approximately HK$3.4 million was spent on working capital.

– 20 –

CORPORATE GOVERNANCE PRACTICES

The Group has committed to upholding high standards of corporate governance. The Board considers that enhanced public accountability and corporate governance are beneficial to the healthy growth of the Group, improving customer and supplier confidence and safeguarding the interests of Shareholders.

The Company has adopted and complied with the Corporate Governance Code (the “ CG Code ”) contained in Appendix 15 to the GEM Listing Rules as its own code and has complied with the CG Code from the date of Listing up to the date of this announcement, except for the following deviation.

Chairman and Chief Executive Officer

CG Code provision A.2.1 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 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 such deviation from the CG Code provision A.2.1 is appropriate in the circumstance.

The Board has continued to monitor and review the corporate governance principles and practices to ensure compliance.

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.

Upon specific enquiry made to all Directors, the Company was not aware of any noncompliance with the Model Code and the Required Standard of Dealings from the date of Listing up to the date of this announcement.

– 21 –

DIRECTORS’ AND CHIEF EXECUTIVES’ INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES OF THE COMPANY OR ANY ASSOCIATED CORPORATION

As at 30 September 2021, the interests and short positions of the Directors and chief executive of the Company in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (the “ SFO ”), which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions in which they were taken or deemed to have under such provisions of the SFO) or which were required pursuant to section 352 of the SFO to be entered in the register referred to therein, or which were required to be notified to the Company and the Stock Exchange pursuant to Rules 5.46 to 5.67 of the GEM Listing Rules were as follows:

Long positions

Ordinary Share

			Percentage of
		Number	the Company’s
	Capacity and	of Shares	issued
Name	nature of interest	(note 1)	share capital
Mr. Yuen Kwok Wai, Tony	Interest of controlled	206,000,000 (L)	25.75%
(“Mr. Tony Yuen”)	corporation
(note 2)
Ms. Yuen Mei Ling, Pauline	Interest of controlled	206,000,000 (L)	25.75%
(“Ms. Pauline Yuen”)	corporation
(note 2)

Notes:

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

2. Delighting View Global Limited (“ Delighting View ”) directly holds 206,000,000 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 Shares held by Delighting View under the SFO.

– 22 –

Save as disclosed above, as at the date of this announcement, none of the Directors and chief executive of the Company or their associates (as defined in the GEM Listing Rules) 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) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 ad 8 of Part XV of the SFO (including interests or short positions which each of them has taken or deemed to be taken under the provisions of the SFO); or which were required, pursuant to section 352 of the SFO, to be entered into the register referred to therein; or which were required, pursuant to Rules 5.46 and 5.67 of the GEM Listing Rules to be notified to the Company and the Stock Exchange.

SUBSTANTIAL SHAREHOLDERS’ AND OTHER PERSONS’ INTERESTS AND SHORT POSITIONS IN THE SHARES AND UNDERLYING SHARES OF THE COMPANY

As at 30 September 2021, so far as is known to the Directors, the following persons, not being Directors or chief executive of the Company had, or were deemed to have, interests or short position in the Shares or underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO; or which were recorded in the register required to be kept by the Company under section 336 of the SFO; or who is directly or indirectly, to be interested in 5% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of the Company:

Long positions

Ordinary Shares

			Percentage of
		Number	the Company’s
	Capacity and	of shares	issued
Name	nature of interest	(note 1)	share capital
Delighting View_(note 2)_	Beneficial owner	206,000,000 (L)	25.75%
Kailong Asia Limited	Beneficial owner	190,000,000 (L)	23.75%
(“Kailong”)(note 3)
Soleil Capital Limited	Interest of controlled	190,000,000 (L)	23.75%
(“Soleil”)(note 3)	corporation
Teo Kian Huat	Interest of controlled	190,000,000 (L)	23.75%
(“Mr. Teo”)(note 3)	corporation

– 23 –

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 Shares held by Delighting View under the SFO.

3. As Kailong is beneficially owned entirely by Soleil, which is in turn ultimately owned entirely by Mr. Teo, each of Soleil and Mr. Teo is deemed to be interested in all Shares held by Kailong under the SFO.

Save as disclosed above, as at the date of this announcement, the Directors are not aware of any other person, other than the Directors and the chief executive of the Company who had, or was deemed to have, interests or short positions in the Shares or underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or, which were recorded in the register required to be kept by the Company under section 336 of the SFO; or who is directly or indirectly, to be interested in 5% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of the Company or options in respect of such share capital.

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 six months ended 30 September 2021.

COMPETING INTERESTS

The Directors confirm that as at 30 September 2021, none of the Directors, the controlling shareholders of the Company and their respective associates (as defined in the GEM Listing Rules) 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.

DISCLOSURES UNDER RULES 17.22 TO 17.24 OF THE GEM LISTING RULES

As at 30 September 2021, the Group had no circumstances which would give rise to a disclosure obligation under Rules 17.22 to 17.24 of the GEM Listing Rules.

– 24 –

AUDIT COMMITTEE

The Company has established an audit committee (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. Poon Wai Hung Richard.

The unaudited condensed consolidated financial statements of the Company for the three and six months ended 30 September 2021 have 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 disclosures 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, 8 November 2021

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

This announcement will remain 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.primeintelligence.com.hk).

– 25 –