Prime Intelligence Solutions Group Limited — Interim / Quarterly Report 2021

Feb 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)

THIRD QUARTERLY RESULTS ANNOUNCEMENT FOR THE NINE MONTHS ENDED 31 DECEMBER 2020

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 give 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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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 nine months ended 31 December 2020 together with the unaudited and audited comparative figures for the corresponding periods in 2019 as follows:

		Three months ended	Three months ended	Nine months ended	Nine months ended
		31 December		31 December
		2020	2019	2020	2019
		HK$’000	HK$’000	HK$’000	HK$’000
	Notes	(unaudited)	(unaudited)	(unaudited)	(unaudited)
Revenue	3	9,963	12,684	32,816	38,113
Cost of sales and services rendered		(4,581)	(7,428)	(17,432)	(21,192)
Gross profit		5,382	5,256	15,384	16,921
Other income	4	8	235	1,349	698
Selling and distribution cost		(1,297)	(1,767)	(3,332)	(4,142)
Administrative expenses		(4,592)	(4,934)	(15,279)	(17,139)
Reversal of impairment losses
on trade receivables		–	–	110	–
Loss from operation		(499)	(1,210)	(1,768)	(3,662)
Finance cost		(44)	(49)	(137)	(168)
Loss before tax		(543)	(1,259)	(1,905)	(3,830)
Income tax expense	5	(60)	(250)	(337)	(720)
Loss for the period	6	(603)	(1,509)	(2,242)	(4,550)
Other comprehensive income
for the period, net of tax:
Item that may be reclassified
to profit or loss:
Exchange differences on translating
foreign operations		–	27	–	2
Total comprehensive income
for the period attributable to
the owners of the Company		(603)	(1,482)	(2,242)	(4,548)
Loss per share (HK cents)
— Basic	8	(0.08)	(0.19)	(0.28)	(0.57)
— Diluted	8	(0.08)	(0.19)	(0.28)	(0.57)

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UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

EQUITY
					Foreign
					currency
	Share	Share	Merger	Legal	translation	Retained	Total	Total
	capital	premium	reserve	reserve	reserve	profits	reserve	equity
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Balance at 1 April 2019 (audited)	8,000	51,682	17,079	12	(271)	18,287	86,789	94,789
Total comprehensive income
for the period (unaudited)	–	–	–	–	2	(4,550)	(4,548)	(4,548)
Balance at 31 December 2019
(unaudited)	8,000	51,682	17,079	12	(269)	13,737	82,241	90,241
Balance at 1 April 2020 (audited)	8,000	51,682	17,079	12	(689)	12,683	80,767	88,767
Total comprehensive income
for the period (unaudited)	–	–	–	–	–	(2,242)	(2,242)	(2,242)
Balance at 31 December 2020
(unaudited)	8,000	51,682	17,079	12	(689)	10,441	78,525	86,525

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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, PO 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 (“ Share(s) ”) 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, security products and other 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 nine months ended 31 December 2020 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 2020 (the “ 2020 Consolidated Financial Statements ”). Except as described in paragraph headed “Change 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 2020 Consolidated Financial Statements.

Changes in accounting policies and disclosures

The following new and amended standards and interpretations are mandatory for the first time for the first time for financial year beginning 1 April 2020:

Amendments to HKFRS 3 Definition of a Business Amendments to HKAS 1 and HKAS 8 Definition of Material Amendments to HKFRS 9, Interest Rate Benchmark Reform HKAS 39 and HKFRS 7

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.

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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
		2020	2019	2020		2019
		HK$’000	HK$’000	HK$’000	HK$’000
		(unaudited)	(unaudited)	(unaudited)	(unaudited)
	Sales of biometrics identification
	devices, security products and
	other accessories	6,036	8,290	21,799		25,998
	Provision of auxiliary and other services	3,927	4,394	11,017		12,115
		9,963	12,684	32,816		38,113
		Three months ended		Nine months	ended
		31 December		31 December
		2020	2019	2020		2019
		HK$’000	HK$’000	HK$’000	HK$’000
		(unaudited)	(unaudited)	(unaudited)	(unaudited)
	Recognised at a point in time	6,744	10,346	23,869		30,029
	Recognised over time	3,219	2,338	8,947		8,084
		9,963	12,684	32,816		38,113
4.	OTHER INCOME
		Three months ended		Nine months	ended
		31 December		31 December
		2020	2019	2020		2019
		HK$’000	HK$’000	HK$’000	HK$’000
		(unaudited)	(unaudited)	(unaudited)	(unaudited)
	Interest income	6	230	137		608
	Government subsidies	–	–	1,149		–
	Others	2	5	63		90
		8	235	1,349		698

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5. INCOME TAX EXPENSES

Provision for the period: Hong Kong Profits Tax	Three months ended 31 December 2020 2019 HK$’000 HK$’000 (unaudited) (unaudited) 60 250 60 250	Nine months ended 31 December 2020 2019 HK$’000 HK$’000 (unaudited) (unaudited) 337 720 337 720	Nine months ended 31 December 2020 2019 HK$’000 HK$’000 (unaudited) (unaudited) 337 720 337 720
			720

Hong Kong Profits Tax is provided at 16.5% (three and nine months ended 31 December 2020: 16.5%) based on the estimated assessable profits arising in or derived from the Hong Kong Special Administrative Region (“ Hong Kong ”) of the People’s Republic of China (the “ PRC ”).

On 21 March 2018, the Hong Kong Legislative Council passed The Inland Revenue (Amendment) (No. 7) Bill 2017 (the “ Bill ”) which introduces the two-tiered profits tax rates regime. The Bill was signed into law on 28 March 2018 and was gazetted on the following day. Under the two-tiered profits tax rates regime, the first HK$2 million of profits of the qualifying group entity will be taxed at 8.25%, and profits above HK$2 million will be taxed at 16.5%. The profits of group entities not qualifying for the two-tiered profits tax rates regime will continue to be taxed at a flat rate of 16.5%.

Following the enactment of the Bill, one of the subsidiaries of the Company is subject to Hong Kong Profits Tax at the rate of 8.25% (three and nine months ended 31 December 2019: 8.25%) for the first HK$2 million of its estimated assessable profits and at 16.5% (three and nine months ended 31 December 2019: 16.5%) on its estimated assessable profits above HK$2 million. Other subsidiaries of the Company are subjected to Hong Kong Profits Tax at the rate of 16.5% (three and nine months ended 31 December 2019: 16.5%) for the three and nine months ended 31 December 2020.

The Group’s subsidiary established and operated in the PRC is subject to PRC Enterprise Income Tax at the rate of 25% (three and nine months ended 31 December 2019: 25%). No PRC Enterprise Income Tax has been provided for the three and nine months ended 31 December 2020 (three and nine months ended 31 December 2019: 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 of the PRC (the “ Macau ”) is subject to Macau Complementary Tax, under which taxable income of up to Macau Pataca (“ MOP ”) 600,000 for the three and nine months ended 31 December 2020 (three and nine months ended 31 December 2019: MOP600,000) is exempted from taxation with taxable income beyond this amount to be taxed at the rate of 12% for the three and nine months ended 31 December 2020 (three and nine months ended 31 December 2019: 12%) for the reporting periods. No Macau Complementary Tax has been provided for the three and nine months ended 31 December 2020 (three and nine months ended 31 December 2019: Nil) as the Group’s Macau subsidiary did not generate any assessable profit during the reporting period.

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6. LOSS FOR THE PERIOD

	Three months ended	Three months ended	Nine months ended	Nine months ended	Nine months ended
	31 December		31 December
	2020	2019	2020		2019
	HK$’000	HK$’000	HK$’000	HK$’000
	(unaudited)	(unaudited)	(unaudited)	(unaudited)
Depreciation
— Owned assets	157	189	450		636
— Right-of-use assets	158	576	1,218		1,585
Staff cost (including Directors’
emoluments)
— Salaries, bonus and allowances
and other benefits in kind	5,190	5,798	16,253		17,342
— Commission	120	112	374		381
— Retirement benefits scheme
contributions	213	320	624		969
	5,523	6,230	17,251		18,692
Cost of inventories sold	3,344	5,381	11,490		14,422
Foreign exchange losses, net	212	12	235		132
Auditor’s remuneration	215	205	500		492

7. DIVIDEND

No dividend was declared or paid during the three and nine months ended 31 December 2020 (three and nine months ended 31 December 2019: Nil).

8. LOSS PER SHARE

(a) Basic loss per Share

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

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	Three months ended 31 December 2020 2019 HK$’000 HK$’000 (unaudited) (unaudited) (603) (1,509) 800,000,000 800,000,000	Nine months ended 31 December 2020 2019 HK$’000 HK$’000 (unaudited) (unaudited) (2,242) (4,550) 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 nine months ended 31 December 2020 and 2019.

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9. 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 “ Shareholder(s) ”) 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 summarised in the paragraph headed “Share Option Scheme” in Appendix IV to 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 end of the reporting period.

10. EVENTS AFTER THE REPORTING PERIOD

Epidemic of the novel coronavirus disease 2019 (COVID-19) has spread across the PRC and other countries since early 2020 and has affected the business and economic activities of the Group as well as the Group’s customers and suppliers to a certain extent. The overall financial effect of the COVID-19 outbreak cannot be reliably estimated as of the approval date of these consolidated financial statements. The Group will closely monitor the development of the COVID-19 outbreak and continue to evaluate its impact on the business, the financial position and operating results of the Group.

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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 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 nine months ended 31 December 2020 was approximately HK$32.8 million, representing a decrease of approximately 13.9% from approximately HK$38.1 million for the nine months ended 31 December 2019. The decrease in revenue was mainly attributable to the (i) decrease in sales of biometrics identification devices and other accessories by approximately HK$4.2 million (or 16.2%) as compared with the corresponding period in 2019; (ii) decrease in revenue derived from provision of auxiliary and other service by approximately HK$1.1 million (or 9.1%) as compared with the corresponding period in 2019; and (iii) the measures implemented by the governments of the PRC and Macau including locking down to control the rapid spread and reduce the scale of the infection of COVID-19, which have impacted the usual business activities of the areas and disrupted the daily operations of the Group.

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	Three months ended 31 December 2020 2019 HK$’000 HK$’000 (unaudited) (unaudited) 6,036 8,290 3,927 4,394 9,963 12,684	Nine months ended 31 December 2020 2019 HK$’000 HK$’000 (unaudited) (unaudited) 21,799 25,998 11,017 12,115 32,816 38,113	Nine months ended 31 December 2020 2019 HK$’000 HK$’000 (unaudited) (unaudited) 21,799 25,998 11,017 12,115 32,816 38,113
			38,113

COST OF SALES AND GROSS PROFIT

The majority of the Group’s cost of sales and services rendered was cost of inventories sold. The Group’s cost of inventories sold decreased by approximately 20.3% to approximately HK$11.5 million for the nine months ended 31 December 2020 as compared to the same period last year. The gross profit margin raised from approximately 44.4% for the nine months ended 31 December 2019 to approximately 46.9% for the nine months ended 31 December 2020. The gross profit dropped from approximately HK$16.9 million for the nine months ended 31 December 2019 to approximately HK$15.4 million for the nine months ended 31 December 2020. The decrease in gross profit was mainly due to the decrease in sales of biometrics identification devices and other accessories.

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EXPENSES

Staff cost for the nine months ended 31 December 2020 was approximately HK$17.3 million (nine months ended 31 December 2019: approximately HK$18.7 million), representing a decrease of approximately HK$1.4 million as compared with that of last corresponding period, which was mainly due to the decrease in average bonus and allowances during the period.

Administrative expenses for the nine months ended 31 December 2020 was approximately HK$15.3 million (nine months ended 31 December 2019: approximately HK$17.1 million), representing a decrease of approximately HK$1.8 million as compared with the last corresponding period, which was mainly due to the decrease in travelling and professional expenses.

LOSS FOR THE PERIOD

The Group incurred a net loss of approximately HK$2.2 million for the nine months ended 31 December 2020, as compared with a net loss of approximately HK$4.6 million for the nine months ended 31 December 2019. The decrease of net loss was mainly due to (i) the decrease in administrative expenses; and (ii) the increase in government subsidies.

The Board does not recommend the payment of dividends for the nine months ended 31 December 2020.

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 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 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 aftersale 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.

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With the latest spread of the 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.

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

As at 31 December 2020, 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 (“ 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 of the Company

			Percentage of
		Number of	the Company’s
	Capacity and nature	Shares	issued share
Name	of interest	(note 1)	capital
Mr. Yuen Kwok Wai, Tony	Interest of controlled	366,000,000 (L)	45.75%
(“Mr. Tony Yuen”)(note 2)	corporation
Ms. Yuen Mei Ling, Pauline	Interest of controlled	366,000,000 (L)	45.75%
(“Ms. Pauline Yuen”)(note 2)	corporation

Note:

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 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 Shares held by Delighting View under the SFO.

Save as disclosed above, as at 31 December 2020, 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 and/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

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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 to 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 31 December 2020, so far as is known to the Directors, the following persons, not being the Directors or chief executive of the Company had, or were deemed to have, interests or short position in the Shares or underlying Shares and/or debentures of the Company 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 of the Company

				Percentage of
			Number of	the Company’s
		Capacity and nature of	Shares	issued share
Name		interest	(note 1)	capital
Delighting View_(note_	2)	Beneficial owner	366,000,000 (L)	45.75%

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.

Save as disclosed above, as at 31 December 2020, the Directors are not aware of any other person, other than 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 and/or debentures of the Company 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.

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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 nine months ended 31 December 2020.

COMPETING INTERESTS

The Directors confirm that as at 31 December 2020, 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.

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.

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 for the nine months ended 31 December 2020, 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. 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 CG Code provision A.2.1 is appropriate in such circumstance.

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

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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 nine months ended 31 December 2020 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, 8 February 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, for which the Directors 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 of Hong Kong Limited 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 beliefs 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.

This announcement will appear on the “Latest Company Announcements” page of the GEM website at www.hkgem.com for at least seven days from the date of its publication on the Company’s website at www.primeintelligence.com.hk.

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