Prime Intelligence Solutions Group Limited — Interim / Quarterly Report 2023

Aug 10, 2022

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

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

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 08379)

FIRST QUARTERLY RESULTS ANNOUNCEMENT FOR THE THREE MONTHS ENDED 30 JUNE 2022

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

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

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

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 months ended 30 June 2022, together with the comparative figures for the corresponding periods in 2021, as follows:

Note Revenue 3 Cost of sales and services rendered Gross profit Other income 4 Selling and distribution costs Administrative and other operating expenses Loss from operation Finance costs Loss before tax Income tax expense 5 Loss for the period 6 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 8

Three months ended 30 June 2022 2021 HK$’000 HK$’000 (unaudited) (unaudited) 12,310 13,432 (6,573) (7,789) 5,737 5,643 342 3 (1,500) (1,083) (6,456) (6,300) (1,877) (1,737) (1) (33) (1,878) (1,770) (54) (224) (1,932) (1,994) – – (1,932) (1,994) (0.24) (0.25)

– 2 –

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Balance at 1 April 2021 (audited) Total comprehensive income for the period (unaudited) Balance at 30 June 2021 (unaudited) Balance at 1 April 2022 (audited) Total comprehensive income for the period (unaudited) Balance at 30 June 2022 (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$’000 17,079 – 17,079 17,079 – 17,079	Legal reserve HK$’000 12 – 12 12 – 12	Foreign currency translation reserve Retained profits/ (accumulated losses) HK$’000 HK$’000 (151) 5,582 – (1,994) (151) 3,588 (10) (17,605) – (1,932) (10) (19,537)	Total reserve HK$’000 74,204 (1,994) 72,210 51,158 (1,932) 49,226	Total equity HK$’000 82,204 (1,994)
							80,210
							59,158 (1,932)
							57,226

– 3 –

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. The address of its principal place of business is located at Unit A, 6/F, TLP132, Nos. 132-134 Tai Lin Pai Road, Kwai Chung, New Territories, Hong Kong. The Company’s shares are listed on GEM of The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”) since 14 February 2018 (the “ Listing ”).

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

2. BASIS OF PRESENTATION AND PREPARATION OF FINANCIAL STATEMENTS

The unaudited condensed consolidated financial statements of the Group for the three months ended 30 June 2022 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 provisions of the Rules Governing the Listing of Securities on GEM of the Stock Exchange.

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

These condensed consolidated results have not been audited but have been reviewed by the audit committee of the Company.

The unaudited condensed consolidated results of the Group for the three months ended 30 June 2022 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 2022 (the “ 2022 Consolidated Financial Statements ”). The accounting policies and methods of computation used in the preparation of the unaudited condensed consolidated results are consistent with those used in the 2022 Consolidated Financial Statements, except for those new and revised HKFRSs and interpretation issued by the HKICPA that are adopted for the first time in the unaudited condensed consolidated financial statements for the three months ended 30 June 2022.

Changes in accounting policy and disclosures

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

– 4 –

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 30 June	Three months ended 30 June
	2022	2021
	HK$’000	HK$’000
	(unaudited)	(unaudited)
Sales of biometrics identification devices,
security products and other accessories	7,980	9,096
Provision of auxiliary and other services	4,330	4,336
	12,310	13,432
	Three months ended 30 June
	2022	2021
Revenue from contracts with customers within	HK$’000	HK$’000
the scope of HKFRS 15	(unaudited)	(unaudited)
Recognised at a point in time	9,075	10,135
Recognised over time	3,235	3,297
	12,310	13,432
OTHER INCOME
	Three months ended 30 June
	2022	2021
	HK$’000	HK$’000
	(unaudited)	(unaudited)
Interest income	1	1
Government Subsidies	336	–
Others	5	2
	342	3

4. OTHER INCOME

– 5 –

5. INCOME TAX EXPENSE

	Three months	ended 30 June
	2022	2021
	HK$’000	HK$’000
	(unaudited)	(unaudited)
Provision for the period:
Hong Kong Special Administrative Region (“Hong Kong”) of
the People’s Republic of China (“PRC”) Profits Tax	54	224

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 months ended 30 June 2021: 8.25%) for the first HK$2 million of its estimated assessable profits and at 16.5% (three months ended 30 June 2021: 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% (three months ended 30 June 2021: 16.5%) for the three months ended 30 June 2022.

The Group’s subsidiary established and operated in the PRC is subject to PRC Enterprise Income Tax at the rate of 25% (three months ended 30 June 2021: 25%). No PRC Enterprise Income Tax has been provided for the three months ended 30 June 2022 (three months ended 30 June 2021: 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 ”) MOP600,000 (three months ended 30 June 2021: MOP600,000) is exempted from taxation with taxable income beyond this amount to be taxed at the rate of 12% (three months ended 30 June 2021: 12%) for the three months ended 30 June 2022.

– 6 –

6. LOSS FOR THE PERIOD

	Three months	ended 30 June
	2022	2021
	HK$’000	HK$’000
	(unaudited)	(unaudited)
Depreciation
— Owned assets	–	92
— Right of use assets	–	350
Staff costs (including directors’ emoluments)
— Salaries, bonus and allowances and other benefits in kind	6,305	5,537
— Commission	81	164
— Retirement benefits scheme contributions	354	315
	6,740	6,016
Cost of inventories sold	3,660	4,747
Foreign exchange (gain)/loss, net	(59)	29
Auditor’s remuneration	128	128

7. DIVIDENDS

No dividends was declared or paid during the three months ended 30 June 2022 (three months ended 30 June 2021: Nil).

– 7 –

8. LOSS PER SHARE

(a) Basic loss per share

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

Loss for the purpose of calculating basic and diluted loss per share Number of shares Weighted average number of ordinary shares for the purpose of calculating basic loss per share	Three months ended 30 June 2022 2021 HK$’000 HK$’000 (unaudited) (unaudited) (1,932) (1,994) Three months ended 30 June 2022 2021 800,000,000 800,000,000

(b) Diluted loss per share

No diluted loss per share is presented as the Company did not have any dilutive potential ordinary shares outstanding during the three months ended 30 June 2022 and 2021.

– 8 –

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 biometrics identification devices, security products and other accessories; and (ii) provision of auxiliary and other services. The Group’s biometrics identification devices have one or more of the following functions: (i) face identification; (ii) fingerprint identification; (iii) finger vein identification; (iv) hand geometry identification; and (v) iris identification. The revenue of the Group for the three months ended 30 June 2022 was approximately HK$12.3 million, representing a decrease of approximately 8.4% from approximately HK$13.4 million for the three months ended 30 June 2021. The decrease in revenue was mainly attributable to the decrease in sales of biometrics identification devices, security products and other accessories by approximately HK$1.1 million (or 12.3%) as compared with the corresponding period in 2021.

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 30 June 2022 2021 HK$’000 HK$’000 (unaudited) (unaudited) 7,980 9,096 4,330 4,336 12,310 13,432	Three months ended 30 June 2022 2021 HK$’000 HK$’000 (unaudited) (unaudited) 7,980 9,096 4,330 4,336 12,310 13,432
		13,432

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 decreased by approximately 21.3% to approximately HK$3.7 million for the three months ended 30 June 2022 (three months ended 30 June 2021: approximately 4.7 million). The gross profit margin raised from approximately 42.0% for the three months ended 30 June 2021 to approximately 46.6% for the three months ended 30 June 2022. The gross profit also raised from approximately HK$5.6 million for the three months ended 30 June 2021 to approximately HK$5.7 million for the three months ended 30 June 2022. The increase of gross profit margin and gross profit was mainly due to change of sales mix.

– 9 –

Expenses

Staff costs for the three months ended 30 June 2022 was approximately HK$6.7 million (three months ended 30 June 2021: approximately HK$6.0 million), representing an increase of approximately HK$0.7 million, which was mainly due to the salary increment during the period.

Administrative expenses for the three months ended 30 June 2022 were approximately HK$6.5 million (three months ended 30 June 2021: approximately HK$6.3 million), representing an increase of approximately HK$0.2 million as compared with the last corresponding period, which was mainly due to the increase in staff costs.

Loss for the Period

The Group incurred a net loss of approximately HK$1.9 million for the three months ended 30 June 2022, as compared with a net loss of approximately HK$2.0 million for the three months ended 30 June 2021. The decrease in net loss was mainly due to the government subsidies during the period.

The Board does not recommend the payment of dividends for the three months ended 30 June 2022.

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 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 unutilised net proceeds from Listing on launching affordable locally manufactured fingerprint identification devices as part of the expansion plan of the business in the Southern China.

With the latest spread of 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.

– 10 –

During the reporting period, the dual foreign name in Chinese of the Company has been changed from “匯安智能科技集團有限公司” to “懶豬科技集團有限公司”. The English stock short name of the Company for trading in the Shares on the Stock Exchange remains unchanged as “PRIME INTEL” and the Chinese stock short name of the Company has been changed from “匯安智能” to “懶豬科技” for trading in the Shares on the Stock Exchange. Details of the above are set out in the Company’s announcement in relation to the change of company name and change of stock short name dated 22 June 2022.

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

As at 30 June 2022, 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 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 shares of the Company

			Percentage of
		Number of	the Company’s
	Capacity and	shares	issued share
Name	nature of interest	(note 1)	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)

– 11 –

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 the Share held by Delighting View under the SFO.

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 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 30 June 2022, 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:

– 12 –

Long positions

Ordinary shares of the Company

			Percentage of
		Number	the Company’s
	Capacity and	of shares	issued share
Name	nature of interest	(note 1)	capital
Delighting View_(note 2)_	Beneficial owner	206,000,000 (L)	25.75%
Mr. Yao Han (“Mr. Yao”)	Beneficial owner
(note 3)		190,000,000 (L)	23.75%
Ms. Jian Yanmei	Interest of spouse
(“Ms. Jian”)(note 3)		190,000,000 (L)	23.75%

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 the Shares held by Delighting View under the SFO.

3. Ms. Jian is Mr. Yao’s spouse and is therefore deemed to be interested in all Shares held by Mr. Yao 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 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 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.

– 13 –

PURCHASE, SALE 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 three months ended 30 June 2022.

COMPETING INTERESTS

The Directors confirm that as at 30 June 2022, 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 from the date of Listing up to the date of this announcement, except for the following deviation.

– 14 –

Chairman and chief executive officer

CG Code provision C.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 C.2.1 is appropriate in such circumstance.

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

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 D.3.3 and D.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 nonexecutive Directors, namely Mr. Chung Billy (chairman of the Audit Committee), Mr. Poon Wai Hung Richard and Mr. Wong Ching Wan.

The unaudited condensed consolidated financial statements of the Company for the three months ended 30 June 2022 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 懶豬科技集團有限公司 Mr. Yuen Kwok Wai, Tony Chairman

Hong Kong, 10 August 2022

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 non-executive Director is Mr. Yam Chiu Fan, Joseph; and the independent nonexecutive Directors are Mr. Chung Billy, Mr. Poon Wai Hung Richard and Mr. Wong Ching Wan.

This announcement will remain on the “Latest Listed Company Information” page of The Stock Exchange of Hong Kong Limited’s website at http://www.hkexnews.hk for at least seven days from the date of its posting and on the Company’s website at www. primeintelligence.com.hk.

– 15 –