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.
Creative Enterprise Holdings Limited
創 毅 控 股 有 限 公 司
(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 3992)
SUPPLEMENTAL ANNOUNCEMENT TO THE ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2019, THE INTERIM REPORT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2019 AND THE ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2020
Reference is made to (i) the annual report of Creative Enterprise Holdings Limited (the ''Company'', together with its subsidiaries, the ''Group'') for the year ended 31 March 2019 (the ''2019 Annual Report''); (ii) the interim report of the Company for the six months ended 30 September 2019 (the ''2020 Interim Report'') and (iii) the annual report of the Company for the year ended 31 March 2020 (the ''2020 Annual Report''). Unless otherwise stated, terms used in this supplemental announcement shall have the same meanings as those defined in the 2020 Annual Report.
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USE OF PROCEEDS FROM LISTING
As disclosed in the 2019 Annual Report, the 2020 Interim Report and the 2020 Annual Report, the net proceeds from the Listing (involving the issue of a total of 125,000,000 ordinary Shares at the offer price of HK$1.0 per Share), after deducting related underwriting fees and other expenses related to the Listing, were approximately HK$99.4 million (the ''Net Proceeds''). Pursuant to paragraphs 11(8), 11A and 41A of Appendix 16 to the Listing Rules, the board (the ''Board'') of directors (the ''Directors'') of the Company would like to provide supplemental information in respect of the use of the Net Proceeds and the information contained in the paragraph headed ''Use of Proceeds from Listing'' in the 2019 Annual Report, the 2020 Interim Report and the 2020 Annual Report shall be replaced by the respective columns in the table as follows:
As at | As at | As at | ||||||||||||||||
31 March 2019 | 30 September 2019 | 31 March 2020 | ||||||||||||||||
Expected timeline | ||||||||||||||||||
for utilising the | ||||||||||||||||||
remaining | ||||||||||||||||||
Actual | Actual | Actual | unutilised | |||||||||||||||
Planned | utilised Unutilised | utilised Unutilised | utilised Unutilised | Net Proceeds | ||||||||||||||
application | amount | amount | amount | amount | amount | amount | (Note 4) | |||||||||||
HK$ | HK$ | HK$ | HK$ | HK$ | HK$ | HK$ | ||||||||||||
million | million | million | million | million | million | million | ||||||||||||
Working capital and cash deposit | 71.5 | 9.9 | 61.6 | 12.4 | 59.1 | 36.3 | 35.2 | On or before | ||||||||||
to secure the performance | 31 March 2022 | |||||||||||||||||
bonds for undertaking | ||||||||||||||||||
additional contracts (Note 1) | ||||||||||||||||||
Upgrade of computer system and | 4.7 | 0.1 | 4.6 | 1.0 | 3.7 | 1.3 | 3.4 | On or before | ||||||||||
accounting system (Note 2) | 31 March 2022 | |||||||||||||||||
Acquisition of property | 18.9 | - | 18.9 | - | 18.9 | - | 18.9 | On or before | ||||||||||
management company | 31 March 2022 | |||||||||||||||||
in Hong Kong (Note 3) | ||||||||||||||||||
General working capital | 4.3 | 1.8 | 2.5 | 2.9 | 1.4 | 4.1 | 0.2 | On or before | ||||||||||
31 March 2021 | ||||||||||||||||||
Total | 99.4 | 11.8 | 87.6 | 16.3 | 83.1 | 41.7 | 57.7 | |||||||||||
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Notes:
1. The utilised Net Proceeds were allocated and used for the business objectives stated in the Prospectus in the allocation manner materially consistent with that disclosed in the Prospectus as follows:
Business objectives | Allocation manner as stated in | Actual business progress and utilisation of Net | ||||||
stated in the Prospectus | the Prospectus | Proceeds from 1 January 2019 to 31 March 2020 | ||||||
Tendering | for | additional | Approx. 39.8% of the Net Proceeds | The Company used approx. HK$28.3 million out of | ||||
property | management | (being approx. HK$39.6 million | the Net Proceeds as working capital and cash | |||||
services | contracts, stand- | adjusted | by | the | actual | Net | deposit to secure the performance bonds for | |
alone | security | services | Proceeds) as working capital and | undertaking 3 property management services | ||||
contracts and stand-alone | cash deposit to secure the | contracts of HK$275.1 million contract value, 3 | ||||||
cleaning services contracts | performance bonds | for undertaking | stand-alone security services contracts of HK$80.2 | |||||
2 property | management services | million contract value, 3 stand-alone cleaning | ||||||
contracts of HK$162.0 million | services contracts of HK$34.0 million contract | |||||||
contract value, 2 stand-alone | value and 1 property service secondment contract of | |||||||
security | services | contracts | of | HK$3.8 million from the Housing Authority. |
HK$48.0 million contract value and
8 stand-alone cleaning services Approx. HK$0.5 million out of the Net Proceeds contracts of HK$96.0 million was used by the Company as working capital for contract value from the Housing undertaking 2 stand-alone security/cleaning services Authority for the period from 1 contracts of HK$5.5 million total contract value
January 2019 to 31 March 2020. | from the Urban Renewal Authority. | ||||||
If the Group fails to obtain the said | Approx. HK$4.2 million out of the Net Proceeds | ||||||
expected contracts or the allocated | was used by the Company as working capital for | ||||||
Net Proceeds cannot be fully | undertaking 2 special cleaning services contracts of | ||||||
utilised by 31 March 2020, the | HK$2.1 million contract value awarded by the | ||||||
Group will keep on identifying | Department of Health for designated quarantine | ||||||
suitable relevant | services | contracts | centres. | ||||
and allocate such Net Proceeds for | The outbreak of COVID-19 has led to an increase in | ||||||
undertaking the | service | contracts | |||||
successfully tendered by the Group. | the demand for our cleaning services from other | ||||||
Hong Kong government clients such as the | |||||||
Department of Health and the Urban Renewal | |||||||
Authority. The Directors consider that undertaking | |||||||
additional services contracts from public customers | |||||||
other than | the Housing Authority reduces the | ||||||
Group's reliance on the Housing Authority and is | |||||||
also consistent with the Group's business objective | |||||||
of tendering for additional property management | |||||||
services contracts, stand-alone security services | |||||||
contracts | and stand-alone cleaning services | ||||||
contracts from public customers as disclosed in the | |||||||
Prospectus; and are of the view that the application | |||||||
of the Net Proceeds as working capital and/or cash | |||||||
deposit to secure the performance bonds for | |||||||
undertaking such services contracts from public | |||||||
customers other than the Housing Authority does | |||||||
not constitute any material change in the use of | |||||||
proceeds as disclosed in the Prospectus. | |||||||
Altogether, the Company utilised approx. HK$33.0 | |||||||
million out of the Net Proceeds in tendering for | |||||||
additional property management, security and | |||||||
cleaning services contracts from public customers | |||||||
(other than HOS estates and non-residential | |||||||
properties | from | the | Housing | Authority), | |||
representing approx. 83.3% of the amount originally | |||||||
planned for such purpose as stated in the | |||||||
Prospectus. |
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Business objectives | Allocation | manner | as stated | in | Actual business progress and utilisation of Net | |||||||
stated in the Prospectus | the Prospectus | Proceeds from 1 January 2019 to 31 March 2020 | ||||||||||
Expanding | our services | Approx. 2.8% of the Net Proceeds | Approx. HK$2.6 million, being approx. 92.9% of | |||||||||
for HOS estates, non- | (being | approx. | HK$2.8 | million | the amount originally planned for this purpose, was | |||||||
residential | properties and | adjusted | by | the | actual | Net | used by the Company as working capital and cash | |||||
private housing estates | Proceeds) | for | undertaking | 3 | deposit to secure performance bonds for undertaking | |||||||
property | management | services | 2 | property | management | services | contracts | of | ||||
contracts of HK$18.0 million | HK$21.8 million contract value for HOS estates | |||||||||||
contract value for HOS estates and | and 1 property management services contract | of | ||||||||||
non-residential properties for the | HK$4.8 million contract value for non-residential | |||||||||||
period from 1 January 2019 to 31 | properties by the Housing Authority. | |||||||||||
March 2020. | ||||||||||||
If the Group fails to obtain the said | ||||||||||||
expected contracts or the allocated | ||||||||||||
Net Proceeds cannot be fully | ||||||||||||
utilised by 31 March 2020, the | ||||||||||||
Group will keep on identifying | ||||||||||||
suitable | relevant | services | contracts | |||||||||
and allocate such Net Proceeds for | ||||||||||||
undertaking | the | service | contracts | |||||||||
successfully tendered by the Group. | ||||||||||||
Approx. 29.4% of the Net Proceeds | The Company used approx. HK$0.6 million out of | |||||||||||
(being approx. HK$29.2 million | the Net Proceeds as working capital for undertaking | |||||||||||
adjusted by the actual Net | 8 | property | management | services | contracts | of | ||||||
Proceeds) | on | tendering | for | HK$7.9 million contract value for private housing | ||||||||
additional 14 property management | estates. | |||||||||||
services contracts of HK$285.0 | ||||||||||||
million contract value for private | The Company utilised only approx. 2.2% of the | |||||||||||
housing estates for the period from | amount originally planned in tendering for | |||||||||||
1 January 2019 to 31 March 2020. | additional property management services contracts | |||||||||||
for private housing estates mainly because the | ||||||||||||
If the Group fails to obtain the said | number and contract sum of the private housing | |||||||||||
expected contracts or the allocated | estates contracts awarded to the Group was lower | |||||||||||
Net Proceeds cannot be fully | than expected. | |||||||||||
utilised by 31 March 2020, the | ||||||||||||
Group will keep on identifying | ||||||||||||
suitable | relevant | services | contracts | |||||||||
and allocate such Net Proceeds for | ||||||||||||
undertaking | the | service | contracts | |||||||||
successfully tendered by the Group. |
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Business objectives | Allocation manner as stated in | ||
stated in the Prospectus | the Prospectus | ||
2. | Upgrading our | computer | Approx. 4.7% of the Net Proceeds |
system and | accounting | (being approx. HK$4.7 million | |
system | adjusted by the actual Net | ||
Proceeds) on upgrading computer | |||
system and accounting system for | |||
the period. |
Actual business progress and utilisation of Net Proceeds from 1 January 2019 to 31 March 2020
As of 31 March 2020, the Company had applied HK$1.3 million for replacing/purchasing new computer sets, hard disks, routers and relevant accounting software to maximise efficiency.
3. Growing our business Approx. 19.0% of the Net through acquisition of Proceeds (being approx. HK$18.9
property | management | million adjusted by the actual Net |
company in Hong Kong | Proceeds) for the acquisition of | |
property management company in | ||
Hong Kong. |
Due to the social unrest in Hong Kong since June 2019 and the subsequent outbreak of COVID-19 which have adversely affected the business environment in Hong Kong, the Board took a cautious approach in identifying suitable property management companies that are worth their value for acquisition or investment in order to maximise the returns to the Company and its shareholders. As at 31 March 2020, the Company is still on the lookout for appropriate acquisition or investment targets.
4. The expected timetable for the use of the remaining unutilised Net Proceeds is determined based on the Group's best estimate of future market conditions, and is subject to change depending on current market conditions and future market developments.
As disclosed above, the utilised Net Proceeds were allocated and used for the business objectives stated in the Prospectus in the allocation manner materially consistent with that disclosed in the Prospectus, and the Board intends to continue to allocate and use the remaining unutilised Net Proceeds in such manner. As at 31 March 2020, the unutilised Net Proceeds were deposited in short-term demand deposits with licensed banks in Hong Kong. The social unrest in Hong Kong since June 2019 and the subsequent outbreak of COVID-19, which have adversely affected the business environment in Hong Kong, have caused the delay in the application of the Net Proceeds and the lower successful tender rate of private housing estates than expected. In response thereto, in addition to carrying out further tenders for services contracts on private housing estates, the Group has explored other business opportunities such as cleaning services required for quarantine centres by the Department of Health to enhance the returns for the Group. Save as disclosed above, the Directors are not aware of any material change to the intended use of the Net Proceeds, and will continue to evaluate and adopt a prudent approach in utilising the Net Proceeds effectively and efficiently for the long-term benefit and development of the Group.
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OTHER OPERATING EXPENSES
As disclosed in the 2019 Annual Report and the 2020 Annual Report, the Group recorded ''other operating expenses'' of HK$38.2 million and HK$43.1 million for the year ended 31 March 2019 and 31 March 2020, respectively. In addition to the information provided in the 2019 Annual Report and the 2020 Annual Report, the Board would like to provide further information and breakdown in relation ''other operating expenses'' of the Group for the year ended 31 March 2019 and 31 March 2020 as follows:
For the year ended | ||||
31 March | ||||
2020 | 2019 | |||
HK$'000 | HK'000 | |||
Allowance for impairment of trade and other receivables | 11 | 347 | ||
Auditor's remuneration | 1,600 | 1,940 | ||
Bank charges | 1,692 | 1,647 | ||
Cleaning materials costs | 8,807 | 7,646 | ||
Depreciation of property, plant and equipment | 1,651 | 1,816 | ||
Depreciation of right-of-use assets | 312 | - | ||
Donation | 58 | 1,202 | ||
Entertainment expenses | 1,609 | 2,024 | ||
Insurance fee | 8,525 | 7,028 | ||
Legal and professional fee | 4,212 | 1,509 | ||
Motor vehicle expenses | 1,297 | 1,160 | ||
Office supplies | 1,680 | 695 | ||
Operating lease payments | - | 234 | ||
Printing and stationary expenses | 2,087 | 2,118 | ||
Rental expenses relating to short-term leases | 398 | - | ||
Repair and maintenance | 2,105 | 1,460 | ||
Uniform expenses | 1,499 | 979 | ||
Utilities expenses | 2,072 | 1,975 | ||
Others(1) | 3,510 | 4,395 | ||
Total | 43,125 | 38,175 |
Note:
1. Mainly include advertising expenses, communication expenses, consumables and other general office expenses, which individually is not material to the Group.
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The information contained in this supplemental announcement does not affect other information contained in the 2019 Annual Report, the 2020 Interim Report and the 2020 Annual Report and save as disclosed above, all other information in the 2019 Annual Report, the 2020 Interim Report and the 2020 Annual Report remains unchanged.
On behalf of the Board
Creative Enterprise Holdings Limited
Poon Kin Leung
Chairman and Executive Director
Hong Kong, 28 August 2020
As at the date of this announcement, the executive Directors are Mr. Poon Kin Leung, Mr. Lee Siu Wah Albert, Mr. Lam Siu Hung Christopher, Mr. Wong King Cheung, Mr. Lai Wai Man and Mr. Wu Ka Chai; and the independent non-executive Directors are Mr. Wong Chung Kin Quentin, Mr. Tang Yiu Ming and Mr. Wong Si Yuen.
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Creative Enterprise Holdings Ltd. published this content on 28 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 August 2020 11:23:05 UTC