Creative : 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

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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