Feiyang International : (1) CHANGE IN USE OF PROCEEDS AND (2) CLARIFICATION IN RELATION TO DISCLOSEABLE TRANSACTION

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Feiyang International Holdings Group Limited ࠭౮਷ყછٰ€ණྠϞࠢʮ̡

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1901)

(1) CHANGE IN USE OF PROCEEDS

AND

(2) CLARIFICATION IN RELATION TO

DISCLOSEABLE TRANSACTION

CHANGE IN USE OF PROCEEDS

References are made to the prospectus of Feiyang International Holdings Group Limited (the ''Company'' together with its subsidiaries, the ''Group'') dated 18 June 2019 (the ''Prospectus''), the annual report of the Company for the year ended 31 December 2019 (the ''2019 Annual Report'') and the interim report of the Company for the six months ended 30 June 2020 (the ''2020 Interim Report''). Unless otherwise defined, capitalised terms used in this announcement shall have the same meanings as those defined in the Prospectus.

The board (the ''Board'') of directors of the Company (''Directors'') hereby announces that the Board resolves to change the use of proceeds from the Global Offering.

Use of Proceeds from the Global Offering

As disclosed in the 2020 Interim Report, net proceeds from the Global Offering amounting to approximately HK$81.90 million (after deducting underwriting fees and other expenses payable by the Company in connection with the Global Offering) will be utilised in accordance with the intended allocation as set out in the section headed ''Future Plans and Use of Proceeds'' in the Prospectus. As at the date of this announcement, the amount of unutilised net proceeds is approximately HK$20.6 million. The Board has determined, after due and careful consideration of the current business environment and the development needs of the Group, to change the use of proceeds of approximately HK$15.2 million originally allocated for setting up new retail branches and points of sales and refurbishing existing retail branches to investing in the management and development of tourist attractions in the PRC.

The following table sets forth the use of proceeds from the Global Offering (as disclosed in the Prospectus), the amount of utilised and unutilised net proceeds as at the date of this announcement, the proposed change of allocation and revised allocation of the unutilised net proceeds and the proposed timetable for utilisation of the unutilised net proceeds:

Proposed

Net proceeds Unutilised net change of Revised Proposed utilised as at proceeds as at allocation of allocation of timetable for

Net proceeds	the date of this	the date of this	the unutilised	the unutilised	utilisation of
allocated	announcement	announcement	net proceeds	net proceeds	the unutilised
(approximately)	(approximately)	(approximately)	(approximately)	(approximately)	net proceeds
(HK$'000)	(HK$'000)	(HK$'000)	(HK$'000)	(HK$'000)
Specific use of net proceeds
Set up new retail branches and
points of sales and refurbish
existing retail branches	16,380	1,204	15,176	(15,176)	-	-
Increase deposits and prepayments
to air ticket suppliers	28,665	28,665	-	-	-	Fully utilised
Upgrade information technology	By 31 December
system	8,190	6,128	2,062	-	2,062	2021
Increase marketing effort in	By 31 December
traditional media	8,190	4,819	3,371	-	3,371	2021
Repay part of bank borrowings	12,285	12,285	-	-	-	Fully utilised
Use as general working capital	8,190	8,190	-	-	-	Fully utilised
Invest in the management and
development of tourist	By 31 December
attractions in the PRC	-	-	-	15,176	15,176	2021
81,900	61,291	20,609	-	20,609

Reasons for and Benefits of the Change in Use of Proceeds

As set out in the 2019 Annual Report, the outbreak of the novel coronavirus (''COVID-19'') has brought negative impact to the tourism industry of the PRC, and the operation and financial performance of the Group in 2020 has inevitably been affected. The Company has been looking for suitable investment and business opportunities to diversify the business of the Group, with an objective to broaden its income sources, and ultimately to maximise the return to its shareholders.

The Board believes that due to the travel restrictions imposed as a result of COVID-19, there will be an increasing demand for local tourist attractions, and considers that the Group can leverage on its experience to cater for the increasing demand for services such as the management and development of these local tourist attractions in the PRC. Moreover, by investing in the management and development of tourist attractions in the PRC, the Board also believes this will provide more business opportunities to the Group by enhancing its sales network and customer base in the PRC. In light of the above reasons, the Board is of the view that it would be in the interests of the Group to reallocate the net proceeds originally designated for setting up new retail branches and points of sales and refurbishing existing retail branches to investing in the management and development of tourist attractions in the PRC.

As at the date of this announcement, the Directors confirm that there is no material change in the nature of business of the Group as set out in the Prospectus. The Directors consider the above change in the use of proceeds is fair and reasonable as this allows the Group to deploy its financial resources more effectively to enhance the profitability of the Group and is in the interests of the Group and its shareholders as a whole.

The Board confirms that, save as disclosed in this announcement, there are no other changes to the intended usages and original allocations of the unutilised net proceeds as at the date of this announcement. However, the Board will continue to assess the impact of the outbreak of COVID-19 on the Group's operation and financial performance and the plans for the unutilised net proceeds as set out above in this announcement. The Board may revise or amend such plans where necessary, to cope with the changing market conditions and strive for better business performance for the Group, and the Company will make further announcement as and when appropriate.

CLARIFICATION IN RELATION TO DISCLOSEABLE TRANSACTION

Reference is made to the announcement of the Company dated 22 March 2021 (the ''Announcement'') in relation to the discloseable transaction relating to the formation of joint venture. Unless otherwise defined, terms used below in this announcement shall have the same meanings as those defined in the Announcement.

As disclosed in the Announcement, Ninglv Feiyang is an indirect non-wholly owned subsidiary of the Company. It was also disclosed that the JV Company will be a subsidiary of the Company and its financial statements will be consolidated into the financial statements of the Group. The Board would like to clarify that Ninglv Feiyang, which is indirectly owned as to 51% by the Company, is an associated company but not a subsidiary of the Company because it does not have direct or indirect control over Ninglv Feiyang pursuant to its articles of association. Accordingly, the JV Company will not be a subsidiary of the Company and its financial statements will not be consolidated into the financial statements of the Group.

Save as disclosed above, all the other information contained in the Announcement is correct and remains unchanged.

By Order of the Board

Feiyang International Holdings Group Limited

He Binfeng

Chairman, Executive Director and Chief Executive Officer

Ningbo, the PRC, 29 March 2021

As at the date of this announcement, the Board comprises Mr. He Binfeng, Mr. Zhang Qinghai, Mr. Huang Yu, Mr. Wu Bin, Mr. Chen Xiaodong and Ms. Qiu Zheng as executive Directors; and Mr. Li Huamin, Mr. Yi Ling and Ms. Li Chengai as independent non-executive Directors.