Duiba : CHANGE IN USE OF PROCEEDS

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DUIBA GROUP LIMITED

兌 吧 集 团 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1753)

CHANGE IN USE OF PROCEEDS

References are made to the prospectus of Duiba Group Limited (the "Company", and together with its subsidiaries, the "Group") dated 24 April 2019 (the "Prospectus") and the announcement of the annual results of the Company for the year ended 31 December 2020 dated 30 March 2021 (the "2020 Annual Results") in relation to the utilization of the net proceeds from the global offering of the Company (the "Global Offering"). Unless otherwise defined, capitalized terms used in this announcement shall have the same meanings as those defined in the Prospectus.

USE OF PROCEEDS

The net proceeds of the Group raised from the Global Offering was approximately HK$569.5 million (equivalent to RMB490.5 million) after deducting professional fees, underwriting commissions and other related listing expenses (the "Net Proceeds"). As disclosed in the section headed "Future Plans and Use of Proceeds" in the Prospectus, the Company intended to use the Net Proceeds in the following matters:

1. approximately 37% or RMB180.2 million for the enhancement of the Group's research and development function;
2. approximately 25% or RMB125.1 million for the enhancement of the Group's sales and marketing function;
3. approximately 8% or RMB38.1 million for the enhancement of the Group's operational function;
4. approximately 20% or RMB98.1 million for investment into and acquiring companies and businesses that are relevant or complementary to the Group's business and technologies, in order to support the Group's growth strategies; and
5. approximately 10% or RMB49.0 million for working capital and other general corporate purposes.
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It was also disclosed in the same section of the Prospectus that the Company will issue an appropriate announcement if there is any material change in the above mentioned use of Net Proceeds.

As disclosed in the 2020 Annual Results, as at 31 December 2020, the Company has utilized approximately RMB210.7 million of the Net Proceeds, and the amount of Net Proceeds which remains unutilized amounted to approximately RMB279.8 million. As at the date of this announcement, the utilized amount and unutilized balance of the Net Proceeds was RMB247.2 million and RMB243.3 million, respectively.

CHANGE IN USE OF PROCEEDS

On 11 April 2021, for the reasons as set out in the paragraph headed "Reasons for and Benefits of the Change in Use of Proceeds" below in this announcement, the Board has resolved to reallocate the Net Proceeds as follows:

				Utilized	Remaining
				amount as at
		Proposed		the date of this	unutilized
	Planned	change of	Revised	announcement	amount
	allocation of	allocation of	allocation of	(after revised	after revised
Use of Net Proceeds	Net Proceeds	Net Proceeds	Net Proceeds	allocation)	allocation
	RMB' million	RMB' million	RMB' million	RMB' million	RMB' million
	Approximate	Approximate	Approximate	Approximate	Approximate

1. Enhancement of the Group's research and development function

	- Recruitment of business-specific staff	82.2	+8.0	90.2	54.2	36.0
	-	Investment in servers	41.1	+8.0	49.1	33.8	15.3
	- Recruitment of staff to improve
		technology infrastructure	34.1	-27.0	7.1	5.1	2.0
	- Establishing a research and development
		center building	22.8	+60.0	82.8	19.0	63.8
			180.2		+49.0	229.2	112.1	117.1
(2)	Enhancement of the Group's sales and
		marketing function
	- Recruitment of sales and marketing staff	46.0	-10.0	36.0	24.2	11.8
	-	Undertaking marketing activities	79.1		-35.0	44.1	40.0	4.1
			125.1		-45.0	80.1	64.2	15.9
(3)	Enhancement of the Group's operational
		function
	- Recruitment of business-specific staff	29.2	+2.0	31.2	19.9	11.3
	- Improving the Group's operational
		facilities	8.9		-6.0	2.9	2.0	0.9
			38.1		-4.0	34.1	21.9	12.2

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									Utilized	Remaining
									amount as at
				Proposed			the date of this	unutilized
		Planned	change of	Revised	announcement	amount
		allocation of	allocation of	allocation of		(after revised	after revised
Use of Net Proceeds	Net Proceeds	Net Proceeds	Net Proceeds		allocation)	allocation
		RMB' million	RMB' million	RMB' million		RMB' million	RMB' million
		Approximate	Approximate	Approximate		Approximate	Approximate
(4)	Investment into and acquiring companies
	and businesses	98.1	-	98.1		-	98.1
(5)	Working capital and other general
	corporate purposes	49.0		-	49.0	49.0		-
		490.5		-	490.5	247.2		243.3

Subject to change based on the current and future development of market conditions, and the best estimation of the future market conditions and business needs made by the Group, it is expected that other than investment into and acquiring companies and businesses, the Net Proceeds allocated for the objectives as set out above will be fully utilized by the end of 2021.

REASONS FOR AND BENEFITS FOR THE CHANGE IN USE OF PROCEEDS

As set out above, approximately RMB34.1 million and RMB8.9 million was originally intended to be used for recruitment of staff to improve technology infrastructure and improving operational facilities, respectively. For the years ended 31 December 2019 and 2020, the Group has recruited eight staff members. Taking into account the current business development needs and to control staff costs, the Group encourages certain existing high- level research and development staff to participate in the enhancement and upgrade of the infrastructure system. The Group has also purchased new computer hardware in November 2020. The Group has continued to improve its technology and considers that the existing servers and infrastructure system are sufficient to support its expanding business. As such, the actual Net Proceeds utilized were less than the amount initially estimated. To optimize resources allocation and achieve effective operation, subject to business needs and development plans, the Group will use the existing funds instead of the Net Proceeds for future upgrade of the platform and technology infrastructure.

The outbreak of COVID-19 pandemic in early 2020 has affected the development and promotion of the Group's interactive advertising business as demand and budget of advertisers has decreased and the advertising platform's offline traffic has come to a staging standstill. In response to the uncertainty caused by COVID-19, the Group has adjusted its marketing strategy for different lines of businesses. It is estimated that the expenses for marketing activities would decrease in 2021.

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As disclosed in the 2020 Annual Results, the Company believes that demand for one-stop user management SaaS services from big businesses including banks and insurance companies present a great untapped potential. As a technology-driven company, the Company is committed to continuing to devote substantial efforts to enhance its research and development capabilities to support its business operations, data analytics and innovation.

The Group intends to reallocate the unutilized Net Proceeds of RMB60.0 million to the establishment of a research and development center building. As disclosed in the Prospectus, the Zijingang Management Committee had agreed to provide a land parcel in the Hangzhou Zijingang Science and Technology Town to the Group for the construction of a new headquarters building of the Group. As disclosed in the announcement of the Company dated 19 June 2020 (the "JV Announcement"), at the request of the Zijingang Management Committee, the new headquarters building would be developed as part of a joint venture project between the Group with the other JV Parties (as defined in the JV Announcement). Upon completion of the relevant joint venture project, the Group will receive the property title to the new headquarters building developed through the said joint venture project. For further details, please refer to the JV Announcement. The Group expects that investment would be needed for the construction and development of the new headquarters building. Meanwhile, given the uncertainty of the COVID-19 pandemic in the future, the Group wants to ensure that it maintains sufficient capital to cope with possible changes in the economic environment and to ensure flexibility in its business operation. Hence, additional unutilized Net Proceeds would be reallocated to provide financial support for the establishment of the building.

The aforesaid changes in the use of the Net Proceeds will enable the Company to effectively deploy its financial resources. The Board believes that such changes are beneficial to implement the strategic planning and optimize the utilization efficiency of funds of the Group.

The Directors confirm that the reallocation does not have material effect on the Group's business strategies as set out in the Prospectus and there are no material changes in the nature of business of the Group as set out in the Prospectus.

By Order of the Board

DUIBA GROUP LIMITED

Chen Xiaoliang

Chairman

Hangzhou, China, 11 April 2021

As at the date of this announcement, the Board comprises Mr. Chen Xiaoliang, Ms. Chen Ting, Mr. Cheng Peng, Mr. Zhu Jiangbo and Mr. Chen Xiuyi as executive Directors, Mr. Huang Tao as non-executive Director and Mr. Kam Wai Man, Dr. Ou-Yang Hui and Dr. Gao Fuping as independent non-executive Directors.

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