Sun Kong : SUPPLEMENTAL ANNOUNCEMENT IN RELATION TO THE ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2019

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SUN KONG HOLDINGS LIMITED

申港控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8631)

SUPPLEMENTAL ANNOUNCEMENT

IN RELATION TO THE ANNUAL REPORT

FOR THE YEAR ENDED 31 MARCH 2019

Reference is made to (i) the prospectus of Sun Kong Holdings Limited (the "Company", together with its subsidiaries, the "Group") dated 21 December 2018 (the "Prospectus") in respect of the listing (the "Listing" of the shares of the Company on The Stock Exchange of Hong Kong Limited (the "Stock Exchange"); (ii) the annual report of the Company for the year ended 31 March 2019 published on 27 June 2019 (the "Annual Report"); and (iii) the announcement of the Company dated 3 July 2020 (the "UOP Announcement") in relation to the change in use of net proceeds from the Listing. Unless otherwise defined, capitalised terms used herein shall have the same meanings as those defined in the Annual Report.

USE OF PROCEEDS

Further to the information disclosed in the Annual Report, the board (the "Board") of directors (the "Directors") of the Company would like to provide the following additional information regarding the Net Proceeds from the Listing pursuant to Rule 18.32(8) of the Rules Governing the Listing of Securities on GEM of the Stock Exchange (the "GEM Listing Rules").

Proposed use of Net Proceeds at the time of the Listing

As disclosed in the Prospectus, the Net Proceeds were intended to be used for the following purposes:

1. approximately HK$15.0 million, representing approximately 43.1% of the Net Proceeds, will be used for purchasing six diesel tank wagons;
2. approximately HK$12.5 million, representing approximately 35.9% of the Net Proceeds, will be used for expanding the manpower of the Group, including recruitment of four drivers, one administrative staff, two accounting staff, one safety manager and two logistic assistants;

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1. approximately HK$5.0 million, representing approximately 14.4% of the Net Proceeds, will be used for upgrading the information technology systems of the Group; and
2. the remaining balance of approximately HK$2.3 million, representing approximately 6.6% of the Net Proceeds, will be used for general working capital of the Group.

Utilisation of Net Proceeds

The table below sets out the (i) percentage and the intended allocation of total Net Proceeds; (ii) the utilised and unutilised Net Proceeds up to 31 March 2019; and (iii) the expected timeline for fully utilising the unutilised amount as at 31 March 2019:

	Intended		Approximate	Utilised		Unutilised	Expected timeline
	allocation of		percentage	Net Proceeds		Net Proceeds	for fully utilising the
	total Net		of total	up to		up to	unutilised amount as at
Use of Net Proceeds	Proceeds		Net Proceeds	31 March 2019		31 March 2019	31 March 2019 (Note)
	HK$ million				HK$ million		HK$ million
Purchase of diesel tank wagons	15.0	43.1%	2.9	12.1	By 31	March 2021
Expand manpower	12.5	35.9%	0.1	12.4	By 30	September 2023
Upgrade information technology	5.0	14.4%	nil	5.0	By 31	March 2020
systems
Working capital	2.3	6.6%	2.3		nil	N/A
	34.8	100%	5.3	29.5

Note: The expected timeline for utilising the unutilised Net Proceeds is based on the best estimation of the future market conditions made by the Group. It may be subject to change based on the current and future development of market conditions.

Purchase of diesel tank wagons

During the year ended 31 March 2019 (the "Reporting Period"), the Group had purchased two new diesel tank wagons to replace two existing diesel tank wagons which was consistent with the Group's implementation plan in respect of the total number of diesel tank wagons to be purchased by 31 March 2019 as disclosed in the Prospectus. As at 31 March 2019, approximately 19.3% of the Net Proceeds allocated for such purpose had been utilised and it is expected that the unutilised amount will be fully utilised by 31 March 2021.

2

Expand manpower

During the Reporting Period, the Group had hired two drivers and a senior accountant. In addition to hiring two drivers and an accounting staff, it was disclosed in the Prospectus that the Group intended to hire one administrative staff, one additional accounting staff, one safety manager and two logistic assistants by 31 March 2019. Despite the Group's effort in actively recruiting and interviewing potential candidates, the Group was unable to find other suitable candidates for the above positions but will continue to recruit potentials. As at 31 March 2019, approximately 0.8% of the Net Proceeds allocated for such purpose had been utilised and it is expected that the unutilised amount of Net Proceeds allocated to expand manpower of the Group will be fully utilised by 30 September 2023.

Upgrade information technology systems

During the Reporting Period, the Group was still in negotiation with the potential suppliers on the requirements and specification of the new office administrative information technology systems. As at 31 March 2019, approximately nil% of the Net Proceeds allocated for such purpose had been utilised and it is expected to be fully utilised by 31 March 2020. Further to the UOP announcement, please refer to note 2 in the table below for the revised expected timeline of full utilisation.

Working capital

As at 31 March 2019, the Group had already fully utilised the amount of Net Proceeds allocated to general working capital of the Group in financing the cost of services and the daily operations of the Group, which represents approximately 6.6% of the Net Proceeds.

Change in use of Net Proceeds

Subsequent to the publication of the Annual Report, as disclosed in the UOP Announcement, the Board after taking into account the outbreak of the coronavirus disease (the "COVID-19") worldwide, the global and local economic activities have been contracting as the governments globally and of the Hong Kong Special Administrative Region have implemented various measures such as travel and transportation restrictions to prevent the spread of COVID-19. Due to these measures, the market demand for diesel oil in Hong Kong was reduced and the supply and logistic chains have also been disrupted as a result.

For the year ended 31 March 2020 and up to the date of the UOP Announcement, the Company considered that increase in the Group's general working capital would enable the Group to maintain a healthy financial position and support its business operation. The Directors consider it prudent to enhance its working capital and liquidity position.

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As at the 31 March 2019, the Group had fully utilised the amount of Net Proceeds allocated for the Group's working capital in the sum of approximately HK$2.3 million. The Directors are of the view that it will be in the interest of the Group to re-allocate the unutilised Net Proceeds of HK$10.8 million which was originally allocated to expand manpower of the Group to working capital of the Group (the "Change in UOP").

The table below sets out (i) the intended allocation of Net Proceeds as disclosed in the Prospectus;

1. the utilised and unutilised Net Proceeds up to the date of the UOP Announcement; (iii) the revised allocation of the Net Proceeds after the Change in UOP; (iv) the amount of unutilised Net Proceeds after the Change in UOP as at the date of UOP Announcement; and (v) the expected timeline for fully utilising the unutilised amount as at the date of this supplemental announcement:

Expected

timeline for

Unutilised

fully utilising

Net Proceeds

the unutilised

Utilised Net

Unutilised Net

after the

amount as at

Proceeds up

Proceeds up

Change in

the date of

to the date of

to the date of

Revised allocation of

UOP as at the

supplemental

Intended allocation of

the UOP

the UOP

the Net Proceeds

date of UOP

announcement

Use of Net Proceeds

total Net Proceeds

Announcement

Announcement

after the Change in UOP

Announcement

(Note 1)

% of

% of

HK$ million

net proceeds

HK$ million

HK$ million

HK$ million

net proceeds

HK$ million

Purchase of diesel tank wagons

15.0

43.1%

10.1

4.9

15

43.1%

4.9

By 31 March 2021

Expand manpower system

12.5

35.9%

1.7

10.8

1.7

4.9%

nil

N/A

By 31 March 2021

Upgrade information technology

5.0

14.4%

nil

5.0

5.0

14.4%

5.0

(Note 2)

Working capital

2.3

6.6%

2.3

nil

13.1

37.6%

nil

N/A

Total

34.8

100%

(14.1)

20.7

34.8

100%

9.9

Note:

1. The expected timeline for utilising the unutilised Net Proceeds is based on the best estimation of the future market conditions made by the Group. It may be subject to change based on the current and future development of market conditions.
2. As disclosed above, the Group planned to utilise approximately HK$5.0 million of the Net Proceeds for upgrading the information technology systems of the Group and such proposal was still in negotiation with the potential suppliers on the requirements and specification of the new office administrative information technology systems as at 31 March 2020, the original expected timeline as set out in the Prospectus. Nonetheless, the Company will continue to adopt a prudent approach for such purpose and will continue to apply the Net Proceeds in accordance with the proceeds allocation set out in the Prospectus and it is expected to be fully utilised by 31 March 2021 as set out in the above table. Save as disclosed above, the Directors are not aware of any material change to the implementation plans in relation to the Net Proceeds as stated in the Prospectus.

4

As disclosed in the UOP Announcement, the Board will continuously assess the implementation plans for the intended allocation of the Net Proceeds as set out in the Prospectus, the annual reports and interim reports of the Company, and may revise or amend such implementation plans where necessary, to cope with the changing market conditions and strive for better business performance for the Group. Please refer to the UOP Announcement for further details of the Change in UOP.

Save as disclosed above, the Net Proceeds (other than the amount of unutilised Net Proceeds) have been utilised in the manner and proportions as disclosed in the Prospectus.

The Board confirms that the above additional information does not affect other information contained in the Annual Report. Save as disclosed above, all other information in the Annual Report remains unchanged.

By order of the Board

Sun Kong Holdings Limited

Law Ming Yik

Chairman and executive Director

Hong Kong, 18 August 2020

As at the date of this announcement, the executive Directors are Mr. LAW Ming Yik (chairman) and Mr. LI Isaiah (chief executive officer); and the independent non-executive Directors are Mr. FENN David, Mr. WONG Ka Chun, Matthew and Mr. HO Cheung Kong.

This announcement, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the GEM Listing Rules 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.

This announcement will remain on GEM's website at www.hkgem.com on the "Latest Listed Company Information" page for at least 7 days from the date of its posting. This announcement will also be published on the Company's website at www.skhl.com.hk.

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