Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

YUSEI HOLDINGS LIMITED

友成控股有限公司*

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 96)

SUPPLEMENTAL ANNOUNCEMENT IN RELATION TO ANNUAL REPORT

AND CHANGE IN USE OF PROCEEDS

References are made to (i) the announcement dated 19 November 2018 (the ''Announcement'') of Yusei Holdings Limited (the ''Company''), together with its subsidiaries (collectively the "Group") in relation of subscription of new shares under general mandate (the "Subscription"); (ii) the Company's interim report for the six months ended 30 June 2019 dated 27 September 2019 (the ''2019 Interim Report'') and

  1. the Company's annual report for the year ended 31 December 2019 dated 29 April 2020 (the ''2019 Annual Report''). Capitalised terms in this announcement have the same meanings as those defined in the Announcement, 2019 Interim Report and 2019 Annual Report unless defined otherwise herein.

The net proceeds from the Subscription, after deducting the expenses relating to the Subscription, amounted to approximately HK$60.0 million (the "Net Proceeds"). As disclosed in the 2019 Interim Report and 2019 Annual Report, the Group has utilized an accumulated amount of approximately HK$30.0 million out of the Net Proceeds in accordance with the planned use of the Net Proceeds as detailed in the Announcement and the remaining unutilized Net Proceeds amounted to approximately HK$30.0 million (the "Unutilized Net Proceeds").

Details of the use of the Net Proceeds as at 31 December 2019 and the expected timeline for the intended use of the Unutilized Net Proceeds as supplemental to 2019 Annual Report are as follows:

Actual use of

Expected

Net Proceeds

Unutilized Net

timeline for

up to 31

Proceeds up to

intended use

Planned use of

December

31 December

as at 31

Net Proceeds

2019

2019

December

(HK$ 'million)

(HK$ 'million)

(HK$ 'million)

2019

Subscription:

- Construction of a new factory

30.0

-

30.0

On or before

in Tianjin, the PRC

31 December

- Repayment of bank

30.0

30.0

-

2020

borrowings of the Group

Total

60.0

30.0

30.0

Details of the use of the Net Proceeds as at 30 June 2019 and the expected timeline for the intended use of the Unutilized Net Proceeds as supplemental to 2019 Interim Report are as follows:

Actual use of

Expected

Net Proceeds

Unutilized Net

timeline for

Planned use of

up to 30 June

Proceeds up to

intended use

Net Proceeds

2019

30 June 2019

as at 30 June

(HK$ 'million)

(HK$ 'million)

(HK$ 'million)

2019

Subscription:

- Construction of a new factory

30.0

-

30.0

On or before

in Tianjin, the PRC

31 December

- Repayment of bank

30.0

30.0

-

2020

borrowings of the Group

Total

60.0

30.0

30.0

CHANGE IN USE OF PROCEEDS

For reasons set out in the paragraph headed "Reasons for and Benefits of the Change in Use of Net Proceeds" below, the board (the "Board") of directors (the "Directors") of the Company has resolved to change the use of approximately HK$30.0 million out of the Unutilized Net Proceeds, which were originally allocated for construction of a new factory in Tianjin, PRC, to "Construction of a new factory in Changchun, the PRC". The table below sets out the original allocation of Net Proceeds, the change in use, the revised position after change in use and expected timeline for utilizing the remaining balance of the Unutilized Net Proceeds as follows:

Expected

timeline for

Actual use of

Unutilized

Net Proceeds

Reallocation

Net

Planned use of

up to 30 June

of Unutilized

Proceeds

Net Proceeds

2020

Net Proceeds

after

(HK$ 'million)

(HK$ 'million)

(HK$ 'million)

allocation

(note 1)

Subscription:

- Construction of a new factory in

30.0

-

-

Tianjin, the PRC

- Construction of a new factory in

-

-

30.0

On or before

Changchun, the PRC

31

December

- Repayment of bank borrowings

30.0

30.0

-

2020

of the Group

Total

60.0

30.0

30.0

Note:

1. The expected timeline for utilizing the Unutilized Net Proceeds is based on the best estimation made by the Group. It will be subject to change based on the current and future development of the market conditions.

REASONS FOR AND BENEFITS OF THE CHANGE IN USE OF NET PROCEEDS

The planned use of Net Proceeds from the Subscription as disclosed in the Announcement was based on the best estimation made by the Group in relation to the then future market conditions as at the date of the Announcement, while the Net Proceeds would be applied in accordance with the actual development of the market from time to time. The Board considered that the Group needs to adopt a more effective policy to make use of the capital and enhance the Group's production capacity in appropriate manner in response to the market conditions.

The Group originally allocated the Net Proceeds for the construction of a new factory in Tianjin, the PRC and repayment of bank borrowing of the Group. Up to the date of this announcement, HK$30.0 million was utilized for repayment of the Group's bank loans. Although the Group attempted to identify a piece of land within high-technology parks in Tianjin, the PRC in the past months that is suitable for construction of a new factory, the Group was unable to compromise in terms of contract terms and has not reached any agreement with potential sellers.

Recently, the Group re-assessed its business needs and the Board decided to prioritize the construction plan of a new factory in Changchun, the PRC. The Group's production base in Changchun, the PRC, is currently located in the leased premise. For increasing its production capacity, the Group has intention to acquire a piece of land in Changchun, the PRC, on which a new factory is constructed.

In light of the current market conditions and the Group's business needs, the Board is of the view that it would be in the best interest of the Company and its shareholders as whole to reallocate the Unutilized Net Proceeds of approximately HK$30.0 million originally assigned for construction of a new factory in Tianjin, PRC to "for construction of a new factory in Changchun, the PRC" so as to meet the Group's operational needs.

The Board considers that the change in the use of the Net Proceeds is fair and reasonable, which may allow the Group to meet its operation needs more efficiently and flexibly. The Board is of the view that the change in the use of the Net Proceeds is in line with the business strategies of the Group and will not materially adversely affect the financial position or operation of the Group.

The Board will continuously assess the plans for use of the Unutilized Net Proceeds, and may revise or amend such plans where necessary to respond to the changing market conditions and strive for better business performance of the Group. Save as disclosed in this announcement, there are no other changes in the use of the Net Proceeds as set out in the Announcement.

The supplemental information provided in this announcement does not affect other information contained in the 2019 Annual Report and the 2019 Interim Report and, save as disclosed above, the contents of the 2019 Annual Report and the 2019 Interim Report remain unchanged.

By order of the Board

Yusei Holdings Limited

Katsutoshi Masuda

Chairman

PRC, 18 August 2020

As at the date of this announcement, the executive directors are Mr. Manabu Shimabayashi and Mr. Xu Yong; the non-executive directors are Mr. Katsutoshi Masuda and Mr. Toshimitsu Masuda, the independent non-executive directors are Mr. Lo Ka Wai, Mr. Fan Xiaoping and Mr. Hisaki Takabayashi.

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Yusei Holdings Ltd. published this content on 18 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 August 2020 15:33:23 UTC