Kin Yat : INSIDE INFORMATION IN RELATION TO THE SERVICE CONTRACT WITH A SIGNIFICANT CUSTOMER OF OUR ELECTRICAL AND ELECTRONIC PRODUCTS SEGMENT

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KIN YAT HOLDINGS LIMITED

建 溢 集 團 有 限 公 司

website: http://www.kinyat.com.hk (Incorporated in Bermuda with limited liability)

(Stock Code: 638)

INSIDE INFORMATION

IN RELATION TO THE SERVICE CONTRACT WITH

A SIGNIFICANT CUSTOMER OF OUR

ELECTRICAL AND ELECTRONIC PRODUCTS SEGMENT

This announcement is made by Kin Yat Holdings Limited (the "Company", and together with its subsidiaries, collectively, the "Group") pursuant to Rule 13.09 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules") and the Inside Information Provisions (as defined under the Listing Rules) under Part XIVA of the Securities and Future Ordinance (Chapter 571 of the Laws of Hong Kong).

The board (the "Board") of directors of the Company (the "Director(s)") wishes to inform the shareholders of the Company (the "Shareholders") and potential investors that the Group has recently come to an agreement with a significant customer (the "Significant Customer") of its electrical and electronic products business segment (the "E&E Products Segment"), which is a leading American technology company specialising in robotic floor care products, to end the relevant service contract (the "Service Contract") between the Group and the Significant Customer on the later of 31 December 2021 and the date by which the Company has completed all the accepted orders placed on or before 31 May 2021 by the Significant Customer.

The business volume agreed between the Group and the Significant Customer peaked in the financial year ended 31 March 2019, accounting for over 70% of the then segment revenue from external customers of approximately HK$3.2 billion, and decreased to a level equivalent to a ratio of less than 70% of the segment revenue from external customers of approximately HK$2.2 billion for the financial year ended 31 March 2020 and such ratio is expected to decrease further in the financial year ended 31 March 2021. The recent consecutive decrease in business with the Significant Customer is mainly attributable to (i) the geographical diversification of the Significant Customer's purchase orders; and (ii) the production cost-escalation environment in China and the demanding pricing of the products, making it a lower than Group's average gross profit margin business.

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The Group will take appropriate corresponding measures and action to minimise the adverse impact, if any, of this aforesaid arrangement with the Significant Customer on the Group. Such measures and action include but are not limited to growing the customer base and gaining more business from existing customers in our E&E Products Segment, geographical diversification of the production base, shifting the production facilities originally assigned for the Significant Customer to other existing and new customers, and implementing appropriate cost saving measures. As regards expanding the customer base and business volume, our E&E Products Segment has progressed to date working with our existing customers and exploring new business in industries other than the robotic floor care product industry and is optimistic about its prospects of securing alternative businesses with higher profit margin in the future.

There may be further development with respect to the ending of the Service Contract and the Board will make further announcement(s) to inform the Shareholders and potential investors if and when appropriate.

Shareholders and potential investors of the Company are advised to exercise caution when dealing in the shares of the Company.

By order of the Board

Kin Yat Holdings Limited

Cheng Chor Kit

Chairman and chief executive officer

Hong Kong, 3 May 2021

As at the date of this announcement, the Board comprises (a) five executive Directors, namely Mr. CHENG Chor Kit, Mr. LIU Tat Luen, Mr. CHENG Tsz To, Mr. CHENG Tsz Hang and Mr. LEE Kim Wa, Winston; (b) one non-executive Director, Dr. FUNG Wah Cheong, Vincent; and (c) four independent non-executive Directors, namely Mr. WONG Chi Wai, Dr. SUN Kwai Yu, Vivian, Mr. CHENG Kwok Kin, Paul and Mr. CHEUNG Wang Ip.

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