G-Resources Group Limited — Annual Report 2018

Sep 28, 2018

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

PALADIN LIMITED

(Incorporated in Bermuda with limited liability)

(Stock code: 495)

ANNOUNCEMENT OF RESULTS FOR THE YEAR ENDED 30 JUNE 2018

The board of directors (the “Board”) of Paladin Limited (the “Company”) is pleased to announce the audited consolidated results of the Company and its subsidiaries (hereinafter collectively referred to as the “Group”) for the year ended 30 June 2018 together with comparative figures for the previous year as follows:

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2018

NOTES Revenue 2 Other income 4 Other gains 5 Administrative expenses Other operating expenses Impairment loss recognised in respect of interest in an associate Share of loss of an associate Finance costs 6 Profit before taxation Taxation 7	2018 HK$’000 7,542 5,776 69,836 (39,773) (18,091) (7,428) (3,112) (2,728) 12,022 –	2017 HK$’000 14,446 4,259 137,746 (54,757) – – (1,841) (2,879) 96,974 (298)

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NOTES Profit for the year Profit (loss) for the year attribute to Owners of the Company Non-controlling interests Other comprehensive income Items that may be subsequently reclassified to profit or loss: Exchange differences arising on translation of foreign operations Fair value gain on an available-for-sale investment Other comprehensive income for the year Total comprehensive income for the year Total comprehensive income (expense) attribute to Owners of the Company Non-controlling interests EARNINGS PER SHARE 8 Basic Diluted	2018 HK$’000 12,022 16,284 (4,262) 12,022 684 976 1,660 13,682 17,610 (3,928) 13,682 1.17 HK cents 0.59 HK cents	2017 HK$’000 96,676 96,899 (223) 96,676 1,317 556 1,873 98,549 98,317 232 98,549 7.28 HK cents 6.81 HK cents

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AT 30 JUNE 2018

Non-current assets Investment properties Property and equipment Interest in an associate Available-for-sale investment Deposits placed for life insurance policies Deposits paid Current assets Other receivables, deposits and prepayments Bank balances and cash Current liabilities Other payables and accrued charges Amounts due to related parties Tax payable Bank overdrafts Secured bank borrowings Convertible notes Convertible redeemable preference shares Net current assets Total assets less current liabilities	2018 HK$’000 642,170 210,186 2,799 13,592 36,258 – 905,005 7,365 332,127 339,492 12,497 24,388 298 – 105,779 41,359 – 184,321 155,171 1,060,176	2017 HK$’000 579,520 211,476 13,759 12,616 35,034 3,199
		855,604
		6,229 354,653
		360,882
		13,108 64,822 298 575 107,639 – 6,446
		192,888
		167,994
		1,023,598

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Non-current liability Other borrowing Net assets Capital and reserves Share capital Reserves Equity attributable to owners of the Company Non-controlling interests Total equity	2018 HK$’000 3,340 1,056,836 14,361 1,045,810 1,060,171 (3,335) 1,056,836	2017 HK$’000 –
		1,023,598
		13,428 1,009,750
		1,023,178 420
		1,023,598

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 30 June 2018

1. BASIS OF PREPARATION

The consolidated financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants. In addition, the consolidated financial statements include applicable disclosures required by the Rules Governing the Listing of Securities on the Stock Exchange and by the Hong Kong Companies Ordinance.

The consolidated financial statements have been prepared on the historical cost basis except for investment properties and certain financial instruments that are measured at fair values at the end of each reporting period.

2. REVENUE

Revenue represents the aggregate of the amounts received and receivable for rental income from investment properties. An analysis of the Group’s revenue is as follows:

	2018	2017
	HK$’000	HK$’000
Rental income from investment properties	7,542	14,446

3. SEGMENT INFORMATION

Information reported to the Chief Executive Officer of the Company, being the Group’s chief operating decision maker (“CODM”), for the purposes of resource allocation and assessment of segment performance focuses on types of services delivered or provided. This is also the basis upon which the Group is organised and specifically focuses on the Group’s operating divisions. No operating segments identified by the CODM have been aggregated in arriving at the reportable segments of the Group.

During the year ended 30 June 2018, CODM identified research and development as the Group’s new operating and reportable segment.

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Specifically, the Group’s reportable and operating segments under HKFRS 8 Operating Segments are as follows:

• Property investment: rental income from leasing out the properties.

• Research and development: conducting research and development, software and hardware design for the manufacture and sales of a range of high technology products such as portable x-ray systems, advanced algorithm and software solutions, image sensors etc.

Segment revenue and results

The following is an analysis of the Group’s revenue and results by operating and reportable segments:

Year ended 30 June 2018

Revenue Segment results Unallocated expenses Unallocated income Profit before taxation	Property investment HK$’000 7,542 58,615	Research and development HK$’000 – (23,518)	Total HK$’000 7,542 35,457 (31,376) 7,941 12,022

Year ended 30 June 2017 (restated)

Revenue Segment results Unallocated expenses Unallocated income Profit before taxation	Property investment HK$’000 14,446 130,515	Research and development HK$’000 – –	Total HK$’000 14,446 130,515 (37,186) 3,645 96,974

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Segment revenue reported above represents revenue generated from external customers.

The accounting policies of the operating segments are the same as the Group’s accounting policies. Segment results represent the profit before taxation incurred by each segment without the allocation of certain other income, gain on fair value change of convertible notes, interest on convertible redeemable preference share, impairment loss recognised in respect of interest in an associate, share of loss of an associate and unallocated corporate expenses. This is the measure reported to the CODM for the purposes of resource allocation and performance assessment.

Information about major customers

Revenue from customers of the corresponding periods contributing over 10% of total revenue of the Group are as follows:

	2018	2017
	HK$’000	HK$’000
Customer A2	Not applicable1	14,446
Customer B2	6,832	–

1 The corresponding revenue did not contribute over 10% of the total revenue of the Group

2 Revenue from property investment segment.

No geographic information is shown as the revenue, non-current assets (other than interest in an associate) and profit from operations of the Group are primarily derived from its activities in Hong Kong.

4. OTHER INCOME

Interest income from deposits placed for life insurance policies Government grants received (Note) Bank interest income Consultancy fee income Others	2018 HK$’000 4,686 866 46 – 178 5,776	2017 HK$’000 3,737 – 51 426 45
		4,259

Note: The government grants represented immediate financial support granted by the local government to one of the subsidiaries operated in Finland. There were no specific conditions attached to the grants and the amounts were recognised in profit or loss when the grants were received.

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5. OTHER GAINS

Gain on fair value change of investment properties Gain on fair value change of convertible notes Reversal of provision for litigations Gain on disposal of property and equipment FINANCE COSTS Interest on bank borrowings Interest on bank overdrafts Interest on other borrowing Interest on convertible redeemable preference shares	2018 HK$’000 62,650 7,186 – – 69,836 2018 HK$’000 2,653 33 42 – 2,728	2017 HK$’000 135,470 – 2,131 145
		137,746
		2017 HK$’000 2,167 57 – 655
		2,879

6. FINANCE COSTS

7. TAXATION

	2018	2017
	HK$’000	HK$’000
Underprovision in prior years	–	298

Hong Kong Profits Tax is calculated at 16.5% of the estimated assessable profit for both years.

Taxation arising in other jurisdictions is calculated at the rates prevailing in the relevant jurisdictions.

No current year tax provision has been provided as the Group had no assessable profit for both years.

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8. EARNINGS PER SHARE

The calculation of the basic and diluted earnings per share attributable to the owners of the Company is based on the following data:

Earnings Earnings for the purposes of basic earnings per share Effect of dilutive potential shares: Interest on convertible redeemable preference shares Gain on fair value change of convertible notes Earnings for the purposes of diluted earnings per share Number of shares Weighted average number of ordinary shares for the purposes of basic earnings per share Effect of dilutive potential shares: Convertible redeemable preference shares Convertible notes Weighted average number of shares for the purpose of diluted earnings per share	For the year ended 30 June 2018 2017 HK$’000 HK$’000 16,284 96,899 – 655 (7,186) – 9,098 97,554 2018 2017 1,393,525,262 1,330,495,814 – 34,608,440 160,057,687 66,854,209 1,553,582,949 1,431,958,463	For the year ended 30 June 2018 2017 HK$’000 HK$’000 16,284 96,899 – 655 (7,186) – 9,098 97,554 2018 2017 1,393,525,262 1,330,495,814 – 34,608,440 160,057,687 66,854,209 1,553,582,949 1,431,958,463
		97,554
		2017 1,330,495,814 34,608,440 66,854,209
		1,431,958,463

For the year ended 30 June 2018, the weighted average number of ordinary shares for the purpose of calculating basic earnings per share has been taken into account the ordinary shares repurchased from the market in May 2017 and subsequently cancelled in July 2017.

Dilutive earnings per share for both periods did not assume the exercise of share options granted by the Company because the exercise price of those options was higher than the average market price of the Company.

9. DEPRECIATION

During the year ended 30 June 2018, the Group acquired approximately HK$4,769,000 (2017: HK$8,519,000) of property and equipment.

During the year ended 30 June 2018, depreciation of property and equipment amounted to HK$6,049,000 (2017: HK$2,077,000).

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DIVIDEND

The Directors of the Company do not recommend the payment of a final dividend (2017: nil).

CLOSURE OF REGISTER OF MEMBERS

For determining the entitlement to attend and vote at the forthcoming annual general meeting to be held on Friday, 7 December 2018, the register of members of the Company will be closed from Tuesday, 4 December 2018 to Friday, 7 December 2018 (both days inclusive), during which period no transfer of shares of the Company will be registered. In order to qualify for attendance and voting at the forthcoming annual general meeting of the Company, all transfers of shares of the Company accompanied by the relevant share certificates must be lodged with the Hong Kong share registrar and transfer office of the Company, Computershare Hong Kong Investor Services Limited of Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong for registration not later than 4:30 p.m. on Monday, 3 December 2018.

MANAGEMENT DISCUSSION AND ANALYSIS

The principal activities of the Group are property investment and research and development of high technology system and applications.

BUSINESS REVIEW AND PROSPECTS

Properties investment

Turnover of the Group for the year ended 30 June 2018 comprising rental income from its investment properties amounted to approximately HK$8 million (2017: HK$14 million). The profit for the year decreased by approximately 88% to HK$12 million as compared to that of the corresponding period in 2017. Such decrease is mainly due to decrease in gain on fair value change of investment properties of the Group by 54% as compared with the same period last year.

The Group will continue to seek and explore investment opportunities to strength its investment portfolios.

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Research and development

The Group actively expands its business to cover a broader spectrum in the field of high technology products. During the year, the Group together with an independent third party established an associate known as Imagica Technology Inc. which is owned as to 49% by the Group and established 4 subsidiaries namely, Next Level A.I. Solutions, LLC., Navigs Oy, Pexray Oy and Dynim Oy, to conduct research and development, software and hardware design for the manufacture and sales of a range of high technology products including:

• portable x-ray systems used in inspection devices for security and counter terrorism applications;

• accurate positioning and image sensing technologies to be integrated into semiautomated agriculture vehicles and advanced driver assistance systems (ADAS);

• advanced algorithm and software solutions used in ADAS, for example, systems for identifying objects, vehicles and people in difficult lighting conditions, forward collision warning systems, lane departure and driver awareness systems, and for surveillance and intelligent traffic markets, for example, advance camera and video systems for traffic monitoring purpose; and

• image sensors such as line scan sensors used in spectroscopy and document scanners, and other sensors used in security applications.

Looking forward, the Group’s corporate strategy will gradually expand its focus from property investment to high technology development. The Group look forward to all potential opportunities to expand its high technology business in different areas and diversify the investments.

Convertible redeemable preference shares

On 5 July 2017, the Group redeemed all the convertible redeemable preference shares (the “Preference Shares”). After this redemption, the Preference Shares ceased to exist and all unpaid amounts on them became a liability of the Group.

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Open offer

On 31 October 2017, the Company announced that it proposed to raise approximately HK$67.9 million, before expenses, by way of an open offer to shareholders of convertible notes in denominations of HK$0.25 principal amount each, to be issued at face value, with new shares in the share alternative at a subscription price of HK$0.25 per Share. Each convertible note may be converted into one share at the initial conversion price of HK$0.25 per Conversion Share. The convertible notes and new shares in the share alternative were offered to the qualifying Shareholders on the basis of assured allotments of one convertible note or one new share in the share alternative for every five existing shares. On 12 December 2017, the Board announced the open offer was fully subscribed.

LIQUIDITY, FINANCIAL RESOURCES AND CAPITAL STRUCTURE

As at 30 June 2018, net current assets of the Group were approximately HK$155 million. The current ratio, current assets divided by current liabilities, was 1.84. The bank balances and cash were approximately HK$332 million.

As at 30 June 2018, the Group has outstanding liabilities of approximately HK$188 million comprising (i) other payables and accrued charges of approximately HK$13 million, (ii) amounts due to related parties of approximately HK$25 million, (iii) bank borrowings of approximately HK$106 million, (iv) convertible notes of approximately HK$41 million and other borrowing of approximately HK$3 million. Bank borrowings are on floating interest rates basis.

The majority of the Group’s assets and borrowings are denominated either in Hong Kong dollars or US dollars thereby avoiding exposure to undesirable exchange rate fluctuations. In view of the stability of the exchange rate of HK dollars and US dollars, the directors consider that the Group has no significant exposure to exchange fluctuation and does not hedge against foreign exchange risk.

The Group’s bank borrowings and overdrafts were secured by leasehold land and building of approximately HK$199 million and deposit placed for a life insurance policy of approximately HK$18 million.

The Group’s gearing ratio, total debts divided by total assets, was approximately 15%.

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SIGNIFICANT INVESTMENTS, ACQUISITIONS AND DISPOSALS

During the year ended 30 June 2018, the Group had no material acquisitions and disposals of subsidiaries.

As at 30 June 2018, the Group had no material investment.

EMPLOYEES AND REMUNERATION POLICIES

As at 30 June 2018, the Group employed total of 30 employees. They were remunerated according to market conditions.

CONTINGENT LIABILITIES

As at 30 June 2018, there were contingent liabilities in respect of certain legal proceedings against certain subsidiaries of the Company. The aggregate amount of claims was approximately HK$13 million. In the opinion of the directors, the claims were remote and no provision has been made in the consolidated financial statements.

PURCHASE, SALE AND REDEMPTION OF SHARES

On 5 July 2017, the Group redeemed all the Preference Shares at a price of HK$0.25 per share.

Save as the above, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company’s listed shares.

REVIEW OF FINAL RESULTS

The Audit Committee has reviewed the annual results of the Group for the year ended 30 June 2018.

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CORPORATE GOVERNANCE

The board of directors of the Company (the “Board”) believes that corporate governance is essential to the success of the Company. During the year ended 30 June 2018, the Company has complied with all the code provisions in the Corporate Governance Code (the “Code”) set out in Appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, save and except as disclosed below:

• the non-executive directors and independent non-executive directors are not appointed for a specific term in accordance with code provision A.4.1 of the Code, but are subject to retirement by rotation and re-election at the annual general meeting of the Company in accordance with the provisions of the bye-laws of the Company.

• under code provision A.6.7 of the Code, independent non-executive directors and other non-executive directors should attend general meetings of the Company. Certain independent non-executive directors of the Company were unable to attend the annual general meeting of the Company as they had other business commitment.

• Under the Code provision A.2.1, the roles of the chairman and chief executive officer should be separated and should not be performed by the same individual. Dr. Oung Shih Hua, James is the Chairman of the Company and the Company currently does not appoint Chief Executive Officer. In the opinion of the Board, Dr. Oung temporarily acts as the role of the Chief Executive Officer. The Board considers that the present structure provides the Group with strong and consistent leadership and allows for efficient and effective business planning and execution.

• Code provision A.5.6 requires that the nomination committee should have a policy concerning diversity of board members. The Company does not consider it necessary to have a policy concerning diversity of board members. Board appointments are based on merit, in the context of the skills, experience and expertise that the selected candidates will bring to the Board. While the Company is committed to equality of opportunity in all aspects of its business and endeavours to ensure that its Board has the appropriate balance of skills, experience and diversity of perspectives, the Company does not consider a formal board diversity policy will provide measurable benefits to enhance the effectiveness of the Board.

The Company will review the current bye-laws as and when it becomes appropriate in the future.

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PUBLICATION OF ANNUAL RESULTS AND ANNUAL REPORT

The annual results announcement is available for viewing on the website of the Stock Exchange and on the website of the Company at http://www.aplushk.com/clients/00495paladin/. The annual report of the Company will be despatched to the shareholders of the Company in due course.

By Order of the Board Oung Shih Hua, James Chairman

Hong Kong, 27 September 2018

At the date of this announcement, the Chairman and executive director of the Company is Dr. Oung Shih Hua, James; the non-executive directors of the Company are Mr. Yuen Chi Wah and Mr. Chan Chi Ho; and the independent non-executive directors of the Company are Dr. Au Chik Lam Alexander, Mr. Liu Man Kin Dickson and Mr. Luo Rongxuan.

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