G-Resources Group Limited — Annual Report 2021

Sep 28, 2021

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 2021

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 2021 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 2021

Note Revenue 3 Cost of sales Gross profit Other income 5 Other gains and losses 6 Impairment of goodwill Impairment of other intangible assets Administrative and other operating expenses Loss from operations Finance costs 7 Gain on deemed disposal of an associate Share of loss of an associate Loss before tax Income tax credit/(expense) 8 Loss for the year	2021 HK$’000 18,272 (6,203) 12,069 1,927 18,035 (2,179) (1,892) (79,294) (51,334) (2,554) – – (53,888) 715 (53,173)	2020 HK$’000 11,742 (1,986) 9,756 2,741 (68,180) – – (76,541) (132,224) (4,504) 3,772 (2,714) (135,670) (439) (136,109)

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Other comprehensive income: Item that may be reclassified to profit or loss: Exchange differences on translating foreign operations Other comprehensive income for the year, net of tax Total comprehensive income for the year Loss for the year attributable to: Owners of the Company Non-controlling interests Total comprehensive income for the year attributable to: Owners of the Company Non-controlling interests Loss per share 9 Basic (HK cents per share) Diluted (HK cents per share) Note	547 547 (52,626) (44,535) (8,638) (53,173) (44,243) (8,383) (52,626) (3.17) (3.17) 2021 HK$’000	(1,049) (1,049) (137,158) (128,591) (7,518) (136,109) (129,205) (7,953) (137,158) (8.96) (8.96) 2020 HK$’000

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AT 30 JUNE 2021

Note Non-current assets Investment properties Property, plant and equipment 11 Right-of-use assets Goodwill Other intangible assets Financial assets at fair value through profit or loss (“FVTPL”) Total non-current assets Current assets Financial assets at FVTPL Inventories Trade and other receivables 12 Bank and cash balances Total current assets Current liabilities Trade and other payables 13 Due to related parties Secured bank borrowings Convertible notes Other borrowings Lease liabilities Total current liabilities Net current assets Total assets less current liabilities	2021 HK$’000 562,800 231,554 1,146 – – 33,326 828,826 20,000 3,254 4,994 141,926 170,174 13,963 24,712 98,645 25,286 2,292 725 165,623 4,551 833,377	2020 HK$’000 592,300 199,262 2,521 2,179 2,485 50,917
		849,664
		– 2,276 4,940 209,785
		217,001
		15,843 34,638 101,290 30,649 582 1,366
		184,368
		32,633
		882,297

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Non-current liabilities Other borrowings Lease liabilities Deferred tax liabilities Total non-current liabilities NET ASSETS CAPITAL AND RESERVES Share capital Reserves Equity attributable to owners of the Company Non-controlling interests TOTAL EQUITY	22,771 645 – 23,416 809,961 14,033 812,622 826,655 (16,694) 809,961 2021 HK$’000	17,014 1,367 671 19,052 863,245 14,290 863,491 877,781 (14,536) 863,245 2020 HK$’000

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2021

1. BASIS OF PREPARATION

These consolidated financial statements have been prepared in accordance with all applicable Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”). HKFRSs comprise Hong Kong Financial Reporting Standards (“HKFRS”); Hong Kong Accounting Standards (“HKAS”); and Interpretations. These consolidated financial statements also comply with the applicable disclosure provisions of the Rules Governing the Listing of Securities on the Main Board of the Stock Exchange of Hong Kong Limited (the “Listing Rules”) and with the disclosure requirements of the Hong Kong Companies Ordinance (Cap. 622).

The HKICPA has issued certain new and revised HKFRSs that are first effective or available for early adoption for the current accounting period of the Group. Note 2 provides information on any changes in accounting policies resulting from initial application of these developments to the extent that they are relevant to the Group for the current and prior accounting periods reflected in these consolidated financial statements.

2. ADOPTION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS

(a) Application of new and revised HKFRSs

The Group has applied the Amendments to Reference to the Conceptual Framework in HKFRS Standards and the following amendments to HKFRSs issued by the HKICPA for the first time, which are mandatorily effective for the annual period beginning on or after 1 July 2020 for the preparation of the consolidated financial statements:

Amendments to HKAS 1	Definition of Material
and HKAS 8
Amendments to HKFRS 3	Definition of a Business
Amendments to HKFRS 9,	Interest Rate Benchmark Reform
HKAS 39 and HKFRS 7

Except as described below, the application of the Amendments to References to the Conceptual Framework in HKFRS Standards and the amendments to HKFRSs in the current year had no material impact on the Group’s financial positions and performance for the current and prior years and/or on the disclosures set out in these consolidated financial statements.

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Amendments to HKAS 1 and HKAS 8 Definition of Material

The amendments provide a new definition of material that states “information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.” The amendments also clarify that materiality depends on the nature or magnitude of information, either individually or in combination with other information, in the context of the financial statements taken as a whole.

The application of the amendments had no impact on the consolidated financial statements.

Amendments to HKFRS 3 Definition of a Business

The amendments clarify the definition of a business and provide further guidance on how to determine whether a transaction represents a business combination. In addition, the amendments introduce an optional “concentration test” that permits a simplified assessment of whether an acquired set of activities and assets is an asset rather than business acquisition, when substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets.

The Group has applied the amendments prospectively to transactions for which the acquisition date is on or after 1 July 2020. The application of the amendments had no impact on the consolidated financial statements.

Amendments to HKFRS 9, HKAS 39 and HKFRS 7, Interest Rate Benchmark Reform

The amendments modify specific hedge accounting requirements to allow hedge accounting to continue for affected hedges during the period of uncertainty before the hedged items or hedging instruments affected by the current interest rate benchmarks are amended as a result of the on-going interest rate benchmark reform.

The amendments had no impact on the consolidated financial statements of the Group.

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(b) New and revised HKFRSs in issue but not yet effective

The Group has not applied any new and revised HKFRSs that have been issued but are not yet effective for the financial year beginning 1 July 2020. These new and revised HKFRSs include the following which may be relevant to the Group.

	Effective for
	accounting periods
	beginning on or after
Amendments to HKFRS 9, HKAS 39, HKFRS 7, HKFRS 4	1 January 2021
and HKFRS 16 Interest Rate Benchmark Reform – Phase 2
Amendments to HKFRS 3 Reference to the Conceptual Framework	1 January 2022
Amendments to HKAS 16 Property, plant and equipment:	1 January 2022
proceeds before intended use
Amendments to HKAS 37 Onerous contracts – cost of fulfilling a contract	1 January 2022
Annual Improvements to HKFRSs 2018 – 2020 Cycle	1 January 2022
Amendments to HKAS 1 Classification of liabilities	1 January 2023
as current or non-current

The Group is in the process of making an assessment of what the impact of these amendments and new standards is expected to be in the period of initial application. So far it has concluded that the adoption of them is unlikely to have a significant impact on the consolidated financial statements.

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3. REVENUE

Revenue from contracts with customers – recognised at a point in time Sales of goods Revenue from other sources Rental income	2021 HK$’000 10,756 7,516 18,272	2020 HK$’000 3,543 8,199
		11,742

4. SEGMENT INFORMATION

The Group has two operating segments as follows:

• Property investment: rental income from leasing out the properties; and

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

The Group’s reportable segments are strategic business units that offer different products and services. They are managed separately because each business requires different technology and marketing strategies.

Segment profits or losses do not include certain other income, gain on deemed disposal of an associate, fair value gains/(losses) on convertible notes, fair value gains/(losses) on financial assets at FVTPL, share of loss of an associate, unallocated corporate expenses and unallocated finance costs.

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Information about operating segment profit or loss:

Year ended 30 June 2021: Revenue from external customers Segment profit/(loss) Unallocated expenses Unallocated income Consolidated loss before tax Interest expense Depreciation and amortisation Other material non-cash items: Fair value gains on investment properties Impairment of goodwill Impairment of other intangible assets	Property investment HK$’000 7,516 6,149 1,927 6,493 9,500 – –	Research and development HK$’000 10,756 (53,644) 607 1,729 – 2,179 1,892	Total HK$’000 18,272 (47,495) (14,767) 8,374 (53,888) 2,534 8,222 9,500 2,179 1,892

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Year ended 30 June 2020: Revenue from external customers Segment loss Unallocated expenses Unallocated income Consolidated loss before tax Interest expense Depreciation and amortisation Other material non-cash items: Fair value losses on investment properties Written off of property, plant and equipment	Property investment HK$’000 8,199 (68,576) 3,683 6,049 64,800 –	Research and development HK$’000 3,543 (49,706) 634 1,338 – 238	Total HK$’000 11,742 (118,282) (21,223) 3,835 (135,670) 4,317 7,387 64,800 238

Information about operating segment assets and liabilities is not provided to the Chief Executive Officer, being the chief operating decision maker, therefore, segment assets and liabilities are not presented.

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Reconciliation of segment loss from operations:

Total loss of reportable segments Share of loss of an associate Unallocated amounts: Other income Other gains and losses Administrative and other operating expenses Finance costs Gain on deemed disposal of an associate Consolidated loss before tax Geographical information:	2021 HK$’000 (47,495) – 448 7,926 (14,747) (20) – (53,888)	2020 HK$’000 (118,282) (2,714) 63 (3,142) (15,180) (187) 3,772
		(135,670)

The Group’s revenue from external customers by location of operations is detailed below:

Hong Kong Finland Consolidated total	Revenue 2021 2020 HK$’000 HK$’000 7,516 8,199 10,756 3,543 18,272 11,742	Revenue 2021 2020 HK$’000 HK$’000 7,516 8,199 10,756 3,543 18,272 11,742
		11,742

The Group’s non-current assets (other than goodwill, other intangible assets, certain equipment and certain right-of-use assets) are mainly located in Hong Kong.

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Revenue from major customers:

	2021	2020
	HK$’000	HK$’000
Property investment segment
Customer a	7,516	8,199
Research and development segment
Customer b	–	1,217
Customer c	2,374	–

5. OTHER INCOME

Government grants received (Note) Bank interest income Others	2021 HK$’000 1,830 15 82 1,927	2020 HK$’000 2,535 69 137
		2,741

Note: During the year, the Group recognised government grants of approximately HK$1,141,000 (2020: HK$Nil) in respect of COVID-19 related subsidies, of which approximately HK$432,000 relates to Employment Support Scheme provided by the Hong Kong Special Administrative Region Government. Government grants of approximately HK$689,000 (2020: HK$2,535,000) mainly represented immediate financial support granted by the local governments to certain subsidiaries operated in Canada and Finland.

For the Employment Support Scheme, the Group had to commit to spending the assistance on payroll expenses, and not reduce employee head count below prescribed levels for a specified period of time. The Group did not have any unfulfilled conditions relating to these programs during the year. For other government grants, 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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6. OTHER GAINS AND LOSSES

Fair value gains/(losses) on investment properties Fair value gains/(losses) on convertible notes Written off of property, plant and equipment Fair value gains/(losses) on financial assets at FVTPL Net foreign exchange gains 7. FINANCE COSTS Interest expense on lease liabilities Interest on bank borrowings Interest on other borrowings Interest on bank overdrafts 8. INCOME TAX (CREDIT)/EXPENSE Current tax – Hong Kong Profits Tax Underprovision in prior year Deferred tax	2021 HK$’000 9,500 5,363 – 2,409 763 18,035 2021 HK$’000 357 1,926 249 22 2,554 2021 HK$’000 – (715) (715)	2020 HK$’000 (64,800) (1,916) (238) (1,226) – (68,180) 2020 HK$’000 629 3,683 154 38 4,504 2020 HK$’000 576 (137) 439

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No provision for Hong Kong Profits Tax is required since the Group has no assessable profit for the year (2020: Nil).

Under the two-tiered Profits Tax regime, Profits Tax rate for the first HK$2 million of assessable profits of qualifying corporations established in Hong Kong will be lowered to 8.25%, and profits above that amount will be subject to the tax rate of 16.5%.

PRC Enterprise Income Tax has been provided at a rate of 25% (2020: 25%).

Tax charges on profits assessable elsewhere have been calculated at the rates of tax prevailing in the countries in which the Group operates, based on existing legislation, interpretation and practices in respect thereof.

The reconciliation between the income tax expense and the product of loss before tax multiplied by the Hong Kong Profits Tax rate is as follows:

Loss before tax Tax at the Hong Kong Profits Tax rate of 16.5% (2020: 16.5%) Tax effect of income that is not taxable Tax effect of expenses that are not deductible Tax effect of tax losses not recognised Tax effect of other temporary differences not recognised Tax effect of utilisation of tax losses not previously recognised Effect of different tax rates of subsidiaries Underprovision in prior year Income tax (credit)/expense	2021 HK$’000 (53,888) (8,891) (4,376) 12,420 2,895 (845) (179) (1,739) – (715)	2020 HK$’000 (135,670) (22,386) (1,607) 22,265 3,877 (408) – (1,878) 576 439

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9. LOSS PER SHARE

The calculation of basic and diluted loss per share is based on the following:

Loss Loss for the purpose of calculating basic and diluted loss per share Number of shares Weighted average number of ordinary shares used in basic and diluted loss per share calculation	2021 HK$’000 (44,535) 2021 1,405,854,316	2020 HK$’000 (128,591) 2020 1,434,450,213

For the year ended 30 June 2021, the weighted average number of ordinary shares for the purpose of calculating basic loss per share has taken into account the ordinary shares cancelled in August 2020.

For the year ended 30 June 2020, the weighted average number of ordinary shares for the purpose of calculating basic loss per share has taken into account the ordinary shares cancelled in December 2019 and February 2020.

As the conversion of the Company’s outstanding convertible notes would be anti-dilutive and there were no dilutive potential ordinary shares for the Company’s share options, diluted loss per share was same as the basic loss per share for the years ended 30 June 2021 and 2020.

10. DIVIDEND

No dividend was paid or proposed by the Group during the year ended 30 June 2021 (2020: Nil), nor has any dividend been proposed since the end of the reporting period.

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11. PROPERTY, PLANT AND EQUIPMENT

Cost At 1 July 2019 Arising on business combination Additions Write off Exchange differences At 30 June 2020 and 1 July 2020 Transfer from investment properties Additions Exchange differences At 30 June 2021 Accumulated depreciation and impairment At 1 July 2019 Charge for the year Write off Exchange differences At 30 June 2020 and 1 July 2020 Charge for the year Exchange differences At 30 June 2021 Carrying amount At 30 June 2021 At 30 June 2020	Leasehold land and buildings HK$’000 205,000 – – – – 205,000 39,000 – – 244,000 9,965 4,271 – – 14,236 4,714 – 18,950 225,050 190,764	Leasehold improvements HK$’000 11,858 – – – – 11,858 – – – 11,858 3,908 1,779 – – 5,687 1,779 – 7,466 4,392 6,171	Office equipment, furniture and fixtures HK$’000 8,748 159 1,068 (322) (75) 9,578 – 509 123 10,210 7,890 522 (84) (12) 8,316 537 58 8,911 1,299 1,262	Motor vehicles HK$’000 1,679 – – – – 1,679 – – – 1,679 362 252 – – 614 252 – 866 813 1,065	Total HK$’000 227,285 159 1,068 (322) (75) 228,115 39,000 509 123 267,747 22,125 6,824 (84) (12) 28,853 7,282 58 36,193 231,554 199,262

At 30 June 2021, the carrying amount of leasehold land and buildings pledged as security for the Group’s bank loans amounted to HK$186,493,000 (2020: HK$190,764,000).

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12. TRADE AND OTHER RECEIVABLES

Trade receivables Other receivables Deposits Prepayments	2021 HK$’000 1,619 1,509 1,095 771 4,994	2020 HK$’000 1,730 1,331 1,496 383
		4,940

The Group’s trading terms with customers are mainly on credit. The credit terms generally range from 30 to 90 days from the invoice date. Each customer has a maximum credit limit. The Group seeks to maintain strict control over its outstanding receivables. Overdue balances are reviewed regularly by the directors.

The ageing analysis of trade receivables, based on the invoice date, is as follows:

0 – 90 days 181 – 365 days	2021 HK$’000 1,619 – 1,619	2020 HK$’000 1,543 187
		1,730

The carrying amounts of the Group’s trade receivables are denominated in Euro (“EUR”).

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13. TRADE AND OTHER PAYABLES

Trade payables Accruals Rental deposits received Other payables	2021 HK$’000 747 7,179 3,969 2,068 13,963	2020 HK$’000 926 6,774 3,943 4,200
		15,843

The ageing analysis of trade payables, based on the date of receipt of goods, is as follows:

				2021	2020
				HK$’000	HK$’000
0	–	90	days	747	926

The carrying amounts of the Group’s trade payables are denominated in EUR.

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DIVIDEND

The Directors of the Company do not recommend the payment of a final dividend (2020: nil).

CLOSURE OF REGISTER OF MEMBERS

For determining the entitlement to attend and vote at the forthcoming annual general meeting to be held on Thursday, 9 December 2021, the register of members of the Company will be closed from Monday, 6 December 2021 to Thursday, 9 December 2021 (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 Friday, 3 December 2021.

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

The Group recorded a loss of approximately HK$53 million as compared to a loss of approximately HK$136 million for the corresponding period in 2020. Such decrease in loss is mainly due to fair value gains on the Group’s investment properties of approximately HK$10 million in 2021 as compared to fair value losses on investment properties of approximately HK$65 million for the corresponding period in 2020.

Properties investment

Turnover of the Group for the year ended 30 June 2021 comprising rental income from its investment properties amounted to approximately HK$8 million (2020: HK$8 million).

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

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Development of high technology products

Due to COVID-19’s effect and restrictions on the world economy, we have experienced some setbacks in our technology operations. However, we are still able to show progress during the period under review in the Group’s development of the next generation technology for a number applications involving imaging, surveillance, navigation and advanced semiconductor processing. The technology divisions of the Group now comprises six operations in five countries employing about 90 research and development engineers. To date, the Group working together with the Finnish Funding Agency for Technology and Innovation, have invested around HK$140 million and further substantial investment is anticipated in the coming years. One of our technology division in Finland has generated revenue of approximately HK$11 million in the current year but not as much as expected due to the setbacks from the COVID-19 pandemic. It is expected that sales of a number of technological products or systems developed by the Group will continue or will commence soon and we are aiming that by the calendar year 2026, our technology division will generate a revenue of US$100 million.

The subsidiaries of the Company in our technology division are engaged in the following areas of technological development:

Pexray Oy – 83.4% held, based in Espoo, Finland is engaged in the development of portable x-ray imaging systems used in inspection devices for security and counter-intelligence applications in such areas on baggage scanning, border control and customs, the detection of explosive devices, forensic investigation and security at large scale sporting and other events. The total sales for the year ended 30 June 2021 was approximately HK$11 million. The major products are focusing on portable x-ray devices intended for security and non-destructive testing (NDT) applications as follows:

• Scanning panel product line for security applications:

The first sales of the product was in August 2019. Pexray Oy has released multiple enhancements to increase product quality and customer satisfaction

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• Flat panel product for industrial NDT application:

The first sales of the product was in September 2020. Multiple accessories and SW features have been released through 2021 to support products and to meet customer demand.

Dynim Oy – 70% held, based in Oulu, Finland is developing high dynamic range video cameras and artificial intelligences processors for machine vision applications in devices to improve driver situational awareness and security cameras. The major products are rugged stereo camera and camera for 3D sensing and surveillance.

• Rugged stereo camera is for heavy duty industrial applications. This camera has been in development for 12 months and it is based on state-of-art application processor from NXP Semiconductors. The camera will provide depth sensing capability through stereo vision. Further sensor fusion applications will be enabled utilizing embedded IMU and GNSS receiver. First articles (2pcs) were delivered for pilot customer in mining industry evaluation in May 2021. Another 6pcs will be delivered in October 2021. This is pilot release with limited features. Full commercial release has been delayed due to completing development of remaining critical product features has taken longer than expected. Current estimate for first commercial release is in 4th quarter 2021.

• Camera for 3D sensing and surveillance is based on same hardware platform and development investment made for Rugged stereo camera. 3D surveillance camera has additional LiDAR or ToF sensor to provide depth information in addition to single RGB camera. 3D surveillance camera will provide contextual awareness in many applications in traffic monitoring, transportation, residential, retail. Main development focus is still in the first stereo camera product and 3D surveillance product has been put on hold. Thus, this development project has not been started. 2D LiDAR is being considered as an expansion to the basic stereo camera in specific applications. Possible project will be planned in 4th quarter 2021 and started first quarter 2022 earliest with the resources available from stereo camera development.

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Navigs Oy – 78.3% held, based in Espoo, Finland. Navigs Oy is engaged in the development of accurate positioning and image sensing technologies to be integrated into semi-automated agricultural vehicles and advanced driver assistance systems in agricultural vehicles to achieve autonomous precision farming, and for application in marine navigation systems. The major products are IPESSA Classic and IPESSA Tiny.

• IPESSA Classic is a stand-alone, self-contained positioning module for autonomous Agri– and other robotics, and based on sensor fusion of satellite and high-performance inertial positioning technologies. The pilot sales of IPESSA Classic suggests that the cost structure of high-performance IPESSA Classic makes it less attractive in basic, originally targeted agricultural vehicles. Marketing effort is therefore now focusing on special applications, where high positioning performance is needed and justified.

• IPESSA Tiny is a low-cost positioning module for light, autonomous vehicles in precision farming, delivery robots, and drones and is based on dual satellite receiver and inertial sensing. Prototypes were completed in early 2021, and piloting with chosen customers ongoing. Volume production is expected to start in early 2022.

Imagica Technology Inc. – 65.76% held, based in Vancouver, Canada. This company is developing a series of linear image sensors for use in spectroscopy, document scanners as well as sensors used for a number of security and machine vision applications. The major products are as follows:

• C576: Linear array image sensor for CIS (Contact Image sensor) applications

Wafers are processed in California. These devices are used in bill readers, document scanners and industrial imaging of web like materials. We currently have a device in fabrication that is a revision to improve performance for certain customers. This will then become several products that serve different market segments. We will have first customer shipments in 3rd quarter 2021 that will be going into customer modules for multi-function peripherals, we will also have our own module for machine vision applications assembled in Taiwan.

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– A2K: Array video sensor for HD format (2K x 1080) at 60 Hz global shutter high performance wide dynamic range

Wafers are processed in Japan, China, and California U.S.A. These devices are used in security and machine vision applications and higher performance imaging areas. Process adaptation to Japanese foundry is mostly complete. CMOS readout wafers will go to fabrication in 3rd quarter 2021. First articles will be available in mid of 4th quarter 2021 to first Quarter 2022 with first customer shipments starting soon after. This is a platform for subsequent improvements in processing and each SKU will be retained and sold at separate products. An example is that the first devices will be black and white and that will be followed by improvements in dark performance and then color filters and more to follow. Preliminary results from early processing and testing indicate as industry setting performance level will be achievable in 2022.

Next Level A.1. Solution, LLC – 100% held, based in California, the United States of America. Next Level is engaged in the development of ambient display solutions and advanced algorithm and software solutions for use, for example, in advanced driver assistance systems by identifying hazards in poor visibility, collision warning systems and driver awareness systems and for advanced traffic monitoring and control systems.

The main product line will be a visual navigational system with 2 cameras. The system includes both software and hardware solutions.

• Software:

Visual Inertial Odometry Next Level is currently developing algorithms using Nvidia Jetson SOM. OpenSource Algorithms has already been successfully developed and is currently rewriting, developing and optimizing new algorithms for more commercially viability. Verification of algorithms on Nvidia Jetson was not successful as the Jetson proved to be too rigid in hardware architecture to afford the resources needed to process the developed algorithms.

Instead, the team has decided to focus solely on FPGA development and implementation of the algorithms as it provides more flexibility and can be scaled into a commercial production product later.

We are anticipating the prototype to be ready by the end of spring 2022.

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• Hardware:

The original camera system that was being prototyped ended up being too costly and not a feasible commercial product. It was decided to overhaul the design and use a more cost effective but flexible solution.

The development has shifted towards a camera based on FPGA platform.

The single FPGA camera is to be ready for production in the second half of 2022.

Commercial product to be ready for launch second half of 2022.

Skyin Technology Limited – 70% held, based in Shanghai, the PRC. This company is developing three-dimensional and artificial intelligence industrial vision software and products. The prototype of three-dimensional industrial cameras (SE01/SE02/SE03) have been developed as planned, but considering the changes of market situation and fierce price competition, they have not been mass produced and put into the market, and no sales revenue has been obtained.

At present, the company focuses on industrial vision software and solutions based on AI. The company is positioned to transform from industrial vision equipment supplier to system solution integrator. We have developed intelligent industrial vision module based on embedded hardware platform and deep learning AI algorithms, which can quickly identify and classify multiple moving or stationary objects at the same time, and drive robots to realize the functions of positioning, sorting, and etc. It can be widely used in the field of production line assembly, logistics and so on, so as to further improve production efficiency and product quality. We will develop solutions for specific industrial applications based on this technology.

Industrial vision customer demands are closely related to their production processes and application scenarios, which are very fragmented. The threshold for obtaining customer demands and technical service requirements are relatively high. We are actively developing technology and maintaining communication with some domestic customers, but it will take some time to accumulate technology and market.

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LIQUIDITY, FINANCIAL RESOURCES AND CAPITAL STRUCTURE

As at 30 June 2021, net current assets of the Group were approximately HK$5 million. The current ratio, current assets divided by current liabilities, was 1.03. The bank balances and cash were approximately HK$142 million.

As at 30 June 2021, the Group has outstanding liabilities of approximately HK$189 million comprising (i) trade and other payables of approximately HK$14 million, (ii) amounts due to related parties of approximately HK$25 million, (iii) secured bank borrowings of approximately HK$99 million, (iv) convertible notes of approximately HK$25 million and other borrowings and liabilities of approximately HK$26 million. Secured 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 were secured by leasehold land and buildings of approximately HK$186 million and a deposit placed for a life insurance policy of approximately HK$20 million.

The Group’s gearing ratio, total debts divided by total assets, was approximately 18.92%.

SIGNIFICANT INVESTMENTS, ACQUISITIONS AND DISPOSALS

During the year ended 30 June 2021, the Group had no material acquisitions and disposals of subsidiaries.

As at 30 June 2021, the Group had no material investment.

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EMPLOYEES AND REMUNERATION POLICIES

As at 30 June 2021, the Group employed total of 100 employees. They were remunerated according to market conditions.

CONTINGENT LIABILITIES

As at 30 June 2021, the Group did not have any significant contingent liabilities.

PURCHASE, SALE AND REDEMPTION OF SHARES

During the year ended 30 June 2021, the Company repurchased 4,215,000 shares of its own ordinary shares through Main Board of The Stock Exchange of Hong Kong Limited (“the Stock Exchange”) at a total consideration of approximately HK$0.7 million (excluding transaction costs).

Details of the repurchases are as follows:

				Aggregate
	Total			consideration
	number of			(excluding
	the ordinary	Highest price	Lowest price	transaction
Month	shares	paid per share	paid per share	costs)
		HK$	HK$	HK$000
July 2020	2,545,000	0.184	0.150	453
May 2021	1,670,000	0.120	0.116	200

Save for the above, neither the Company nor any of its subsidiaries purchased, sold or redeemed interest in 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 2021.

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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 2021, 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, 28 September 2021

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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