PAK FAH YEOW INTERNATIONAL LIMITED
(Incor porated in Ber muda with limited liability) Stock Code:239
2020INTERIM REPORT
This Interim Report is printed on environmentally friendly paper
CONTENTS
Page | |
Corporate Information | 2 |
Highlights | 3 |
Management Discussion and Analysis | 5 |
Independent Auditor's Report on Review of | |
Condensed Interim Financial Information | 14 |
Condensed Consolidated Statement of Comprehensive Income | 16 |
Condensed Consolidated Statement of Financial Position | 18 |
Condensed Consolidated Statement of Changes in Equity | 20 |
Condensed Consolidated Statement of Cash Flows | 21 |
Notes to the Condensed Interim Financial Information | 22 |
Disclosure of Interests and Other Information | 38 |
2 | Pak Fah Yeow International Limited | Interim Report 2020 |
CORPORATE INFORMATION
DIRECTORS
Executive Directors
Gan Wee Sean (Chairman and
Chief Executive Officer) (R)
Gan Fock Wai, Stephen (R)
Gan Cheng Hooi, Gavin
Non-executive Director
Gan Fook Yin, Anita
Independent Non-executive Directors Leung Man Chiu, Lawrence
(chairing A, chairing R and chairing N) Wong Ying Kay, Ada (A, R and N)
Ip Tin Chee, Arnold (A, R and N)
COMPANY SECRETARY
Lo Tai On
REGISTERED OFFICE
Clarendon House
2 Church Street
Hamilton HM 11
Bermuda
HEAD OFFICE AND PRINCIPAL PLACE OF BUSINESS IN HONG KONG
11th Floor, 200 Gloucester Road
Wanchai
Hong Kong
AUDITOR
Mazars CPA Limited
42nd Floor, Central Plaza
18 Harbour Road
Wanchai
Hong Kong
SOLICITOR
Woo, Kwan, Lee & Lo
26th Floor, Jardine House
1 Connaught Place
Central
Hong Kong
PRINCIPAL SHARE REGISTRAR
Conyers Corporate Services (Bermuda)
Limited
Clarendon House
2 Church Street
Hamilton HM 11
Bermuda
HONG KONG SHARE REGISTRAR
Tricor Standard Limited
Level 54, Hopewell Centre
183 Queen's Road East
Wanchai, Hong Kong
STOCK CODE
239
HOME PAGE
http://www.pakfahyeow.com
pfy@pfy.com.hk
TELEPHONE
(852) 2881 7713
(A) Audit Committee member
- Remuneration Committee member
- Nomination Committee member
Interim Report 2020 | Pak Fah Yeow International Limited | 3 |
HIGHLIGHTS
- Revenue down 40.2% year-on-year.
- Underlying recurring (loss) profit, the performance indicator of the Group, down 102.5% year-on-year, mainly due to weak performance of Healthcare segment.
- Reported (loss) profit down 321.3% year-on-year, mainly due to unrealised fair value loss on investment properties in Hong Kong and the United Kingdom.
- Geopolitical issues and COVID-19 effects would inevitably affect the Group's business environment for the second half of 2020.
Results Summary
Six months ended 30 June | ||||
2020 | 2019 | |||
Notes | HK$'000 | HK$'000 | Change | |
Revenue | 1 | 44,694 | 74,771 | -40.2% |
Reported (loss) profit | 2 | (47,210) | 21,331 | -321.3% |
Underlying recurring (loss) | ||||
profit | 3 | (600) | 23,538 | -102.5% |
HK cents | HK cents | |||
(Loss) Earnings per share: | 4 | |||
Reported (loss) profit | (15.1) | 6.8 | -322.1% | |
Underlying recurring (loss) | ||||
profit | (0.2) | 7.6 | -102.6% | |
Total dividends per share | 4 | 2.6 | 4.9 | -46.9% |
At | At | |||
30 June | 31 December | |||
2020 | 2019 | |||
HK$'000 | HK$'000 | |||
Shareholders' funds | 5 | 675,099 | 760,117 | -11.2% |
HK$ | HK$ | |||
Net asset value per share | 6 | 2.17 | 2.44 | -11.1% |
4 | Pak Fah Yeow International Limited | Interim Report 2020 | |
Notes: 1. | Revenue represents revenue derived from the three business segments, namely | ||
healthcare ("Healthcare"), property investments ("Property Investments") and | |||
treasury investments ("Treasury Investments"). |
- Reported (loss) profit ("Reported (Loss) Profit") is the loss or profit attributable to owners of the Company, which is prepared in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants.
- Underlying recurring (loss) profit ("Underlying Recurring (Loss) Profit") reflects the Group's performance of the three business segments and is arrived at by excluding from Reported (Loss) Profit the unrealised fair value changes of financial assets at fair value through profit or loss and of investment properties, and the items that are non-recurring in nature.
- The basic and diluted (loss) earnings per share and the total dividends per share are calculated using the ordinary shares in issue during the period.
- Shareholders' funds are the equity attributable to owners of the Company, which is equivalent to the total equity as presented in the Company's consolidated statement of financial position.
- Net asset value per share represents shareholders' funds divided by the number of ordinary shares of the Company in issue as at the balance sheet date.
Interim Report 2020 | Pak Fah Yeow International Limited | 5 |
MANAGEMENT DISCUSSION AND ANALYSIS
BUSINESS REVIEW
Results Overview
During the first half of 2020, businesses across all industries were disrupted by the COVID-19 pandemic, causing adverse influence over global economy. The impact was particularly significant against certain sectors such as retail, tourism and property, with which the businesses of the Group were correlated. As such, the businesses of the Group were adversely affected and a significant drop in revenue was recorded as compared to the corresponding period in 2019.
In this challenging business environment, the Group recorded total revenue of HK$44,694,000 for the six months ended 30 June 2020, a decrease of 40.2% from HK$74,771,000 for the same corresponding period in 2019. Revenue of each business segment is as follows:
Six months ended 30 June
2020 | 2019 | Change | ||
HK$'000 | HK$'000 | % | ||
Healthcare | 40,674 | 69,459 | -41.4 | |
Property Investments | 3,795 | 4,948 | -23.3 | |
Treasury Investments | 225 | 364 | -38.2 | |
44,694 | 74,771 | -40.2 | ||
Underlying Recurring (Loss) Profit, which excludes from Reported (Loss) Profit the unrealised fair value changes of financial assets and of investment properties and the items that are non-recurring in nature, was a loss of HK$600,000, down 102.5% from a profit of HK$23,538,000 year-on-year. This mainly reflected weak performance of Healthcare segment. Loss per share of Underlying Recurring (Loss) Profit was HK0.2 cents, down 102.6% from earnings per share of HK7.6 cents for 2019.
6 | Pak Fah Yeow International Limited | Interim Report 2020 |
Reported (Loss) Profit for the six months ended 30 June 2020 down 321.3% to a loss of HK$47,210,000 (2019: profit of HK$21,331,000), primarily due to unrealised fair value losses on the Group's investment properties. Loss per share of Reported (Loss) Profit was HK15.1 cents, down 322.1% from earnings per share of HK6.8 cents for 2019.
Below is the reconciliation between Underlying Recurring Profit and Reported Profit:
Six months ended 30 June | ||||
2020 | 2019 | Change | ||
HK$'000 | HK$'000 | % | ||
Underlying Recurring (Loss) Profit | (600) | 23,538 | -102.5 | |
Unrealised fair value changes of: | ||||
Financial assets | (2,129) | 1,368 | ||
Investment properties: | ||||
United Kingdom | (23,481) | (7,275) | ||
Hong Kong and Singapore | (21,000) | 3,700 | ||
Reported (Loss) Profit | ||||
(47,210) | 21,331 | -321.3 | ||
The revaluation of other properties, which is accounted for as other comprehensive (loss) income, has resulted in a net revaluation loss for the period of HK$18,835,000 (2019: gain of HK$14,975,000).
Total comprehensive loss attributable to owners for the six months ended 30 June 2020 was approximately HK$73,176,000 (2019: income of HK$35,822,000).
Interim Report 2020 | Pak Fah Yeow International Limited | 7 |
OPERATIONS REVIEW
Healthcare
Revenue from Healthcare segment decreased by 41.4% to HK$40,674,000 (2019: HK$69,459,000). Revenue of each geographical segment is as follows:
Six months ended 30 June | ||||
2020 | 2019 | Change | ||
HK$'000 | HK$'000 | % | ||
Hong Kong | 8,015 | 53,977 | -85.2 | |
Macau | 3,431 | 5,191 | -33.9 | |
Mainland China | 16,063 | 33 | +48,575.8 | |
Southeast Asia | 10,746 | 9,805 | +9.6 | |
North America | 1,590 | - | N/A | |
Others | 829 | 453 | +83.0 | |
Segment revenue | ||||
40,674 | 69,459 | -41.4 | ||
Segment profit | ||||
5,626 | 31,292 | -82.0 | ||
Sales contribution from Hong Kong decreased significantly by 85.2% year-on-year from HK$54.0 million to HK$8.0 million. Sales contribution from Macau also decreased by 33.9% year-on-year. These reflected a weakened retail market by various factors during the first half of 2020, such as reduced consumer confidence, border restrictions and plunge in visitor arrivals to Hong Kong and Macau as clouded by COVID-19 pandemic. The Group will continue to adopt proactive sales and marketing approaches in Hong Kong and Macau to explore opportunities for sustainable growth.
Sales performance in Mainland China on the other hand was stable for the first half of 2020. This is attributable to the use of brand building and above-the-line marketing strategies, as complemented by local customers using different digital purchasing platforms.
8 | Pak Fah Yeow International Limited | Interim Report 2020 |
Sales contribution from Southeast Asia was overall positive in the first half of 2020 as compared to the same period in 2019 despite the COVID-19 pandemic that had been affecting global markets. The second half of 2020 may have strong headwinds as the ripple effects from citywide lockdowns in South East Asian countries may begin to show signs. Sales to the United States had normalised and had shown positive performance in the first half of 2020. A slowdown of new retail account openings within this market is expected as the COVID-19 ravages the country. Other markets have been weathering the pandemic storm and the overall outlook will remain cautious.
Property Investments
Revenue for this segment decreased by 23.3% to HK$3,795,000 (2019: HK$4,948,000). This change mainly represents decreased rental income derived in the United Kingdom as a result of non-payment of rent since the effects of COVID-19 became apparent in the second quarter, as well as decreased average exchange rate of Pound Sterling in translating the rental income. Revenue of each geographical segment is as follows:
Six months ended 30 June | ||||
2020 | 2019 | Change | ||
HK$'000 | HK$'000 | % | ||
Hong Kong - office and residential | 1,682 | 1,755 | -4.2 | |
Singapore - industrial | 111 | 110 | +0.9 | |
United Kingdom - retail/residential | 2,002 | 3,083 | -35.1 | |
Segment revenue | ||||
3,795 | 4,948 | -23.3 | ||
Segment result - (loss) profit | ||||
(41,329) | 715 | -5,880.3 | ||
For the six months ended 30 June 2020, segment revenue of about 44.3%, 2.9% and 52.8% (2019: 35.5%, 2.2% and 62.3%) were derived from investment properties in Hong Kong, Singapore and the United Kingdom respectively. Occupancy rate was 98.1% (2019: 100%) for the six months ended 30 June 2020.
Interim Report 2020 | Pak Fah Yeow International Limited | 9 |
Underlying Recurring Segment Result, which excludes from the segment result the unrealised fair value changes of financial assets and of investment properties and the items that are non-recurring in nature, was a profit of HK$3,152,000, down 26.5% from HK$4,290,000 in
2019. Property expenses ratio as a percentage of segment revenue increased to 16.9% (2019: 13.3%) for the period. Both Underlying Recurring Segment Result and the property expenses ratio for 2020 reflected higher proportional property expenses due to lower rental income.
Segment result for the six months ended 30 June 2020 down 5,880.3% to a loss of HK$41,329,000 (2019: profit of HK$715,000), principally reflecting unrealised fair value loss of HK$44,481,000 (2019: HK$3,575,000) on the Group's investment properties' valuation recorded this period.
Below is the reconciliation between Underlying Recurring Segment Result and the segment result:
Six months ended 30 June | ||||
2020 | 2019 | Change | ||
HK$'000 | HK$'000 | % | ||
Underlying Recurring Segment Result | 3,152 | 4,290 | -26.5 | |
Unrealised fair value changes of | ||||
investment properties: | ||||
United Kingdom | (23,481) | (7,275) | ||
Hong Kong and Singapore | (21,000) | 3,700 | ||
Segment result - (loss) profit | ||||
(41,329) | 715 | -5,880.3 | ||
Treasury Investments
Other than placing deposits in renowned banks, the Group also invested in equity and debt securities, mutual funds and dual currency investments for higher yields.
Revenue (mainly interest income) derived from this segment decreased by 38.2% to HK$225,000 (2019: HK$364,000). Underlying Recurring Segment Result decreased to a profit of HK$55,000 (2019: HK$264,000). Such decrease reflected decreased interest income as lower bank deposits balances and lower interest rate as well as weak performance on foreign currency transactions during the period.
10 | Pak Fah Yeow International Limited | Interim Report 2020 |
The segment result decreased to a loss of HK$2,074,000 (2019: profit of HK$1,632,000), mainly attributable to, amongst others as mentioned above, unrealised fair value losses on listed investments.
Below is the reconciliation between Underlying Recurring Segment Result and the segment result:
Six months ended 30 June | ||||
2020 | 2019 | Change | ||
HK$'000 | HK$'000 | % | ||
Underlying Recurring Segment Result | 55 | 264 | -79.2 | |
Unrealised fair value changes of | ||||
financial assets | (2,129) | 1,368 | ||
Segment result - (loss) profit | ||||
(2,074) | 1,632 | -227.1 | ||
FINANCIAL REVIEW
The results overview and operations review in preceding sections also cover financial review of the Group's three business segments. This section discusses other significant financial items.
Staff Costs
Staff costs are categorised into production (production-related payroll costs) and administration (other payroll costs, including management and head office staff), which decreased by 2.8% from HK$16,025,000 to HK$15,582,000. This mainly reflected decreased provision for management bonus, partly offset by annual salary increment.
Other Operating Expenses
Other operating expenses increased by 11.3% to HK$14,213,000 (2019: HK$12,772,000), mainly attributable to increase in sales and marketing expenses for brand building and above-the-line marketing. Other operating expenses ratio as a percentage of total revenue increased to 31.8% (2019: 17.1%) for the period. This reflected higher proportional expenses due to significant decrease in total revenue.
Interim Report 2020 | Pak Fah Yeow International Limited | 11 |
Finance Costs
Finance costs decreased by 10.7% to HK$469,000 (2019: HK$525,000), mainly due to lower bank loan balance and lower average exchange rate in translating interest expenses of the loan denominated in Pound Sterling. Interest coverage ratio (profit from operations before interest and taxes and before unrealised fair value changes of financial assets and of investment properties divided by finance costs) decreased to 3.1 (2019: 55.6) for the period. Such decrease reflected a weak financial performance in 2020.
Taxation
Decrease in taxation from HK$5,137,000 to HK$1,596,000 was principally due to decrease in taxable operating profits of subsidiaries in Hong Kong and the United Kingdom. The effect was partly offset by underprovision of taxation in Hong Kong for previous years.
Investment Properties
The Group's investment properties in Hong Kong and the United Kingdom were valued at 30 June 2020 by an independent professional valuer on a fair value basis. No revaluation was made for the Group's investment properties in Singapore as its fair value change was considered insignificant for the period. The valuation as at 30 June 2020 was HK$292,543,000, a decline of 15.6% from HK$346,432,000 as at 31 December 2019. Such decrease reflected an increasing market risk of retail sector in the United Kingdom and a weakened office and residential sectors in Hong Kong due to uncertainty over the future global impact of COVID-19. The valuation of the Group's investment properties in each geographical segment as at the balance sheet date is as follows.
As at 30 June 2020 | As at 31 December 2019 | |||||
Original | Original | Change in | ||||
currency | currency | HK$ | ||||
'000 | HK$'000 | '000 | HK$'000 | % | ||
Hong Kong - office and residential | HK$156,300 | 156,300 | HK$177,300 | 177,300 | -11.8 | |
Singapore - industrial | S$1,950 | 11,236 | S$1,950 | 11,236 | - | |
United Kingdom - retail/residential | GBP13,100 | 125,007 | GBP15,480 | 157,896 | -20.8 | |
292,543 | 346,432 | -15.6 | ||||
Unrealised fair value loss on investment properties of HK$44,481,000 (2019: HK$3,575,000) was recognised for the period.
12 | Pak Fah Yeow International Limited | Interim Report 2020 |
FINANCIAL RESOURCES AND TREASURY POLICIES
The Group continues to adhere to prudent treasury policies. Gearing ratio (interest-bearing borrowings divided by total shareholders' funds) as at 30 June 2020 was 2.5% (31 December 2019: 2.6%). Total bank borrowings of the Group amounted to HK$16,843,000 (31 December
2019: HK$19,492,000), mainly denominated in Pound Sterling with floating interest rates.
Current ratio (current assets divided by current liabilities) was 3.2 times as at 30 June 2020 (31 December 2019: 3.3 times). The Group holds sufficient cash and marketable securities on hand to meet its short-term liabilities, commitments and working capital demand.
EXCHANGE RATE EXPOSURES
Most of the Group's business transactions were conducted in Hong Kong Dollars and United States Dollars. Certain rental income is derived in the United Kingdom and denominated in Pound Sterling. As at 30 June 2020, the Group's debt borrowing was mainly denominated in Pound Sterling. The Group also had equity and debt securities and dual currency investments denominated in foreign currencies.
The Group considers there is no significant exposure to foreign exchange fluctuations for United States Dollars as long as the Hong Kong-United States dollar exchange rate remains pegged. Other than United States Dollars whose exchange rate with Hong Kong Dollars remained relatively stable during the period, the Group's foreign exchange exposure relating to investments in overseas securities and bank balances as at 30 June 2020 were approximately HK$43.0 million (31 December 2019: HK$42.0 million) in total, or about 5.3% (31 December 2019: 4.6%) of the Group's total assets. The Group was also exposed to foreign exchange rate changes (net of the underlying debt borrowings) of approximately HK$108.2 million (31 December 2019: HK$139.1 million) relating to carrying amount of the investment properties in the United Kingdom.
PLEDGE OF ASSETS
As at 30 June 2020, certain of the Group's leasehold land and buildings and investment properties with an aggregate carrying value of approximately HK$272.0 million (31 December 2019: HK$324.9 million) were pledged to secure banking facilities granted to the Group to the extent of approximately HK$91.4 million (31 December 2019: HK$93.3 million), of which approximately HK$16.8 million (31 December 2019: HK$19.5 million) were utilised as at 30 June 2020.
Interim Report 2020 | Pak Fah Yeow International Limited | 13 |
CONTINGENT LIABILITIES
As at 30 June 2020, no legal proceedings were initiated by any third parties against the Group as defendant, nor were there any outstanding claims which may result in significant financial losses to the Group.
PLAN FOR SIGNIFICANT INVESTMENT OR ACQUISITION OF CAPITAL ASSETS IN THE FUTURE
The Group has no plan for significant investment or acquisition of material capital assets.
EMPLOYEES AND REMUNERATION POLICIES
As at 30 June 2020, the Group had a total of 91 (31 December 2019: 90) employees. Remuneration packages of employees and directors are reviewed annually and determined by reference to market pay and individual performance. In addition to salary payments, the Group also provides other employment benefits including medical allowance and educational subsidies to eligible employees.
OUTLOOK
Global and Hong Kong economic outlooks for the second half of 2020 are still clouded by geopolitical issues and COVID-19 effects which would inevitably affect the Group's business environment. The situation may continue to deteriorate further as the latest wave of COVID-19 infections appears more worrying. Ongoing preventive and control measures, including border control and prohibition on group gathering, are expected to continue for a period of time and these would change many aspects of people lives and affect consumer confidence and spending. The Group will closely monitor and respond to the development and will continue to assess its impact on the Group's financial position and operating results.
By Order of the Board
Pak Fah Yeow International Limited
Gan Wee Sean
Chairman
Hong Kong, 27 August 2020
14 | Pak Fah Yeow International Limited | Interim Report 2020 |
INDEPENDENT AUDITOR'S REPORT ON REVIEW OF CONDENSED INTERIM FINANCIAL INFORMATION
中審眾環(香港)會計師事務所有限公司
To the board of directors
Pak Fah Yeow International Limited
(incorporated in Bermuda with limited liability)
Introduction
We have reviewed the condensed interim financial information of Pak Fah Yeow International Limited (the "Company") and its subsidiaries (together the "Group") set out on pages 16 to 37, which comprises the condensed consolidated statement of financial position as of 30 June 2020 and the related condensed consolidated statement of comprehensive income, condensed consolidated statement of changes in equity and condensed consolidated statement of cash flows for the six-month period then ended, and other explanatory notes. The Main Board Listing Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of a report on interim financial information to be in compliance with the relevant provisions thereof and Hong Kong Accounting Standard 34 "Interim Financial Reporting" ("HKAS 34") issued by the Hong Kong Institute of Certified Public Accountants (the "HKICPA"). The directors of the Company are responsible for the preparation and presentation of this condensed interim financial information in accordance with HKAS 34.
Our responsibility is to express a conclusion on this condensed interim financial information based on our review and to report our conclusion solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.
Interim Report 2020 | Pak Fah Yeow International Limited | 15 |
Scope of review
We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the HKICPA. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed interim financial information as at 30 June 2020 is not prepared, in all material respects, in accordance with HKAS 34.
Mazars CPA Limited
Certified Public Accountants
Hong Kong, 27 August 2020
16 | Pak Fah Yeow International Limited | Interim Report 2020 |
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months ended 30 June 2020
Six months ended 30 June | ||||
2020 | 2019 | |||
(unaudited) | (unaudited) | |||
Notes | HK$'000 | HK$'000 | ||
Revenue | 3 | 44,694 | 74,771 | |
Other revenue | 4 | 75 | 149 | |
Other net income | 5 | 942 | 50 | |
Changes in inventories of finished goods | 6,047 | 1,168 | ||
Raw materials and consumables used | (15,185) | (13,438) | ||
Staff costs | (15,582) | (16,025) | ||
Depreciation expenses | (3,998) | (4,191) | ||
Net exchange loss | (1,315) | (512) | ||
Other operating expenses | (14,213) | (12,772) | ||
Profit from operations before fair value | ||||
changes of financial assets through profit or | ||||
loss and of investment properties | 1,465 | 29,200 | ||
Net (loss) gain on financial assets at fair value | (2,129) | |||
through profit or loss | 1,368 | |||
Revaluation deficit in respect of investment | (44,481) | |||
properties | (3,575) | |||
(Loss) Profit from operations | (45,145) | 26,993 | ||
Finance costs | 6 | (469) | (525) | |
(Loss) Profit before taxation | 6 | (45,614) | 26,468 | |
Taxation | 7 | (1,596) | (5,137) | |
(Loss) Profit for the period, attributable to | ||||
owners of the Company | (47,210) | 21,331 | ||
Interim Report 2020 | Pak Fah Yeow International Limited | 17 |
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (CONTINUED)
Six months ended 30 June 2020
Six months ended 30 June | ||||
2020 | 2019 | |||
(unaudited) | (unaudited) | |||
Notes | HK$'000 | HK$'000 | ||
Other comprehensive (loss) income | ||||
Items that may be reclassified subsequently to | ||||
profit or loss: | ||||
Exchange difference arising from translation | ||||
of financial statements of overseas | (9,596) | |||
subsidiaries | (690) | |||
Exchange difference arising from translation | ||||
of inter-company balances with overseas | 2,465 | |||
subsidiaries representing net investments | 206 | |||
Item that will not be reclassified to profit or loss: | ||||
Revaluation (deficit) surplus of leasehold | ||||
land and buildings, net of tax effect of | (18,835) | |||
HK$3,721,000 (2019: HK$2,959,000) | 14,975 | |||
Other comprehensive (loss) income | ||||
for the period, net of tax, attributable | ||||
to owners of the Company | (25,966) | 14,491 | ||
Total comprehensive (loss) income for | ||||
the period, attributable to owners of the | ||||
Company | (73,176) | 35,822 | ||
(Loss) Earnings per share | 9 | (15.15) cents | ||
Basic and diluted | 6.84 cents | |||
18 | Pak Fah Yeow International Limited | Interim Report 2020 |
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 30 June 2020
At | At | ||
30 June | 31 December | ||
2020 | 2019 | ||
(unaudited) | (audited) | ||
Notes | HK$'000 | HK$'000 | |
Non-current assets | 10 | 292,543 | 346,432 |
Investment properties | |||
Property, plant and equipment | 10 | 342,578 | 368,511 |
Intangible assets | 2,450 | 2,450 | |
Financial assets at fair value through | 12 | 5,761 | 5,789 |
profit or loss | |||
643,332 | 723,182 | ||
Current assets | 25,928 | 17,929 | |
Inventories | 11 | ||
Trade and other receivables | 18,179 | 13,776 | |
Financial assets at fair value through | 12 | 14,600 | 16,489 |
profit or loss | |||
Tax recoverable | 28 | 2,505 | |
Bank balances and cash | 116,722 | 137,969 | |
175,457 | 188,668 | ||
Current liabilities | 13 | 16,843 | 19,492 |
Bank borrowings, secured | |||
Current portion of deferred income | 14 | 226 | 242 |
Trade and other payables | 21,546 | 26,992 | |
Tax payables | 4,275 | 3,024 | |
Dividends payable | 12,577 | 7,302 | |
55,467 | 57,052 | ||
Net current assets | 119,990 | 131,616 | |
Total assets less current liabilities | 763,322 | 854,798 | |
Interim Report 2020 | Pak Fah Yeow International Limited | 19 |
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)
At 30 June 2020
At | At | ||
30 June | 31 December | ||
2020 | 2019 | ||
(unaudited) | (audited) | ||
Notes | HK$'000 | HK$'000 | |
Non-current liabilities | |||
Long-term portion of consideration payable | 2,073 | 2,073 | |
for acquisition of trademarks | |||
Long-term portion of deferred income | 31,601 | 33,899 | |
Provision for directors' retirement benefits | 4,903 | 4,689 | |
Deferred taxation | 49,646 | 54,020 | |
88,223 | 94,681 | ||
NET ASSETS | 675,099 | 760,117 | |
Capital and reserves | 15 | 15,582 | 15,582 |
Share capital | |||
Share premium and reserves | 659,517 | 744,535 | |
TOTAL EQUITY | 675,099 | 760,117 | |
20 | Pak Fah Yeow International Limited | Interim Report 2020 |
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Six months ended 30 June 2020
Share | |||||||||
Properties | premium | ||||||||
Share | Share | Exchange | Proposed | Retained | and | ||||
revaluation | reserves | Total | |||||||
capital | premium | reserve | reserve | dividends | profits | total | |||
HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | HK$'000 | ||
At 1 January 2019 | 15,582 | 21,997 | 273,151 | (36,906) | 11,842 | 471,036 | 741,120 | 756,702 | |
Profit for the period | - | - | - | - | - | 21,331 | 21,331 | 21,331 | |
Other comprehensive income | - | - | 14,975 | (484) | - | - | 14,491 | 14,491 | |
Total comprehensive income | |||||||||
attributable to owners of the | - | - | 14,975 | (484) | - | 21,331 | 35,822 | 35,822 | |
Company | |||||||||
Transactions with owners: | |||||||||
Distributions to owners | |||||||||
Interim dividends declared | - | - | - | - | 6,544 | (15,270) | (8,726) | (8,726) | |
(note 8) | |||||||||
2018 final dividend transferred | - | - | - | - | (11,842) | - | (11,842) | (11,842) | |
to dividend payable | |||||||||
Total transactions with owners | - | - | - | - | (5,298) | (15,270) | (20,568) | (20,568) | |
At 30 June 2019 | 15,582 | 21,997 | 288,126 | (37,390) | 6,544 | 477,097 | 756,374 | 771,956 | |
At 1 January 2020 | 15,582 | 21,997 | 265,811 | (33,766) | 11,842 | 478,651 | 744,535 | 760,117 | |
Loss for the period | - | - | - | - | - | (47,210) | (47,210) | (47,210) | |
Other comprehensive loss | - | - | (18,835) | (7,131) | - | - | (25,966) | (25,966) | |
Total comprehensive loss | |||||||||
attributable to owners | - | - | (18,835) | (7,131) | - | (47,210) | (73,176) | (73,176) | |
of the Company | |||||||||
Transactions with owners: | |||||||||
Distributions to owners | |||||||||
Interim dividends declared | - | - | - | - | 8,103 | (8,103) | - | - | |
(note 8) | |||||||||
2019 final dividend transferred | - | - | - | - | (11,842) | - | (11,842) | (11,842) | |
to dividend payable | |||||||||
Total transactions with owners | - | - | - | - | (3,739) | (8,103) | (11,842) | (11,842) | |
At 30 June 2020 | 15,582 | 21,997 | 246,976 | (40,897) | 8,103 | 423,338 | 659,517 | 675,099 | |
Interim Report 2020 | Pak Fah Yeow International Limited | 21 | |||
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS | |||||
Six months ended 30 June 2020 | |||||
Six months ended 30 June | |||||
2020 | 2019 | ||||
(unaudited) | (unaudited) | ||||
HK$'000 | HK$'000 | ||||
OPERATING ACTIVITIES | (13,119) | ||||
Cash (used in) generated from operations | 33,635 | ||||
Interest received | 225 | 364 | |||
Interest paid | (189) | (245) | |||
Income taxes refunded (paid) | 2,149 | (896) | |||
Net cash (used in) generated from operating activities | (10,934) | 32,858 | |||
INVESTING ACTIVITIES | (621) | ||||
Purchase of property, plant and equipment | (151) | ||||
Net cash used in investing activities | (621) | (151) | |||
FINANCING ACTIVITIES | |||||
Payments of consideration payable for acquisition of | (280) | ||||
trademark | (280) | ||||
Net movement in bank borrowings, secured | (1,439) | (1,067) | |||
Dividends paid | (6,567) | (6,646) | |||
Net cash used in financing activities | (8,286) | (7,993) | |||
Net (decrease) increase in cash and cash equivalents | (19,841) | 24,714 | |||
Cash and cash equivalents at beginning of period | 137,969 | 126,115 | |||
Effect of foreign exchange rate changes | (1,406) | (89) | |||
Cash and cash equivalents at end of period | 116,722 | 150,740 | |||
Analysis of the balances of cash and cash equivalents | 83,893 | ||||
Cash at bank and in hand | 126,240 | ||||
Time deposits | 32,829 | 24,500 | |||
116,722 | 150,740 | ||||
22 | Pak Fah Yeow International Limited | Interim Report 2020 |
NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION
Six months ended 30 June 2020
1. BASIS OF PREPARATION
The unaudited condensed interim financial information of Pak Fah Yeow International Limited (the "Company") and its subsidiaries (together the "Group") for the six months ended 30 June 2020 (the "Interim Financial Information") has been prepared in accordance with the applicable disclosure requirements of Appendix 16 to the Main Board Listing Rules Governing the Listing of Securities (the "Listing Rules") on The Stock Exchange of Hong Kong Limited (the "Stock Exchange") and the Hong Kong Accounting Standard 34 "Interim Financial Reporting" ("HKAS 34") issued by the Hong Kong Institute of Certified Public Accountants (the "HKICPA").
The Interim Financial Information does not include all the information and disclosures required in the annual financial statements and should be read, where relevant, in conjunction with the Group's annual financial statements for the year ended 31 December 2019 ("2019 Annual Accounts").
The Interim Financial Information is unaudited, but has been reviewed by the Company's Audit Committee.
2. PRINCIPAL ACCOUNTING POLICIES
The Interim Financial Information has been prepared under the historical cost convention except for investment properties, leasehold land and buildings and financial assets at fair value through profit or loss, which are measured at fair value.
The accounting policies and basis of preparation adopted in this Interim Financial Information is consistent with those used in the preparation of the 2019 Annual Report, except for the adoption of the new/revised Hong Kong Financial Reporting Standards ("HKFRSs") that are relevant to the Group and effective for the Group's financial year beginning on 1 January 2020 as described below:
Amendments to HKFRS 3 | Definition of a Business |
Amendments to HKAS 1 and HKAS 8 | Definition of Material |
Amendments to HKFRS 9, HKAS 39 and HKFRS 7 | Interest Rate Benchmark Reform |
The adoption of these amendments to HKFRSs did not result in substantial changes to the Group's accounting policies and amounts reported for the current and prior years.
Interim Report 2020 | Pak Fah Yeow International Limited | 23 |
3. OPERATING SEGMENT INFORMATION
Management has determined the operating segments based on the reports reviewed by the chief operating decision maker - the executive directors for making strategic decisions and resources allocation. The Group's operating segments are structured and managed separately according to the nature of their businesses. The Group is currently organised into three operating businesses as follows:
- Healthcare - manufacturing and sale of Hoe Hin products
- Property investments
- Treasury investments
Each of the Group's operating segments represents a strategic business unit subject to risks and returns that are different from those of the other operating segments.
For the purposes of assessing the performance of the operating segments between segments, the executive directors assess segment profit or loss before income tax without allocation of finance costs, directors' emoluments, office staff salaries, legal and professional fees and central administrative costs and the basis of preparing such information is consistent with that of the consolidated financial statements. All assets are allocated to reportable segments other than tax recoverable and corporate assets. All liabilities are allocated to reportable segments other than deferred taxation, provision for directors' retirement benefits, tax payable, dividends payable and other corporate liabilities.
Business segments
Six months ended 30 June 2020 | |||||||
Property | Treasury | ||||||
Healthcare | investments | investments | Consolidated | ||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||
HK$'000 | HK$'000 | HK$'000 | HK$'000 | ||||
Revenue from external customers | 40,674 | 3,795 | 225 | 44,694 | |||
Segment results | 5,626 | (41,329) | (2,074) | (37,777) | |||
Unallocated corporate expenses | (7,368) | ||||||
Loss from operations | (45,145) | ||||||
Finance costs | (469) | ||||||
Loss before taxation | (45,614) | ||||||
Taxation | (1,596) | ||||||
Loss for the period | (47,210) | ||||||
24 | Pak Fah Yeow International Limited | Interim Report 2020 |
3. OPERATING SEGMENT INFORMATION (CONTINUED)
Business segments (Continued)
Six months ended 30 June 2019 | ||||||
Property | Treasury | |||||
Healthcare | investments | investments | Consolidated | |||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||
HK$'000 | HK$'000 | HK$'000 | HK$'000 | |||
Revenue from external customers | 69,459 | 4,948 | 364 | 74,771 | ||
Segment results | 31,292 | 715 | 1,632 | 33,639 | ||
Unallocated corporate expenses | (6,646) | |||||
Profit from operations | 26,993 | |||||
Finance costs | (525) | |||||
Profit before taxation | 26,468 | |||||
Taxation | (5,137) | |||||
Profit for the period | 21,331 | |||||
Segment assets and liabilities
The following table presents segment assets and liabilities of the Group's business segments as at 30 June 2020 and 31 December 2019:
At 30 June 2020 | ||||
Property | Treasury | |||
Healthcare | investments | investments | Consolidated | |
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |
HK$'000 | HK$'000 | HK$'000 | HK$'000 | |
Assets | 440,140 | 293,116 | 84,970 | 818,226 |
Segment assets | ||||
Unallocated corporate assets | 563 | |||
Consolidated total assets | 818,789 | |||
Liabilities | 22,007 | 50,389 | - | 72,396 |
Segment liabilities | ||||
Unallocated corporate liabilities | 71,294 | |||
Consolidated total liabilities | 143,690 | |||
Interim Report 2020 | Pak Fah Yeow International Limited | 25 |
3. OPERATING SEGMENT INFORMATION (CONTINUED)
Segment assets and liabilities (Continued)
At 31 December 2019 | ||||
Property | Treasury | |||
Healthcare | investments | investments | Consolidated | |
(audited) | (audited) | (audited) | (audited) | |
HK$'000 | HK$'000 | HK$'000 | HK$'000 | |
Assets | ||||
Segment assets | 475,207 | 347,298 | 86,360 | 908,865 |
Unallocated corporate assets | 2,985 | |||
Consolidated total assets | 911,850 | |||
Liabilities | ||||
Segment liabilities | 27,196 | 54,567 | - | 81,763 |
Unallocated corporate liabilities | 69,970 | |||
Consolidated total liabilities | 151,733 | |||
Geographical information | ||||||
Revenue from external | Results from | |||||
customers | operations | |||||
Six months ended 30 June | Six months ended 30 June | |||||
2020 | 2019 | 2020 | 2019 | |||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||
HK$'000 | HK$'000 | HK$'000 | HK$'000 | |||
Hong Kong | 9,879 | 55,969 | (23,471) | 30,486 | ||
Macau | 3,431 | 5,191 | 2,282 | 3,229 | ||
PRC | 16,063 | 33 | (270) | (1,855) | ||
Southeast Asia | 10,873 | 10,005 | 4,754 | 4,030 | ||
North America | 1,590 | - | 87 | 5 | ||
United Kingdom | 2,030 | 3,120 | (21,529) | (4,228) | ||
Europe (excluding United Kingdom) | - | - | (619) | 1,152 | ||
Other regions | 828 | 453 | 475 | 357 | ||
Unallocated corporate expenses | - | - | (6,854) | (6,183) | ||
44,694 | 74,771 | (45,145) | 26,993 | |||
26 | Pak Fah Yeow International Limited | Interim Report 2020 | |||
4. | OTHER REVENUE | ||||
Six months ended 30 June | |||||
2020 | 2019 | ||||
(unaudited) | (unaudited) | ||||
HK$'000 | HK$'000 | ||||
Listed investments: | |||||
Dividend income from financial assets | |||||
at fair value through profit or loss | 78 | 146 | |||
(Loss) Gain on disposal of financial assets | |||||
at fair value through profit or loss | (3) | 3 | |||
75 | 149 | ||||
5. | OTHER NET INCOME | ||||
Six months ended 30 June | |||||
2020 | 2019 | ||||
(unaudited) | (unaudited) | ||||
HK$'000 | HK$'000 | ||||
Commission received | 13 | 11 | |||
Loss on disposal of property, plant and equipment | - | (1) | |||
Sundry income | 929 | 40 | |||
942 | 50 | ||||
Interim Report 2020 | Pak Fah Yeow International Limited | 27 |
6. (LOSS) PROFIT BEFORE TAXATION
Six months ended 30 June | ||||
2020 | 2019 | |||
(unaudited) | (unaudited) | |||
This is stated after charging: | HK$'000 | HK$'000 | ||
(a) | Finance costs | |||
Interest on bank borrowings | 189 | 245 | ||
Interest on consideration payable for acquisition | 280 | |||
of trademarks | 280 | |||
469 | 525 | |||
(b) | Other items | |||
Cost of inventories | 19,049 | 21,429 | ||
7. | TAXATION | |||
The Inland Revenue (Amendment) (No. 7) Bill 2017 (the "Bill") which introduces the two-tiered profits tax rates regime was signed into law and gazetted in March 2018. Under the two-tiered profits tax rates regime, the first HK$2 million of profits of qualifying group entity are taxed at 8.25% and profits above HK$2 million are taxed at 16.5%. The profits of other group entities in Hong Kong not qualifying for the two-tiered profits tax rates continue to be taxed at a flat rate of 16.5%.
Overseas taxation has been provided on the estimated assessable profits for the period, in respect of the Group's overseas operations, at the rates of taxation prevailing in the relevant jurisdictions.
The charge comprises: | |||
Six months ended 30 June | |||
2020 | 2019 | ||
(unaudited) | (unaudited) | ||
HK$'000 | HK$'000 | ||
Current tax | |||
Hong Kong Profits Tax | 560 | ||
- Current period | 4,572 | ||
- Underprovision in prior year | 1,280 | - | |
Overseas tax | 409 | 609 | |
Deferred taxation | 2,249 | 5,181 | |
(653) | |||
Origination and reversal of temporary differences | (44) | ||
1,596 | 5,137 | ||
28 | Pak Fah Yeow International Limited | Interim Report 2020 |
8. DIVIDENDS
Dividends attributable to the previous financial year, approved and paid during the
period
At the board meeting held on 26 March 2020, the directors proposed a final dividend of HK3.8 cents per share totalling HK$11,842,000 for the year ended 31 December 2019 (year ended
31 December 2018: HK3.8 cents per share totalling HK$11,842,000). Upon the approval by shareholders on 30 June 2020, the appropriation was transferred to dividends payable.
Dividends attributable to the period
Six months ended 30 June | ||
2020 | 2019 | |
(unaudited) | (unaudited) | |
HK$'000 | HK$'000 | |
Interim dividend of HK2.6 cents per share | ||
(2019: first and second interim dividends of | ||
HK2.8 and HK2.1 cents) | 8,103 | 15,270 |
On 27 August 2020, the directors declared an interim dividend of HK2.6 cents per share totalling HK$8,103,000 (2019: first interim dividend of HK2.8 cents per share totalling HK$8,726,000 and second interim dividend of HK2.1 cents per share totalling HK$6,544,000 declared on 18 June 2019 and 22 August 2019 respectively), which is payable to the shareholders on the register of members of the Company on 9 October 2020.
9. (LOSS) EARNINGS PER SHARE
The calculation of the basic and diluted loss (2019: earnings) per share is based on the loss
attributable to owners of the Company for the period of HK$47,210,000 (2019: earnings of
HK$21,331,000) and 311,640,000 (2019: 311,640,000) ordinary shares in issue during the period.
Diluted (loss) earnings per share equals to basic (loss) earnings per share as there were no potential dilutive ordinary shares outstanding during the two periods ended 30 June 2019 and 2020.
Interim Report 2020 | Pak Fah Yeow International Limited | 29 |
10. MOVEMENTS IN INVESTMENT PROPERTIES AND PROPERTY, PLANT AND EQUIPMENT
The Group's investment properties situated in Hong Kong and leasehold land and buildings situated in Hong Kong were stated at fair value as at 30 June 2020 as estimated by the directors with reference to the valuation provided by an independent professional valuer. The Group recorded a net deficit on revaluation of the investment properties situated in Hong Kong of HK$21,000,000 (six months ended 30 June 2019: surplus of HK$3,700,000) during the period, which was recognised in profit or loss. In addition, the Group recorded a deficit on revaluation of the leasehold land and buildings situated in Hong Kong of HK$22,556,000 (six months ended 30 June 2019: surplus of HK$17,934,000) during the period, which was recognised in the properties revaluation reserve.
In addition, the Group's investment properties situated in London, the United Kingdom were also stated at fair value as at 30 June 2020 as estimated by the directors with reference to the valuation provided by an independent professional valuer. The Group recorded a net deficit on revaluation of the investment properties situated in United Kingdom of HK$23,481,000 during the period (2019: HK$7,275,000), which was recognised in profit or loss. During the period, the Group also recorded a deficit on exchange realignment of HK$9,408,000 (six months ended 30 June 2019: HK$631,000) on the investment properties situated in the United Kingdom which was recognised as part of the exchange difference arising from translation of financial statements of overseas subsidiaries in the exchange reserve.
In the opinion of the directors, the change in fair value of the Group's investment properties situated in Singapore for the period was not material to the results of the Group.
During the period, the Group acquired property, plant and equipment of HK$621,000 (six months ended 30 June 2019: HK$151,000).
30 | Pak Fah Yeow International Limited | Interim Report 2020 | |
11. TRADE AND OTHER RECEIVABLES | |||
At | At | ||
30 June | 31 December | ||
2020 | 2019 | ||
(unaudited) | (audited) | ||
HK$'000 | HK$'000 | ||
Trade receivables | 461 | 9,835 | |
Bills receivable | 15,066 | 658 | |
Other receivables | |||
Deposits, prepayments and other debtors | 2,652 | 3,283 | |
18,179 | 13,776 | ||
The Group allows credit period ranging from 30 days to 120 days (2019: 30 days to 120 days) | |||
to its customers. The ageing analysis of trade receivables by invoice date is as follows: | |||
At | At | ||
30 June | 31 December | ||
2020 | 2019 | ||
(unaudited) | (audited) | ||
HK$'000 | HK$'000 | ||
Within 30 days | 461 | 9,835 | |
Interim Report 2020 | Pak Fah Yeow International Limited | 31 |
12. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
The Group's major investments as at 30 June 2020 are detailed below:
As at 30 June 2020 | For the six | ||||
Approximate | months | ||||
percentage of | Approximate | ended 30 | |||
the Group's | percentage of | June 2020 | |||
Fair/Market | investment | the Group's | Fair value | ||
Stock code | value | portfolio | net assets | gain (loss) | |
HK$'000 | % | % | HK$'000 | ||
Equity securities, listed in Hong Kong | |||||
HSBC Holdings plc | 00005.HK | 1,079 | 5.3 | 0.2 | (734) |
Guangdong Investment Limited | 00270.HK | 1,330 | 6.5 | 0.2 | (300) |
Equity securities, listed overseas | |||||
Pfizer Inc. | PFE.NYSE | 1,615 | 7.9 | 0.2 | (320) |
SANOFI-ACT | SAN.EPA | 1,169 | 5.7 | 0.2 | 13 |
Mutual funds, unlisted | |||||
KBC Eco Fund SICAV-Water | |||||
capitalisation | N/A | 3,330 | 16.4 | 0.5 | (415) |
Multipartner SICAV-RobecoSAM | |||||
Sustainable Water Fund | |||||
B-capitalisation | N/A | 1,437 | 7.1 | 0.2 | (101) |
Debt securities, unlisted | |||||
Aberdeen Marina Club Limited | N/A | 2,785 | 13.7 | 0.4 | - |
Shenzhen Xili Golf Club | N/A | 1,842 | 9.0 | 0.3 | - |
32 | Pak Fah Yeow International Limited | Interim Report 2020 |
13. BANK BORROWINGS, SECURED
The analysis of the carrying amount of bank borrowings is as follows:
At | At | |
30 June | 31 December | |
2020 | 2019 | |
(unaudited) | (audited) | |
HK$'000 | HK$'000 | |
Bank borrowings due for repayment | ||
within one year (note (i)) | 16,843 | 18,768 |
Term loan from a bank which contains | ||
a repayment on demand clause (note (ii)) | - | 724 |
16,843 | 19,492 | |
- The revolving loan of HK$16,843,000 (31 December 2019: HK$18,768,000) bears interest at the bank's cost of fund plus 1.5% per annum and is repayable one month after drawdown. The loan is secured by pledging the Group's investment properties with an aggregate carrying value of HK$125,007,000 (31 December 2019: HK$157,896,000) together with the assignment of rental monies derived from the investment properties.
- The term loan bore interest at the Hong Kong prime rate minus 3% per annum and was entirely repaid on 28 April 2020. At 31 December 2019, it was secured by a first legal charge over the Group's leasehold land and buildings held for own use with a carrying value of HK$167,000,000.
Interim Report 2020 | Pak Fah Yeow International Limited | 33 | |||
14. TRADE AND OTHER PAYABLES | |||||
At | At | ||||
30 June | 31 December | ||||
2020 | 2019 | ||||
(unaudited) | (audited) | ||||
HK$'000 | HK$'000 | ||||
Trade payables | 4,830 | 5,120 | |||
Other payables | |||||
Accrued charges and other creditors | 2,534 | 3,775 | |||
Accrued advertising and promotion expenses | 9,858 | 9,899 | |||
Accrued rebate and discounts | 4,324 | 8,198 | |||
16,716 | 21,872 | ||||
21,546 | 26,992 | ||||
The ageing analysis of trade payables by invoice date is as follows:
At | At | |
30 June | 31 December | |
2020 | 2019 | |
(unaudited) | (audited) | |
HK$'000 | HK$'000 | |
Within 30 days | 4,813 | 3,400 |
31 - 60 days | - | 1,703 |
61 - 90 days | - | - |
More than 90 days | 17 | 17 |
4,830 | 5,120 | |
34 | Pak Fah Yeow International Limited | Interim Report 2020 | ||||
15. SHARE CAPITAL | ||||||
At 30 June 2020 | At 31 December 2019 | |||||
(unaudited) | (audited) | |||||
No. of | HK$'000 | No. of | ||||
shares | shares | HK$'000 | ||||
Authorised: | ||||||
At beginning and end of the | ||||||
reporting period | ||||||
Ordinary shares of HK$0.05 each | 600,000,000 | 30,000 | 600,000,000 | 30,000 | ||
Issued and fully paid: | ||||||
At beginning and end of the | 311,640,000 | 15,582 | ||||
reporting period | 311,640,000 | 15,582 | ||||
16. PLEDGE OF ASSETS
Certain of the Group's leasehold land and buildings and investment properties were pledged to secure banking facilities, including bank borrowings, granted to the Group to the extent of HK$91,377,000 (31 December 2019: HK$93,325,000), of which HK$16,843,000 (31 December 2019: HK$19,492,000) were utilised at the end of the reporting period.
The carrying amounts of the Group's pledged assets are as follows:
At | At | |
30 June | 31 December | |
2020 | 2019 | |
(unaudited) | (audited) | |
HK$'000 | HK$'000 | |
Leasehold land and buildings | 147,000 | 167,000 |
Investment properties | 125,007 | 157,896 |
272,007 | 324,896 | |
Interim Report 2020 | Pak Fah Yeow International Limited | 35 |
17. RELATED PARTY TRANSACTIONS
In addition to the transactions/information disclosed elsewhere in this Interim Financial Information, during the period, the Group had the following transactions with related parties.
Six months ended 30 June | ||
2020 | 2019 | |
(unaudited) | (unaudited) | |
HK$'000 | HK$'000 | |
Compensation paid to key management personnel, | ||
including directors: | ||
- Salaries and other benefits | 7,004 | 7,498 |
- Contributions to defined contribution plan | 38 | 45 |
18. CAPITAL COMMITMENT
In 2007, the Group entered into a master agreement with a bank to invest in a private equity fund with maximum capital injection of US$1 million (equivalent to approximately HK$7.8 million). In 2017, the maximum capital injection had been revised to US$817,000 (equivalent to HK$6,373,000). As at 30 June 2020, US$792,000 (equivalent to approximately HK$6,175,000) (31 December 2019: US$792,000 (equivalent to approximately HK$6,175,000)) was called and paid up. Since the commitment period ended on 31 December 2011, the remaining US$25,000 (equivalent to approximately HK$197,000) (31 December 2019: US$25,000 (equivalent to approximately HK$197,000)) would only be payable in limited situations stipulated in the master agreement.
19. FAIR VALUE DISCLOSURES
The following presents the assets measured at fair value or required to disclose their fair value in this Interim Financial Information on a recurring basis at the end of the reporting period across the three levels of the fair value hierarchy defined in HKFRS 13, Fair Value Measurement, with the fair value measurement categorised in its entirety based on the lowest level input that is significant to the entire measurement. The levels of inputs are defined as follows:
- Level 1 (highest level): quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date;
- Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly;
- Level 3 (lowest level): unobservable inputs for the asset or liability.
36 | Pak Fah Yeow International Limited | Interim Report 2020 | |||
19. FAIR VALUE DISCLOSURES (CONTINUED) | |||||
Financial assets measured at fair value | |||||
30 June | |||||
2020 | Level 1 | Level 2 | Level 3 | ||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | ||
HK$'000 | HK$'000 | HK$'000 | HK$'000 | ||
Financial assets at fair value | |||||
through profit or loss | |||||
Equity securities, listed in | |||||
Hong Kong | 4,376 | 4,376 | - | - | |
Equity securities, listed overseas | 4,146 | 4,146 | - | - | |
Mutual funds, unlisted | 5,116 | - | 5,116 | - | |
Dual currency deposits | 962 | 962 | - | - | |
Debt securities, unlisted | 4,823 | 4,823 | - | - | |
Private equity fund, unlisted | 938 | - | - | 938 | |
20,361 | 14,307 | 5,116 | 938 | ||
31 | |||||
December | |||||
2019 | Level 1 | Level 2 | Level 3 | ||
(audited) | (audited) | (audited) | (audited) | ||
HK$'000 | HK$'000 | HK$'000 | HK$'000 | ||
Financial assets at fair value | |||||
through profit or loss | |||||
Equity securities, listed in | |||||
Hong Kong | 5,414 | 5,414 | - | - | |
Equity securities, listed overseas | 4,514 | 4,514 | - | - | |
Mutual funds, unlisted | 6,561 | - | 6,561 | - | |
Debt securities, unlisted | 4,823 | 4,823 | - | - | |
Private equity fund, unlisted | 966 | - | - | 966 | |
22,278 | 14,751 | 6,561 | 966 | ||
During the period ended 30 June 2020 and the year ended 31 December 2019, there were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into and out of Level 3 fair value measurements. The Group's policy is to recognise transfers between levels as at the end of the reporting period.
Interim Report 2020 | Pak Fah Yeow International Limited | 37 | |||
19. FAIR VALUE DISCLOSURES (CONTINUED) | |||||
Movements in level 3 fair value measurements | |||||
Description | Unlisted private equity fund | ||||
At | At | ||||
30 June | 31 December | ||||
2020 | 2019 | ||||
(unaudited) | (audited) | ||||
HK$'000 | HK$'000 | ||||
At beginning of the reporting period | 966 | 1,137 | |||
Gains recognised in: | 3 | ||||
- profit or loss | - | ||||
Disposals | (31) | (171) | |||
At end of the reporting period | 938 | 966 | |||
The above gains are reported as "Net (loss) gain on financial assets at fair value through profit or loss" within profit or loss.
Description of the valuation techniques and inputs used in Level 2 fair value measurement
The unlisted mutual funds are valued based on quoted market prices from dealers or by reference to quoted market prices for similar instruments.
Description of the valuation techniques and inputs used in Level 3 fair value measurement
The unlisted private equity fund's assets mainly comprise investment in unlisted companies in various industries (the "Investment") and the fair value of the Investment is estimated by the external fund manager by reference to a number of factors including the operating cash flows and financial performance of the Investment, trends within sectors and/or regions, underlying business models, expected exit timing and strategy and any specific rights or terms associated with the Investment.
Valuation processes of the Group
The Group reviews estimation of fair value of the unlisted private equity fund which is categorised into Level 3 of the fair value hierarchy. Reports with estimation of fair value are prepared by the external fund manager on a quarterly basis. Discussion of the valuation process and results with the Audit Committee is held twice a year, to coincide with the reporting dates.
38 | Pak Fah Yeow International Limited | Interim Report 2020 |
DISCLOSURE OF INTERESTS AND OTHER INFORMATION
DIRECTORS' INTERESTS IN SECURITIES
As at 30 June 2020, the interests and short positions of the directors and chief executive in the shares of the Company and associated corporations, as defined in Part XV of Securities and Futures Ordinance (the "SFO") and as recorded in the register required to be kept by the Company under section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by the Directors of Listed Issuers (the "Model Code") as set out in Appendix 10 to the Listing Rules, were as follows:
- Long positions in shares of the Company
Number of shares held | Percentage of | |||||
issued | ||||||
Personal | Family | Corporate | shares of | |||
Name of director | interests | interests | interests | Total | the Company | |
Mr. Gan Wee Sean | 27,208,322 | 2,380,560 | 65,323,440 | 94,912,322 | 30.46% | |
(Note 1) | (Note 2) | (Note 2) | ||||
Mr. Gan Fock Wai, Stephen | 10,446,879 | - | 62,527,920 | 72,974,799 | 23.42% | |
(Note 3) | (Note 3) | |||||
Ms. Gan Fook Yin, Anita | 1,190,280 | - | - | 1,190,280 | 0.38% |
- Long positions in non-voting deferred shares of associated corporations
- Hoe Hin Pak Fah Yeow Manufactory, Limited ("HHPFY")
Percentage | ||||||
of issued | ||||||
Number of non-voting deferred | non-voting | |||||
deferred | ||||||
shares of HK$1,000 each held | ||||||
shares of the | ||||||
Personal | Family | Corporate | respective | |||
Name of director | interests | interests | interests | Total | corporations | |
Mr. Gan Wee Sean | 8,600 | 800 | - | 9,400 | 42.7% | |
(Note 1) | ||||||
Mr. Gan Fock Wai, Stephen | 2,800 | - | - | 2,800 | 12.7% |
Interim Report 2020 | Pak Fah Yeow International Limited | 39 |
DISCLOSURE OF INTERESTS AND OTHER INFORMATION (CONTINUED)
DIRECTORS' INTERESTS IN SECURITIES (CONTINUED)
- Long positions in non-voting deferred shares of associated corporations (Continued)
- Pak Fah Yeow Investment (Hong Kong) Company, Limited ("PFYI")
Percentage | ||||||
of issued | ||||||
Number of non-voting deferred | non-voting | |||||
deferred | ||||||
shares of HK$1 each held | ||||||
shares of the | ||||||
Personal | Family | Corporate | respective | |||
Name of director | interests | interests | interests | Total | corporations | |
Mr. Gan Wee Sean | 8,244,445 | 711,111 | - | 8,955,556 | 42.2% | |
(Note 1) | ||||||
Mr. Gan Fock Wai, Stephen | 2,800,000 | - | - | 2,800,000 | 13.2% |
Notes:
- Madam Khoo Phaik Gim, wife of Mr. Gan Wee Sean, beneficially owned 2,380,560 shares of the Company, 800 non-voting deferred shares of HHPFY and 711,111 non-voting deferred shares of PFYI.
- These 65,323,440 shares were beneficially owned by Hexagan Enterprises Limited, a company wholly-owned by Mr. Gan Wee Sean and his wife, Madam Khoo Phaik Gim. The total number of 94,912,322 shares in aggregate represented approximately 30.46% of the issued shares of the Company.
- These 62,527,920 shares were beneficially owned by Gan's Enterprises Limited, a company in which Mr. Gan Fock Wai, Stephen has an interest of approximately 32%. The total number of 72,974,799 shares in aggregate represented approximately 23.42% of the issued shares of the Company.
40 | Pak Fah Yeow International Limited | Interim Report 2020 |
DISCLOSURE OF INTERESTS AND OTHER INFORMATION (CONTINUED)
DIRECTORS' INTERESTS IN SECURITIES (CONTINUED)
Other than as disclosed above, as at 30 June 2020, none of the directors or chief executives, nor their associates, had any interests and short positions in shares, underlying shares and debentures of the Company or any of its associated corporations as defined in Part XV of the SFO and none of the directors or chief executives, or their spouses or children under the age of 18, had any right to subscribe for the securities of the Company, or had exercised any such rights at any time during the period.
SUBSTANTIAL SHAREHOLDERS
As at 30 June 2020, the interests or short positions of every person, other than the directors and their respective associates as disclosed in "DIRECTORS' INTERESTS IN SECURITIES" above, in the shares and underlying shares of the Company as recorded in the register required to be kept under section 336 of the SFO, are set out below:
Long position in the shares and underlying shares of the Company
Percentage of | |||
Number of | issued shares of | ||
Name of shareholder | Nature of interest | shares held | the Company |
Jonathan William Brooke | Beneficial owner | 21,317,500 (Note) | 6.84% |
Note: As reported by Jonathan William Brooke on 10 June 2020, Mr. Jonathan William Brooke has 100% control of Brook Capital Limited which is interested in 15,130,000 shares of the Company, representing 4.85% of the issued shares of the Company.
ARRANGEMENTS TO ACQUIRE SHARES OR DEBENTURES
At no time during the period was the Company or any of its subsidiaries a party to any arrangements, to enable the directors of the Company to acquire benefits by means of acquisition of shares in, or debentures of, the Company or any other body corporate.
Interim Report 2020 | Pak Fah Yeow International Limited | 41 |
OTHER INFORMATION
INTERIM DIVIDEND
The directors resolved to declare an interim dividend of HK2.6 cents per share in respect of the six months ended 30 June 2020 (30 June 2019: first interim dividend of HK2.8 cents per share and second interim dividend of HK2.1 cents per share) payable to the shareholders on the register of members of the Company on 9 October 2020. The interim dividend will be dispatched to the shareholders on or about 11 December 2020.
CLOSING OF REGISTER OF MEMBERS
The register of members will be closed from Wednesday, 7 October 2020 to Friday, 9 October 2020, both days inclusive, during which no transfer of shares will be registered. In order to qualify for the interim dividend, all completed transfer forms accompanied by the relevant share certificates must be lodged with the Company's Hong Kong share registrar, Tricor Standard Limited at Level 54, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong not later than 4:30 p.m. on Tuesday, 6 October 2020.
PURCHASE, SALE OR REDEMPTION OF COMPANY'S LISTED SECURITIES
During the period, there were no purchase, sale or redemption by the Company, or any of its subsidiaries, of the Company's listed shares.
CORPORATE GOVERNANCE
The Company has adopted the Corporate Governance Code ("CG Code") as set out in Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules") as its own code on corporate governance practices.
The Company has complied with code provisions as set out in the CG Code for the six months ended 30 June 2020 except the following deviation:
42 | Pak Fah Yeow International Limited | Interim Report 2020 |
CORPORATE GOVERNANCE (CONTINUED)
Code provision A.2.1 stipulates that the roles of Chairman and Chief Executive Officer should be separate and should not be performed by the same individual. Mr. Gan Wee Sean, the Chairman of the board of directors, was appointed as the acting Chief Executive Officer on 21 April 2008 and the Chief Executive Officer on 1 September 2011. Although these two roles are performed by the same individual, certain responsibilities have been shared with the other executive directors to balance the power and authority. In addition, all major decisions have been made in consultation with members of the board as well as senior management. The board has one non-executive director and also three independent non-executive directors who offer different independent perspectives. Therefore, the board is of the view that there are adequate balance of power and safeguards in place. The board would review and monitor the situation on a regular basis and would ensure that the present structure would not impair the balance of power in the Company.
MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS
The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") as set out in Appendix 10 to the Listing Rules as its own code of conduct regarding directors' securities transactions. Having made specific enquiry of all directors, the directors have confirmed compliance with the required standard set out in the Model Code during the six months ended 30 June 2020.
CHANGE OF DIRECTOR'S INFORMATION UNDER RULE 13.51B(1)
OF THE LISTING RULES
Pursuant to Rule 13.51B(1) of the Listing Rules, change of directors' information of the Company since the date of the 2019 annual report is as follows:
Mr. LEUNG Man Chiu, Lawrence resigned as a non-executive director of World Super Holdings Limited (Stock code: 08612), a company listed on The Stock Exchange of Hong Kong Limited, on 21 July 2020.
AUDIT COMMITTEE
The audit committee of the Company comprises the three independent non-executive directors of the Company, and meets at least twice each year. The interim financial report of the Company for the six months ended 30 June 2020 has been reviewed by the audit committee. At the request of the directors, the interim financial information set out on page 16 to page 37 has also been reviewed by the Company's auditor, Mazars CPA Limited, in accordance with Hong Kong Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the HKICPA and an unmodified review report has been issued.
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Pak Fah Yeow International Limited published this content on 18 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 September 2020 08:44:09 UTC