Paladin : ANNOUNCEMENT OF RESULTS FOR THE YEAR ENDED 30 JUNE 2019

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 2019

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 2019 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 2019

		2019			2018
	Note	HK$'000	HK$'000
Revenue	3	8,199			7,542
Other income	5	894			5,776
Other gains/(losses)	6	22,603			62,408
Administrative and other operating expenses		(89,900)	(57,864)
(Loss)/profit from operations		(58,204)	17,862
Finance costs	7	(3,605)	(2,728)
Share of loss of an associate		(3,003)	(3,112)
(Loss)/profit before tax		(64,812)	12,022
Income tax expense	8	-	-
(Loss)/profit for the year		(64,812)	12,022

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		2019						2018
	Note	HK$'000	HK$'000
Other comprehensive income:
Items that may be reclassified to profit or loss:
Exchange differences on translating
foreign operations		(1,715)	684
Fair value changes of available-for-sale
financial assets		-	976
Other comprehensive income for the year,
net of tax		(1,715)	1,660
Total comprehensive income for the year		(66,527)	13,682
(Loss)/profit for the year attributable to:
Owners of the Company		(58,170)	16,284
Non-controlling interests		(6,642)	(4,262)
		(64,812)	12,022
Total comprehensive income for the year
attributable to:
Owners of the Company		(59,480)	17,610
Non-controlling interests		(7,047)	(3,928)
		(66,527)	13,682
(Loss)/earnings per share	10
Basic (HK cents per share)		(4.05)	1.17
Diluted (HK cents per share)		(4.30)	0.59

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AT 30 JUNE 2019

		2019	2018
		HK$'000		HK$'000
Non-current assets
Investment properties	657,100	642,170
Property, plant and equipment	205,160	210,186
Interest in an associate	4,398	2,799
Financial assets at fair value through
profit or loss ("FVTPL")	52,143		-
Available-for-sale financial assets	-	13,592
Deposits placed for life insurance policies	-	36,258
Total non-current assets	918,801	905,005
Current assets
Inventories - raw materials	1,993		-
Other receivables, deposits and prepayments	4,476	7,365
Bank and cash balances	250,714	332,127
Total current assets	257,183	339,492
Current liabilities
Other payables and accruals	13,245	12,497
Due to related parties	14,824	24,388
Secured bank borrowings	103,457	105,779
Convertible notes	28,733	41,359
Current tax liabilities	298	298
Total current liabilities	160,557	184,321
Net current assets	96,626	155,171
Total assets less current liabilities	1,015,427	1,060,176

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	2019		2018
	HK$'000	HK$'000
Non-current liabilities
Other borrowings	12,430		3,340
NET ASSETS	1,002,997		1,056,836
CAPITAL AND RESERVES
Share capital	14,387		14,361
Reserves	998,144		1,045,810
Equity attributable to owners of the Company	1,012,531		1,060,171
Non-controlling interests	(9,534)	(3,335)
TOTAL EQUITY	1,002,997		1,056,836

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 30 June 2019

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 Stock Exchange of Hong Kong Limited 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
3. 1. Application of new and revised HKFRSs
      The HKICPA has issued a number of new and revised HKFRSs that are first effective for annual periods beginning on or after 1 July 2018. Of these, HKFRS 9 Financial Instruments is relevant to the Group's consolidated financial statements.
      The Group has not applied any new standard or interpretation that is not yet effective for the current accounting period.

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HKFRS 9 Financial Instruments

HKFRS 9 replaces the provisions of HKAS 39 that relate to the recognition, classification and measurement of financial assets and financial liabilities, derecognition of financial instruments, impairment of financial assets and hedge accounting.

The Group has applied HKFRS 9 in accordance with the transition provisions set out in HKFRS 9, i.e. applied the classification and measurement requirements retrospectively to instruments that have not been derecognised as at 1 July 2018 (date of initial application) and has not applied the requirements to instruments that have already been derecognised as at 1 July 2018. The difference between carrying amounts as at 30 June 2018 and the carrying amounts as at 1 July 2018 are recognised in the opening accumulated profits and other components of equity, without restating comparative information.

Accordingly, certain comparative information may not be comparable as comparative information was prepared under HKAS 39 Financial Instruments: Recognition and Measurement.

The adoption of HKFRS 9 resulted in the following changes to the Group's accounting policies.

1. Classification

From 1 July 2018, the Group classifies its financial assets in the following measurement categories:

• those to be measured subsequently at FVTPL, and
• those to be measured at amortised cost.

The classification depends on the Group's business model for managing the financial assets and the contractual terms of the cash flows.

For assets measured at fair value, gains and losses will be recorded in profit or loss.

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1. Measurement

The Group reclassifies debt investments when and only when its business model for managing those assets changes.

At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at FVTPL, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVTPL are expensed in profit or loss.

Subsequent measurement of debt instruments depends on the Group's business model for managing the asset and the cash flow characteristics of the asset. There are two measurement categories into which the Group classifies its debt instruments:

• Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in other income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses), together with foreign exchange gains and losses. Impairment losses are presented as separate line item in the statement of profit or loss.
• FVTPL: Assets that do not meet the criteria for amortised cost or fair value through other comprehensive income are measured at FVTPL. A gain or loss on a debt investment that is subsequently measured at FVTPL is recognised in profit or loss and presented net within other gains/(losses) in the period in which it arises.

Changes in the fair value of financial assets at FVTPL are recognised in other gains/(losses) in the statement of profit or loss as applicable.

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1. Impairment

From 1 July 2018, the Group assesses on a forward looking basis the expected credit losses associated with its debt instruments carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

The Group has determined that the additional impairment allowance under the application of HKFRS 9 impairment model requirements at 1 July 2018 is insignificant.

The following table and the accompanying notes below explain the original measurement categories under HKAS 39 and the new measurement categories under HKFRS 9 for each class of the Group's financial assets as at 1 July 2018.

				Carrying	Carrying
				amount	amount
		Classification	Classification	under	under
Financial assets		under HKAS 39	under HKFRS 9	HKAS 39	HKFRS 9
	Note			HK$'000	HK$'000
Golf club membership	(I)	Available-for-sale	FVTPL	13,592	13,592
Deposits placed for life
insurance policies	(II)	Loans and receivables	FVTPL	36,258	39,645
Other receivables, deposits
and prepayments	(III)	Loans and receivables	Amortised cost	4,117	730
Bank and cash balances	(IV)	Loans and receivables	Amortised cost	332,127	332,127

The impact of these changes on the Group's equity is as follows:

		Effect on
		investment	Effect on
		revaluation	accumulated
		reserve	profits
	Note	HK$'000	HK$'000
Opening balance - HKAS 39		6,092		768,217
Reclassify golf club membership from available-for-sale
to financial assets at FVTPL	(I)	(6,092)	6,092
Opening balance - HKFRS 9		-	774,309

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The measurement categories for all financial liabilities remain the same. The carrying amounts for all financial liabilities at 1 July 2018 have not been impacted by the initial application.

Notes:

1. Golf club membership that was previously classified as available-for-sale under HKAS 39 is now classified at FVTPL. Upon initial application of HKFRS 9, investment revaluation reserve of approximately HK$6,092,000 related to the available-for-sale financial assets is transferred to the opening accumulated profits at 1 July 2018.

1. Deposits placed for life insurance policies that were previously classified as loans and receivables and carried at amortised cost are now classified as FVTPL since the contractual cash flows do not consist solely of payments of principal and interest on the principal amount outstanding. The directors of the Company estimated that the fair value of deposits placed for life insurance policies upon initial application of HKFRS 9 approximates the amount as measured at amortised cost. At 1 July 2018, current portion of deposits paid for life insurance policies of approximately HK$3,387,000 was included in other receivables, deposits and prepayments.

1. Other receivables, deposits and prepayments that were classified as loans and receivables under HKAS 39 are now classified at amortised cost.

(IV) Bank and cash balances that were classified as loans and receivables under HKAS 39 are now classified at amortised cost.

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1. New and revised HKFRSs in issue but not yet effective
   The Group has not early applied new and revised HKFRSs that have been issued but are not yet effective for the financial year beginning 1 July 2018. These new and revised HKFRSs include the following which may be relevant to the Group.

	Effective for
	accounting periods
	beginning
	on or after
HKFRS 16 Leases	1 January 2019
HK(IFRIC) 23 Uncertainty over Income Tax Treatments	1 January 2019
Annual Improvements to HKFRSs 2015 - 2017 Cycle	1 January 2019
Amendments to HKAS 28 Long-term Interest in Associates and Joint Ventures	1 January 2019

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 the Group has identified some aspects of HKFRS 16 which may have a significant impact on the consolidated financial statements. Further details of the expected impacts are discussed below. While the assessment has been substantially completed for HKFRS 16, the actual impacts upon the initial adoption of the standards may differ as the assessment completed to date is based on the information currently available to the Group, and further impacts may be identified before the standards are initially applied in the Group's interim financial report for the six months ending 31 December 2019. The Group may also change its accounting policy elections, including the transition options, until the standards are initially applied in that interim financial report.

HKFRS 16 Leases

HKFRS 16 replaces HKAS 17 Leases and related interpretations. The new standard introduces a single accounting model for lessees. For lessees the distinction between operating and finance leases is removed and lessees will recognise right-of-use assets and lease liabilities for all leases (with optional exemptions for short-term leases and leases of low value assets). HKFRS 16 carries forward the accounting requirements for lessors in HKAS 17 substantially unchanged. Lessors will therefore continue to classify leases as operating or financing leases.

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HKFRS 16 is effective for annual periods beginning on or after 1 January 2019. The Group intends to apply the simplified transition approach and will not restate comparative amounts for the year prior to first adoption.

Based on a preliminary assessment, the standard will affect primarily the accounting for the Group's operating leases. The Group's office property leases are currently classified as operating leases and the lease payments (net of any incentives received from the lessor) are recognised as an expense on a straight-line basis over the lease term. Under HKFRS 16 the Group may need to recognise and measure a liability at the present value of the future minimum lease payments and recognise a corresponding right-of-use asset for these leases. The interest expense on the lease liability and depreciation on the right-of-use asset will be recognised in profit or loss. The Group's assets and liabilities will increase and the timing of expense recognition will also be impacted as a result.

The Group's future minimum lease payments under non-cancellable operating leases for its office properties amounted to HK$7,483,000 as at 30 June 2019. These leases are expected to be recognised as lease liabilities, with corresponding right-of-use assets, once HKFRS 16 is adopted. The amounts will be adjusted for the effects of discounting and the transition reliefs available to the Group.

Other than the recognition of lease liabilities and right-of-use assets, the Group expects that the transition adjustments to be made upon the initial adoption of HKFRS 16 will not be material. However, the expected changes in accounting policies as described above could have a material impact on the Group's consolidated financial statements from 2020 onwards.

HK(IFRIC) 23 Uncertainty over Income Tax Treatments

The interpretation of HKAS 12 Income Taxes sets out how to apply that standard when there is uncertainty about income tax treatments. Entities are required to determine whether uncertain tax treatments should be assessed separately or as a group depending on which approach will better predict the resolution of the uncertainties. Entities will have to assess whether it is probable that a tax authority will accept an uncertain tax treatment. If yes, the accounting treatment will be consistent with the entity's income tax filings. If not, however, entities are required to account for the effects of the uncertainty using either the most likely outcome or expected value method depending on which method is expected to better predict its resolution.

The Group is unable to estimate the impact of the interpretation on the consolidated financial statements until a more detailed assessment has been completed.

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1. REVENUE
   Revenue represents the aggregate of the amounts received and receivable for rental income from investment properties.
2. SEGMENT INFORMATION
   The Group has two operating segments as follows:
3. • 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, fair value gains on convertible notes, impairment loss on interest in an associate, written off of other receivables, fair value losses on financial assets at FVTPL, share of loss of an associate and unallocated corporate expenses.

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Information about operating segment profit or loss:
		Property			Research and
		investment			development	Total
		HK$'000			HK$'000	HK$'000
Year ended 30 June 2019:
Revenue from external customers	8,199			-	8,199
Segment profit/(loss)		9,223		(55,755)	(46,532)
							(30,404)
Unallocated expenses
Unallocated income						12,124
Consolidated loss before tax						(64,812)
		Property			Research and
		investment			development	Total
		HK$'000			HK$'000	HK$'000
Year ended 30 June 2018:
Revenue from external customers	7,542			-	7,542
Segment profit/(loss)		58,615		(23,158)	35,457
Unallocated expenses						(31,376)
Unallocated income						7,941
Consolidated profit before tax						12,022

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)/profit from operations:
	2019		2018
	HK'000	HK'000
Total (loss)/profit of reportable segments	(46,532)	35,457
Share of loss of an associate	(3,003)	(3,112)
Unallocated amounts:
Other income	153		755
Other gains/(losses)	7,676		(242)
Administrative and other operating expenses	(23,106)	(20,836)
Consolidated (loss)/profit before tax	(64,812)	12,022

No geographical information is presented as the Group's revenue is primarily derived from its business activities in Hong Kong and the Group's non-current assets (other than interest in an associate) are mainly located in Hong Kong.

	Revenue from major customer:
		2019	2018
		HK$'000		HK$'000
	Property investment segment
	Customer a	8,199	6,832
5.	OTHER INCOME
		2019	2018
		HK$'000		HK$'000
	Interest income from deposits placed for life insurance policies	-	4,686
	Government grants received (Note)	653	866
	Bank interest income	104	46
	Others	137	178
		894	5,776

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

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6. OTHER GAINS/(LOSSES)

		2019		2018
		HK$'000	HK$'000
	Fair value gains on investment properties	14,930		62,650
	Fair value gains on convertible notes	11,971		7,186
	Impairment loss on interest in an associate	(3,198)	(7,428)
	Loss on disposal of property, plant and equipment	(3)	-
	Written off of other receivables	(3)	-
	Fair value losses on financial assets at FVTPL	(1,094)	-
		22,603		62,408
7.	FINANCE COSTS
		2019		2018
		HK$'000	HK$'000
	Interest on bank borrowings	3,477		2,653
	Interest on other borrowings	95		42
	Interest on bank overdrafts	33		33
		3,605		2,728

8. INCOME TAX EXPENSE

No provision for Hong Kong Profits Tax is required since the Group has no assessable profit for the year (2018: Nil).

On 21 March 2018, the Inland Revenue (Amendment) (No. 7) Bill 2017, which introduces a two-tiered profits tax regime, was substantively enacted. Under the two-tiered profits tax regime, the first HK$2 million of assessable profits of qualifying corporations will be taxed at 8.25% with effect from the year assessment 2018/2019. Profits above HK$2 million will continue to be subject to the tax rate of 16.5%.

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PRC Enterprise Income Tax has been provided at a rate of 25% (2018: 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)/profit before tax multiplied by the Hong Kong Profits Tax rate is as follows:

	2019		2018
	HK$'000	HK$'000
(Loss)/profit before tax	(64,812)	12,022
Tax at the Hong Kong Profits Tax rate of 16.5% (2018: 16.5%)	(10,694)	1,984
Tax effect of income that is not taxable	(4,476)	(12,307)
Tax effect of expenses that are not deductible	16,563		6,980
Tax effect of tax losses not recognised	639		4,297
Tax effect of temporary differences not recognised	(932)	-
Others	-	(643)
Effect of different tax rates of subsidiaries	(1,100)	(311)
Income tax expense	-	-

9. PROPERTY, PLANT AND EQUIPMENT

During the year ended 30 June 2019, the Group acquired property, plant and equipment of approximately HK$1,454,000 (2018: HK$4,769,000).

During the year ended 30 June 2019, depreciation of property, plant and equipment amounted to approximately HK$6,458,000 (2018: HK$6,049,000).

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10. (LOSS)/EARNINGS PER SHARE

The calculation of basic and diluted (loss)/earnings per share is based on the following:

		2019		2018
		HK$'000	HK$'000
(Loss)/earnings
(Loss)/earnings for the purpose of calculating
basic (loss)/earnings per share	(58,170)	16,284
Fair value gains on convertible notes	(11,971)	(7,186)
(Loss)/earnings for the purpose of calculating
diluted (loss)/earnings per share	(70,141)	9,098
		2019		2018
Number of shares
Weighted average number of ordinary shares used in
basic (loss)/earnings per share calculation	1,437,384,821		1,393,525,262
Effect of dilutive potential ordinary shares arising from
convertible notes outstanding	192,900,226		160,057,687
Weighted average number of ordinary shares used in
diluted (loss)/earnings per share calculation	1,630,285,047		1,553,582,949

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

Dilutive (loss)/earnings per share for the years ended 30 June 2019 and 2018 did not assume the exercise of share options granted by the Company because the exercise prices of those options were higher than the average market price of the Company.

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DIVIDEND

The Directors of the Company do not recommend the payment of a final dividend (2018: nil).

CLOSURE OF REGISTER OF MEMBERS

For determining the entitlement to attend and vote at the forthcoming annual general meeting to be held on Monday, 9 December 2019, the register of members of the Company will be closed from Wednesday, 4 December 2019 to Monday, 9 December 2019 (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 Tuesday, 3 December 2019.

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$65 million as compared to a profit of approximately HK$12 million for the corresponding period in 2018. Such loss is mainly due to (1) fair value gains on the Group's investment properties decreased from approximately HK$63 million in 2018 to approximately HK$15 million in 2019; (2) increase in share option expenses of approximately HK$12 million attributable to the share options granted by the Company in November 2018; and (3) increase in operating expenses of approximately HK$33 million for high technology business.

Properties investment

Turnover of the Group for the year ended 30 June 2019 comprising rental income from its investment properties amounted to approximately HK$8 million (2018: HK$8 million).

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

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Development of high technology products

Considerable progress has been made during the financial year under review in the Group's development of the next generation technology for a number applications involving imaging, surveillance, navigation and advanced semi-conductor processing. The technology division of the Group now comprises six operations in six countries employing about 85 research and development engineers. To date the Group, together with the Finnish Funding Agency for Technology and Innovation which has matched our investment in our Finnish operations, has invested around HK$140 million and further substantial investment is anticipated in the coming years. It is expected that sales of a number of technological products or systems developed by the Group will continue or will have commenced sales in the current financial year and we are aiming that by the calendar year 2024 our technology division will be generating sales of US$100 million.

Each of the subsidiaries or associate of the Company in our technology division is engaged in the following are of technological development:

• Pexray Oy - 75.9% held, based in Espoo, Finland and intends to set up a manufacturing facility in Vietnam in the near future. Pexray Oy 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.
• Dynin Oy - 70% held, based in Oulu, Finland. This company is developing high dynamic range video cameras and artificial intelligences processors for machine vision applications for use in the health care and agricultural sectors, in devices to improve driver situational awareness and security cameras.
• Navigs Oy - 70% held, based in Helsinki, 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.
• Skyin Technology Limited - 70% held, based in Shanghai, the PRC. This company is developing three dimensional machine vision software for three dimensional industrial cameras, artificial intelligence industrial cameras and three dimensional vision software.

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• 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.
• Imagica Technology Inc. - 59% held, based in Vancouver, Canada. This Company is developing a series of linear image sensors for use in spectroscopy, document scanners and sensors used for a number of security applications.

Grant of options

The Company granted an aggregate of 126,000,000 options under the Company's Share Option Scheme on 9 November 2018.

LIQUIDITY, FINANCIAL RESOURCES AND CAPITAL STRUCTURE

As at 30 June 2019, net current assets of the Group were approximately HK$97 million. The current ratio, current assets divided by current liabilities, was 1.60. The bank balances and cash were approximately HK$251 million.

As at 30 June 2019, the Group has outstanding liabilities of approximately HK$173 million comprising (i) other payables and accruals of approximately HK$13 million, (ii) amounts due to related parties of approximately HK$15 million, (iii) secured bank borrowings of approximately HK$103 million, (iv) convertible notes of approximately HK$29 million and other borrowings of approximately HK$12 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 and overdrafts were secured by leasehold land and buildings of approximately HK$195 million and a deposit placed for a life insurance policy of approximately HK$18 million.

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

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SIGNIFICANT INVESTMENTS, ACQUISITIONS AND DISPOSALS

During the year ended 30 June 2019, the Group had no material acquisitions and disposals of subsidiaries.

As at 30 June 2019, the Group had no material investment.

EMPLOYEES AND REMUNERATION POLICIES

As at 30 June 2019, the Group employed total of 96 employees. They were remunerated according to market conditions.

CONTINGENT LIABILITIES

As at 30 June 2019, the Group did not have any significant contingent liabilities.

PURCHASE, SALE AND REDEMPTION OF SHARES

During the year, 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 2019.

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 2019, 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.

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• 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.

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, 26 September 2019

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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