Pak Fah Yeow International : Interim Report 2020

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

EMAIL

[e-mail]

TELEPHONE

(852) 2881 7713

(A) Audit Committee member

1. Remuneration Committee member

1. 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").

1. 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.
2. 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.
3. 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.
4. 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.
5. 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:

1. Healthcare - manufacturing and sale of Hoe Hin products
2. Property investments
3. 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

1. 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.
2. 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:

1. 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%

1. Long positions in non-voting deferred shares of associated corporations
2. 1. 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)

1. Long positions in non-voting deferred shares of associated corporations (Continued)
2. 1. 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:

1. 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.
2. 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.
3. 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.