PanAsialum : Interim Report 2020

I 2

NT	ERIM
	ORT
REP
020

CONTENTS

Corporate Information	2
Financial Highlights and Key Financial Ratios	4
Condensed Consolidated Interim Financial Information
• Condensed Consolidated Interim Statement of Financial Position	6
• Condensed Consolidated Interim Statement of Comprehensive Income	8
• Condensed Consolidated Interim Statement of Changes in Equity	10
• Condensed Consolidated Interim Statement of Cash Flows	11
Notes to the Condensed Consolidated Interim Financial Statements	12
Management Discussion and Analysis	25
Other Information	30

Interim Report 2020

PANASIALUM HOLDINGS COMPANY LIMITED

1

Corporate Information

DIRECTORS

Executive Directors

Ms. Li Jiewen

• (Chief Executive Officer) Mr. Pan Zhaolong
  Mr. Gao Mingjie

Independent Non-executive Directors

Mr. Mar Selwyn

Mr. Leung Ka Tin

Dr. Cheung Wah Keung

• (Independent Non-Executive Chairman) Mr. Chan Kai Nang

BOARD COMMITTEES

Audit Committee

Mr. Mar Selwyn (Chairman)

Mr. Leung Ka Tin

Dr. Cheung Wah Keung

Mr. Chan Kai Nang

Remuneration Committee

Dr. Cheung Wah Keung (Chairman)

Ms. Li Jiewen

Mr. Leung Ka Tin

Mr. Chan Kai Nang

Nomination Committee

Mr. Leung Ka Tin (Chairman)

Dr. Cheung Wah Keung

Mr. Chan Kai Nang

Mr. Pan Zhaolong

AUTHORIZED

REPRESENTATIVES

Mr. Pan Zhaolong

Ms. Li Jiewen

COMPANY SECRETARY

Ms. Kwok Ka Huen

REGISTERED OFFICE

Cricket Square

Hutchins Drive

P.O. Box 2681

Grand Cayman KY1-1111

Cayman Islands

STOCK CODE

2078

PLACE OF LISTING

The Stock Exchange of Hong Kong Limited

("Exchange")

2

PANASIALUM HOLDINGS COMPANY LIMITED

Interim Report 2020

PRINCIPAL PLACE OF BUSINESS IN HONG KONG

Unit 05, 17th Floor, Nanyang Plaza

57 Hung To Road

Kwun Tong, Kowloon,

Hong Kong

PRODUCTION BASES IN PEOPLE'S REPUBLIC

OF CHINA ("PRC")

Tangerine Garden

Guangshan Road

Licheng Town

Zengcheng, Guangzhou

Guangdong Province

PRC

Long Sheng Industrial Area

No. 6 Long Sheng Road

Wolong District

Nanyang City

Henan Province

PRC

Dong Fang Xi Wang Aluminium

Industrial Garden

Wu Cai Wan

ZhunDong Economic and

Technology Development Zone

Changji City

Xinjiang Province

PRC

Corporate Information

PRINCIPAL SHARE

REGISTRAR

SMP Partners (Cayman) Limited Royal Bank House - 3rd Floor, 24 Shedden Road,

P.O. Box 1586,

Grand Cayman, KY1-1110, Cayman Islands

HONG KONG BRANCH SHARE REGISTRAR

Computershare Hong Kong Investor

Services Limited

Shops 1712-1716, 17th Floor

Hopewell Centre

183 Queen's Road East

Wanchai, Hong Kong

PRINCIPAL BANKERS

Agricultural Bank of China

China CITIC Bank, Nanyang Branch

Bank of Communications, Nanyang Branch Bank of China Macau branch Guangzhou Rural Commercial Bank, Zengcheng Branch

Guangzhou Rural Commercial Bank, Jiangmen Branch

INDEPENDENT AUDITOR

BDO Limited

LEGAL ADVISER

Jeffrey Mak Law Firm | JML

WEBSITE

www.palum.com

Note: Information in this section is as the date of this report.

Interim Report 2020

PANASIALUM HOLDINGS COMPANY LIMITED

3

Financial Highlights and Key Financial Ratios

	For the six months ended June 30,
	2020	2019	Change
	(Unaudited)	(Unaudited)	in %
Revenue	HK$885 million	HK$736 million	20.2%
Loss attributable to
owners of the Company	(HK$145 million)	(HK$215 million)	32.6%
Gross Profit Margin	6.9%	4.2%	64.3%
Loss per Share (HK cents)	(12.1)	(17.9)
Return on equity	(142.7%)	(40.3%)
Interest Coverage Ratio	(1.80)	(2.3)
		As at	As at
		June 30, December 31,
		2020	2019
		(Unaudited)	(Audited)
Current Ratio		0.66	0.62
Quick Ratio		0.44	0.44
Gearing Ratio		1,512.5%	630.6%
Debt to Equity Ratio		1,497.8%	624.1%

4

PANASIALUM HOLDINGS COMPANY LIMITED

Interim Report 2020

Financial Highlights and Key Financial Ratios

ANALYSIS OF REVENUE BY GEOGRAPHICAL LOCATIONS

61%	64%
10%
7%	17%
10%	6%
12%	13%

	2020				2019
The PRC			Australia		Hong Kong		South East Asia		Others

1. The calculation of Gross Profit Margin is based on gross profit divided by revenue and multiplied by 100%.
2. The calculation of Return on Equity is based on profit attributable to owners of the Company for the Period divided by equity attributable to owners of the Company and multiplied by 100%.
3. The calculation of Interest Coverage Ratio is based on profit before interest and tax expenses divided by finance costs.
4. The calculation of Current Ratio is based on current assets divided by current liabilities.
5. The calculation of Quick Ratio is based on current assets less inventories divided by current liabilities.
6. The calculation of Gearing Ratio is based on total borrowings divided by total equity multiplied by 100%.
7. The calculation of Debt to Equity Ratio is based on total borrowings less cash and cash equivalents divided by total equity multiplied by 100%.

The Board of Directors ("Directors") of the Company ("Board") did not declare an interim dividend for the six months ended June 30, 2020 (six months ended June 30, 2019: Nil).

Interim Report 2020

PANASIALUM HOLDINGS COMPANY LIMITED

5

Condensed Consolidated Interim Statement of Financial Position

As at June 30, 2020

			Unaudited		Audited
			June 30,		December 31,
		2020		2019
	Notes		HK$'000		HK$'000
ASSETS
Non-current assets
Property, plant and equipment	7	954,030		1,009,088
Right-of-use assets		328,155		290,989
Investment property		11,255		11,496
Deposits and lease prepayments		593		609
Prepayments for property, plant and
equipment		53,595		59,570
		1,347,628		1,371,752
Current assets
Inventories		299,789		222,146
Trade and bills receivables	8	376,791		383,891
Prepayments, deposits and other
receivables		102,528		118,304
Pledged bank deposits		91,912		47,950
Cash and cash equivalents		14,990		15,923
		886,010		788,214
Total assets		2,233,638		2,159,966
EQUITY
Capital and reserves attributable to
owners of the Company
Share capital	9	120,000		120,000
Reserves		(18,126)	123,242
Equity attributable to owners of
the Company		101,874		243,242

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PANASIALUM HOLDINGS COMPANY LIMITED

Interim Report 2020

Condensed Consolidated Interim Statement of Financial Position

						As at June 30, 2020
			Unaudited		Audited
			June 30,		December 31,
		2020		2019
	Notes		HK$'000		HK$'000
LIABILITIES
Non-current liabilities
Borrowings	10	789,268		622,706
Lease liabilities		8,829		14,217
		798,097		636,923
Current liabilities
Trade and bills payables	11	225,095		76,713
Contract liabilities, other payables and
accrued charges		256,111		184,597
Due to a director			-	645
Borrowings	10	751,552		911,203
Lease liabilities		11,819		13,864
Deferred income on government grants		17,330		17,791
Current income tax liabilities		71,760		74,988
		1,333,667		1,279,801
Total liabilities		2,131,764		1,916,724
Total equity and liabilities			2,233,638		2,159,966

The notes on pages 12 to 24 are an integral part of this condensed consolidated interim financial information.

Interim Report 2020

PANASIALUM HOLDINGS COMPANY LIMITED

7

Condensed Consolidated Interim Statement of Comprehensive Income

For the six months ended June 30, 2020

			Unaudited		Unaudited
			six months		six months
			ended		ended
			June 30,		June 30,
		2020		2019
	Notes		HK$'000		HK$'000
Revenue	6	884,518	735,787
Cost of sales	6		(823,475)	(704,707)
Gross profit			61,043			31,080
Distribution and selling expenses		(37,042)	(33,109)
Administrative expenses		(112,972)	(151,955)
Other income		8,923		7,998
Other losses - net	13	(11,465)	(2,582)
Operating loss		(91,513)	(148,568)
Finance income	14	438		69
Finance costs	14	(50,746)	(63,551)
Finance costs - net	14	(50,308)	(63,482)
Loss before income tax	12	(141,821)	(212,050)
Income tax expense	15	(3,592)	(2,591)
Loss for the Period		(145,413)	(214,641)
Loss attributable to owners of the
Company			(145,413)	(214,641)

8

PANASIALUM HOLDINGS COMPANY LIMITED

Interim Report 2020

Condensed Consolidated Interim Statement of Comprehensive Income

			For the six months ended June 30, 2020
			Unaudited		Unaudited
			six months		six months
			ended		ended
			June 30,		June 30,
		2020		2019
	Note		HK$'000		HK$'000
Loss for the Period		(145,413)	(214,641)
Other comprehensive income:
Item that may be reclassified
subsequently to profit or loss:
Currency translation differences		1,054	2,678
Item that will not be reclassified
to profit or loss:
Change in fair value of investment
property			-	(111)
Total comprehensive income
for the Period		(144,359)	(212,074)
Loss per share for loss
attributable to the owners
of the Company
(Basic and diluted HK cents
per share)	17		(12.1)	(17.9)

The notes on pages 12 to 24 are an integral part of this condensed consolidated interim financial information.

Interim Report 2020

PANASIALUM HOLDINGS COMPANY LIMITED

9

Condensed Consolidated Interim Statement of Changes in Equity

For the six months ended June 30, 2020

														Unaudited
											Attributable to owners of the Company
									Shares held		Employee
											for share		share-based
		Share	Share		award	compensation		Other	Accumulated	Total
		capital	premium	scheme		reserves		reserves		losses	equity
		HK$'000	HK$'000	HK$'000		HK$'000		HK$'000		HK$'000	HK$'000
Balance at January 1, 2020	120,000		1,001,287			(774)		4,670	(40,707)		(841,234)		243,242
Loss for the Period				-		-		-			-		-	(145,413)		(145,413)
Other comprehensive income:				-		-		-			-	1,054			-	1,054
Currency translation differences
Total comprehensive income
			-		-		-			-	1,054		(145,413)		(144,359)
for the Period
Equity-settledshare-based
			-		-		-		2,991		-		-	2,991
payment
Transfer upon lapse of				-		-		-		(197)		-	197		-
share options
Balance at June 30, 2020		120,000		1,001,287			(774)		7,464	(39,653)		(986,450)		101,874
															Unaudited
													Attributable to owners of the Company
												Shares held
												for share
				Share			Share			award		Revaluation		Other		Accumulated	Total
				capital			premium		scheme		reserves		reserves		losses	equity
				HK$'000			HK$'000		HK$'000		HK$'000		HK$'000		HK$'000	HK$'000
Balance at January 1, 2019		120,000	1,001,287			(774)			-	(29,985)	(345,640)	744,888
Loss for the Period					-				-			-			-			-	(214,641)	(214,641)
Other comprehensive income:
Currency translation differences					-				-			-			-	2,678			-	2,678
Change in fair value of investment
property					-				-			-	(111)			-			-	(111)
Total comprehensive income
for the Period					-				-			-	(111)	2,678	(214,641)	(212,074)
Balance at June 30, 2019
		120,000		1,001,287			(774)	(111)	(27,307)	(560,281)	532,814

The notes on pages 12 to 24 are an integral part of this condensed consolidated interim financial information.

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PANASIALUM HOLDINGS COMPANY LIMITED

Interim Report 2020

Condensed Consolidated Interim Statement of Cash Flows

		For the six months ended June 30, 2020
		Unaudited		Unaudited
		six months		six months
		ended		ended
		June 30,		June 30,
	2020		2019
		HK$'000		HK$'000
Net cash generated from/(used in)
operating activities	136,222		(271,158)
Net cash used in investing activities	(63,854)	(76,229)
Net cash (used in)/generated from
financing activities	(71,113)	410,534
Net increase in cash and cash equivalents	1,255		63,147
Cash and cash equivalents at
beginning of the Period	15,923		22,720
Exchange losses on cash and cash equivalents	(2,188)	(826)
Cash and cash equivalents at end of the Period		14,990		85,041

The notes on pages 12 to 24 are an integral part of this condensed consolidated interim financial information.

Interim Report 2020

PANASIALUM HOLDINGS COMPANY LIMITED

11

Notes to the Condensed Consolidated Interim Financial Statements

1 GENERAL INFORMATION

PanAsialum Holdings Company Limited ("Company") and its subsidiaries (together, the "Group") are principally engaged in the manufacturing and trading of aluminium products. The Company is an investment holding company. The Company was incorporated and registered as an exempted company with limited liability in the Cayman Islands on October 7, 2005 under the Companies Law, Cap.22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands. The address of its registered office is Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1-1111, Cayman Islands.

The Company's shares have been listed on the main board of The Stock Exchange of Hong Kong Limited since February 5, 2013.

This condensed consolidated interim financial information is presented in Hong Kong Dollar ("HK$" or "HKD"), unless otherwise stated. This condensed consolidated interim financial information has been reviewed by the Audit Committee but not audited, and it was approved for issue by the board of Directors ("Board") on August 28, 2020.

2 BASIS OF PREPARATION

The condensed consolidated interim financial information for the six months ended June 30, 2020 has been prepared in accordance with HKAS 34 'Interim Financial Reporting'. This condensed consolidated interim financial information does not include all the notes of the type normally included in annual consolidated financial statements. Accordingly, this condensed consolidated interim financial information should be read in conjunction with the consolidated financial statements for the year ended December 31, 2019, which have been prepared in accordance with Hong Kong Financial Reporting Standards.

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PANASIALUM HOLDINGS COMPANY LIMITED

Interim Report 2020

Notes to the Condensed Consolidated Interim Financial Statements

3 ACCOUNTING POLICIES

Except as described below, the accounting policies applied are consistent with those of the consolidated financial statements for the year ended December 31, 2019, as described in those annual consolidated financial statements.

1. Estimation of income tax:
   Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.
2. Changes in HKFRSs:
   The HKICPA has issued a number of new or amended HKFRSs that are first effective for the current accounting period of the Group:
3. • Amendments to HKFRS 3: Definition of a Business
   • Amendments to HKFRS 7, HKFRS 9 and HKAS 39: Interest Rate Benchmark Reform
   • Amendments to HKAS 1 and HKAS 8: Definition of Material
   • Amendments to HKFRS 16: Covid-19-Related Rent Concessions

The new or amended HKFRSs that are effective from January 1, 2020 did not have any significant impact on the Group's accounting policies.

Amendments to HKFRS 3: Definition of a Business

The amendments clarify that a business must include, as a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs, together with providing extensive guidance on what is meant by a "substantive process".

Additionally, the amendments remove the assessment of whether market participants are capable of replacing any missing inputs or processes and continuing to produce outputs, whilst narrowing the definition of "outputs" and a "business" to focus on returns from selling goods and services to customers, rather than on cost reductions.

An optional concentration test has also been added that permits a simplified assessment of whether an acquired set of activities and assets is not a business.

Interim Report 2020

PANASIALUM HOLDINGS COMPANY LIMITED

13

Notes to the Condensed Consolidated Interim Financial Statements

3 ACCOUNTING POLICIES (Continued)

1. Changes in HKFRSs: (Continued)
   Amendments to HKFRS 7, HKFRS 9 and HKAS 39: Interest Rate Benchmark Reform
   The amendments modify some specific hedge accounting requirements to provide relief from potential effects of the uncertainties caused by interest rate benchmark reform. In addition, the amendments require companies to provide additional information to investors about their hedging relationships which are directly affected by these uncertainties.
   Amendments to HKAS 1 and HKAS 8: Definition of Material
   The amendments clarify the definition and explanation of "material", aligning the definition across all HKFRSs and the Conceptual Framework, and incorporating supporting requirements in HKAS 1 into the definition.
   Amendments to HKFRS 16: Covid-19-Related Rent Concessions
   Effective June 1, 2020, HKFRS 16 was amended to provide a practical expedient for lessees accounting for rent concessions that arise as a direct consequence of the COVID-19 pandemic and satisfy the following criteria:
2. 1. The change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change;
   2. The reduction is lease payments affects only payments originally due on or before June 30, 2021; and
   3. There is no substantive change to other terms and conditions of the lease.

Rent concessions that satisfy these criteria may be accounted for in accordance with the practical expedient, which means the lessee does not need to assess whether the rent concession meets the definition of a lease modification. Lessees apply other requirements in HKFRS 16 in accounting for the concession.

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PANASIALUM HOLDINGS COMPANY LIMITED

Interim Report 2020

Notes to the Condensed Consolidated Interim Financial Statements

1. FINANCIAL RISK MANAGEMENT
2. 1. Financial risk factors
      The Group's activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Group is not exposed to material equity price risk. There have been no changes in any risk management policies since the last year end.
      The condensed consolidated interim financial information does not include all financial risk management information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's consolidated financial statements for the year ended December 31, 2019.
   2. Liquidity risk
      Compared to the last year end, there was no material change in the contractual undiscounted cash out flows for financial liabilities.
   3. Commodity price risk on aluminium
      The Group is exposed to commodity price risk because aluminium ingots are the major raw materials of the Group's products. During the Period, the Group has not entered into any instruments in order to mitigate the risk arising from fluctuations in aluminium price. Any change in aluminium price could affect the Group's financial performance.
      Management considers the fluctuation on the commodity price of aluminium does not have a significant impact on the Group's earnings and cash flows in the long run.
   4. Fair value estimation
      The carrying amounts of the Group's financial assets and liabilities approximate their fair values due to their short maturity.
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

The preparation of interim financial information requires the management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing this interim condensed consolidated financial information, the significant judgements made by the management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial information for the year ended December 31, 2019.

Interim Report 2020

PANASIALUM HOLDINGS COMPANY LIMITED

15

Notes to the Condensed Consolidated Interim Financial Statements

6 REVENUE AND SEGMENT INFORMATION

The principal activities of the Group are manufacturing and trading of aluminium products. In prior years, the Group's revenue was divided into three product segments, namely electronics parts, construction and industrial products, and door and window frames systems which are operating in five geographical areas, namely the PRC (excluding Hong Kong for the purpose of this segmental analysis), Australia, North America, Hong Kong and others.

For the six months ended June 30, 2020, the executive directors ("ED(s)") of the Company, being the chief operating decision makers, regularly reviewed revenue analysis by products and by locations. The EDs reassessed the Group's product segments reporting and decided that for financial reporting purposes, the three segments should be combined as the resource allocation, performance assessment and decision making of these three segments are not considered separately. The operating segment has been identified on the basis of internal management reports prepared and is regularly reviewed by the EDs of the Company. Accordingly, no analysis of product segment is presented. Due to the expansion of our business to South East Asia, the geographical areas presented are the PRC (excluding Hong Kong for the purpose of this segmental analysis), Australia, South East Asia, Hong Kong and others.

The tables below present geographical segment information on the revised basis, with prior years amended to conform to the current year presentation.

								Unaudited
						six months ended June 30, 2020
								Hong		South
		The PRC	Australia	Kong	East Asia	Others	Total
			HK$'000	HK$'000	HK$'000		HK$'000	HK$'000	HK$'000
Sales to external customers	543,598		88,094		57,184		108,629		87,013		884,518
Cost of sales		(511,553)	(71,068)	(55,198)	(107,114)	(78,542)	(823,475)
Gross profit		32,045		17,026		1,986			1,515		8,471		61,043
								Unaudited
							six months ended June 30, 2019
								Hong		South
			The PRC	Australia	Kong		East Asia	Others	Total
			HK$'000	HK$'000	HK$'000		HK$'000	HK$'000	HK$'000
Sales to external customers	468,878			122,799		47,262			-	96,848		735,787
Cost of sales	(461,745)	(106,858)	(41,142)		-	(94,962)	(704,707)
Gross profit	7,133			15,941		6,120			-	1,886		31,080

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PANASIALUM HOLDINGS COMPANY LIMITED

Interim Report 2020

Notes to the Condensed Consolidated Interim Financial Statements

7 PROPERTY, PLANT AND EQUIPMENT

			Unaudited		Audited
			six months		year
			ended		ended
			June 30,		December 31,
			2020		2019
			HK$'000		HK$'000
	Opening net book amount		1,009,088		958,608
	Exchange differences		(14,480)	(13,958)
	Additions		17,799		184,418
	Transfer to investment property		-	(6,432)
	Disposals		(1,900)	(7,555)
	Revaluation loss		-	(630)
	Depreciation (Note 12)		(56,477)	(105,363)
	Closing net book amount		954,030			1,009,088
8	TRADE AND BILLS RECEIVABLES
			Unaudited		Audited
			June 30,		December 31,
			2020		2019
			HK$'000		HK$'000
	Trade receivables - net		376,791		376,136
	Bills receivables		-	7,755
	Trade and bills receivables - net		376,791			383,891

Interim Report 2020

PANASIALUM HOLDINGS COMPANY LIMITED

17

Notes to the Condensed Consolidated Interim Financial Statements

8 TRADE AND BILLS RECEIVABLES (Continued)

The carrying amounts of these receivables approximate their fair values. The Group's sales are mainly made on (i) cash on delivery; and (ii) credit terms of 30 to 90 days (2019: Same). The Group does not hold any collateral as security.

The ageing analysis of the trade and bills receivables based on due date was as follows:

			Unaudited		Audited
			June 30,		December 31,
		2020		2019
			HK$'000		HK$'000
Current	258,550	245,107
1 - 30 days	53,939		70,963
31	- 60 days	17,099		20,418
61	- 90 days	9,451		18,756
91	- 180 days	21,114		25,833
181 days - 1 year	15,312		1,487
More than 1 year	1,326		1,327
			376,791	383,891

As at June 30, 2020, receivables of HK$258,550,000 were neither past due nor impaired (as at December 31, 2019: HK$245,107,000). These receivables relate to customers for whom there is no recent history of default.

Certain subsidiaries of the Group pledged trade receivables balances amounting to HK$34,290,000 to financial institution in exchange for cash as at June 30, 2020 (as at December 31, 2019: HK$44,755,000). The transactions have been accounted for as collateralized borrowings (Note 10).

As at June 30, 2020, all trade receivables were non-interest bearing (as at December 31, 2019: Same).

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PANASIALUM HOLDINGS COMPANY LIMITED

Interim Report 2020

Notes to the Condensed Consolidated Interim Financial Statements

9	SHARE CAPITAL
			Unaudited							Audited
			June 30, 2020				December 31, 2019
			Number of				Number of
			shares	HK$'000				shares		HK$'000
	Authorized:
	Ordinary shares of HK$0.10 each		2,400,000,000					240,000		2,400,000,000	240,000
	Issued and fully paid:		1,200,000,000					120,000			1,200,000,000		120,000
10	BORROWINGS
								Unaudited					Audited
								June 30,			December 31,
									2020				2019
								HK$'000					HK$'000
	Current
	Collateralized borrowings of a financial
	institution (Note 8)								23,283				38,151
	Other loans								728,269				873,052
									751,552				911,203
	Non-current
	Other loans								789,268				622,706
	Total							1,540,820				1,533,909

As at June 30, 2020, the effective interest rate of the interest-bearing borrowings was 6.47% per annum (as at December 31, 2019: 7.85% per annum). The Group's bank borrowings carry interest at floating rates and their carrying amounts approximate their fair values.

As at June 30, 2020, the Group's banking facilities were secured by the (i) guarantees of the Company and certain subsidiaries; (ii) guarantees of the former executive directors of the Company; (iii) guarantees of a director of a PRC subsidiary; (iv) guarantees of two state-owned enterprises of the PRC; (v) pledge of the Group's certain property, plant and equipment; (vi) pledge of the Group's certain right-of-use assets; (vii) pledge of the Group's certain inventories; (viii) pledge of the Group's certain trade receivables and (ix) pledge of the Group's certain bank deposits (as at December 31, 2019: Same).

Interim Report 2020

PANASIALUM HOLDINGS COMPANY LIMITED

19

Notes to the Condensed Consolidated Interim Financial Statements

11 TRADE AND BILLS PAYABLES

As at June 30, 2020 and December 31, 2019, the ageing analysis of the Group's trade and bills payables based on invoice date was as follows:

			Unaudited		Audited
			June 30,		December 31,
		2020		2019
			HK$'000		HK$'000
	0 - 30 days	144,669	19,972
	31 - 60 days	41,061		23,790
	61 - 90 days	10,997		7,849
	Over 90 days	28,368		25,102
		225,095	76,713
12 EXPENSES BY NATURE
			Unaudited		Unaudited
			six months		six months
			ended		ended
			June 30,		June 30,
		2020		2019
			HK$'000		HK$'000
	Operating loss is stated after charging/
	(crediting) the following:
	Auditor's remuneration
	- current period	2,000		2,350
	- prior period over provision	(700)		-
	Cost of inventories recognized as
	expenses	823,475	704,707
	Employee benefit expenses
	(include wages and salaries)	125,824	161,788
	Depreciation of property, plant and
	equipment (Note 7)	56,477		50,412
	Depreciation of right-of-use assets	9,793		8,861
	Write off of right-of-use assets	806			-
	Impairment loss on trade receivables	3,965			-
	Impairment loss on inventories	2,999			-
	Equity settled share-based payments to
	the consultant of the Group		983			-

20

PANASIALUM HOLDINGS COMPANY LIMITED

Interim Report 2020

Notes to the Condensed Consolidated Interim Financial Statements

13 OTHER LOSSES - NET

			Unaudited		Unaudited
			six months		six months
			ended		ended
			June 30,		June 30,
		2020		2019
			HK$'000		HK$'000
	Net exchange losses	(11,465)	(2,582)
		(11,465)	(2,582)
14 FINANCE INCOME AND COSTS
			Unaudited		Unaudited
			six months		six months
			ended		ended
			June 30,		June 30,
		2020		2019
			HK$'000		HK$'000
	Interest income:
	Interest income on bank deposits	438		69
	Finance income	438		69
	Interest expenses:
	Interest expense on lease liabilities	(871)	(796)
	Interest expense on borrowings	(49,875)	(62,754)
	Interest element of finance leases		-	(1)
	Finance costs	(50,746)	(63,551)
	Finance costs - net		(50,308)	(63,482)

Interim Report 2020

PANASIALUM HOLDINGS COMPANY LIMITED

21

Notes to the Condensed Consolidated Interim Financial Statements

15 INCOME TAX EXPENSE

Hong Kong profits tax is calculated at two-tiered rates on the estimated assessable profits arising in Hong Kong at 8.25% on assessable profits up to HK$2 million and 16.5% on any part of assessable profits over HK$2 million during the six months ended June 30, 2020 (2019: same).

The Group's operations in the PRC are subject to the PRC corporate income tax. The standard PRC Corporate income tax rate was 25% during the six months ended June 30, 2020 (2019: same).

Pursuant to Article 12 of Decree-Law No. 58/99/M issued by the Macao Government, OPAL (Macao Commercial Offshore) Limited is exempted from Macao Complementary Tax during the six months ended June 30, 2020 (2019: Same).

		Unaudited		Unaudited
		six months		six months
		ended		ended
		June 30,		June 30,
	2020		2019
		HK$'000		HK$'000
Hong Kong profits tax
- current period	(1,994)	(2,591)
Overseas taxation
- under provision in prior year	(1,598)		-
		(3,592)	(2,591)

16 DIVIDENDS

No dividend has been declared by the Company for the six months ended June 30, 2020 and 2019.

22

PANASIALUM HOLDINGS COMPANY LIMITED

Interim Report 2020

Notes to the Condensed Consolidated Interim Financial Statements

17 LOSS PER SHARE

Basic

Basic loss per share is calculated by dividing the loss for the Period attributable to owners of the Company by the weighted average number of ordinary shares in issue during the Period.

		Unaudited		Unaudited
		six months		six months
		ended		ended
		June 30,		June 30,
	2020		2019
Loss attributable to owners of the
Company (HK$'000)	(145,413)	(214,641)
Weighted average number of ordinary
shares in issue less shares held for
share award scheme (thousands)	1,199,405		1,199,405
Basic loss per share (HK cents)		(12.1)	(17.9)

Diluted

For the six months ended June 30, 2020, the computation of diluted loss per share does not assume the subscription of the Company's outstanding potential ordinary shares as they are anti-dilutive.

For the six months ended June 30, 2019, diluted loss per share is the same as basic loss per share as there were no potential dilutive ordinary shares outstanding during the six month ended June 30, 2019.

18 CAPITAL COMMITMENTS

		Unaudited		Audited
		June 30,		December 31,
	2020		2019
		HK$'000		HK$'000
Contracted but not provided for
- property, plant and equipment		214,653	245,776

Interim Report 2020

PANASIALUM HOLDINGS COMPANY LIMITED

23

Notes to the Condensed Consolidated Interim Financial Statements

19 RELATED PARTY TRANSACTIONS

Related parties refer to entities in which the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions, or directors or officers of the Company and its subsidiaries.

Save as disclosed elsewhere in the consolidated interim financial information, the Group had the following related party transactions during the six months ended June 30, 2020 and 2019:

Key management compensation

Key management includes directors and senior management. The compensation paid or payable to key management for employee services is shown below:

		Unaudited		Unaudited
		six months		six months
		ended		ended
		June 30,		June 30,
	2020		2019
		HK$'000		HK$'000
Salaries, bonus and allowances	3,563		7,476
Contributions to defined contribution plans	15		130
		3,578		7,606

24

PANASIALUM HOLDINGS COMPANY LIMITED

Interim Report 2020

Management Discussion and Analysis

OVERVIEW

Business and Financial Overview

PanAsialum Holdings Company Limited ("Company") and its subsidiaries (collectively, the "Group") is an aluminium products manufacturer with several production plants in the People's Republic of China ("PRC"), making and selling a large and diverse portfolio of high quality products to its customers. The Group strategically located plants in Guangdong, Henan, Xinjiang, literally in south, middle and north-west of PRC allows the Group to serve customers with more optimal cost of production in different locations.

Performance Overview

The six months ended June 30, 2020 ("Period") marked a period of uncertainties and volatilities globally and over PRC. As compared to the six months ended June 30, 2019 ("2019 Period"), the Group's performance has an improvement for the Period. The total operating revenue of the Group for the Period was HK$885 million (2019 Period: HK$736 million), representing an increase of 20.2% as compared with the corresponding period in 2019. The gross profit margin of the Group increased to 6.9% for the Period (2019 Period: 4.2%). The loss attributable to owners of the Company for the Period was HK$145 million (2019 Period: HK$215 million), demonstrating its resilience despite the current challenging business environment, and a period of Renminbi ("RMB") depreciation.

Revenue

The following tables set out information about the geographical location of the Group's revenue from external customers:

						Unaudited
				six months ended June 30, 2020
						Hong		South
	The PRC	Australia	Kong	East Asia	Others	Total
		HK$'000	HK$'000	HK$'000		HK$'000	HK$'000	HK$'000
Sales to external customers	543,598		88,094		57,184		108,629		87,013		884,518
Cost of sales		(511,553)	(71,068)	(55,198)	(107,114)	(78,542)	(823,475)
Gross profit		32,045		17,026		1,986			1,515		8,471		61,043

Interim Report 2020

PANASIALUM HOLDINGS COMPANY LIMITED

25

Management Discussion and Analysis

					Unaudited
			six months ended June 30, 2019
					Hong		South
	The PRC		Australia		Kong		East Asia	Others		Total
	HK$'000		HK$'000		HK$'000		HK$'000	HK$'000		HK$'000
Sales to external customers	468,878	122,799	47,262		-	96,848	735,787
Cost of sales	(461,745)	(106,858)	(41,142)		-	(94,962)	(704,707)
Gross profit	7,133	15,941	6,120		-	1,886	31,080

The significant increase in overall revenue during the Period was mainly attributable to the expansion into South East Asia market and an increase in sales in the PRC offsetting the decrease of revenue in Australia. The decrease in revenue in Australia were attributable to the adverse impact of the Coronavirus Disease 2019 ("COVID-19") outbreak during the Period.

Cost of sales

With the increase in sales, cost of sales increased by 16.7% from HK$705 million for the 2019 Period to HK$823 million for the Period.

Gross profit

Gross profit increased by 96.8% from HK$31 million for the 2019 Period to HK$61 million for the Period, and the increase in gross profit margin from 4.2% for the 2019 Period to 6.9% for the Period was due to (i) an increase in sales turnover for the Period; and (ii) an increase in the ingot-to-product yield.

Distribution and selling expenses

Distribution and selling expenses increased from HK$33 million for the 2019 Period to HK$37 million for the Period. It consisted of mainly transportation expenses and staff related expenses was in line with increase in sales.

Administrative expenses

Administrative expenses decreased from HK$152 million for the 2019 Period to HK$113 million for the Period. It was mainly due to decrease in operating expenses especially the employee benefit expenses and administrative staff cost.

26

PANASIALUM HOLDINGS COMPANY LIMITED

Interim Report 2020

Management Discussion and Analysis

Other losses - net

Other losses increased from HK$3 million for the 2019 Period to HK$11 million for the Period. The loss was mainly due to the depreciation of RMB and Great Britain Pound ("GBP") against HKD during the Period which the Group had suffered exchange losses.

Finance income

Finance income increased from HK$0.1 million for the 2019 Period to HK$0.4 million for the Period. It mainly comprised of interest income.

Finance costs

Finance costs amounted to HK$51 million for the Period compared to HK$64 million for 2019 Period. The decrease in finance cost is due to the drop of the interest rate during the Period.

Income tax expenses

Income tax expenses of HK$4 million was mainly incurred in Hong Kong and China for the Period.

Prospect

At the beginning of 2020, the challenges generally arising from the COVID-19 are unprecedented, the Group's production facilities were disrupted, resulting in more than one month's delay in production after Chinese New Year holiday. Throughout the Period, the Group had continued to enhance the performance. It will continue to develop the markets for its products, put emphasis on sales to overseas customers, and endeavor to improve its gross profit margin.

The Group has commenced the relocation of its manufacturing facilities from Zengcheng to other manufacturing sites of the Group in the PRC and is halfway through its relocation process, which is expected to be completed by the end of 2020. After the relocation, the Group will dispose the land of Zengcheng ("Land") by way of a public land auction under the Redevelopment Scheme ("Disposal"). The Board is of the view that the Group's financial position will be greatly strengthened and the proceeds will provide the Group with additional working capital for its future business development. Given that the Group has been relocating its equipment and machinery and diverting its orders to its manufacturing facility in Nanyang which has sufficient production capacity, the Company is of the view that the Disposal will have no material impact on the Group's business and operations. For details of the Disposal, please refer to the paragraph "Event After Reporting Period".

Liquidity and Financial Resources

The Group principally finances its operations through internally generated cash flow and borrowings. As at June 30, 2020, the Group had HK$15 million cash and cash equivalents (as at December 31, 2019: HK$16 million), HK$92 million pledged bank deposits (as at December 31, 2019: HK$48 million) and interest-bearing borrowings of HK$1,541 million denominated in RMB (as at December 31, 2019: HK$1,534 million denominated in RMB).

Interim Report 2020

PANASIALUM HOLDINGS COMPANY LIMITED

27

Management Discussion and Analysis

Charges on Asset

HK$252 million (as at December 31, 2019: HK$259 million) of right-of-use assets,

HK$21 million (as at December 31, 2019: HK$23 million) of buildings, HK$102 million

(as at December 31, 2019: HK$115 million) of plant and machinery, HK$34 million (as

at December 31, 2019: HK$45 million) of trade receivables, HK$202 million (December

31, 2019: HK$219 million) of inventories and HK$17 million (December 31, 2019: HK$45 million) of bank deposits of the Group were pledged as security for the Group's bank borrowings.

Capital Structure

As at June 30, 2020 and December 31, 2019, the Company's issued share capital was HK$120,000,000, divided into 1,200,000,000 shares of HK$0.1 each.

Foreign Exchange and Other Risk

The Group continued to receive Australian Dollar ("AUD"), USD and RMB from our sales to major customers during the Period, while most of the Group's purchases of raw materials were settled in RMB. As RMB is not a freely convertible currency, any fluctuation in exchange rate of HKD against RMB may have impact on the Group's results. Currently, the Group has not entered into any agreements or purchased any instruments to hedge the Group's exchange rate risks. Any material fluctuation in the exchange rates of AUD and RMB may have an impact on the operating results of the Group.

The Group is exposed to commodity price risk because aluminium ingots are the major raw materials of the Group's products. During the Period, the Group has not entered into any instruments in order to mitigate the risk arising from fluctuations in aluminium price. Any change in aluminium price could affect the Group's financial performance.

Significant Investment, Material Acquisition and Disposal

As disclosed in the announcements of the Company dated June 6, 2019 and March 3, 2020, PanAsia Enterprises (Jiangmen) Company Limited (榮陽實業(江門)有限公司), a wholly owned subsidiary of the Company established in the PRC, succeeded in the bidding of the land use right of phase 1 of the target lands, which consisted of a site area of approximately 133,332.99 square meters through an open tender on February 26, 2020 at the consideration of RMB46 million (equivalent to approximately HK$52 million). This transaction is completed on April 16, 2020.

Save as disclosed above, the Group did not have any other significant investment, material acquisition and disposal during the Period.

28

PANASIALUM HOLDINGS COMPANY LIMITED

Interim Report 2020

Management Discussion and Analysis

Capital Commitments

Capital commitments contracted by the Group but not yet provided for in the consolidated financial statements as at June 30, 2020 amounted to approximately HK$215 million (as at December 31, 2019: HK$246 million), which was mainly related to the acquisition of machineries in the PRC.

Contingent Liabilities

As at June 30, 2020, the Group had no contingent liabilities (as at December 31, 2019: Nil).

Employee Information and Remuneration Policies

As at June 30, 2020, the Group employed approximately 2,700 staff (as at December 31, 2019: 2,700). The Group's remuneration package is determined with reference to the experience and qualifications of the individual employee and general market conditions. The Group also ensures that all employees are provided with adequate training and continued professional opportunities according to their needs. During the Period, the Group incurred staff costs (including Directors' emoluments) of HK$126 million (2019 Period: HK$162 million).

Event After Reporting Period

As disclosed in the announcements of the Company dated July 8, 2020 and August 13, 2020, and the circular of the Company dated July 29, 2020, the Group will dispose the Land by way of a public land auction under the Redevelopment Scheme. Subsequent to the passing of an ordinary resolution in respect of the granting of the proposed mandate in advance to the Directors to enter into and complete the Disposal at the extraordinary general meeting of the Company held on August 13, 2020, a land disposal agreement has been entered into between the Group and the Planning and Natural Resources Bureau on August 13, 2020 and the Disposal will then go through a public land auction process pursuant to the land disposal agreement. The Group will be compensated by the Planning and Natural Resources Bureau from proceeds derived from the sale of the Land.

The Group has engaged an independent valuer, Knight Frank Petty Limited ("Valuer"), to carry out a valuation on the Land. The Valuer has appraised the Land by adopting the estimated amount to be compensated as the market value of the Land. Based on the assumption that the Land will be acquired by the Planning and Natural Resources Bureau and changed to residential and commercial use, the market value of the Land and the compensation amount as appraised by the Valuer is approximately RMB1,558 million as at May 31, 2020.

The Company will disclose material updates or information on the Disposal by way of announcement(s) as and when appropriate in accordance with the Rules Governing the

Listing of Securities on the Exchange ("Listing Rules").

Interim Report 2020

PANASIALUM HOLDINGS COMPANY LIMITED

29

Other Information

INTERIM DIVIDEND

At the meeting of the Board held on August 28, 2020, the Board did not declare an interim dividend for the six months ended June 30, 2020.

SHARE OPTION SCHEME

On January 18, 2013, the Company adopted a share option scheme ("Share Option Scheme") whereby the Board can grant options for the subscription of our shares to the employees, managerial staff and senior employees and those other persons that the Board considers that they will contribute or have contributed to the Group ("Participants") as described in the Share Option Scheme in order to serve as compliment and to reciprocate their contribution to the Group. The maximum number of shares that can be issued according to the Share Option Scheme is 120,000,000 shares which is equivalent to 10% of the issued capital of the Company after completion of the global offering ("Global Offering", as defined in the prospectus dated January 23, 2013). The number of options that may be granted pursuant to the terms of the Share Option Scheme shall not exceed 10% of the issued shares immediately after the completion of the Global Offering. Unless otherwise approved by the shareholders in general meeting, the number of shares that may be granted to any one Participant under the options shall not exceed 1% within any 12-month Period (other than those granted to the substantial shareholders (as defined in the Listing Rules), or the total number of shares that may be granted under the options to the independent non-executive Directors or any of their respective connected persons shall not exceed 0.1% of the shares in issue of the Company from time to time. There is no minimum period that the options must be held before they become exercisable, and the options granted shall be exercised within the Period decided by the Board, however no options shall be exercised 10 years after they have been granted. The exercise price of the option shall be the higher of (a) the closing price of the shares on the daily quotation sheet of the Exchange on the date of grant; (b) the average closing price of the shares on the daily quotation sheet of the Exchange for the five business days immediately preceding the date of grant; and (c) nominal value of the share.

Each grantee shall pay a consideration of HK$1.00 at the time the option is granted. The Share Option Scheme shall take effect from the date it is adopted and shall remain effective within a Period of 10 years from that date.

As at the date of this report, the outstanding number of options available for issue under the Share Option Scheme is 48,000,000, representing 4% of the issued shares of the Company.

30

PANASIALUM HOLDINGS COMPANY LIMITED

Interim Report 2020

Other Information

Details of the share options movements during the Period under the Share Option Scheme are as follows:

						Number of share options
	Date of			Balance as						Balance as
	grant of	Exercise		at	Granted	Exercised	Lapsed	Cancelled	Surrendered	at
Name or category	share	price		January 1,	during	during	during	during	during	June 30,
of grantee	option	(HKD)	Exercise period	2020	the Period	the Period	the Period	the Period	the Period	2020

Directors
Ms. Li Jiewen	23/12/2019	0.396	23/12/2019 -
		(Note 1)	22/12/2029
Mr. Gao Mingjie	23/12/2019	0.396	23/12/2019 -
		(Note 1)	22/12/2029
Mr. Mar Selwyn	23/12/2019	0.396	23/12/2019 -
		(Note 1)	22/12/2029
Mr. Leung Ka Tin	23/12/2019	0.396	23/12/2019 -
		(Note 1)	22/12/2029
Dr. Cheung Wah	23/12/2019	0.396	23/12/2019 -
Keung		(Note 1)	22/12/2029
Mr. Chan Kai Nang	23/12/2019	0.396	23/12/2019 -
		(Note 1)	22/12/2029
Other Participants
Employees	23/12/2019	0.396	23/12/2019 -
		(Note 1)	22/12/2029
Others	23/12/2019	0.396	23/12/2019 -
		(Note 1)	22/12/2029

12,000,000	-	-	-	-	-	12,000,000
(Note 2)
6,000,000	-	-	-	-	-	6,000,000
(Note 2)
1,200,000	-	-	-	-	-	1,200,000
(Note 2)
1,200,000	-	-	-	-	-	1,200,000
(Note 2)
1,200,000	-	-	-	-	-	1,200,000
(Note 2)
1,200,000	-	-	-	-	-	1,200,000
(Note 2)
38,320,000	-	-	248,000	-	1,200,000	36,872,000
(Note 2)
10,800,000	-	-	-	-	-	10,800,000
(Note 2)

Total	71,920,000	-	-	248,000	-	1,200,000	70,472,000

Notes:

1. The closing price of the shares immediately before December 23, 2019, on which those options were granted, was HKD0.38.
2. The Share Options are exercisable for a period of ten years from the date of grant, subject to the vesting period as follows: (i) 60% of the Share Options be vested on the date of grant; and (ii) 40% of the Share Options be vested on the first anniversary of the date of grant.

Interim Report 2020

PANASIALUM HOLDINGS COMPANY LIMITED

31

Other Information

SHARE AWARD SCHEME

The Company adopted a share award scheme ("Share Award Scheme") on March 3, 2014 ("Adoption Date").

Who May Join

Employee(s) are selected by the Board pursuant to the scheme rules for participation in the Share Award Scheme ("Selected Employee(s)").

The Purpose and Objective of the Share Award Scheme

The purposes of the Share Award Scheme are to recognize the contributions by Selected Employees and to give incentives thereto in order to retain them for the continual operation and development of the Group as part of talent retention program of the Group, and to attract suitable personnel for further development of the Group.

Operation of the Share Award Scheme

Bank of Communications Trustee Limited has been appointed as the trustee of the Share Award Scheme ("Trustee"). Pursuant to the scheme rules and the trust deed entered into with the Trustee, the Trustee shall purchase from the market or subscribe for the relevant number of shares awarded out of the Company's resources and shall transfer the relevant Shares to that Selected Employee at no cost in accordance with the scheme rules.

The Share Award Scheme came into effect on March 3, 2014, and shall terminate on the earlier of (i) the tenth (10) anniversary date of the Adoption Date; or (ii) such date of early termination as determined by the Board.

During the Period, no shares were purchased by the Trustee on the market for the purpose of the Share Award Scheme. No shares were granted to Employees during the Period.

32

PANASIALUM HOLDINGS COMPANY LIMITED

Interim Report 2020

Other Information

INTERESTS AND SHORT POSITIONS OF THE DIRECTORS AND CHIEF EXECUTIVES OF THE COMPANY IN THE SHARES, UNDERLYING SHARES AND DEBENTURES

As at June 30, 2020, the interests or short positions of the Directors or chief executives of the Company in the shares, underlying shares and debentures of the Company or its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance ("SFO")) required to be notified to the Company and the Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO) or which would be required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or which would be required, pursuant to Model Code for Securities Transactions by Directors of Listed Companies as set out in Appendix 10 of the Listing Rules ("Model Code"), are as follows:

Long Position in the Shares

			Number of	Percentage
			underlying	of the issued
			shares held	share capital
		Number of	pursuant to	of the
		ordinary	share options	Company
Name of Director	Nature of interest	shares	(Note 1)	(Note 2)
Ms. Li Jiewen	Beneficial owner	-	12,000,000	1.00%
Mr. Gao Mingjie	Beneficial owner	-	6,000,000	0.50%
Mr. Mar Selwyn	Beneficial owner	-	1,200,000	0.10%
Mr. Leung Ka Tin	Beneficial owner	-	1,200,000	0.10%
Dr. Cheung Wah Keung	Beneficial owner	-	1,200,000	0.10%
Mr. Chan Kai Nang	Beneficial owner	-	1,200,000	0.10%

Notes:

1. Details of share options held by Directors are set out in the section headed "Share Option Scheme".
2. The percentage represents the number of shares of the Company interested divided by the number of the issued shares as at June 30, 2020 (i.e. 1,200,000,000 shares).

Save as disclosed above, as at June 30, 2020, none of the Directors or chief executives of the Company had or was deemed to have any interests or short positions in any shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO), or which were required to be 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 Exchange pursuant to the Model Code.

Interim Report 2020

PANASIALUM HOLDINGS COMPANY LIMITED

33

Other Information

DIRECTORS' RIGHTS TO PURCHASE SHARES OR DEBENTURES

Save as disclosed under the headings "Share Option Scheme" and "Share Award Scheme", at no time during the Period were rights to acquire benefits by means of the acquisition of shares in or debentures of the Company granted to any Director or their respective spouse or minor children, or were any such rights exercised by them; or was the Company, its holding company, or any of its subsidiaries or fellow subsidiaries a party to any arrangement to enable the Directors to acquire such rights in any other body corporate.

SUBSTANTIAL SHAREHOLDERS' INTERESTS AND SHORT POSITIONS

As at June 30, 2020, the following persons (other than the Directors and chief executives of the Company) had or deemed or taken to have an interest and/or short position in the shares or the underlying shares which would fall to be disclosed under the provisions of Divisions 2 and 3 of Part XV of the SFO or which were recorded in the register required to be kept by the Company under section 336 of the SFO:

Long Position in the Share

			Approximate
		Number of	Percentage of
Name	Capacity	Shares	Shareholding
Easy Star Holdings Limited	Beneficial Owner	900,000,000	75%
("Easy Star") (Note)
Marina Star Limited (Note)	Interest in controlled	900,000,000	75%
	corporation
HSBC International Trustee	Trustee	900,000,000	75%
Limited (Note)

Note:

Easy Star was the registered holder of the 900,000,000 shares. Easy Star was wholly-owned by Marina Star Limited. The entire issued share capital of Marina Star Limited was owned by HSBC International Trustee Limited as trustee for The Pan Family Trust. The Pan Family Trust was a discretionary trust established by Mr. Marcus Pan as settlor. Mr. Pan Zhaolong, the executive director of the Company, is a nominated beneficiary under The Pan Family Trust.

CORPORATE GOVERNANCE PRACTICES

The Group is committed to maintaining high standards of corporate governance and the Board considers that effective corporate governance is an essential factor to corporate success and to enhance the shareholders' value. The Group has applied the principles and complied with the code provisions of the Corporate Governance Code as set out in Appendix 14 to the Listing Rules throughout the Period.

34

PANASIALUM HOLDINGS COMPANY LIMITED

Interim Report 2020

Other Information

CHANGES OF DIRECTORS' INFORMATION

Below are the changes in the information of Directors during the Period and up to the date of this report that are required to be disclosed pursuant to Rule 13.51B(1) of the Listing Rules:

Dr. Cheung Wah Keung ("Dr. Cheung"), the independent non-executive director of the Company, has joined the board of directors of the Hong Kong Academy of Gifted Education since April 29, 2020.

Dr. Cheung has ceased to be and Mr. Pan Zhaolong ("Mr. Pan"), the executive director of the Company, has been appointed as the authorised representative of the Company under Rule 3.05 of the Listing Rules, with effect from August 6, 2020.

Ms. Li Jiewen, the executive director and chief executive officer of the Company, has ceased to be and Mr. Pan has been appointed as the member of the Nomination Committee, with effect from August 6, 2020.

Mr. Mar Selwyn, the independent non-executive director of the Company, has resigned as the member of the nomination committee and remuneration committee of the Company with effect from August 26, 2020.

Except as set out in this report, there is no other change in the information of the Directors required to be disclosed pursuant to Rule 13.51B of the Listing Rules.

MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS

The Company has adopted the Model Code set out in Appendix 10 to the Listing Rules as its code of conduct for dealings in securities of the Company by the Directors. The Company, having made specific enquiry, all Directors confirmed that they had complied with the Model Code provisions during the Period.

PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S SHARES

The Company and any of its subsidiaries have not redeemed any of its listed securities during the Period. Neither the Company nor any of its subsidiaries purchased or sold any of the Company's listed securities during the Period.

SUFFICIENCY OF PUBLIC FLOAT

Based on the information available to the Company and within the knowledge of the Directors, the Company maintained a sufficient public float as required under the Listing Rules as at the date of this report.

Interim Report 2020

PANASIALUM HOLDINGS COMPANY LIMITED

35

Other Information

AUDIT COMMITTEE

The Company has an audit committee ("Audit Committee") which was established in compliance with Rule 3.21 of the Listing Rules for the purpose of reviewing and providing supervision over the Group's financial reporting process and internal controls. The Audit Committee comprises four members who are the independent non-executive Directors, namely Mr. Mar Selwyn, Mr. Leung Ka Tin, Dr. Cheung Wah Keung and Mr. Chan Kai Nang.

The Audit Committee and the management have reviewed the accounting principles and practices adopted by the Group, as well as the unaudited consolidated interim financial statements for the six months ended June 30, 2020 and has recommended their adoption to the Board.

REVIEW OF INTERIM RESULTS

The condensed consolidated financial statements for the Period has not been audited, but has been reviewed by the Audit Committee.

By order of the Board

Cheung Wah Keung

Independent Non-executive Chairman

and Independent Non-executive Director

Hong Kong, August 28, 2020

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PANASIALUM HOLDINGS COMPANY LIMITED

Interim Report 2020