Contents Financial Summary 2 Corporate Information 4 Chairman s Statement 6 Management Discussion and Analysis 8 Management Profile 15 Financial Revie

Transcription

1 DINGYI GROUP INVESTMENT LIMITED (Incorporated in Bermuda with limited liability) (Stock Code : 508) Annual Report 2013

2 Contents Financial Summary 2 Corporate Information 4 Chairman s Statement 6 Management Discussion and Analysis 8 Management Profile 15 Financial Review 19 Corporate Governance Report 22 Report of the Directors 36 Independent Auditor s Report 48 Consolidated Income Statement 50 Consolidated Statement of Comprehensive Income 52 Consolidated Statement of Financial Position 53 Company Statement of Financial Position 55 Consolidated Statement of Changes in Equity 56 Consolidated Statement of Cash Flows 57 Notes to the Consolidated Financial Statements 58 Page 1

3 Financial Summary SEGMENT REVENUE BY GEOGRAPHICAL MARKET # # Continuing operations Discontinued operations Total HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 Hong Kong 67,048 70, ,929 67, ,912 Australia 62,592 62,592 Macau 37,738 37,738 Singapore 1,901 1,901 Mainland China 1,355 1,355 Total 67,048 70, ,515 67, ,498 # including share of revenue of associates # Revenue (HK$ Million ) Shareholders funds (HK$ Million ) Dividends per share Net asset value per share (excluding non-controlling interests) (HK cents ) (HK cents ) Dingyi Group Investment Limited Annual Report

4 Financial Summary The following is a summary of the total assets, total liabilities, total equity, share capital, results and other financial information of the Company and its subsidiaries (collectively, the Group ) as of year ended 31 March for the last five years. Financials (HK$ Million) Total assets Total liabilities Total equity Non-controlling interests (9) (7) 40 Shareholders funds Share capital in number (Million) 2,375 2,375 2,375 2,255 2,155 in value ( : HK$0.01 per share, : HK$0.05 per share, 2009: HK$0.5 per share) Revenue (Loss)/profit attributable to equity holders of the Company (30) (24) 148 (22) (159) Per Share Basis (HK cents) (Loss)/earnings Basic (1.27) (1.03) 6.3 (1.0) (7.4) Diluted (1.26) (1.03) 6.3 (1.0) (7.4) Dividends 4.6 * 13.6 ** Net asset value (excluding non-controlling interests) Note: During the year ended 31 March 2012, the management implemented a capital reorganisation whereby the Company reduced the authorised and issued share capital through reduction in nominal value of the authorised and issued share capital to the extent of HK$0.04 per share amounting to HK$140,000,000 and HK$95,004,000 respectively ,000,00095,004,000 * The dividend per share for the year ended 31 March 2012 represented special dividend of HK4.6 cents per share paid for the year. * 4.6 ** The dividend per share for the year ended 31 March 2011 represented special dividend of HK13.6 cents per share paid for that year. **

5 Corporate Information BOARD OF DIRECTORS Executive Directors Mr. LI Kwong Yuk (Chairman) Mr. SU Xiaonong (Chief Executive Officer) Mr. CHEUNG Sze Ming Independent Non-Executive Directors Mr. CHENG Xiusheng Mr. SUN Dongsheng Mr. CHOW Shiu Ki COMPANY SECRETARY Miss MAN Tsz Sai, Lavender AUDITOR PricewaterhouseCoopers Certified Public Accountants, Hong Kong 22nd Floor, Prince s Building Central, Hong Kong LEGAL ADVISERS DLA Piper Hong Kong Appleby Appleby AUTHORISED REPRESENTATIVES Mr. CHEUNG Sze Ming Miss MAN Tsz Sai, Lavender AUDIT COMMITTEE Mr. CHOW Shiu Ki (Chairman) Mr. CHENG Xiusheng Mr. SUN Dongsheng REMUNERATION COMMITTEE Mr. CHOW Shiu Ki (Chairman) Mr. SU Xiaonong Mr. CHEUNG Sze Ming Mr. CHENG Xiusheng Mr. SUN Dongsheng Dingyi Group Investment Limited Annual Report

6 Corporate Information NOMINATION COMMITTEE Mr. LI Kwong Yuk (Chairman) Mr. CHOW Shiu Ki Mr. SUN Dongsheng PRINCIPAL BANKERS Hang Seng Bank Limited Shanghai Commercial Bank Limited China Construction Bank (Asia) Corporation Limited Bank of China (Hong Kong) Limited The Hongkong and Shanghai Banking Corporation Limited REGISTERED OFFICE Canon s Court 22 Victoria Street Hamilton, HM 12, Bermuda PRINCIPAL PLACE OF BUSINESS IN HONG KONG Units /F., Convention Plaza Office Tower 1 Harbour Road, Wanchai, Hong Kong PRINCIPAL SHARE REGISTRAR AND TRANSFER AGENT IN BERMUDA Butterfield Fulcrum Group (Bermuda) Limited 26 Burnaby Street Hamilton HM 11 Bermuda BRANCH SHARE REGISTRAR AND TRANSFER OFFICE IN HONG KONG Tricor Standard Limited 26th Floor, Tesbury Centre 28 Queen s Road East, Hong Kong SHARE LISTING The Stock Exchange of Hong Kong Limited Stock Code: 508 ADR DEPOSITARY BANK The Bank of New York Mellon American Depositary Receipts 101 Barclay Street, 22nd Floor West New York, NY 10286, USA Stock Symbol: COAZY WEBSITE Canon s Court 22 Victoria Street Hamilton, HM 12, Bermuda Butterfield Fulcrum Group (Bermuda) Limited 26 Burnaby Street Hamilton HM 11 Bermuda 508 The Bank of New York Mellon American Depositary Receipts 101 Barclay Street, 22nd Floor West New York, NY 10286, USA COAZY 5

7 Chairman s Statement By abiding the corporate spirit of seeking early opportunities with insight, pursuing excellence, progressing proactively and forging ahead innovatively, all over the years, we have all along been adhering to the industry intrinsic value as the core of our value investment philosophy. We believe that all investment values are built on the growth and success of business operation. We have applied the perfect investment evaluation and management system to select and invest in enterprises with higher growth potential, which have been firmly carried out the operation based on the industry s own development pattern. Meanwhile, we also have worked closely with the management teams of prominent enterprises, working together hand in hand to maximize our own investment value through joint growth with the investees. As in the past, we are continuing to move forward in the way of realizing the leap into the world with our foothold in China and become a professional investment institute with international competitiveness focusing on scalable industry investment. Apart from our existing food and beverages and securities trading businesses, we have applied relentlessly various resources and channels to seek proactively significant opportunities which are suitable for enterprise development, so as to achieve an explosive growth for the Group in repaying the shareholders of the Company (the Shareholders ) for their long-term support. Here, I am pleased to announce that we are ready for this moment. After the balance sheet date of this year, the Company has made an indicative, nonbinding, incomplete and conditional proposal to Elemental Minerals Limited ( Elemental ), and if each condition is satisfied, such proposal will proceed to a formal offer, it will procure the Company to acquire all the issued shares of Elemental by the Company. Elemental Minerals LimitedElemental Elemental Dingyi Group Investment Limited Annual Report

8 Chairman s Statement Elemental is a sizeable potash exploration and mining company dual listed on the Australian Stock Exchange and the Toronto Stock Exchange. It is currently developing the Sintoukola potash project located in the Republic of Congo. The Company is deeply convinced that the Sintoukola potash project, which has been identified as the strategic scarce resources at national level in China, has huge development potential with foreseeable fruitful returns. I do always hope that while creating wealth for the Company and the Shareholders, I can devote into a business that can benefit our country and people, for which the acquisition of Elemental and the Sintoukola potash project will not only achieve the strategic goal of the Company but also fulfil my long-term dream. Elemental Sintoukola Elemental Sintoukola At present, the Company is making queries, seeking for advices and discussing about such acquisition in order to arrange for implementation of the formal agreements as soon as possible by Elemental and the Company. At the same time, in order to meet the capital requirements for the proposed acquisition and other investment projects, the Company is in discussion with various investment institutes and individuals for fund raising and preliminary result is noted. As disclosed in the Company s announcement, the Company received full support from China-Africa Development Fund and its wholly-owned subsidiary, both are belonged to the China Development Bank. Elemental Finally, I would like to take this opportunity to express my gratitude to all stakeholders who had made valuable contributions to the Group this year. They include our loyal Shareholders, my fellow directors of the Company (the Directors ), our valued business partners, our steadfast customers, and hardworking and dedicated staff. My sincere thanks to you all for your continuous support. Reward Others While Enriching Ourselves, Thus Enlightening Dingyi! LI Kwong Yuk Chairman 7

9 Management Discussion and Analysis BUSINESS REVIEW The revenue from the Group s ongoing operations during the year under review amounted to HK$67 million, which was 6% or HK$4 million less than what was achieved during the previous year. There was a loss attributable to the Company s equity holders of HK$30 million (2012: HK$24 million) which includes a fair value loss on derivative financial liabilities amounted to HK$20 million (2012: nil). 6,700 6%400 3,000 2,400 2,000 The basic loss per share on ongoing operations was HK1.27 cents, compared with loss per share of HK0.88 cents last year, while the overall loss per share for the year was HK1.27 cents (2012: HK1.03 cents) FOOD AND BEVERAGES The continuing food and beverages segment generated a revenue of HK$67 million during the year under review. This was 6% lower than the amount for last year. The segment reported a loss of HK$2 million for the current year (2012: HK$11 million). The restaurants and bars and kiosks of the Group are operated by 3 subsidiaries (the World Pointer Group ). As of 31 March 2013, the World Pointer Group operated 5 restaurants and bars and 3 kiosks including but not limited to Watermark, The Boathouse, Pier 7 Café & Bar and Café de Paris (Soho) in Hong Kong. 6,700 6% 200 1,100 3World Pointer World Pointer 53 Watermark The Boathouse Pier 7 Café & Bar Café de Paris (Soho) Cafe Deco Holdings Limited, a former subsidiary of the Group, provides general administrative and management services to the restaurants and bars and kiosks under the World Pointer Group such as operation management, preparation of books of accounts, maintenance of premises of restaurants and bars, and repairs and decorations up to 15 February 2014 under a management agreement. Cafe Deco Holdings Limited World Pointer Dingyi Group Investment Limited Annual Report

10 Management Discussion and Analysis SECURITIES TRADING BUSINESS During the year, the Group has substantial performance in the securities trading business. All the securities traded are shares listed on The Stock Exchange of Hong Kong Limited (the Stock Exchange ). This segment recorded a realized gain on investments at fair value through profit or loss of HK$4.8 million (2012: HK$1.7 million) and reported a profit of HK$12.6 million (2012: HK$0.4 million) during the year under review , EVENTS AFTER REPORTING PERIOD I COMPLETION OF THE ISSUE OF HK$200 MILLION 2% CONVERTIBLE BONDS UNDER SPECIFIC MANDATE On 12 October 2012, after trading hours, Mr. Li Xuan (the Subscriber 1 ), Mr. Leung Chiu (the Subscriber 2 ) and Mr. Yang Dongjun (the Subscriber 3 ) and the Company entered into a subscription agreement in respect of the issue of and subscription for the convertible bonds in the aggregate principal amount of HK$150 million (the First Subscription Agreement ). On 17 October 2012, after trading hours, Mr. Lei Chong (the Subscriber 4 ) entered into a subscription agreement in respect of the issue of and subscription for the convertible bond in a principal amount of HK$50 million (the Second Subscription Agreement ). I 200,000, ,000, ,000,000 Completion of the issue of and subscription for the convertible bonds in the principal amount of HK$50 million each by the Subscriber 2 and the Subscriber 3 under the First Subscription Agreement took place on 28 March 2013 (the First Completion ) ,000,000 9

11 Management Discussion and Analysis On 31 May 2013, the issue of and subscription for the convertible bonds in the principal amount of HK$50 million each by the Subscriber 1 under the First Subscription Agreement and by the Subscriber 4 under the Second Subscription Agreement was completed (the Second Completion ). The net proceeds from the issue of the convertible bonds to the Subscriber 1 and the Subscriber 4, are approximately HK$99.95 million, which are placed in an interest bearing account with a financial institution pending for funding the partial payment of the Proposed Offer (as defined below) or other possible future investments, for financing the development of the Group and for using as the general working capital of the Group ,000, ,950,000 Details of the First Subscription Agreement, the Second Subscription Agreement, the First Completion and the Second Completion were disclosed in the announcements of the Company dated 12 October 2012, 17 October 2012, 20 November 2012, 31 December 2012, 31 January 2013, 28 March 2013 and 31 May 2013 and the circular issued by the Company dated 2 November II A NON-BINDING INDICATIVE INCOMPLETE PROPOSAL MADE BY THE COMPANY TO ELEMENTAL MINERALS LIMITED II ELEMENTAL MINERALS LIMITED On 11 April 2013, after trading hours, the Company has made an indicative, non-binding, incomplete and conditional proposal to Elemental which could result in a cash offer being made by the Company to acquire all the issued shares of Elemental (the Elemental Shares ) for an offer price of AUD0.66 (equivalent to approximately HK$5.3832) per Elemental Share (the Proposed Offer ) if it was to proceed to a formal offer. Elemental is an advanced mining exploration and development company dual listed on the Australian Stock Exchange and the Toronto Stock Exchange. It is currently developing the Sintoukola potash project located in the Republic of Congo. The Proposed Offer or any offer to be made by the Company, if made, may constitute a notifiable transaction for the Company under Chapter 14 of the Rules Governing the Listing of Securities on the Stock Exchange (the Listing Rules ). Elemental Elemental Elemental Elemental Elemental Sintoukola 14 Dingyi Group Investment Limited Annual Report

12 Management Discussion and Analysis On the same date, the Company also entered into an exclusivity and cost reimbursement deed with Elemental (the Exclusivity Deed ), pursuant to which Elemental (i) must not have any discussions or negotiations relating to other potential competing proposals; and (ii) must ensure its representatives or related organizations do not directly or indirectly solicit or initiate inquiries, proposals or discussion regarding any potential competing proposals, within the maximum period from the date of the Exclusivity Deed to 11 May 2013 (unless extended), Elemental has also agreed the arrangement for the cost reimbursement. Elemental Elemental (i) (ii) Elemental On 13 May 2013, the Company and Elemental have mutually agreed to extend the exclusivity period from 11 May 2013 to 31 May 2013 (unless further extended). Elemental On 30 May 2013, the Company and Elemental have further mutually agreed to extend the exclusivity period from 31 May 2013 to 30 June 2013 (unless further extended) in order to enable Elemental and the Company to finalize the outstanding due matters, comply with the regulatory requirements and facilitate further negotiation. Elemental Elemental Details of the Proposed Offer were disclosed in the announcements of the Company dated 11 April 2013, 13 May 2013 and 30 May

13 Management Discussion and Analysis III GRANT OF SHARE OPTIONS III On 19 April 2013 and 26 April 2013, the board of the Directors (the Board ) granted 85,050,000 share options and 20,000,000 share options respectively to the eligible employees/eligible participants as defined in the share option scheme adopted by the Company on 21 September 2012 (the New Share Option Scheme ) at an exercise price of HK$0.375 per share ,050,00020,000,000 Details of the above grant of share options were disclosed in the announcements of the Company dated 19 April 2013, 26 April 2013 and 3 May IV PLACING OF NEW SHARES UNDER GENERAL MANDATE IV On 25 April 2013, after the trading hours, Kingston Securities Limited (the Placing Agent ) and the Company entered into a placing agreement (the Placing Agreement ), pursuant to which the Company has conditionally agreed to place, through the Placing Agent on a best effort basis, a maximum of 475,000,000 placing shares at a price of HK$0.30 per placing share to not fewer than six placees who and whose ultimate beneficial owners, if any, are third parties independent of and are not connected with the Company and its connected persons (as defined in the Listing Rules) (the Placing ). The net proceeds from the Placing, after deducting related placing commission and other related expenses in connection with the Placing, is approximately HK$140.9 million, which placed in an interest bearing account with a financial institution pending for funding the partial payment of the Proposed Offer or other possible future investments. The Placing was successfully completed on 28 May ,000, ,900,000 Details of the Placing were disclosed in the announcements of the Company dated 25 April 2013, 2 May 2013 and 28 May Dingyi Group Investment Limited Annual Report

14 Management Discussion and Analysis V PROPOSED ISSUE OF 5% CONVERTIBLE BONDS AND WARRANTS DUE 2015 UNDER SPECIFIC MANDATE V 5 On 20 June 2013, after trading hours, Hantang Resources Investment Limited( Hantang ) as the subscriber and the Company entered into a subscription agreement (the Subscription Agreement ) in respect of the issue of and subscription for the convertible bonds in the aggregate principal amount not exceeding HK$620,000,000 at an initial conversion price of HK$0.33 per conversion share and the warrants in the aggregate principal amount of HK$155,000,000 at an exercise price of HK$0.35 per warrant share, respectively (the Proposed Issue of the New Convertible Bonds and the Warrants ). The Subscription Agreement and the transactions contemplated thereunder, including the allotment and issue of the conversion shares and the warrant shares under a specific mandate of the Company, are subject to the approval by the Shareholders at a special general meeting of the Company ,000, ,000,000 The estimated net proceeds of the issue of the convertible bonds (after deducting the fees and expenses) will be approximately HK$619.5 million and the exercise in full of the warrants will result in further net proceeds of approximately HK$155 million. The total net proceeds are intended to be used for funding the partial payment of the Proposed Offer or other possible further investments. 619,500, ,000,000 A circular containing, among other things, details about the Proposed Issue of the New Convertible Bonds and the Warrants will be despatched to the Shareholders on or before 19 July Details of the Proposed Issue of the New Convertible Bonds and the Warrants were disclosed in the announcement of the Company dated 20 June

15 Management Discussion and Analysis VI ALLOTMENT AND ISSUE OF CONVERSION SHARES VI On 26 June 2013, 227,272,727 conversion shares were allotted and issued to each of the Subscriber 1 and the Subscriber 2 pursuant the exercise of conversion rights attaching to the convertible bonds (the Convertible Bonds ) issued on 28 March 2013 and 31 May 2013 to the Subscriber 2 and the Subscriber 1 respectively. 227,272, Details of the Convertible Bonds were disclosed in the circular issued by the Company dated 2 November STRATEGY AND OUTLOOK Apart from the existing businesses of food and beverages and securities trading, the Group will continue to explore other potential investment opportunities with reasonable returns that meet the Company s criteria. This will not only strengthen our core business but also increase the Company s equity holders values. The Group has been exploring a few investment opportunities. Since early 2012, the Company has been negotiating with a mining company with principal place of business in Africa in respect of the possible acquisition of a strategic shareholding interest by stages in this mining company and is actively negotiating the principal terms of the aforesaid possible acquisition. The Company is also exploring the investment opportunities in other mining projects. Dingyi Group Investment Limited Annual Report

16 Management Profile Set out below are the biographical details of the current Directors: EXECUTIVE DIRECTORS MR. LI KWONG YUK ( Mr. Li ) Mr. Li, aged 51, joined the Company as executive Director and chairman of the Company on 27 October He is also the chairman of the nomination committee (the Nomination Committee ) and directors of various subsidiaries of the Company. Mr. Li is a businessman with over 11 years investment experience in the highway industry in The People s Republic of China (the PRC ). He studied at Guangzhou Institute of Foreign Trade from 1978 to Mr. Li had worked on various investment projects in areas such as infrastructure and finance in Hong Kong and the PRC. He has 50% shareholding in Wincon International Limited ( Wincon International ), a company set up by Mr. Li and incorporated in Hong Kong, which is principally engaged in investment business in highways in the PRC. He is a sole director and the beneficial owner of Wincon Capital Investment Limited ( WCIL ), the controlling Shareholders, and also directors of various companies including Wincon International, Wincon Asset Management Limited, Dingyi Wantong Investment (HK) Limited, Dingyi Venture Capital (HK) Limited, Dingyi New Energy Investment Limited, (Guangzhou Huan Long Expressway Co., Ltd., being its unofficial English Translation) and (Shenzhen Dingyi Wantong Investment Co., Ltd., being its unofficial English Translation). MR. SU XIAONONG ( Mr. Su ) Mr. Su, aged 49, joined the Company as executive Director and chief executive officer of the Company (the Chief Executive Officer ) on 27 October He is also a member of the remuneration committee (the Remuneration Committee ) and directors of various subsidiaries of the Company. Mr. Su graduated from East China College of Political Science and Law in He has been director or management of various venture capital, private equity and investment consultancy companies in the PRC, including worked at (Shenzhen Gofar Investment Management Co., Ltd., being its unofficial English Translation) from April 2003 to November Mr. Su currently works at (Shenzhen Union Venture Capital Consulting Co., Ltd., being its unofficial English Translation) and (Shenzhen Dingyi Wantong Investment Co., Ltd., being its unofficial English Translation). He is also a partner and vice president of Shenzhen Dingyi Venture Capital L.P % 49 15

17 Management Profile MR. CHEUNG SZE MING ( Mr. Cheung ) Mr. Cheung, aged 44, joined the Company as executive Director and chief financial officer of the Company on 27 October He is also a member of the Remuneration Committee and directors of various subsidiaries of the Company. Mr. Cheung has accumulated over 20 years working experience from the international audit firm and public listed companies. He holds a Bachelor Degree in Accountancy from the Hong Kong Polytechnic University. Mr. Cheung is a fellow member of The Association of Chartered Certified Accountants and a member of The Hong Kong Institute of Certified Public Accountants. He was an audit manager in an international audit firm. Mr. Cheung was an executive director of Jackin International Holdings Limited (now known as AMCO United Holding Limited) (stock code: 630) during the period from April 2005 to December INDEPENDENT NON-EXECUTIVE DIRECTORS MR. CHENG XIUSHENG ( Mr. Cheng ) Mr. Cheng, aged 68, joined the Company as independent nonexecutive Director on 27 October He is also members of the audit committee of the Company (the Audit Comittee ) and the Remuneration Committee. Mr. Cheng holds a Bachelor Degree in Mathematics and Mechanics of Peking University and a Master Degree in Economic Management of Tsinghua University. He has worked in several departments of the Technology and Economic Research Center and the Development Research Center of the State Council of the PRC (the State Council ). Mr. Cheng is now a committee member and a researcher of the academic committee of the Development Research Center of the State Council, and is also a part-time professor in Nankai University, China University of Technology and Macau University of Science and Technology. He has served as an independent non-executive director of GREE ELECTRIC APPLIANCES, INC. OF ZHUHAI (a company listed on the Shenzhen Stock Exchange, stock code: ) from June 2002 to May Mr. Cheng is an executive director of the China Society of Administration for Industry and Commerce as well as the (China Policy and Technology Research Association, being its unofficial English translation), a vice chairman of Beijing Olympic Economy Research Association and an independent non-executive director of Beijing Capital Co., Ltd. (a company listed on the Shanghai Stock Exchange, stock code: ) Dingyi Group Investment Limited Annual Report

18 Management Profile MR. SUN DONGSHENG ( Mr. Sun ) Mr. Sun, aged 55, joined the Company as independent non-executive Director on 27 October He is also members of the Audit Committee, the Remuneration Committee and the Nomination Committee. Mr. Sun holds a Bachelor Degree in Engineering from the Secondary Mechanics of (Shandong Engineering Institute, being its unofficial English Translation, now known as Shandong University after renamed from (Shandong University of Technology, being its unofficial English Translation)), a Master Degree in Engineering from the Department of Materials of Shandong University of Technology (now known as Shandong University) and a Doctor Degree in Engineering from the School of Engineering of Osaka University in Japan. He has been named as (outstanding young intellectual model of Shandong Province, being its unofficial English translation) (excellent youth high school scholar of Shandong Province, Mr. Sun has been awarded (the foundation for the excellent youth scholars of China, being its unofficial English translation), doctoral foundation, (the foundation for excellent young scientist of Shandong Province, being its unofficial English translation) and has been selected in the (Thousand Talent Project of China, being its unofficial English Translation). He is the chairman of various venture capital management companies. Mr. Sun is also the president of Shenzhen Capital Group Co., Ltd., the vice chairman of Beijing Easpring Co., Ltd. (a company listed on the Growth Enterprise Market of the Shenzhen Stock Exchange, stock code: ), as well as a director of Shenzhen Capital Group Co., Ltd. (Hong Kong) and Dalian Metallurgical Bearing Co., Ltd

19 Management Profile MR. CHOW SHIU KI ( Mr. Chow ) Mr. Chow, aged 45, joined the Company as independent non-executive Director on 27 October He is also chairman of the Audit Committee and the Remuneration Committee and a member of the Nomination Committee. Mr. Chow has accumulated years of working experience in auditing, accounting and corporate finance areas. He holds a Master Degree in Professional Accounting. Mr. Chow is a fellow member of The Association of Chartered Certified Accountants and a fellow member of The Hong Kong Institute of Certified Public Accountants. He has worked for various private and listed companies at senior management level. Mr. Chow was an independent nonexecutive director of China Oriental Culture Group Limited ( China Oriental, stock code: 2371) during the period from January 2008 to May He is currently the financial controller of a renowned local travel agency and an independent non-executive director of China Assurance Finance Group Limited ( China Assurance, stock code: 8090). Both China Oriental and China Assurance are companies listed on the Stock Exchange Dingyi Group Investment Limited Annual Report

20 Financial Review CONTINUING OPERATIONS REVENUE The Group s revenue dropped by 6% from HK$71 million in 2012 to HK$67 million in The revenue was contributed by World Pointer Group. 7,100 6%6,700 World Pointer GROSS PROFIT Gross profit margin of the Group maintained stable at 75% this year. Turnover decrease led to the drop of gross profit margin. The drop of gross profit margin was off-set by the decrease of cost. 75% OTHER GAINS/(LOSSES), NET Other gains, net increased from losses of HK$2 million last year to gains of HK$8 million this year. This was mainly attributed to the fair value profit of HK$7 million for investments at fair value through profit or loss SELLING AND DISTRIBUTION COSTS, AND ADMINISTRATIVE EXPENSES Selling and distribution costs decreased from HK$54 million last year to HK$45 million this year while administrative expenses increased from HK$18 million to HK$31 million. The total increase of HK$13 million was mainly attributable to the increase in the consultancy fees and professional fees during the year. 5,400 4,500 1,800 3,1001,300 PLANT AND EQUIPMENT Plant and equipment decreased from HK$8 million last year to HK$4 million. This was mainly due to the depreciation charge for the year INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS Investments at fair value through profit or loss increased substantially for HK$7 million mainly because of the increase in the addition of the listed investments in the securities trading business

21 Financial Review CASH AND BANK BALANCES Cash and bank balances increased from HK$104 million last year to HK$190 million, mainly due to the cash received from the issuance of the convertible bonds SHAREHOLDERS FUNDS AND FINANCIAL RATIOS As at 31 March 2013, the Group s net assets attributable to equity holders of the Company amounted to HK$199 million (2012: HK$159 million), an increase of 25% or HK$40 million when compared with Such increase was mainly caused by the issuance of convertible bonds equity conversion component of HK$70 million less the loss attributable to equity holders of HK$30 million. At the end of the reporting year, the Group had no bank borrowing (2012: nil). Cash and bank balances amounted to HK$190 million (2012: HK$104 million) % 4,0007,000 3, Total debt to equity ratio was 0.21 (2012: nil) and net debt to equity ratio was nil (2012: nil), which was expressed as a percentage of total convertible bonds and net convertible bonds respectively, over the total equity of HK$190 million (2012: HK$152 million) BORROWINGS As at 31 March 2013 and 2012, there was no bank borrowings. CHARGE ON ASSETS As at 31 March 2013 and 2012, there was no charge on assets. Dingyi Group Investment Limited Annual Report

22 Financial Review CONTINGENTLY LIABILITIES Details of the contingent liabilities as at 31 March 2013 are set out in note 34 to the consolidated financial statements. 34 CAPITAL COMMITMENTS Details of the capital commitments as at 31 March 2013 are set out in note 35 to the consolidated financial statements. 35 TREASURY POLICIES The Group adopts conservative treasury policies in cash and financial management. To achieve better risk control and minimize cost of funds, the Group s treasury activities are centralized. Cash is generally placed in short-term deposits mostly denominated in Hong Kong or US dollars or Renminbi. The Group s liquidity and financing requirements are frequently reviewed. In anticipating new investments, the Group will consider new financing while maintaining an appropriate level of gearing. 21

23 Corporate Governance Report CORPORATE GOVERNANCE PRACTICES The Company is committed to maintaining a high standard of corporate governance and has introduced corporate governance practices appropriate to the conduct and growth of its business. The Company s corporate governance practices are based on the principles and the code provisions as set out in the Corporate Governance Code contained in Appendix 14 of the Listing Rules (the CG Code ). 14 In the opinion of the Directors, the Company has complied with all code provisions of the CG Code during the year ended 31 March 2013 except for the deviations from the code provisions A.5.2(a) and A.6.7 as explained below: A.5.2(a) A.6.7 Code provision A.5.2(a) stipulates that the nomination committee should review the structure, size and composition (including the skills, knowledge and experience) of the board at least annually and make recommendations on any proposed changes to the board to complement the issuer s corporate strategy. During the year ended 31 March 2013, no Nomination Committee meeting was held due to the fact that the structure, size and composition of the Board had been reviewed by the time the Nomination Committee was established on 29 March 2012 and there was no change in the Board composition during the year. The Company therefore considers holding the Nomination Committee meeting during the year ended 31 March 2013 is not necessary. A.5.2(a) Code provision A.6.7 stipulates that independent non-executive directors should attend general meetings and develop a balanced understanding of the views of the Shareholders. During the year ended 31 March 2013, Mr. Cheng Xiusheng and Mr. Sun Dongsheng did not attend the Company s annual general meeting held on 21 September 2012 and the Company s special general meeting held on 20 November 2012 due to other business engagements. A.6.7 Dingyi Group Investment Limited Annual Report

24 Corporate Governance Report DIRECTORS SECURITIES TRANSACTIONS The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 of the Listing Rules (the Model Code ) as its code of conduct for securities transactions by Directors during the year. The Company has made specific enquiries of all the Directors and they have confirmed they have complied with the required standard set out in the Model Code throughout the year ended 31 March THE BOARD OF DIRECTORS The overall management of the business of the Company is vested in the Board, which assumes the responsibility for leadership and control of the Company and is collectively responsible for promoting the success of the Company by directing and supervising its affairs. All Directors should make decisions objectively in the interests of the Company and the Shareholders as a whole. The Board has delegated the power to oversee the daily operational matters of the Group to the management of the Company under the supervision of the Board. The functions of the Board are carried out either directly or through the Board committees. To ensure the Board is in a position to exercise its power in an informed manner, all members of the Board have full and timely access to all relevant information and may take independent professional advice if necessary. The Board has full support from the Chief Executive Officer and the management of the Company to discharge its responsibilities. Appropriate insurance cover for the Directors liabilities in respect of legal actions against the Directors and senior management of the Group arising out of corporate activities of the Group has been arranged. The Board is responsible for performing the corporate governance duties set out in the code provision D.3.1 of the CG Code. D

25 Corporate Governance Report BOARD COMPOSITION Currently, the Board comprises six Directors and their respective roles are set out as follows: Executive Directors Mr. Li Kwong Yuk (Chairman) Mr. Su Xiaonong (Chief Executive Officer) Mr. Cheung Sze Ming Independent Non-executive Directors Mr. Cheng Xiusheng Mr. Sun Dongsheng Mr. Chow Shiu Ki The biographical details of each Director are set out in the Management Profile section in this annual report. Their roles and functions are published on the websites of the Stock Exchange and the Company. The Board possesses a balance of skills and experience which are appropriate for the requirements of the business of the Company. A balanced composition of executive and independent non-executive Directors also generates a strong independent element on the Board, which allows independent and objective decision making process for the best interest of the Company. The Company will review the composition of the Board regularly to ensure the Board possesses the appropriate and necessary expertise, skills and experience to meet the needs of the business development of the Group. The Company has received written annual confirmation of his independence from each of the independent non-executive Directors pursuant to rule 3.13 of the Listing Rules. Based on the confirmation, the Company considers all independent non-executive Directors to be independent during the year ended 31 March Dingyi Group Investment Limited Annual Report

26 Corporate Governance Report BOARD MEETING The Board meets either in person or through other electronic means of communication to monitor the execution of plans, review the Group s business performance and review financial reporting as well as all other material matters. The Board held 3 meetings during the year ended 31 March Individual attendance records of each Director at the Board meetings are set out in the table on page 31 of this annual report. Sufficient notice with agenda and the relevant information of the Board meeting are given to all Directors. Minutes of the Board Meetings and meetings of the Audit Committee, the Remuneration Committee and the Nomination Committee are drafted by the Company Secretary and the final version of the minutes of the said meetings are sent to all Directors for comments and record. The signed minutes of the said meetings are kept by the Company Secretary and are open for inspection by any Directors. If a substantial Shareholder or a Director has a conflict of interest in a matter to be considered by the Board which the Board has determined to be material, the matters will be dealt with by a Board meeting rather than written resolutions and the Board will ensure that an adequate number of independent nonexecutive Directors are involved in the consideration of the relevant matters. Independent non-executive Directors are encouraged to take an active role in the Board meetings. 31 RELATIONSHIPS BETWEEN THE BOARD MEMBERS There is no relationship, including financial, business, family or other material/relevant relationships, among the Board members. 25

27 Corporate Governance Report CONTINUOUS PROFESSIONAL DEVELOPMENT The Directors are encouraged to participate in continuous professional developments (the Continuous Professional Development ) to develop and refresh their knowledge and skills. According to the confirmations received from the Directors, all Directors have participated in the Continuous Professional Development for the year ended 31 March 2013 in the following manner: Attending seminars/ courses/ conferences in relation to Reading the relevant Materials in training relation to conducted Attending the director s by the in-house duties and professional Name briefings Giving talks responsibilities parties Executive Directors Mr. Li Kwong Yuk Mr. Su Xiaonong Mr. Cheung Sze Ming Independent Non-executive Directors Mr. Cheng Xiusheng Mr. Sun Dongsheng Mr. Chow Shiu Ki Dingyi Group Investment Limited Annual Report

28 Corporate Governance Report CHAIRMAN AND CHIEF EXECUTIVE OFFICER Mr. Li Kwong Yuk is currently the chairman of the Board (the Chairman ) and Mr. Su Xiaonong is currently the Chief Executive Officer. In accordance with the code provision A.2.1 of the CG Code, the roles of the Chairman and the Chief Executive Officer are separate and performed by different person. A.2.1 The Chairman is responsible for overseeing the functions of the Board and providing leadership for the Board while the Chief Executive Officer is responsible for managing the businesses of the Group. NON-EXECUTIVE DIRECTORS Each independent non-executive Director has entered into a service agreement with the Company for a fixed term of two years from the effective date of the service agreement and automatically renewed for one year from the expiry date of the appointed period until terminated by either party giving at least three months notice. APPOINTMENT AND RE-ELECTION OF DIRECTORS Each of the Directors has entered into a service agreement with the Company for a fixed term of two years from the effective date of the service agreement and automatically renewed for one year from the expiry date of the appointed period until terminated by either party giving at least three months notice. In accordance with the Bye-laws, all Directors are subject to retirement by rotation and re-election at annual general meeting of the Company (the AGM ). Under Bye-law 112.(A), at each AGM, one-third of the Directors for the time being, (or, if their number is not a multiple of three, the number nearest to but not less than one-third) shall retire from office by rotation. Every Director shall retire from office no later than the third AGM since the last re-election or appointment of such Director. 112.(A) 27

29 Corporate Governance Report BOARD COMMITTEES The Board has established the Audit Committee, the Remuneration Committee and the Nomination Committee in order to maintain high level of corporate governance standard of the Company. AUDIT COMMITTEE The Audit Committee was established with written terms of reference and the same has been revised in order to comply with the relevant code provisions in the CG Code. The Audit Committee comprises three independent non-executive Directors, namely Mr. Chow Shiu Ki (chairman of the Audit Committee), Mr. Cheng Xiusheng and Mr. Sun Dongsheng. The principal responsibilities of the Audit Committee are to review and provide supervision over the financial reporting system and internal control procedures of the Group and to review the Company s annual report and accounts and the interim report and to provide advices and comments thereon to the Board. During the year ended 31 March 2013, the Audit Committee met twice with the auditor of the Company (the Auditor ). Details of the duties and responsibilities of the Audit Committee were disclosed in the Terms of Reference of Audit Committee which has been published on the websites of the Stock Exchange and the Company on 29 March During the year ended 31 March 2013, the Audit Committee has reviewed with the management the accounting principles and practices adopted by the Group and discussed auditing, internal controls, risk management systems of the Group and financial reporting matters including the review of the audited financial statements of the Group for the year ended 31 March The Audit Committee held two meetings during the year ended 31 March Individual attendance record of each member of the Audit Committee is set out in the table on page 31 of this annual report. 31 Dingyi Group Investment Limited Annual Report

30 Corporate Governance Report REMUNERATION COMMITTEE The Remuneration Committee was established with written terms of reference and the same has been revised in order to comply with the relevant code provisions in the CG Code. The Remuneration Committee comprises three independent nonexecutive Directors, namely Mr. Chow Shiu Ki (chairman of the Remuneration Committee), Mr. Cheng Xiusheng and Mr. Sun Dongsheng, and two executive Directors, namely Mr. Su Xiaonong and Mr. Cheung Sze Ming. The principal responsibilities of the Remuneration Committee are, including but not limited to, to make recommendations to the Board on the Company s policy and structure for the remuneration of all Directors and the senior management of the Company and to establish a formal and transparent procedure for developing remuneration policy. Details of the duties and responsibilities of the Remuneration Committee were disclosed in the Terms of Reference of Remuneration Committee which has been published on the websites of the Stock Exchange and the Company on 29 March During the year ended 31 March 2013, no Remuneration Committee meeting was held due to the fact that the remuneration of all the Directors packages had been reviewed and approved by the Board by the time when they were appointed on 27 October 2011 and the term of their services was fixed for two years. The members of the Remuneration Committee therefore considers holding the Remuneration Committee meeting during the year ended 31 March 2013 is not necessary. The Remuneration Committee adopted the model which is described in the code provision B.1.2(c)(ii) of the CG Code that the Remuneration Committee makes recommendations to the Board on the remuneration packages of individual executive Directors and senior management. B.1.2(c) (ii) 29

31 Corporate Governance Report NOMINATION COMMITTEE The Nomination Committee was established with written terms of reference in compliance with the relevant code provisions in the CG Code. The Nomination Committee comprises one executive Director, namely Mr. Li Kwong Yuk (chairman of the Nomination Committee) and two independent non-executive Directors, namely Mr. Chow Shiu Ki and Mr. Sun Dongsheng. The principal responsibilities of the Nomination Committee are, including but not limited to, to review the structure, size and composition (including the skills, knowledge, experience and length of service) of the Board at least annually and make recommendations on any proposed changes to the Board to complement the Company s corporate strategy. Details of the duties and responsibilities of the Nomination Committee were disclosed in the Terms of Reference of Nomination Committee which has been published on the websites of the Stock Exchange and the Company on 29 March During the year ended 31 March 2013, no Nomination Committee meeting was held due to the fact that the structure, size and composition of the Board had been reviewed by the time the Nomination Committee was established on 29 March 2012 and there was no change in the Board composition during the year. The Company therefore considers holding the Nomination Committee meeting during the year ended 31 March 2013 is not necessary. AUDITORS REMUNERATION During the year ended 31 March 2013, the fees paid/payable to the Auditor in respect of audit and non-audit services provided by the Auditor were as follows: Nature of services Amount (HK$ 000) Audit services PricewaterhouseCoopers 1,600 Non-audit services PricewaterhouseCoopers 12 Fees for non-audit services comprise of taxation service fees. Dingyi Group Investment Limited Annual Report

32 Corporate Governance Report ATTENDANCE RECORD OF DIRECTORS AND COMMITTEE MEMBERS During the year ended 31 March 2013, the individual attendance record of the Directors for the Board meetings, the Audit Committee meetings, the Nomination Committee meeting and the Remuneration Committee meeting is set out below: Name Board Meeting Attended/ Eligible to attend Nomination Committee Meeting Attended/ Eligible to attend Remuneration Committee Meeting Attended/ Eligible to attend Audit Committee Meeting Attended/ Eligible to attend Special General Meeting Attended/ Eligible to attend 2012 AGM Attended/ Eligible to attend Executive Directors Mr. Li Kwong Yuk 3/3 0/0 0/0 2/2 1/1 1/1 Mr. Su Xiaonong 3/3 0/0 0/0 2/2 1/1 1/1 Mr. Cheung Sze Ming 3/3 0/0 0/0 2/2 1/1 1/1 Independent Non-executive Directors Mr. Cheng Xiusheng 3/3 0/0 0/0 2/2 0/1 0/1 Mr. Sun Dongsheng 3/3 0/0 0/0 2/2 0/1 0/1 Mr. Chow Shiu Ki 3/3 0/0 0/0 2/2 1/1 1/1 31

33 Corporate Governance Report DIRECTORS ACKNOWLEDGEMENT The Directors acknowledged their responsibility for the preparation of the financial statements in accordance with the statutory requirements and applicable accounting standards. The Directors are not aware of any material uncertainties relating to events or conditions which may cast significant doubt upon the Company s ability to continue as a going concern. AUDITOR S STATEMENT The statement by the Auditor about their reporting responsibilities on the financial statements for the year ended 31 March 2013 is set out in the Independent Auditor s Report of this annual report. INTERNAL CONTROL The Board, recognizing its overall responsibility in ensuring the system of internal control of the Group and for reviewing its effectiveness, is committed to implement an effective and sound internal control system to safeguard the interest of the Shareholders and the assets of the Group. The Board is responsible for establishing the Group s internal control framework, covering all material controls including financial, operational and compliance controls. The internal control framework also provides for identification and management of risk. The Audit Committee reviewed the overall effectiveness of the internal control system and reported its findings and made recommendations to the Board. The Board has also conducted a review of the effectiveness and adequacy of the internal control system of the Group. With the consideration of the findings and recommendations by the Audit Committee, the Board has reached the conclusion that the Group s internal control system was in place and effective. Dingyi Group Investment Limited Annual Report