INTERIM REPORT 中期報告 CONTENTS 目錄 CORPORATE INFORMATION 2 CHAIRMAN S STATEMENT 3 報告 INFORMATION PROVIDED IN ACCORDANCE WITH THE LISTING RULES 7 CO

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1 Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. (Incorporated in Bermuda with limited liability) (Stock Code: 243) INTERIM RESULTS ANNOUNCEMENT FOR THE SIX MONTHS ENDED 31 OCTOBER The Board of Directors (the Board or Directors ) of QPL International Holdings Limited (the Company ) announces the unaudited consolidated interim results of the Company and its subsidiaries (collectively the Group ) for the six months ended 31 October together with the comparative figures. This announcement, containing the full text of the Interim Report of the Company, complies with the relevant requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the Stock Exchange ) in relation to information to accompany preliminary announcements of interim results. This announcement is published on the websites of the Stock Exchange ( and the Company ( The printed version of the Company s Interim Report will be despatched to the shareholders of the Company and available on above websites in due course. Hong Kong, 12 December By Order of the Board QPL International Holdings Limited Li Tung Lok Executive Chairman and Chief Executive As at the date of this announcement, the Board comprises four executive directors, namely Mr. Li Tung Lok (Executive Chairman and Chief Executive), Mr. Phen Hoi Ping, Patrick, Mr. Wong Ka Lok, Andrew and Ms. Tung Siu Ching, one non-executive director, namely Mr. Wong Wai Man and three independent non-executive directors, namely Ms. Chung Hoi Yan, Mr. Yau Chi Hang and Mr. Chu Chun On, Franco.

2 INTERIM REPORT 中期報告 CONTENTS 目錄 CORPORATE INFORMATION 2 CHAIRMAN S STATEMENT 3 報告 INFORMATION PROVIDED IN ACCORDANCE WITH THE LISTING RULES 7 CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 13 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION 14 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 15 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS 16 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 17 報 1

3 INTERIM REPORT 中期報告 CORPORATE INFORMATION 集團資料 DIRECTORS Executive Directors Li Tung Lok (Executive Chairman and Chief Executive) Phen Hoi Ping Patrick Wong Ka Lok Andrew (appointed on 5 October ) Tung Siu Ching Non-executive Director Wong Wai Man Independent Non-executive Directors Chung Hoi Yan (appointed on 15 November ) Chu Chun On Franco (appointed on 15 September ) Yau Chi Hang COMPANY SECRETARY Wong Wai Man AUDITOR Deloitte Touche Tohmatsu Certified Public Accountants 35th Floor, One Pacific Place 88 Queensway Hong Kong LEGAL ADVISORS Bermuda Appleby Jardine House 1 Connaught Place Central, Hong Kong PRINCIPAL BANKER The Hongkong and Shanghai Banking Corporation Limited China Construction Bank (Asia) Corporation Limited REGISTERED OFFICE Canon s Court 22 Victoria Street Hamilton HM12 Bermuda HEAD OFFICE AND PRINCIPAL PLACE OF BUSINESS IN HONG KONG 8th Floor, Hale Weal Industrial Building Tai Chung Road Tsuen Wan, New Territories Hong Kong PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICE Appleby Management (Bermuda) Ltd. Canon s Court 22 Victoria Street Hamilton HM12 Bermuda HONG KONG BRANCH SHARE REGISTRAR AND TRANSFER OFFICE Tricor Standard Limited Level 22, Hopewell Centre 183 Queen s Road East Hong Kong STOCK CODE 243 COMPANY WEBSITE 中 中 Canon s Court 22 Victoria Street Hamilton HM12 Bermuda Appleby Management (Bermuda) Ltd. Canon s Court 22 Victoria Street Hamilton HM12 Bermuda 183 中

4 INTERIM REPORT 中期報告 CHAIRMAN S STATEMENT 主席報告 The Board of Directors (the Board or Directors ) of QPL International Holdings Limited (the Company ) announced the unaudited consolidated interim results of the Company and its subsidiaries (collectively the Group ) for the six months ended 31 October (the Period ). The interim financial results and report have not been audited, but have been reviewed by the audit committee of the Company. FINANCIAL RESULTS The Group reported a turnover of HK$150,669,000 for the Period, representing a decrease of 1.2% as compared with HK$152,498,000 for the same period last year. The Group s consolidated profit for the Period amounted to HK$1,819,000, as compared with HK$55,344,000 for the corresponding period in Earnings per share for the Period was HK0.08 cents (2015 restated: earnings per share of HK24.33 cents). DIVIDEND The Directors do not recommend the payment of an interim dividend for the Period (2015: nil). BUSINESS REVIEW The Group faced many challenges in the tough business environment for the Period. The Group recorded a decrease in turnover of 1.2% to HK$150,669,000 (2015: HK$152,498,000) during the Period. During the Period, staff costs decreased to HK$42,918,000 (2015: HK$45,368,000), representing 28.5% (2015: 29.7%) of the Group s turnover. The Group will continue to implement policies to mitigate the increasing labour costs. During the Period, other expenses decreased to HK$40,583,000 (2015: HK$42,767,000), representing 26.9% (2015: 28.0%) of the Group s turnover. The Group will continue to tighten its expenditure in its efforts to minimize the impact of increasing factory operating costs. LIQUIDITY AND FINANCIAL RESOURCES The Group s cash and bank balances amounted to HK$413,909,000 as at 31 October (30 April : HK$641,668,000). To finance its working capital, the Group has incurred total outstanding debts of HK$29,862,000 as at 31 October (30 April : HK$38,552,000), which comprised HK$1,744,000 (30 April : HK$1,249,000) of obligations under finance leases, HK$28,043,000 (30 April : HK$37,228,000) of collateralized bank borrowings and a HK$75,000 (30 April : HK$75,000) loan from a director. In terms of interest costs, HK$29,787,000 (30 April : HK$38,477,000) was interest bearing and HK$75,000 (30 April : HK$75,000) was interest free. The gearing ratio was 4.0% as at 31 October (30 April : 5.2%). The aggregate net proceeds from the open offer and the placing which completed on 6 April and 7 April respectively, were approximately HK$ million (the Total Proceeds ). QPL International Holdings Limited 期 中期 中期 報告 期 150,669,000 期 152,498, % 期 1,819,000 期 55,344,000 期 期 中期 期 期 1.2% 150,669, ,498,000 期 42,918,000 45,368, % 29.7% 期 40,583,000 42,767, % 28.0% 413,909, ,668,000 29,862,000 38,552,000 1,744,000 1,249,000 28,043,000 37,228,00075,000 75,000 中 29,787,000 38,477,00075,000 75, % 5.2% 636,830,000 3

5 INTERIM REPORT 中期報告 CHAIRMAN S STATEMENT 主席報告 As at 31 October, the Group had temporary used HK$213 million of the Total Proceeds which HK$40 million for available-for-sale investments and approximately HK$173 million for investments held for trading. Once the Group identified and acquired a piece of land for the construction of new factory, it would allocate such HK$213.0 million proceeds backs to its intended use. FOREIGN EXCHANGE RISK MANAGEMENT The Group mainly operates in the PRC and Hong Kong and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to RMB and United States dollars. The fluctuations in currency exchange rates for the Period did not adversely affect the Group s operations or liquidity. During the Period, the Group has not entered into any hedging arrangements. However the management will continue to monitor closely its foreign currency exposure and requirements and to arrange for hedging facilities when necessary. EQUITY PRICE RISK EXPOSURE The Group is exposed to equity price risk through its investments in listed securities. Although, the Group currently does not maintain any hedging policy to hedge against the equity price risk, the management team manages this exposure by monitoring the price movements and the changes in market conditions that may affect the value of the investments and will consider taking appropriate actions to minimize the risk. CAPITAL EXPENDITURE During the Period, the Group invested HK$7,635,000 (30 April : HK$5,711,000) in acquiring property, plant and equipment. This capital expenditure was financed mainly from internal financial resources. PLEDGE OF ASSETS As at 31 October, trade receivables with a carrying amount of approximately HK$36,534,000 (30 April : HK$48,652,000) were pledged to secure bank borrowings granted to the Group and motor vehicles with a carrying amount of approximately HK$1,837,000 (30 April : HK$1,402,000) were assets held under finance leases. EMPLOYEES AND EMOLUMENT POLICY As at 31 October, the total number of employees of the Group was approximately 886 (30 April : 1,175). The Group maintains its emolument policy to ensure that employee remuneration is commensurate with job nature, qualifications and experience. The Group continues to offer competitive remuneration packages, share options and other benefits to eligible staff, based on the performance of the Group and of individual employees. SIGNIFICANT INVESTMENTS As at 31 October, the equity securities acquired by the Group as investments held for trading comprised of only securities listed on the Stock Exchange of Hong Kong. During the Period, the Group also subscribed an investment fund as available-for-sale investments for capital appreciation purposes. 中 213,000,000 中 40,000,000173,000, ,000,000 中 期 期 期 7,635,000 5,711,000 36,534,000 48,652,000 1,837,000 1,402, ,175 期 4

6 INTERIM REPORT 中期報告 CHAIRMAN S STATEMENT 主席報告 As at 31 October, except for the investment in Greaterchina Professional Services Limited ( GPS ) of approximately HK$78,100,000 and available-for-sale investments ( Investment Fund ) of approximately HK$43,757,000, there was no investment held by the Group which value was more than 5% of the total assets of the Group. The Group held approximately 110,000,000 shares of GPS and recorded an unrealised gain on investment of approximately HK$9,900,000 (excluding potential tax effect of approximately HK$1,634,000) for the Period. The major activities of GPS are provision of asset advisory services and asset appraisal, corporate services and consultancy, media advertising and financial services in Hong Kong. The Directors considered that the future prospects of GPS may be affected by external market conditions, and will continue to monitor and assess the Group s investment. The Investment Fund will be primarily invested in listed equities and related securities in the Greater China Region to such medium to long term capital appreciation. The Group will continue to adopt a diversified investment strategy including investing in quality stocks with a view to enhance shareholders return. NOTIFIABLE TRANSACTION On 7 October, the Company proposed to make a voluntary conditional share exchange offer to (i) acquire all of the issued shares in the share capital of L & A International Holdings Limited (stock code: 8195) (other than those already owned by the Group and parties acting in concert with it); and (ii) cancel all of the outstanding L & A International Holdings Limited s share options (the Offers ). Given the current exceptionally low market capitalisation of L&A International Holdings Limited, the Directors are of the view that the Offers represent an opportune investment of the Group. Furthermore, the Directors consider that the development of L&A International Holdings Limited s business may enhance the growth in the long run, and thus the Group would be able to enjoy considerable returns from its investment in L&A International Holdings Limited. The Offers was already secured support of the shareholders of the Company at the special general meeting held on 9 December. Details of the Offers were set out in the Company s circular dated 18 November and the Company s announcements dated 14 October, 4 November and 9 December. PROSPECTS The Group will continuously strengthen its engineering and production departments in order to maintain its competitive edges of short lead times and high production planning flexibility. These competitive edges will enable the Group to serve its customers better and may eventually expand the Group s market share. 78,100,000 43,757,000 5% 110,000,000 期 9,900,000 1,634,000 告 中 中 報 (i) 8195 中 (ii) 報 期 期 5

7 INTERIM REPORT 中期報告 CHAIRMAN S STATEMENT 主席報告 In order to improve the Group s operational performance, the Group will continue to implement plans to increase its production efficiency and capacity. The Group will keep deploying resources to upgrade and restructure existing plant and machinery to improve the Group s competitiveness and fulfill different production requirements. In addition, the Group will continue to explore other business opportunities with a view to generate improved returns to our shareholders. 報 By Order of the Board Li Tung Lok Executive Chairman and Chief Executive Hong Kong, 12 December 6

8 INTERIM REPORT 中期報告 INFORMATION PROVIDED IN ACCORDANCE WITH THE LISTING RULES 根據上市規則提供之資料 DIRECTORS The Directors during the Period and up to the date of this report were: 期 報告 期 Executive Directors Mr. Li Tung Lok (Executive Chairman and Chief Executive) Mr. Phen Hoi Ping Patrick Mr. Wong Ka Lok Andrew (appointed on 5 October ) Ms. Tung Siu Ching Non-executive Director Mr. Wong Wai Man Independent Non-executive Directors Ms. Chung Hoi Yan (appointed on 15 November ) Mr. Chu Chun On Franco (appointed on 15 September ) Mr. Yau Chi Hang Mr. How Sze Ming (retired on 8 September ) Mr. Lee Kwok Wan (retired on 8 September ) DIRECTORS AND CHIEF EXECUTIVE S INTERESTS IN SHARES AND UNDERLYING SHARES As at 31 October, the interests and short positions of the Directors, chief executive and their associates in the shares, underlying shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance ( SFO )) as recorded in the register required to be kept by the Company pursuant to Section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange of Hong Kong Limited (the Stock Exchange ) pursuant to the Model Code for Securities Transactions by Directors of Listed Issues (the Model Code ) were as follows: 期 期 352 期 XV 中 7

9 INTERIM REPORT 中期報告 INFORMATION PROVIDED IN ACCORDANCE WITH THE LISTING RULES 根據上市規則提供之資料 DIRECTORS AND CHIEF EXECUTIVE S INTERESTS IN SHARES AND UNDERLYING SHARES (Continued) Long position in shares and underlying shares of the Company Number of issued ordinary shares/underlying shares of the Company Percentage of the issued Personal Family Corporate share capital of Name of Director interests interests interests Total the Company Mr. Li Tung Lok Ordinary shares in issue 67,210, ,000 4,647,736 72,758,253 (Note a) a (Note b) b Unlisted share options 16,500,000 16,500,000 83,710, ,000 4,647,736 89,258, % Mr. Phen Hoi Ping Patrick Unlisted share options 5,000,000 5,000, % Notes: a. The family interests of 900,000 shares represent the interest of the wife of Mr. Li Tung Lok. b. Mr. Li Tung Lok wholly owns Solar Forward Company Limited, which owns 4,647,736 shares of the Company. a. 900,000 b. 4,647,736 Save as disclosed above, as at 31 October, none of the Directors nor chief executive of the Company had or was deemed to have any interests or short positions in the shares, underlying shares or debentures of the Company and its associated corporations. 中 8

10 INTERIM REPORT 中期報告 INFORMATION PROVIDED IN ACCORDANCE WITH THE LISTING RULES 根據上市規則提供之資料 SHARE OPTION The 2015 Share Option Scheme (the New Scheme ) The Company s New Scheme was adopted pursuant to an ordinary resolution passed on 15 September 2015 (the Adoption Date ), which has a terms of 10 years commencing on the Adoption Date. The purpose of the New Scheme is enable the Group to grant share options to employees, the Directors and other selected participants as incentives or rewards for their contribution to the Group. 期 期 A share option granted by the Company is exercisable at any time during a period to be determined and notified by the Directors to each grantee, which period may commence from the date on which the offer for the grant of share options is made, but shall end in any event not later than 10 years from the date of grant of the option subject to the provisions for early termination thereof. The option acceptance date should not later than 28 days after the date of offer. The exercise price (subject to adjustment as provided therein) of the option under the New Scheme shall be determined by the Board, but shall not be less than the highest of (i) the closing price of the shares as stated in the Stock Exchange s daily quotations sheet on the date of the offer for the grant, which must be a business day; (ii) the average closing price of shares as stated in the Stock Exchange s daily quotations sheet for the five business days immediately preceding the date of the offer for the grant; and (iii) the nominal value of a share. 期 期 期 期 28 (i) 期 報 (ii) 期 報 (iii) The maximum number of shares in respect of which share options may be granted under the New Scheme shall not exceed such number of shares as required under the Listing Rules, being 10% of the shares in issue as Adoption Date, excluding the shares which would have been issuable pursuant to the share options which have lapsed pursuant to the New Scheme. 期 10% As at 31 October, an aggregate of 22,790,000 share options granted under the New Scheme remained outstanding, representing 1.0% of the issued share capital of the Company. However, the total maximum number of shares which may be issued upon exercise of all outstanding share options must not exceed 30% of the issued share capital of the Company from time to time. The number of shares in respect of which options may be granted to any one grantee in any 12-month period is not permitted to exceed 1% of the shares of the Company in issue in such 12-month period up to and including the proposed date of grant, without prior approval from the Company s shareholders. 22,790, % 30% 12 期 期 12 期 1% 9

11 INTERIM REPORT 中期報告 INFORMATION PROVIDED IN ACCORDANCE WITH THE LISTING RULES 根據上市規則提供之資料 SHARE OPTION (Continued) The 2015 Share Option Scheme (the New Scheme ) (Continued) The movements in the Company s share options granted to the Directors and employees during the Period were as follows: 期 Movement during the period Outstanding Outstanding at Date of grant at 1 May Granted Exercised Cancelled Lapsed 31 October Exercise period Category 1: Directors Mr. Li Tung Lok 22 April 16,500,000 16,500, April to 21 April 2026 Mr. Phen Hoi Ping Patrick 22 April 5,000,000 5,000, April to 21 April 2026 Total Directors 21,500,000 21,500,000 Category 2: Eligible Employees 22 April 1,370,000 (80,000) 1,290, April to 21 April 2026 Total employees 1,370,000 (80,000) 1,290,000 Total all categories 22,870,000 (80,000) 22,790,000 10

12 INTERIM REPORT 中期報告 INFORMATION PROVIDED IN ACCORDANCE WITH THE LISTING RULES 根據上市規則提供之資料 ARRANGEMENTS TO PURCHASE SHARES OR DEBENTURES Other than the share option scheme of the Company, at no time during the Period was the Company or any of its subsidiaries a party to any arrangements to enable the Directors or chief executive of the Company, their spouses or children under the age of 18 to acquire benefits by means of the acquisition of shares or underlying shares in, or debentures of, the Company or any other body corporate, and none of them had any right to subscribe for the securities of the Company or its associated corporations, or had exercised any such right during the Period. 期 18 期 SUBSTANTIAL SHAREHOLDERS INTERESTS IN SHARES AND UNDERLYING SHARE As at 31 October, to the best knowledge of the Board and chief executives of the Company, the following persons were substantial shareholders of the Company and had interests or short positions in the shares and underlying shares of the Company as recorded in the register required to be kept under Section 336 of the SFO: 中 期 336 Percentage Number of of the issued issued ordinary share capital of Name of Director Capacity shares held the Company 中 Trustee 181,200, % Other than as disclosed above, the Company has not been notified of any other relevant interest or short position in the issued share capital of the Company as at 31 October. 中 PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES During the Period, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company s listed securities. AUDIT COMMITTEE The audit committee of the Company (the Audit Committee ) comprises three independent non-executive Directors, has reviewed the accounting principles and practices adopted by the Company and has discussed auditing, internal control and financial reporting matters. The Audit Committee has reviewed the Group s unaudited condensed consolidated financial statements for the six months ended 31 October. 期 報 報 CORPORATE GOVERNANCE PRACTICES The Company is committed to building and maintaining best practice standards of corporate governance. The corporate governance principles of the Company emphasize a quality Board, effective internal controls, stringent disclosure practices and transparency, independence and accountability to all shareholders of the Company. 11

13 INTERIM REPORT 中期報告 INFORMATION PROVIDED IN ACCORDANCE WITH THE LISTING RULES 根據上市規則提供之資料 CORPORATE GOVERNANCE PRACTICES (Continued) The Company has adopted its own Code on Corporate Governance Practices (the QPL Code ) incorporating the principles and code provisions set out in the Corporate Governance Code (the CG Code ) contained in Appendix 14 to the Rules Governing the Listing of Securities (the Listing Rules ) on the Stock Exchange. A copy of the QPL Code is posted on the Company s website (qpl.com). QPL 14 QPL(qpl.com) For the Period, the Company has applied the principles and complied with all the code provisions set out in the CG Code except for the deviations explained in the relevant paragraphs below. Nevertheless, such deviations are considered by the Board to be immaterial given the size, nature and circumstances of the Company. 期 Code Provision A.2.1 of the CG Code stipulates that the roles of chairman and chief executive should be separate and should not be performed by the same individual. Mr. Li has been the Chairman of the Board since the establishment of the Company in January Mr. Li has also served as the Chief Executive since January 1989 (except for the period from February 2004 to December 2008). Being the founder of the Group, Mr. Li s industry expertise and detailed understanding of the Company s operations is highly regarded by the Company. Accordingly, vesting the roles of Chairman of the Board and Chief Executive in Mr. Li adds significant value to the Company s business growth while enhancing the efficiency of the decision-making process in response to the changing environment. Given all major decisions are reserved to the Board and a majority of the Board members are independent non-executive Directors, the Company considers that there is an adequate balance of power and authority in place between the Board and the management of the Company. A.2.1 期 Code provision A.6.7 of the CG Code stipulates that the chairman of the board should attend annual general meetings of the Company. Owing to other business engagements, the Chairman of the Board, Mr. Li Tung Lok, was unable to attend the annual general meeting of the Company held on 8 September. A.6.7 MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS The Board has adopted the Model Code as set out in Appendix 10 of the Listing Rules for dealings in the securities of the Company by the Directors. All Directors have confirmed, following specific enquiry by the Company, that they have fully complied with the required standard set out in the Model Code and its code of conduct regarding directors securities transactions throughout the Period. 10 期 12

14 INTERIM REPORT 中期報告 CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the Six Months ended 31 October 簡明綜合損益及其他全面收益表 Six months ended 31 October NOTES 2015 Turnover 3 150, ,498 Other income 4 2,875 5,422 Exchange gain/(loss), net 1,743 (624) Changes in inventories of finished goods and work in progress 87 1,357 Raw materials and consumables used (69,466) (77,954) Staff costs (42,918) (45,368) Depreciation of property, plant and equipment (804) (2,084) Net loss on fair value change of derivative financial instrument (153) Net gain on fair value changes of investments held for trading 3,132 79,401 Realised loss on investments held for trading (1,360) Other expenses (40,583) (42,767) Finance cost (571) (520) Profit before taxation 2,804 69,208 Taxation 5 (985) (13,864) Profit for the period 期 6 1,819 55,344 Other comprehensive income (expense): Items that may be subsequently reclassified to profit or loss: Exchange differences arising on translation of foreign operations Changes in fair value of available-for-sale investments (51) (5) 3,757 Total comprehensive income for the period 期 5,525 55,339 (Restated) Earnings per share Basic 8 HK0.08 cents HK24.33 cents Diluted 8 HK0.08 cents HK24.33 cents 13

15 INTERIM REPORT 中期報告 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION At 31 October 簡明綜合財務狀況表 於二零一六年十月三十一月 NOTES At 31 October At 30 April (Audited) Non-current assets Property, plant and equipment 9 24,347 17,516 Current assets Inventories 33,261 31,930 Available-for-sale investments 43,757 Investments held for trading 258,947 84,214 Trade and other receivables 10 61,083 70,192 Deposits and prepayments 12,257 6,014 Bank balances and cash 413, , , ,018 Current liabilities Trade and other payables 11 34,962 32,585 Deposits and accrued expenses 18,704 22,188 Taxation payable Bank and other borrowings 12 28,118 37,303 Obligations under finance leases ,081 93,135 Net current assets 740, , , ,399 Capital and reserves Share capital , ,501 Share premium and reserves 573, ,345 Equity attributable to owners of the Company 754, ,846 Non-current liabilities Obligations under finance leases 1, Deferred taxation 8,897 8,586 10,109 9, , ,399 14

16 INTERIM REPORT 中期報告 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the Six Months ended 31 October 簡明綜合權益變動表 Share capital HK$ 000 Share premium HK$ 000 Contributed surplus HK$ 000 Capital redemption reserve HK$ 000 Share options reserve HK$ 000 Available-forsale investment revaluation reserve HK$ 000 Translation reserve HK$ 000 Accumulated losses HK$ 000 Total HK$ 000 At 1 May 2015 (audited) 61, ,812 40,475 12, (233,815) 28,456 Profit for the period 期 55,344 55,344 Other comprehensive expenses 期 for the period (5) (5) Total comprehensive (expense) income for the period 期 (5) 55,344 55,339 Issue of shares 12,277 73,665 85,942 Transaction costs attributable to issue of shares (1,295) (1,295) At 31 October 2015 (unaudited) 73, ,182 40,475 12, (178,471) 168,442 At 1 May (audited) 180, ,688 95,726 12,310 8, (244,806) 748,846 Profit for the period 期 1,819 1,819 Other comprehensive income (expense) 期 for the period 3,757 (51) 3,706 Total comprehensive income (expense) 期 for the period 3,757 (51) 1,819 5,525 Forfeiture of share-based payment expenses (29) 29 At 31 October (unaudited) 180, ,688 95,726 12,310 8,129 3, (242,958) 754,371 15

17 INTERIM REPORT 中期報告 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS For the Six Months ended 31 October 簡明綜合現金流量表 Six months ended 31 October 2015 NET CASH USED IN OPERATING ACTIVITIES (329,031) (168,080) INVESTING ACTIVITIES Interest received Purchase of property, plant and equipment (7,001) (5,711) Payment for settlement of derivative financial instrument (1,315) NET CASH USED IN INVESTING ACTIVITIES (6,541) (7,023) FINANCING ACTIVITIES New bank loans raised 107, ,284 Repayment of obligations under finance leases (138) Advance from a director 31,295 New trust receipt loans raised 5,786 Repayment of trust receipt loans (10,432) Proceeds from issue of shares 85,942 Transaction costs attributable to issue of shares (1,295) NET CASH FROM FINANCING ACTIVITIES 107, ,580 NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (227,759) 44,477 CASH AND CASH EQUIVALENTS AT 1 MAY 641,668 4,686 CASH AND CASH EQUIVALENTS AT 31 OCTOBER Representing bank balances and cash 413,909 49,163 16

18 INTERIM REPORT 中期報告 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Six Months ended 31 October 1. GENERAL INFORMATION The Company is incorporated in Bermuda as an exempted company with limited liability and its shares are listed on The Stock Exchange of Hong Kong Limited (the Stock Exchange ). 簡明綜合財務報表附註 1. The Company is an investment holding company. The principal activities of the Company and its subsidiaries (collectively referred to as the Group ) are the manufacture and sale of integrated circuit leadframes, heatsinks and stiffeners, securities trading and investment holding. 2. BASIS OF PREPARATION AND ACCOUNTING POLICES The interim condensed consolidated financial statements have been prepared in accordance with Hong Kong Accounting Standard ( HKAS ) 34 Interim Financial Reporting, issued by the Hong Kong Institute of Certified Public Accountants ( HKICPA ) and applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on the Stock Exchange. The interim condensed consolidated financial statements are unaudited but have been reviewed by the Company s audit committee. 2. 中期 報 34 中期 報告 16 中期 報 The interim condensed consolidated financial statements have been prepared on the historical cost basis except for certain financial instruments, which are measured at fair value, as appropriate. Historical cost is generally based on the fair value of the consideration given in exchange for goods. 中期 報 The interim condensed consolidated financial statements should be read in conjunction with the Group s annual financial statements for the year ended 30 April, which have been prepared in accordance with Hong Kong Financial Reporting Standards ( HKFRSs ). 中期 報 報告 報告 報 In the current interim period, the Group has adopted all the new amendments (the new and revised HKFRSs ) issued by the HKICPA that are relevant to its operations and effective for its accounting period beginning on 1 May. The adoption of these new and revised HKFRSs did not result in significant changes to the Group s accounting policies and amounts reported for the current and prior accounting period. 中期期 期 報告 報告 期 期 報告 The Group has not applied any new and revised HKFRSs that are not yet effective for the current period. 期 報告 17

19 INTERIM REPORT 中期報告 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Six Months ended 31 October 3. TURNOVER AND SEGMENTAL INFORMATION Turnover Turnover represents the amounts received and receivable for goods sold by the Group to outside customers less sales returns and discounts. 簡明綜合財務報表附註 3. Segmental information Information reported to the executive directors of the Company, being the chief operating decision marker ( CODM ), for the purpose of resources allocation and assessment of segment performance focuses on the location of customers. 報告 The customers of the Group are currently located in the United States of America (the USA ), Hong Kong, Europe, the People s Republic of China (the PRC ), Philippines, Malaysia, Singapore, Thailand, and other countries (which represent aggregation of other non-reportable operating segments under HKFRS 8). 中 中 報告 8 報告 18

20 INTERIM REPORT 中期報告 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Six Months ended 31 October 3. TURNOVER AND SEGMENTAL INFORMATION (Continued) Segmental information (Continued) Segment revenues and results The following is an analysis of the Group s turnover and results by reportable segment for the Period: 簡明綜合財務報表附註 3. 期 報告 Turnover Six months ended 31 October Segment results Six months ended 31 October The USA 33,539 31, (755) Hong Kong 1,446 1, (43) Europe 2,362 1, (53) The PRC 中 53,119 53,268 1,433 (2,036) Philippines 18,494 29, (1,913) Malaysia 17,397 11, (341) Singapore 6,847 5, (155) Thailand 15,410 12, (363) Reportable segment total 148, ,375 3,850 (5,659) Other countries 8,162 7, (121) 156, ,207 4,070 (5,780) Eliminations (6,107) (3,709) Group s turnover and segment results 150, ,498 4,070 (5,780) Depreciation of property, plant and equipment (804) (2,084) Net loss on fair value change of derivative financial instrument (153) Net gain on fair value changes of investments held for trading 3,132 79,401 Realised loss on investments held for trading (1,360) Unallocated interest income Unallocated corporate expenses (2,123) (1,659) Interest on bank borrowings (571) (520) Profit before taxation 2,804 69,208 19

21 INTERIM REPORT 中期報告 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Six Months ended 31 October 3. TURNOVER AND SEGMENTAL INFORMATION (Continued) Segmental information (Continued) Segment revenues and results (Continued) Included in the USA and the PRC reportable segments are revenue from inter-segments of HK$6,037,000 (2015: HK$3,407,000) and HK$70,000 (2015: HK$302,000) respectively. 簡明綜合財務報表附註 3. 中 報告 6,037,0003,407,000 70,000302,000 Segment results represents the profit (loss) from each segment without allocation of corporate expenses which include directors remuneration, depreciation expenses, net (loss) gain on fair value changes of derivative financial instrument and investments held for trading, realised loss on investments held for trading, interest income on bank deposits and interest expense on bank borrowings. This is the measure reported to the CODM for the purposes of resources allocation and performance assessment. 報 Intersegment sales are charged at prevailing market rates. Segment assets The follows is an analysis of the Group s assets by reportable segment: 報告 At 31 October At 30 April (Audited) The USA 9,748 11,056 Hong Kong Europe The PRC 中 29,798 27,776 Philippines 3,405 8,568 Malaysia 2,760 2,467 Singapore 2,475 1,299 Thailand 2,778 5,225 Reportable segment total 51,756 57,440 Other countries 3,472 3,936 55,228 61,376 Unallocated Property, plant and equipment 24,347 17,516 Inventories 33,261 31,930 Available-for-sale investments 43,757 Investments held for trading 258,947 84,214 Bank balances and cash 413, ,668 Other unallocated assets 18,112 14,830 Consolidated total assets 847, ,534 20

22 INTERIM REPORT 中期報告 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Six Months ended 31 October 3. TURNOVER AND SEGMENTAL INFORMATION (Continued) Segmental information (Continued) Segment assets (Continued) For the purposes of monitoring segment performance and allocating resources between segments, all assets are allocated to operating segments other than property, plant and equipment, inventories, available-for-sale investments, investments held for trading and bank balances and cash. No segment information on liabilities is presented as such information is not regularly reported to the CODM for the purpose of resource allocation and performance assessment. 簡明綜合財務報表附註 3. 期 報 4. OTHER INCOME 4. Six months ended 31 October 2015 Sales of by-products and scrap 2,262 5,413 Interest income on bank deposits Sundry income ,875 5,422 21

23 INTERIM REPORT 中期報告 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Six Months ended 31 October 5. TAXATION 簡明綜合財務報表附註 5. Six months ended 31 October 2015 Current tax 期 PRC Enterprise Income Tax 中 Deferred tax charge (Note) ,102 Income tax expenses ,864 Note: Deferred tax charge during the six months ended 31 October and 2015 is arising from the fair value change on investments held for trading. Under the Law of the PRC on Enterprise Income Tax (the EIT Law ) and Implementation Regulation of the EIT Law, the tax rate of the PRC subsidiaries is 25% from 1 January 2008 onwards. 中 中 25% Hong Kong Profits Tax is calculated at 16.5% of the estimated assessable profit for both years. 16.5% No provision for Hong Kong Profits Tax has been made as the Group had no estimated assessable profits arising from Hong Kong for both periods. 期 Taxation arising in other jurisdictions are calculated at the rates prevailing in the relevant jurisdictions. 22

24 INTERIM REPORT 中期報告 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Six Months ended 31 October 6. PROFIT FOR THE PERIOD Profit for the Period has been arrived at after charging the following items: 簡明綜合財務報表附註 6. 期 Six months ended 31 October 2015 Repair and maintenance expenses 6,779 7,086 Impairment for inventories (included in raw materials and consumables used) 50 Operating lease rentals in respect of premises 5,512 7, DIVIDEND The directors of the Company do not recommend the payment of an interim dividend for the six months ended 31 October (2015: nil). 7. 中期 23

25 INTERIM REPORT 中期報告 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Six Months ended 31 October 8. EARNINGS PER SHARE The calculation of the basic and diluted earnings per share attributable to the owners of the Company is based on the following data: 簡明綜合財務報表附註 8. Six months ended 31 October 2015 Profit for the period for the purposes of basic and diluted earnings per share 期 1,819 55,344 Number of shares Weighted average number of ordinary shares for the purpose of calculating basic earnings per share Effect of dilutive potential ordiary shares: share options (Restated) 2,256,265, ,470,534 1,572,504 Weighted average number of ordiary shares for the purpose of calculating dilutive earnings per share 2,257,837, ,470,534 The weighted average number of ordinary shares for the purpose of basic and diluted earnings per share for the six months ended 31 October 2015 has been adjusted for share consolidation on 29 February and open offer on 6 April. There was no outstanding share options during the six months ended 31 October

26 INTERIM REPORT 中期報告 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Six Months ended 31 October 9. PROPERTY, PLANT AND EQUIPMENT For the six months ended 31 October, the Group incurred HK$7,635,000 (six months ended 31 October 2015: HK$5,711,000) for the acquisition of property, plant and equipment to expand its operations. 簡明綜合財務報表附註 9. 7,635,000 5,711,000 The additions mainly comprised mould, toolings and production films of approximately HK$1,649,000 (six months ended 31 October 2015: HK$1,878,000), plant and machinery of approximately HK$4,650,000 (six months ended 31 October 2015: HK$3,590,000) and furniture and fixtures of approximately HK$416,000 (six months ended 31 October 2015: HK$243,000). The addition for motor vehicles of approximately HK$651,000 and leasehold improvements of approximately HK$269,000 (six months ended 31 October 2015: nil) for the six months ended 31 October (six months ended 31 October 2015: nil). 1,649,000 1,878,000 4,650,000 3,590, , , , ,000 At the end of the reporting period, the directors of the Company conducted a review of the Group s property, plant and equipment and determined that neither significant impairment nor reversal of impairment for property, plant and equipment is required. 報告期 25

27 INTERIM REPORT 中期報告 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Six Months ended 31 October 10. TRADE AND OTHER RECEIVABLES The Group allows a credit period ranging from 30 to 90 days to its trade customers. The following is an aged analysis of trade receivables net of allowance for bad and doubtful debts presented based on the invoice date at the end of the reporting period: 簡明綜合財務報表附註 10. 期 報告期 期 At 31 October At 30 April (Audited) Trade receivables Within 30 days 30 23,415 23,076 Between 31 and 60 days ,308 22,499 Between 61 and 90 days ,620 8,776 Over 90 days 90 3,885 7,025 55,228 61,376 Other receivables 5,855 8,816 61,083 70, TRADE AND OTHER PAYABLES The following is an aged analysis of trade payables presented based on the invoice date at the end of the reporting period: 11. 報告期 期 At 31 October At 30 April (Audited) Trade payables Within 30 days 30 8,375 7,834 Between 31 and 60 days ,635 4,291 Between 61 and 90 days ,434 2,467 Over 90 days 90 9,220 8,974 26,664 23,566 Other payables 8,298 9,019 34,962 32,585 26

28 INTERIM REPORT 中期報告 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Six Months ended 31 October 12. BANK AND OTHER BORROWINGS 簡明綜合財務報表附註 12. At 31 October At 30 April (Audited) Collateralised bank borrowings (Note a) a 28,043 37,228 Borrowings from a director (Note b) b ,118 37,303 Carrying amount shown under current liabilities: Repayable on demand or within one year 28,118 37,303 Notes: (a) The collateralised bank borrowings were bank advance from the factoring of the Group s trade receivables and carry interest at USD trade finance rate minus 0.5% per annum and contained a repayable on demand clause. (a) 0.5 (b) The borrowings are advanced from Mr. Li Tung Lok ( Mr. Li ), a director of the Company, and are interest-free and unsecured. (b) 27

29 INTERIM REPORT 中期報告 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Six Months ended 31 October 13. SHARE CAPITAL 簡明綜合財務報表附註 13. Number of shares Nominal value Authorised: At 1 May and 31 October Ordinary shares of HK$0.08 each ,000,000,000 1,200,000 Redeemable preference shares of HK$0.02 each ,000,000 10,000 Issued and fully paid: Ordinary shares of HK$0.08 each 0.08 At 1 May and 31 October 2,256,265, ,501 There was no movement in the Company s share capital during the six months ended 31 October. 14. MATERIAL NON-CASH TRANSACTION During the six months ended 31 October, the Group s repayment of the collateralised bank borrowings of approximately HK$117,186,000 (six months ended 31 October 2015: HK$104,191,000) was offset by the trade receivables transferred to a bank ,186, ,191,000 28

30 INTERIM REPORT 中期報告 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Six Months ended 31 October 15. CAPITAL COMMITMENTS At the end of the reporting period, the Group had outstanding capital commitments as follows: 簡明綜合財務報表附註 15. 報告期 At 31 October At 30 April (Audited) Capital expenditure in respect of acquisition of property, plant and equipment contracted for but not provided in the condensed consolidated financial statements 報 1,925 4, PLEDGED ASSETS As at 31 October, trade receivables with a carrying amount of approximately HK$36,534,000 (30 April : HK$48,652,000) was pledged to secure bank borrowings granted to the Group and Motor Vehicles with a carrying amount of approximately HK$1,837,000 (30 April : HK$1,402,000) were assets held under finance leases ,534,000 48,652,000 1,837,000 1,402,000 29

31 INTERIM REPORT 中期報告 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Six Months ended 31 October 17. FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS This note provides information about how the Group determines fair value of the financial assets or liabilities. 簡明綜合財務報表附註 17. (i) Fair value of the Group s financial assets and financial liabilities that are measured at fair value on a recurring basis The Group s derivative financial assets and financial liabilities are measured at fair value at the end of each reporting period. The following table gives information about how the fair values, of these financial assets and financial liability are determined (in particular, the valuation technique(s) and inputs used), as well as the level of the fair value hierarchy into which the fair value measurement is categorised (levels 1 to 3) based on the degree to which the inputs to the fair value measurement is observable. (i) 報告期 Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active market for identical assets or liabilities that the entity can access at the measurement date; 報 期 Level 2 fair value measurements are those derived from inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and 中報 Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). 30

32 INTERIM REPORT 中期報告 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Six Months ended 31 October 17. FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS (Continued) (i) Fair value of the Group s financial assets and financial liabilities that are measured at fair value on a recurring basis (Continued) 簡明綜合財務報表附註 17. (i) Level 1 At 31 October At 30 April HK$ 000 HK$ 000 (Audited) Level 2 At 31 October At 30 April HK$ 000 HK$ 000 (Audited) Investment held for trading 258,947 84,214 Available-for-sale investments 43,757 Investment held for trading was a listed equity security in Hong Kong, for which the fair value was determined with reference to quoted bid prices in active market. 報 Available-for-sale investments that trade in markets that are not considered to be active and are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs are classified within Level 2. As Level 2 investments include positions that are not traded in active markets and/or subject to transfer restrictions, valuation may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information. 報 報 The Group did not have any financial liabilities measured at fair value on a recurring basis as at 31 October and 30 April. There was no transfer between instrument in level 1 and 2 in both periods. 期 (ii) Fair value of the Group s financial assets and liabilities that are not measured at fair value on a recurring basis The carrying amounts of the Group s financial assets and financial liabilities carried at amortised cost appropriate to their respective fair values as at 31 October and 30 April. (ii) 31

33 INTERIM REPORT 中期報告 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Six Months ended 31 October 18. RELATED PARTY TRANSACTIONS In the ordinary course of its business, the Group entered into the following transactions with related party: 簡明綜合財務報表附註 18. (a) Interest-free loans were obtained from Mr. Li, a director of the Company, as disclosed in note 12. (a) 12 (b) Compensation of key management personnel (b) The remuneration of directors of the Company and other members of key management during the interim periods are as follows: 中期期 Six months ended 31 October 2015 Fees and salaries 1,213 1,610 Retirement benefit schemes ,254 1,659 The remuneration of directors of the Company and key management is determined by the remuneration committee having regard to the performance of individuals and market trends. 32