Tou Rong Chang Fu Group Limited (Incorporated in the Cayman Islands with limited liability) ( ) (HKEx Stock Code : 850) 2016 Interim Report

Transcription

1 Tou Rong Chang Fu Group Limited (Incorporated in the Cayman Islands with limited liability) () (HKEx Stock Code : 850) 2016 Interim Report

2 Contents 2 Corporate Information 4 Management Discussion and Analysis 10 Interim Condensed Consolidated Income Statement 11 Interim Condensed Consolidated Statement of Comprehensive Income 12 Interim Condensed Consolidated Statement of Financial Position 14 Interim Condensed Consolidated Statement of Changes in Equity 15 Interim Condensed Consolidated Statement of Cash Flows Corporate Governance and Other Information Tou Rong Chang Fu Group Limited Interim Report

3 Corporate Information BOARD OF DIRECTORS Executive Directors: Mr. Li Zhenjun (Chairman) Mr. Poon Sum (Honorary Chairman) Mr. Wong Kwok Leung (Chief Executive Officer) Mr. Poon Wai Kong Mr. Hu Dehua (appointed on 24 May 2016) Non-executive Director: Mr. Zaid Latif (retired on 26 August 2016) Independent Non-executive Directors: Mr. Chan Shu Kin Mr. Cheung Kwan Hung Mr. Chiu Wai Piu AUDIT COMMITTEE Mr. Chan Shu Kin (Chairman) Mr. Cheung Kwan Hung Mr. Chiu Wai Piu REMUNERATION COMMITTEE Mr. Chan Shu Kin (Chairman) Mr. Cheung Kwan Hung Mr. Poon Sum Mr. Chiu Wai Piu NOMINATION COMMITTEE Mr. Cheung Kwan Hung (Chairman) Mr. Chan Shu Kin Mr. Poon Sum Mr. Chiu Wai Piu CORPORATE GOVERNANCE COMMITTEE Mr. Chan Shu Kin Mr. Cheung Kwan Hung Mr. Poon Wai Kong Mr. Chiu Wai Piu COMPANY SECRETARY Mr. Poon Wai Kong Zaid Latif 2 Tou Rong Chang Fu Group Limited Interim Report

4 Corporate Information REGISTERED OFFICE Cricket Square Hutchins Drive P.O. Box 2681, Grand Cayman, KY Cayman Islands HEAD OFFICE AND PRINCIPAL PLACE OF BUSINESS 19th Floor 80 Gloucester Road Wan Chai Hong Kong PRINCIPAL SHARE REGISTRAR Codan Trust Company (Cayman) Limited Cricket Square Hutchins Drive P.O. Box 2681, Grand Cayman, KY Cayman Islands BRANCH SHARE REGISTRAR Computershare Hong Kong Investor Services Limited 46th Floor Hopewell Centre 183 Queen s Road East Hong Kong LEGAL ADVISERS Michael Li & Co AUDITOR PricewaterhouseCoopers PRINCIPAL BANKERS DBS Bank (Hong Kong) Limited Industrial and Commercial Bank of China (Asia) Limited STOCK CODE 850 CONTACT Telephone: (852) Facsimile: (852) Website: Cricket Square Hutchins Drive P.O. Box 2681, Grand Cayman, KY Cayman Islands Codan Trust Company (Cayman) Limited Cricket Square Hutchins Drive P.O. Box 2681, Grand Cayman, KY Cayman Islands (852) (852) Tou Rong Chang Fu Group Limited Interim Report

5 Management Discussion and Analysis OVERVIEW ON CONSOLIDATED OPERATING RESULTS During the six months ended 30 September 2016, the Group achieved a revenue of approximately HK$5,992,877,000 (six months ended 30 September 2015: HK$1,994,564,000), representing an increase of 200% from the same period in Increase in the Group s revenue was mainly attributable from the increase in revenue in commodity trading segment. 5,992,877,000 1,994,564, % The Group recorded consolidated operating profit of approximately HK$69,326,000 (six months ended 30 September 2015: HK$536,000), representing an increase of 12,834% from the same period in Significant increase in operating profit of the Group was mainly due to increase in revenue in commodity trading segment. BUSINESS REVIEW Commodity trading 69,326, ,000 12,834% During the period under review, commodity trading business contributed the majority revenue of the Group, amounting to approximately HK$5,934,464,000 (six months ended 30 September 2015: HK$1,946,359,000) and representing 99% of the Group s revenue (six months ended 30 September 2015: 98%), representing an increase of 205% as compared with the same period in This was mainly due to increase in trading volume in oil products and new product lines in particularly plastic materials products (including PEEK, PEI, PSU and TPU), Indium Tin Oxide ( ITO ) products and display driver IC products during the reporting period. Plastic materials PEEK, PEI, PSU and TPU are mainly used for manufacturing of medical equipment parts, household products, sports goods, high temperature connectors and lights of vehicles, metal substitutes for fiber optic connectors etc. 5,934,464,000 1,946,359,000 99% 98% 205% PEEK PEI PSU TPU ITO IC PEEK PEI PSU TPU After the first quarter of 2016, China s domestic and international economy flattens out gradually. Moreover, the trading volume in both China s domestic and international oil market were up concussion situation. Although, the oil price was declining, the demand for petroleum products and their derivatives chemical products still increased significantly as compared with last year. Our operation teams took advantage of this market situation to increase the trading volume and revenue of the Group s commodity trading business significantly during the six months ended 30 September Tou Rong Chang Fu Group Limited Interim Report

6 Management Discussion and Analysis As for the oil products trading, the Group recorded revenue of approximately HK$965,746,000 for the six months ended 30 September 2016 (six months ended 30 September 2015: HK$433,120,000), representing an increase of 123% as compared with the same period in A total of 42,346 tons (six months ended 30 September 2015: 22,990 tons) and 230,301 tons (six months ended 30 September 2015: 100,529 tons) of oil products were traded in China and in other Asia Pacific countries respectively, and maintaining steady gross profit. 965,746, ,120, % 42,346 22, , ,529 To ensure a steady profit growth in commodity trading business and risk diversification, our operating teams carried out new product lines for trading since July 2015 such as plastic material products, ITO products and display driver IC products. During the six months ended 30 September 2016, revenue of approximately HK$4,968,718,000 was generated from these new product lines (six months ended 30 September 2015: HK$1,513,239,000). ITO IC 4,968,718,000 1,513,239,000 Looking forward into the next half year, the international oil price is expected to running at comparatively low level with narrow fluctuation. Meanwhile, the supply of oil tends to be declined in China which has positive effect on the Group s commodity trading business. The Group will keep its satisfactory performance with its existing product lines; explore new opportunity in oil derivatives, clean energy, chemicals or electronic related markets; optimise the sales network and integrate privilege customers from both suppliers and customers to increase the trading volume; and utilise domestic and international resources and market to achieve the Group s commodity diversification and steady profit growth. Crude oil The Group owns 96% interest of an indirect subsidiary, which owns an oilfield project in Fularji District near Qiqihar City of Heilongjiang Province of China. Since January 2015, the Group subcontracted the operation of the oilfields in the Fu 718, Fu 710 and Meilisi 723 areas in Qiqihar ( Oilfields ) to an independent oil service professional (the Contractor ), which the Contractor provides on-site technical and management services in respect of the latter s exploration and production activities on Oilfields. The Contractor is responsible for all operation costs and investment of funds in drilling new wells and oilfields related long term investment. In return for the provision of those services, the Contractor will share majority of total crude oil revenue during the service period. 96% Tou Rong Chang Fu Group Limited Interim Report

7 Management Discussion and Analysis During the period under review, the supply in the international oil market was still ample. International oil prices continued to fluctuate at a low level. In view of the low oil prices and high production cost, the management and the Contractor considered to diminish the risk and loss by fine tuning the development plan in the Oilfields and slowing down the oil exploitation process in the Oilfields since last financial year. The management expected that the development progress will be further delayed. Chemical products The Group strived to maintain its loyal customers and suppliers for chemical products trading business. The revenue of approximately HK$48,927,000 was recognised for the six months ended 30 September 2016 (six months ended 30 September 2015: HK$41,305,000), representing an increase of 18%. On the other hand, another subsidiary within this segment, which is based in Beijing and providing paint services, in view of the risk relating to the increment of materials cost and staff cost; and facing to the uncertain economic environment of the industry in China, the operation in Beijing will be gradually reduced. 48,927,000 41,305,000 18% Money lending The Group started the money lending business in Hong Kong since June During the period under review, two indirect wholly-owned subsidiaries of the Company have obtained the money lending licences in Hong Kong. For the six months ended 30 September 2016, interest revenue was HK$8,026,000 (six months ended 30 September 2015: HK$4,885,000). 8,026,000 4,885,000 The licensing of money lenders and regulation of money-lending transactions are governed by the Money Lenders Ordinance, Chapter 163 of the Laws of Hong Kong. The market of money lending business by licensed money lenders in Hong Kong is keen and competitive. In order to maximise the market share in this business but also to ensure the compliance of the related laws and regulations, the operation team has established a credit policy and loan approval process to minimise the credit risk Tou Rong Chang Fu Group Limited Interim Report

8 Management Discussion and Analysis Securities brokerage To cope with the development strategy of stepping into the financial services market in Hong Kong, an indirect wholly-owned subsidiary of the Company has successfully obtained a licence by Securities and Futures Commission of Hong Kong to carry out type 1 (dealing in securities) regulated activities on 30 September The Group commenced the business on 30 March In view of its expected revenue growth with promising market outlook Shenzhen Hong Kong Stock Connect program, the Group intends to deploy more resources in brokerage and asset management services. 1 Insurance In August 2016, the Group entered into a shares purchase agreement with two independent third parties to acquire 100% equity interests in People Insurance Broker Limited ( People Insurance ). People Insurance is carrying out insurance brokerage service in Hong Kong with the licence to transact all types of general insurance business and long term insurance business in Hong Kong. On 4 May 2016, a subsidiary of the Group entered into a non-legally binding memorandum of understanding with a vendor in relation to a possible acquisition of an entire interest of a company, which is principally engaged in the sale of insurance products, collection of insurance premium, loss investigation and claim settlement in respect of relevant insurance businesses as agent in Zhejiang Province, the PRC. The Board believes that the above possible acquisition represents a viable business opportunity to step forward in strengthening the Group s business development in the financial sector and to further expand the Group s financial services business into the PRC market. The Directors are also of the view that People Insurance and the above possible acquisition represent a good opportunity for the Group to expand its existing business so as to broaden its sources of income, aiming at maximising profit and return for the Group and its shareholders. Tou Rong Chang Fu Group Limited Interim Report

9 Management Discussion and Analysis FINANCIAL REVIEW Revenue and operating results For the six months ended 30 September 2016, the Group recorded a consolidated revenue of approximately HK$5,992,877,000 (six months ended 30 September 2015: HK$1,994,564,000), representing an increase of 200% from the same period in The Group recorded a profit for the period attributable to owners of the Company of approximately HK$52,354,000 (six months ended 30 September 2015: loss of HK$12,076,000). Basic earnings per share of HK$0.70 cents (six months ended 30 September 2015: basic loss per share of HK$0.24 cents). The turnaround of the Group s results was mainly due to the substantial segment profit contributed by the commodity trading segment amounted to approximately HK$107,640,000 (six months ended 30 September 2015: HK$32,337,000). 5,992,877,000 1,994,564, % 52,354,000 12,076, ,640,000 32,337,000 Working capital As at 30 September 2016, the Group s current assets were kept at approximately HK$939,326,000 (31 March 2016: HK$682,060,000) whilst current liabilities were approximately HK$324,349,000 (31 March 2016: HK$324,889,000). The current ratio, being the proportion of total current assets against current liabilities, was 2.90 (31 March 2016: 2.10). The directors consider that the present working capital level is conservatively sufficient to meet the upcoming operating needs. 939,326, ,060, ,349, ,889, Liquidity and financial resources The Group generally finances its operations with internally generated cash flows and facilities provided by its principal bankers in Hong Kong and China. The Group had cash and bank balances of approximately HK$351,376,000 at 30 September 2016 (31 March 2016: HK$208,168,000). The Group s bank balances and cash were mostly held in Hong Kong dollar and Renminbi. 351,376, ,168,000 At 30 September 2016, the Group s total carrying amount of bank borrowings and bonds were approximately HK$431,031,000 (31 March 2016: HK$366,830,000) and total assets were approximately HK$1,327,411,000 (31 March 2016: HK$1,075,279,000). 431,031, ,830,000 1,327,411,000 1,075,279,000 8 Tou Rong Chang Fu Group Limited Interim Report

10 Management Discussion and Analysis The gearing ratio, calculated by dividing the total bank borrowings and bonds by the total assets, was equal to 32.5% at 30 September 2016 (31 March 2016: 34.1%). 32.5% 34.1% Pledge of assets Details of the Group s pledge of assets at 30 September 2016 are set out in Note 19 to the condensed consolidated interim financial information. 19 Commitments Details of the Group s commitments at 30 September 2016 are set out in Note 23 to the condensed consolidated interim financial information. 23 Interim dividend The Board of Directors of the Company does not recommend the payment of an interim dividend for the six months ended 30 September 2016 (30 September 2015: Nil). EXPOSURE TO FOREIGN EXCHANGE RISK AND INTEREST RATE RISK The Group s business transactions are mainly denominated in United States dollars, Hong Kong dollars and Renminbi. Most of the Group s bank borrowings are interest bearing at floating rate basis. The management monitors foreign currency exposure and will consider hedging significant foreign currency exposures should the need arise. The Group also uses derivative financial instruments to manage interest rate exposures for hedging purpose only. EMPLOYEES AND REMUNERATION POLICIES As at 30 September 2016, the Group had an aggregate of 76 employees (30 September 2015: 87) of which about 35 employees (30 September 2015: 46) were located in Mainland China while the rest were based in Hong Kong, Kazakhstan and Macau. The employee s remuneration package includes salary, bonus, share options and awarded shares. Pursuant to the Group s remuneration policy, employees are rewarded on the basis of merit and market conditions and in accordance with the statutory requirements of the respective jurisdiction where the employees located Tou Rong Chang Fu Group Limited Interim Report

11 Interim Condensed Consolidated Income Statement For the six months ended 30 September 2016 (Expressed in Hong Kong dollars) (Unaudited) (Unaudited) 30 September 30 September Note (Restated) Revenue 6 5,992,877 1,994,564 Cost of sales 8 (5,857,037) (1,960,544) Gross profit 135,840 34,020 Other losses, net 7 (786) (5,810) Selling and distribution costs 8 (15,382) (592) Administrative expenses 8 (50,346) (27,082) Operating profit 69, Finance income 247 1,194 Finance costs (18,642) (15,966) Share of loss of an associate (20) Profit/(loss) before income tax 50,931 (14,256) Income tax (expense)/credit 9 (282) 420 Profit/(loss) for the period 50,649 (13,836) Profit/(loss) for the period attributable to: Owners of the Company 52,354 (12,076) Non-controlling interests (1,705) (1,760) 50,649 (13,836) Earnings/(loss) per share (HK cents) 10 Basic 0.70 (0.24) Diluted 0.70 (0.24) 10 Tou Rong Chang Fu Group Limited Interim Report

12 Interim Condensed Consolidated Statement of Comprehensive Income For the six months ended 30 September 2016 (Expressed in Hong Kong dollars) (Unaudited) (Unaudited) 30 September 30 September Note Profit/(loss) for the period 50,649 (13,836) Other comprehensive income/(loss): Items that may be reclassified subsequently to profit or loss: Exchange differences arising on translation of foreign operations Changes in fair value of available-for-sale investments Share of exchange reserve of an associate (8,999) (16,819) 15 3,913 (15,646) 1 (5,086) (32,464) Total comprehensive income/(loss) for the period 45,563 (46,300) Total comprehensive income/(loss) attributable to: Owners of the Company 49,253 (40,656) Non-controlling interests (3,690) (5,644) 45,563 (46,300) Tou Rong Chang Fu Group Limited Interim Report

13 Interim Condensed Consolidated Statement of Financial Position As at 30 September 2016 (Expressed in Hong Kong dollars) Non-current assets (Unaudited) (Audited) 30 September 31 March Note Property, plant and equipment 12 81,000 87,298 Investment properties , ,349 Goodwill 16,587 16,040 Other intangible assets 121, ,461 Interests in associates 14 Prepayments, deposit and other receivables 28,281 31,538 Other financial assets 15 33,446 24,533 Current assets 388, ,219 Inventories 4,323 2,626 Trade receivables , ,020 Loans receivable 17 97,807 19,913 Prepayments, deposits and other receivables 111, ,676 Derivative financial assets 510 Other financial assets Client trust bank balances 12,068 Cash and bank balances 351, ,168 Current liabilities 939, ,060 Trade payables , ,924 Accruals and other payables 39,418 49,754 Bank borrowings 19 34,465 Current income tax liabilities , ,889 Net current assets 614, ,171 Total assets less current liabilities 1,003, , Tou Rong Chang Fu Group Limited Interim Report

14 Interim Condensed Consolidated Statement of Financial Position Capital and reserves As at 30 September 2016 (Expressed in Hong Kong dollars) (Unaudited) (Audited) 30 September 31 March Note Share capital 20 75,507 62,174 Reserves 535, ,258 Equity attributable to owners of the Company 611, ,432 Non-controlling interests (6,786) (3,096) Total equity 604, ,336 Non-current liabilities Deferred tax liabilities 1,878 2,224 Bonds , , , ,054 1,003, ,390 Tou Rong Chang Fu Group Limited Interim Report

15 Interim Condensed Consolidated Statement of Changes in Equity For the six months ended 30 September 2016 (Expressed in Hong Kong dollars) At 1 Apr 2016(audited) Share capital Treasury Shares Share premium Attributable to owners of the Company Sharebased payment reserve Other reserves Exchange reserve Accumulated losses Noncontrolling interests Total Total equity 62,174 (5,370) 764,306 6,440 (243,152) 23,940 (223,906) 384,432 (3,096) 381,336 Comprehensive income Profit for the period 52,354 52,354 (1,705) 50,649 Other comprehensive income/(loss) Exchange differences arising on translation of foreign operations Change in fair value of available-for-sale investments Total other comprehensive income/(loss) Total comprehensive income/(loss) for the period (7,014) (7,014) (1,985) (8,999) 3,913 3,913 3,913 3,913 (7,014) (3,101) (1,985) (5,086) 3,913 (7,014) 52,354 49,253 (3,690) 45,563 Transactions with owners Placement of new shares 13, , , ,533 Recognition of equity-settled share-based payments 12,186 12,186 12,186 Lapse of share options (85) 85 Vesting of shares of share award scheme 5,370 (5,370) Total transactions with owners 13,333 5, ,200 6, , ,719 At 30 September 2016 (unaudited) 75, ,506 13,171 (239,239) 16,926 (171,467) 611,404 (6,786) 604,618 At 1 April 2015(audited) Share capital Share premium Attributable to owners of the Company Sharebased payment reserve Other reserves Exchange reserve Retained earnings/ (accumulated losses) Total Noncontrolling interests Total equity 49, ,127 25,861 (220,038) 31,723 3, ,683 9, ,816 Comprehensive loss Loss for the period (12,076) (12,076) (1,760) (13,836) Other comprehensive income/(loss) Exchange differences arising on translation of foreign operations Change in fair value of available-for-sale investments Share of exchange reserve of an associate Total other comprehensive income/(loss) Total comprehensive loss for the period (12,935) (12,935) (3,884) (16,819) (15,646) (15,646) (15,646) (15,646) (12,934) (28,580) (3,884) (32,464) (15,646) (12,934) (12,076) (40,656) (5,644) (46,300) Transactions with owners Placement of new shares 1,000 12,800 13,800 13,800 Exercise of non-listed warrants 1,300 25,584 (7,046) 19,838 19,838 Dividend paid to non-controlling interests (1,230) (1,230) Total transactions with owners 2,300 38,384 (7,046) 33,638 (1,230) 32,408 At 30 September 2015 (unaudited) 52, ,511 18,815 (235,684) 18,789 (8,923) 458,665 2, , Tou Rong Chang Fu Group Limited Interim Report

16 Interim Condensed Consolidated Statement of Cash Flows For the six months ended 30 September 2016 (Expressed in Hong Kong dollars) (Unaudited) (Unaudited) 30 September 30 September Cash flows from operating activities Cash used in operations (54,566) (74,565) Hong Kong profits tax paid (82) Net cash used in operating activities (54,648) (74,565) Cash flows from investing activities Purchase of property, plant and equipment (3,682) (4,521) Deposit paid for acquisition of properties (21,281) Proceeds from disposal of property, plant and equipment 23 Net cash outflow arising on acquisition of a subsidiary (2,098) Net cash outflow arising on acquisition of an available-for-sale investment (5,000) Interest received 247 1,194 Decrease in restricted bank deposits 31,798 Net cash (used in)/generated from investing activities (10,510) 7,190 Cash flows from financing activities Net proceeds from placement of new shares 165,533 13,800 Proceeds from exercise of non-listed warrants 19,838 Additional bank borrowings 35,000 34,488 Repayments of bank borrowings (811) (67,162) Net proceeds from issuance of bonds 25, ,943 Interest paid (14,296) (29,675) Net cash generated from financing activities 210,816 75,232 Tou Rong Chang Fu Group Limited Interim Report

17 Interim Condensed Consolidated Statement of Cash Flows For the six months ended 30 September 2016 (Expressed in Hong Kong dollars) (Unaudited) (Unaudited) 30 September 30 September Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the period Effect of foreign exchange rate changes Cash and cash equivalents at the end of the period 145,658 7, , ,786 (2,450) (2,106) 351, ,537 Analysis of cash and cash equivalents: Cash and bank balances 351, ,719 Less: Restricted bank deposits (15,182) Cash and cash equivalents 351, , Tou Rong Chang Fu Group Limited Interim Report

18 1 GENERAL INFORMATION For the six months ended 30 September Tou Rong Chang Fu Group Limited (formerly known as PetroAsian Energy Holdings Limited, the Company ) is a limited liability company incorporated in the Cayman Islands and its shares are listed on The Stock Exchange of Hong Kong Limited (the Stock Exchange ). The addresses of the registered office and the principal place of business of the Company are Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1-1111, Cayman Islands and 19th Floor, 80 Gloucester Road, Wan Chai, Hong Kong, respectively. Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1-1111, Cayman Islands The principal activity of the Company is investment holding. The principal activities of its subsidiaries are trading of commodities, the exploitation and sale of crude oil, sale of chemical products, provision of exploration drilling services, property investment, money lending business, brokerage of securities and brokerage of insurance. The Company and its subsidiaries are referred to as the Group. The condensed consolidated interim financial information is presented thousands of Hong Kong dollars ( ), unless otherwise stated. This condensed consolidated interim financial information has been approved by the Board of Directors on 25 November BASIS OF PREPARATION The condensed consolidated interim financial information has been prepared in accordance with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on the Stock Exchange (the Listing Rules ) and with Hong Kong Accounting Standard (the HKAS ) 34 Interim Financial Reporting issued by the Hong Kong Institute of Certified Public Accountants. The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31 March 2016, which have been prepared in accordance with Hong Kong Financial Reporting Standards (the HKFRS ) Tou Rong Chang Fu Group Limited Interim Report

19 For the six months ended 30 September BASIS OF PREPARATION (Continued) Changes in presentation of the interim condensed consolidated income statement 2 In previous periods, the Group presented an analysis of expenses recognised in interim condensed consolidated income statement using a classification based on their nature. During the year ended 31 March 2016, the Board of the Directors has performed a review of the content and presentation of the financial statements to ensure compliance with relevant accounting standards as well as comparable to those of the other market participants within the same industry and the business development and operation of the Group. In view of the Group s results of operations mainly driven by the commodity trading segment in the year and place less focus on the exploitation of crude oil, the Board of Directors considered that it is appropriate to adopt an analysis of expenses recognised in consolidated income statement using a classification based on their function which would be more relevant to the Group s circumstances and for the users of the Group s financial statements. The changes in presentation have been adopted retrospectively, and certain corporate figures have been restated. The changes in the presentation of the interim condensed consolidated income statement did not have any impact of the Group s profit/(loss) for the period or the calculation of the Group s earnings/(loss) per share. 18 Tou Rong Chang Fu Group Limited Interim Report

20 3 PRINCIPAL ACCOUNTING POLICIES For the six months ended 30 September Except as described below, the accounting policies applied are consistent with those of the annual financial statements for the year ended 31 March 2016, as described in those annual financial statements. (a) Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings. (a) (b) Effect of adopting new standards and new amendments to existing standards (b) The following new standards and new amendments to existing standards are mandatory for the financial period beginning on 1 April The adoption of these new standards and new amendments to existing standards does not have any significant impact to the results and financial position of the Group. Amendments to HKAS 1 Amendments to HKAS 16 and 38 Amendments to HKAS 16 and 41 Amendments to HKAS 27 Amendments to HKFRS 10, HKFRS 12 and HKAS 28 Amendments to HKFRS 10 and HKAS 28 Amendment to HKFRS 11 HKFRS 14 Amendments to HKFRSs Disclosure initiative Clarification of acceptance methods of depreciation and amortisation Agriculture: bearer plants Equity method in separate financial statements Investment entities: Applying the consolidation exception Sale or contribution of assets between an investor and its associate or joint venture Accounting for acquisitions of interests in joint operations Regulatory deferred accounts Annual improvements cycle Tou Rong Chang Fu Group Limited Interim Report

21 For the six months ended 30 September PRINCIPAL ACCOUNTING POLICIES (Continued) 3 (c) New standards that have been issued but are not effective for the financial period beginning on 1 April 2016 and have not been early adopted by the Group (c) Effective for annual periods beginning on or after HKFRS 9 Financial instruments 1 January HKFRS 15 Revenue from contracts with customers 1 January HKFRS 16 Leases 1 January The Group is assessing the impacts of these new standards and will apply them once they are effective. 4 ESTIMATES The preparation of financial information requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amount of assets and liabilities, income and expense. Actual results may differ from these estimates. 4 In preparing this condensed consolidated interim financial information, the significant judgements made by management in applying the Group s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 March Tou Rong Chang Fu Group Limited Interim Report

22 5 FINANCIAL RISK MANAGEMENT For the six months ended 30 September (a) Financial risk factors (a) The Group s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The condensed consolidated interim financial information does not include all financial risk management information and disclosures required in the annual financial statements, and should be read in conjunction with the Group s annual financial statements as at 31 March There have been no changes in the risk management department since year end. (b) Liquidity risk (b) The following table details Group s remaining contractual maturity for its non-derivative financial liabilities. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. In addition, the following table details the Group s liquidity analysis for its derivative financial instruments. The table has been drawn up based on the undiscounted contractual net cash outflows on derivative instruments that settle on a net basis. Tou Rong Chang Fu Group Limited Interim Report

23 For the six months ended 30 September FINANCIAL RISK MANAGEMENT (Continued) (b) Liquidity risk (Continued) 5 (b) Weighted average interest rate Within 1 year 1-2 years 2-5 years Over 5 years Total undiscounted cash flows Carrying amount % As at 30 September 2016 (unaudited) Trade payables (249,876) (249,876) (249,876) Other payables (20,913) (20,913) (20,913) Bank borrowings 2.04 to (4,034) (3,994) (11,619) (18,395) (38,042) (34,465) Bonds 5.09 to (16,724) (32,998) (64,780) (521,800) (636,302) (396,566) (291,547) (36,992) (76,399) (540,195) (945,133) (701,820) As at 31 March 2016 (audited) Trade payables (274,924) (274,924) (274,924) Other payables (49,651) (49,651) (49,651) Bonds 5.09 to (15,446) (25,446) (154,596) (419,566) (615,054) (366,830) (340,021) (25,446) (154,596) (419,566) (939,629) (691,405) Derivative net settlement Foreign currency forward contracts Tou Rong Chang Fu Group Limited Interim Report

24 For the six months ended 30 September FINANCIAL RISK MANAGEMENT (Continued) 5 (c) Fair value estimation (c) The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows: Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1). Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2). Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3). The following table presents the Group s assets and liabilities that are measured at fair value at 30 September 2016 and 31 March As at 30 September 2016 (unaudited) As at 31 March 2016 (audited) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets Financial assets at fair value through profit or loss Held-for-trading investments: Listed equity securities Trading derivatives: Foreign currency forward contracts Available-for-sale investments: Listed equity securities 28,446 28,446 24,533 24,533 Total 28,625 28,625 24, ,190 Liabilities Tou Rong Chang Fu Group Limited Interim Report

25 For the six months ended 30 September FINANCIAL RISK MANAGEMENT (Continued) 5 (c) Fair value estimation (Continued) (c) (i) During the six months ended 30 September 2016, there were no transfers between level 1, 2 and 3. (i) (ii) There were no changes in valuation techniques during the period. (ii) (iii) Valuation techniques used to derive Level 2 fair values: (iii) The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value of an instrument are observable, the instrument is included in level 2. If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. Level 2 trading derivatives foreign currency forward contracts are fair valued using discount cash flow, Black-Scholes option pricing model and Monte Carlo simulation by using observable exchange rate, currency volatility and yield curve. 24 Tou Rong Chang Fu Group Limited Interim Report

26 6 REVENUE AND SEGMENT INFORMATION For the six months ended 30 September The executive directors of the Company have been regarded as the Chief Operating Decision-Maker ( CODM ). The Group s operating segments, based on information reported to the CODM for the purpose of resource allocation and performance assessment, are as follows: Trading of commodities ( Commodity trading ); Exploitation and sale of crude oil ( Crude oil ); Sale of paints, blended solvents and plastic colorants ( Chemical products ); Leasing of investment properties ( Property investment ); and Others. The Group also carries out business as money lending, securities brokerage, insurance brokerage and provision of exploration drilling services. The financing for these businesses was primarily obtained through the Group s internal resources. The CODM, after reviewing for qualitative factors such as the business activities, economic and legal characteristics of the business and quantitative factors such as the financial performance of the business, has accordingly determined that the money lending, securities brokerage, insurance brokerage and provision of exploration drilling services did not qualify as reportable operating segments, and their financial information is included in Others. Tou Rong Chang Fu Group Limited Interim Report

27 For the six months ended 30 September REVENUE AND SEGMENT INFORMATION (Continued) 6 The accounting policies of the operating segments are the same as the Group s accounting policies. Segment results represent the loss made or profit earned by each segment without allocation of incomes or expenses which are not recurring in nature and unrelated to the Group s operating performance, including bank interest income, central administration costs, directors emoluments, share of loss of an associate, changes in fair value of held-for-trading investments and derivative financial instruments, share-based payments and finance costs. The CODM also reviews the earnings/loss before net finance income and costs, income tax expense, depreciation and amortisation, unallocated other income less expenses and noncontrolling interests ( EBITDA or LBITDA ) of the Group. Accordingly, EBITDA or LBITDA is also presented. EBITDA LBITDA EBITDA LBITDA For the purposes of monitoring segment performances and allocating resources among segments, all assets are allocated to operating segments other than interests in associates, derivative financial assets, other financial assets, cash and bank balances and other corporate assets. The CODM reviews the segment assets for the purposes of resource allocation and performance assessment, an analysis of the Group s liabilities is not regularly reviewed by the CODM and hence, the relevant information is not presented accordingly. 26 Tou Rong Chang Fu Group Limited Interim Report

28 6 REVENUE AND SEGMENT INFORMATION (Continued) For the six months ended 30 September (a) Segment revenue and results (a) The following is an analysis of the Group s revenue and results by reportable operating segments: For the six months ended 30 September 2016 (unaudited) Commodity trading Crude oil Chemical products Property investment Others Total Segment revenue 5,934,464 48,927 1,299 8,187 5,992,877 Segment EBITDA/(LBITDA) EBITDA/(LBITDA) 108,385 (1,076) (645) 1,140 5, ,999 Segment depreciation and amortisation (745) (5,400) (24) (1,227) (2,150) (9,546) Segment results 107,640 (6,476) (669) (87) 3, ,453 Unallocated expenses (34,127) Finance income 247 Finance costs (18,642) Share of loss of an associate Profit before income tax 50,931 Tou Rong Chang Fu Group Limited Interim Report

29 For the six months ended 30 September REVENUE AND SEGMENT INFORMATION (Continued) 6 (a) Segment revenue and results (Continued) (a) For the six months ended 30 September 2015 (unaudited) Commodity trading Crude oil Chemical products Property investment Others Total Segment revenue 1,946,359 41,305 6,900 1,994,564 Segment EBITDA/(LBITDA) EBITDA/(LBITDA) 33,143 (1,680) 71 (102) 5,028 36,460 Segment depreciation and amortisation (806) (263) (38) (258) (4,524) (5,889) Segment results 32,337 (1,943) 33 (360) ,571 Unallocated expenses (30,035) Finance income 1,194 Finance costs (15,966) Share of loss of an associate (20) Loss before income tax (14,256) 28 Tou Rong Chang Fu Group Limited Interim Report

30 6 REVENUE AND SEGMENT INFORMATION (Continued) For the six months ended 30 September (b) Segment assets (b) The following is an analysis of the Group s assets by reportable operating segments: (Unaudited) (Audited) As at As at 30 September 31 March Segment assets Commodity trading 366, ,733 Crude oil 173, ,873 Chemical products 32,517 11,372 Property investment 114, ,236 Others 118,585 42,346 Total segment assets 806, ,560 Unallocated 520, ,719 Total assets 1,327,411 1,075,279 Tou Rong Chang Fu Group Limited Interim Report

31 For the six months ended 30 September OTHER LOSSES, NET 7 (Unaudited) Six months ended (Unaudited) Six months ended 30 September 30 September Exchange losses, net (741) (1,858) Loss on disposal of property, plant and equipment (77) Loss from changes in fair value of derivative financial instruments (3,890) Gain/(loss) from changes in fair value of held-for-trading investments 32 (62) (786) (5,810) 30 Tou Rong Chang Fu Group Limited Interim Report

32 8 EXPENSES BY NATURE Wages, salaries and other benefits (including directors emoluments) Cost of inventories recognised in expenses Depreciation of property, plant and equipment (Note 12) Depreciation of investment properties (Note 13) Amortisation of the other intangible assets For the six months ended 30 September (Unaudited) Six months ended (Unaudited) Six months ended 30 September 30 September (Restated) 11,313 10,797 5,856,695 1,954, ,828 5, , Operating lease expenses 4,677 4,181 Legal and professional fee 2,825 3,506 Share-based payments in respect of consultation fee 2,957 Share-based payments 12,186 Public relation 3,571 3,345 Commission expenses 15,199 Transportation 1,364 1,606 Donation 1,150 9 Others 4, Total cost of sales, selling and distribution costs and administrative expenses 5,922,765 1,988,218 Tou Rong Chang Fu Group Limited Interim Report

33 For the six months ended 30 September INCOME TAX EXPENSE/(CREDIT) 9 (Unaudited) Six months ended (Unaudited) Six months ended 30 September 30 September Hong Kong profits tax 461 Deferred income tax (179) (420) 282 (420) Hong Kong profits tax is calculated at 16.5% (six months ended 30 September 2015: 16.5%) on the estimated assessable profit for the period. Taxation for overseas subsidiaries is charged at the appropriate current rates of taxation in the relevant jurisdiction of which the most significant jurisdictions are the PRC which has a corporate income tax rate of 25% (six months ended 30 September 2015: 25%) and Macau which has a complementary corporate tax rate of 12% (six months ended 30 September 2015: 12%). 16.5% 16.5% 25% 25% 12% 12% No current Macau complementary corporate tax and PRC corporate income tax have been provided for as the Group did not have any assessable profits in Macau nor in the PRC for the six months ended 30 September 2016 (six months ended 30 September 2015: Nil). 32 Tou Rong Chang Fu Group Limited Interim Report

34 10 EARNINGS/(LOSS) PER SHARE For the six months ended 30 September Basic earnings/(loss) per share attributable to the owners of the Company is calculated by dividing profit/(loss) for the period attributable to owners of the Company by the weighted average number of shares in issue during the reporting period. (Unaudited) (Unaudited) Six months Six months ended ended 30 September 30 September Profit/(loss) for the period attributable to the owners of the Company () 52,354 (12,076) Weighted average number of ordinary shares in issue (shares in thousands) Effect of dilutive potential ordinary shares upon exercise of warrants (shares in thousands) 7,514,294 5,081,079 3,184 7,517,478 5,081,079 Basic earnings/(loss) per share (HK cents) Diluted earnings/(loss) per share (HK cents) 0.70 (0.24) 0.70 (0.24) The share options outstanding at 30 September 2016 (30 September 2015: warrants) have no dilutive effect on basic earnings/(loss) per share. Tou Rong Chang Fu Group Limited Interim Report

35 For the six months ended 30 September DIVIDEND 11 The Board of Directors does not recommend the payment of an interim dividend for the six months ended 30 September 2016 (six months ended 30 September 2015: Nil). 12 PROPERTY, PLANT AND EQUIPMENT During the six months ended 30 September, the movements in the Group s property, plant and equipment are as follows: 12 (Unaudited) (Unaudited) Net book value at 1 April 87, ,952 Additions 3,682 4,521 Disposals (100) Depreciation (Note 8) 8 (7,828) (5,445) Exchange realignment (2,052) (8,459) Net book value at 30 September 81, , INVESTMENT PROPERTIES During the six months ended 30 September, the movements in the Group s investment properties are as follows: 13 (Unaudited) (Unaudited) Net book value at 1 April 108,349 23,862 Depreciation (Note 8) 8 (1,227) (256) Net book value at 30 September 107,122 23, Tou Rong Chang Fu Group Limited Interim Report

36 14 INTERESTS IN ASSOCIATES For the six months ended 30 September (Unaudited) (Audited) 30 September 31 March Cost of investments in associates Unlisted Contributions to an unlisted associate Share of post-acquisition comprehensive losses 75,592 75,592 9,327 9,327 (84,919) (84,919) 15 OTHER FINANCIAL ASSETS Other financial assets of the Group comprised of the followings: 15 (Unaudited) (Audited) 30 September 31 March Held-for-trading investments: Listed equity security in Hong Kong Available-for-sale investments: Unlisted equity investment, at cost 12,837 5,837 Less: Provision for impairment (5,837) (5,837) Amount due to an available-for-sale investment 7,000 (2,000) 5,000 Listed equity security in Hong Kong (Note (a)) (a) 28,446 24,533 Less: amount shown under non-current assets 33,625 24,680 (33,446) (24,533) Amount shown under current assets Tou Rong Chang Fu Group Limited Interim Report

37 For the six months ended 30 September OTHER FINANCIAL ASSETS (Continued) 15 Note: (a) The listed equity security represents the Group s long-term investment of 8.63% equity interest in Gold Tat Group International Ltd ( Gold Tat ). It is measured at fair value with reference to the bid prices on the Stock Exchange at 30 September 2016, the fair value of Gold Tat increased by approximately HK$3,913,000 (30 September 2015: decrease of HK$15,646,000) and the same amount was credited (30 September 2015: debited) to the investment revaluation reserve for the six months ended 30 September (a) 8.63% 3,913,000 15,646, TRADE RECEIVABLES 16 (Unaudited) (Audited) 30 September 31 March Trade receivables 373, ,743 Less: Provision of impairment (11,351) (11,723) 361, ,020 (a) Before accepting any new customer, the Group uses an internal credit assessment system to assess the potential customer s credit quality and defines credit limits by customer. Balances which are neither past due nor impaired are all receivable from customers with good historical repayment records and good credit quality. (a) (b) Trade receivables are due within 30 to 120 days from the date of invoicing. (b) 36 Tou Rong Chang Fu Group Limited Interim Report

38 For the six months ended 30 September TRADE RECEIVABLES (Continued) 16 (c) Aging analysis of trade receivables based on invoice date net of impairment is as follows: (c) (Unaudited) (Audited) 30 September 31 March Less than 1 month 261, ,547 1 month to 3 months 60,508 72,463 More than 3 months but less than 1 year 39,737 94,768 Over 1 year 130 2,242 Trade receivables 361, , LOANS RECEIVABLE 17 (Unaudited) (Audited) 30 September 31 March Loans receivable 97,807 19,913 Tou Rong Chang Fu Group Limited Interim Report

39 For the six months ended 30 September LOANS RECEIVABLE (Continued) The Group s loans receivable, which arise from the money lending business of providing short-term loans to independent third parties in Hong Kong, are denominated in HK$. 17 Loans receivable bear coupon interest rates ranging from 15.00% to 54.00% (31 March 2016: 8.00% to 60.00%) per annum and repayable with fixed terms ranging from three to twelve months (31 March 2016: three to twelve months) agreed with the Group s customers. The carrying amounts are determined using the expected future repayments discounted at effective interest rates ranging from 14.99% to 52.92% (31 March 2016: 7.35% to 59.67%) per annum % 54.00% 8.00% % 52.92% 7.35% 59.67% Certain loans receivable are secured by collaterals. The maximum exposure to credit at each of the reporting dates is the carrying value of the receivables mentioned above. Interest income of HK$7,301,000 has been recognised as revenue in the interim condensed consolidated income statement. 7,301,000 As at 30 September 2016 and 31 March 2016, the maturity profile of the loans receivable based on the maturity date is as follows: (Unaudited) (Audited) 30 September 31 March Less than 1 month 43,317 5,405 1 month to 3 months 46,753 9,894 More than 3 months but less than 1 year 7,737 4,614 97,807 19,913 The credit quality of loans receivable has been assessed by reference to historical information about counterparties credit history. The existing counterparties do not have defaults in the past. 38 Tou Rong Chang Fu Group Limited Interim Report

40 18 TRADE PAYABLES For the six months ended 30 September (Unaudited) (Audited) 30 September 31 March Trade payables 142, ,020 Accounts payable arising from brokerage clients 12,068 Bills payables 94,891 19, , ,924 Aging analysis of trade payables based on invoice date is as follows: (Unaudited) (Audited) 30 September 31 March Less than 1 month 32, ,886 1 month to 3 months 110,152 58,767 More than 3 months but less than 1 year 21 79,474 Over 1 year 546 2, , ,020 Tou Rong Chang Fu Group Limited Interim Report

41 For the six months ended 30 September TRADE PAYABLES (Continued) Aging analysis of bills payables based on date of bills is as follows: 18 (Unaudited) (Audited) 30 September 31 March Less than 1 month 31,377 2,302 1 month to 3 months 27,994 13,526 More than 3 months but less than 1 year 35,520 4,076 94,891 19, BANK BORROWINGS 19 (Unaudited) (Audited) 30 September 31 March Bank loans, secured 34,465 Carrying amount repayable Within one year 3,355 Between one and two years 3,373 Between two and five years 10,220 Over five years 17,517 34, Tou Rong Chang Fu Group Limited Interim Report

42 For the six months ended 30 September BANK BORROWINGS (Continued) 19 (a) Bank loans contained a repayment on demand clause which enables the bank to exercise at its sole discretion. Accordingly, the entire balance was classified under current liabilities as at 30 September (a) (b) As at 30 September 2016, the bank loans were interest bearing with variable rate at contractual interest of HIBOR plus certain basis points per annum. The effective interest rate for the period was ranged from 2.04% to 12.59%. The borrowings were repayable on monthly instalment basis up to maturity in accordance with the terms set out in the respective banking facility letters. (b) 2.04% 12.59% (c) As at 30 September 2016, the Group pledged the following assets to secure the Group s bank borrowings and trading facilities: (c) (1) Corporate guarantee executed by the Company for an unlimited amount (31 March 2016: same); and (1) (2) Investment properties with a carrying value of HK$107,122,000 (31 March 2016: HK$23,349,000). (2) 107,122,000 23,349, SHARE CAPITAL 20 Number of shares Ordinary shares of HK$0.01 each 0.01 Issued and Issued and Authorised fully paid Authorised fully paid At 1 April ,000,000 4,985,724 80,000 49,857 Placement of new shares 100,000 1,000 Exercise of non-listed warrants 130,000 1,300 At 30 September ,000,000 5,215,724 80,000 52,157 At 1 April ,000,000 6,217, ,000 62,174 Placement of new shares 1,333,332 13,333 At 30 September ,000,000 7,550, ,000 75,507 Tou Rong Chang Fu Group Limited Interim Report

43 For the six months ended 30 September BONDS 21 As at 30 September 2016 As at 31 March 2016 Unsecured bonds 396, ,830 During the six months ended 30 September 2016, the Company issued bonds with aggregated amount of HK$31,000,000 to several independent third parties with coupon rate 6.00%, payable in 3 to 7 years from the respective issue dates. The amounts of the bonds repayable at their maturities are disclosed in Note 5(b). 31,000, % 3 7 5(b) The carrying amounts of the bonds are determined using the expected future payments discounted at effective interest rates ranged from 5.09% to 13.41% (31 March 2016: 5.09% to 13.41%) prevailing at the respective dates of issuance. 5.09% 13.41% 5.09% 13.41% The fair values of the bonds as at 30 September 2016 amounted to approximately HK$390,819,000 (31 March 2016: HK$364,932,000). The fair values are determined based on cash flows discounted using a rate based on the effective market interest rates ranged from 4.54% to 12.16% per annum as at 30 September ,819, ,932, % 12.16% The carrying amounts of the Group s bonds are denominated in HK$. 42 Tou Rong Chang Fu Group Limited Interim Report

44 22 SHARE-BASED PAYMENTS For the six months ended 30 September The Company has a share option scheme for eligible directors and employees of the Group. The Group also issued non-listed warrants to certain independent third parties in prior years. Details of the share options granted and non-listed warrants outstanding as at 30 September 2016 and 31 March 2016 are as follows: For the six months ended 30 September 2016 Date of grant Exercisable period Exercise price As at 1 April As at 30 September Granted Exercised Lapsed Forfeited Share options Executive directors 22 April October 2016 to 21 April 2018 Employees 22 April October 2016 to 21 April 2018 Non-listed warrants Independent third parties 25 October October 2013 to 24 October 2016 HK$ ,500 (1,000) 140, HK$ ,800 (500) 73, ,300 (1,500) 213,800 HK$ ,000 20, ,000 20,000 20, ,300 (1,500) 233,800 Notes: (a) During the period, no share options and non-listed warrants were exercised. (a) (b) For the six months ended 30 September 2016, the Group recognised net aggregate share-based payments expense of approximately HK$12,186,000 in relation to the share options granted to directors and employees of the Company. (b) 12,186,000 Tou Rong Chang Fu Group Limited Interim Report

45 For the six months ended 30 September CAPITAL COMMITMENTS 23 The Group had capital expenditure commitments in respect of investments in projects, properties under construction and acquisition of properties, plant and equipment as shown below: (Unaudited) (Audited) 30 September 31 March Contracted but not provided for investments in project 1,000 The Group does not have any capital commitments that are authorised but not contracted for as at 30 September 2016 and 31 March RELATED PARTY TRANSACTIONS (a) Transactions with related parties All members of key management personnel are the directors and other members of key management of the Company. The remuneration of the directors and key executives is determined by the remuneration committee having regard to the performance of individuals and market trends. Compensation of key management personnel for the reporting period is as follows: 24 (a) (Unaudited) (Unaudited) Six months Six months ended ended 30 September 30 September Short-term employee benefits 5,227 4,774 Post-employment benefits ,272 4, Tou Rong Chang Fu Group Limited Interim Report

46 Corporate Governance and Other Information CHANGE OF NAME Pursuant to a special resolution passed by the shareholders of the Company on 26 August 2016, the name of the Company was changed from PetroAsian Energy Holdings Limited to Tou Rong Chang Fu Group Limited and the dual foreign name of the Company was changed from to. The change of name of the Company took effect on 31 August DIRECTORS AND CHIEF EXECUTIVE S INTERESTS PetroAsian Energy Holdings Limited Tou Rong Chang Fu Group Limited At 30 September 2016, the interests of the Directors and Chief Executive in the shares, underlying shares or debentures of the Company or any of its associated corporations (as defined in Part XV of the Securities and Futures Ordinance ( SFO )), as recorded in the register required to be kept under Section 352 of the SFO, or as 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 Issuers contained in the Rules Governing the Listing of Securities on the Stock Exchange ( Listing Rules ) were as follows: XV 352 Name of Directors Capacity Nature of Interests Number of Shares Equity Derivative Total Interest (Note 3) 3 Total % of Issued Shares Mr. Li Zhenjun Interest of controlled corporation Corporate Interest (Notes 1&4) 2,000,000,000 2,005,000, % 1 4 Beneficial Owner Personal Interest (Notes 3&4) 5,000, Mr. Poon Sum Beneficial Owner Personal Interest (Notes 3&4) 159,746,453 50,000, ,125, % 3 4 Founder of a Discretionary Trust Other Interest (Notes 2&4) 344,378, Mr. Wong Kwok Leung Beneficial Owner Personal Interest (Notes 3&4) 116,285 50,000,000 50,116, % 3 4 Mr. Poon Wai Kong Beneficial Owner Personal Interest (Notes 3&4) 7,900,000 25,000,000 32,900, % 3 4 Mr. Chan Shu Kin Beneficial Owner Personal Interest (Notes 3&4) 61,500 3,500,000 3,561, % 3 4 Mr. Cheung Kwan Hung Beneficial Owner Personal Interest (Notes 3&4) 234,000 3,500,000 3,734, % 3 4 Mr. Chiu Wai Piu Beneficial Owner Personal Interest (Notes 3&4) 3,500,000 3,500, % 3 4 Tou Rong Chang Fu Group Limited Interim Report

47 Corporate Governance and Other Information Notes: 1. These shares are held by Tou Rong Chang Fu (HK) Holding Co., Limited. The issued share capital of Tou Rong Chang Fu (HK) Holding Co., Limited is owned as to 100% by (Hangzhou Tou Rong Chang Fu Financial Services Group Limited*), a company established in the PRC with limited liability, which in turn is owned as to 90% by Mr. Li Zhenjun % 90% 2. These shares are held by Ever Source Enterprises Limited. The issued share capital of Ever Source Enterprises Limited is beneficially owned as to 50% by Time Concord Limited, a company incorporated in the British Virgin Islands and indirectly owned by a discretionary trust, the beneficiaries of which are family members of Mr. Poon Sum, and as to 50% by Guidance Investments Limited, a company incorporated in the British Virgin Islands and indirectly owned by a discretionary trust, the beneficiaries of which are family members of Mr. Poon Sau Tin, the elder brother of Mr. Poon Sum. Accordingly, Mr. Poon Sum is deemed to be interested in 344,378,558 shares, representing approximately 4.561% of the shares in issue as at 30 September 2016, through his shareholding in Ever Source Enterprises Limited. 2. Ever Source Enterprises Limited Ever Source Enterprises Limited Time Concord Limited 50% Guidance Investments Limited 50% Ever Source Enterprises Limited344,378, % 3. All interests in underlying shares of equity derivatives of the Company are interests in share options of the Company granted under the share options scheme, which may be exercised during the period from 22 October 2016 to 21 April 2018 at the exercise price of HK$0.193 per share All interests in shares and underlying shares of equity derivatives of the Company are long position. * The English transliteration of the Chinese name in this report, where indicated, is included for information purpose only, and should not be regarded as the official English name of such Chinese name. 4. * Save as disclosed above, as at 30 September 2016, none of the directors and chief executive of the Company had held any interests or short positions in the shares, underlying shares or debentures of the Company or any of its associated corporations (as defined in Part XV of the SFO) as recorded in the register required to be kept by the Company under Section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code. XV Tou Rong Chang Fu Group Limited Interim Report

48 Corporate Governance and Other Information SHARE OPTIONS Pursuant to the share option scheme adopted by the Company on 24 June 2013 (the Share Options Scheme ), employees, contracted celebrity, advisor, consultant, service provider, agent, customer, partner or joint venture partner of the Group (including any director of the Group) may be granted options to subscribe for the shares of the Company. Details of the share options outstanding as at 30 September 2016 were as follows: Participants Date of grant Exercise price per share Exercise period Executive Directors As at 1 Apr 2016 Granted during the period Number of options Exercised during the period Lapsed during the period As at 30 Sep 2016 Price of Company s shares For For Options Options granted exercised HK$ HK$ HK$ (Note 1) (Note 2) 1 2 Mr. Li Zhenjun 22 April October 2016 to 21 April 2018 Mr. Poon Sum 22 April October 2016 to 21 April 2018 Mr. Wong Kwok Leung 22 April October 2016 to 21 April 2018 Mr. Poon Wai Kong 22 April October 2016 to 21 April ,000,000 5,000, ,000,000 50,000, ,000,000 50,000, ,000,000 25,000, Non-executive Director Mr. Zaid Latif (retired on 26 August 2016) Zaid Latif 22 April October 2016 to 21 April ,000,000 (1,000,000) Tou Rong Chang Fu Group Limited Interim Report

49 Corporate Governance and Other Information Participants Date of grant Exercise price per share Exercise period Independent Non-executive Directors As at 1 Apr 2016 Granted during the period Number of options Exercised during the period Lapsed during the period As at 30 Sep 2016 Price of Company s shares For For Options Options granted exercised HK$ HK$ HK$ (Note 1) (Note 2) 1 2 Mr. Chan Shu Kin 22 April October 2016 to 21 April 2018 Mr. Cheung Kwan Hung 22 April October 2016 to 21 April 2018 Mr. Chiu Wai Piu 22 April October 2016 to 21 April ,500,000 3,500, ,500,000 3,500, ,500,000 3,500, Employees In aggregate 22 April October 2016 to 21 April ,800,000 (500,000) 73,300, Total 215,300,000 (1,500,000) 213,800,000 Notes: 1. The price of the Company s shares disclosed for options granted is the closing price of the shares immediately before the date on which the options were granted The price of the Company s shares disclosed for options exercised is the weighted average closing price of the shares immediately before the dates on which the options were exercised. 2. Save as disclosed above, none of the directors, or their spouse or children under the age of 18, had been granted any right to subscribe for the equity or debt securities of the Company or any of its associated corporations, or had exercised any such right during the period. 48 Tou Rong Chang Fu Group Limited Interim Report

50 Corporate Governance and Other Information SHARE AWARD SCHEME On 16 October 2008, the Company adopted the share award scheme (the Share Award Scheme ) in which elected employees of the Group, including without limitation any Executive and Non-executive Director, officer, agent or consultant (with payroll) of the Group, are entitled to participate in the Share Award Scheme pursuant to the rules of the Share Award Scheme. The purposes and objectives of the Share Award Scheme are to recognise the contributions by certain employees and to provide them with incentives in order to retain them for the continual operation and development of the Group and to attract suitable personnel for further development of the Group. Subject to any early termination as may be determined by the Board, the Share Award Scheme shall be valid and effective for a term of 10 years commencing on the adoption date. The maximum number of shares which may be awarded to a selected employee under the Share Award Scheme shall not exceed 1% of the issued share capital of the Company as at the adoption date. The nominal value of the shares awarded by the Board under the Share Award Scheme shall not exceed 5% of the issued share capital of the Company as at the adoption date. 1% 5% During the six months ended 30 September 2016, no share was purchased for the Share Award Scheme. Details of the awarded shares granted by the Company pursuant to the Share Award Scheme and outstanding at 30 September 2016 are as below: Grant date Fair value per share Vesting date Number of awarded shares As at 1 April 2016 Granted Vested Forfeited As at 30 September /10/2015 HK$ /8/ ,000 (30,000) Tou Rong Chang Fu Group Limited Interim Report

51 Corporate Governance and Other Information SUBSTANTIAL SHAREHOLDERS INTERESTS At 30 September 2016, the interests of the shareholders, not being a director or chief executive of the Company, in the shares and underlying shares of the Company as recorded in the register required to be kept under Section 336 of the SFO were as follows: 336 Name of Substantial Shareholders Capacity Nature of Interests Number of Shares Equity Derivative Total Interest Total % of Issued Shares Hangzhou Tou Rong Chang Fu Financial Interest of Controlled Corporate Interest 2,000,000,000 2,000,000, % Services Group Limited Corporation (Notes 1&2) 1 2 Tou Rong Chang Fu (HK) Holding Beneficial owner Corporate Interest 2,000,000,000 2,000,000, % Co., Limited (Notes 1&2) 1 2 Notes: 1. The issued share capital of Tou Rong Chang Fu (HK) Holding Co., Limited is owned as to 100% by Hangzhou Tou Rong Chang Fu Financial Services Group Limited, a company established in the PRC with limited liability, which in turn is owned as to 90% by Mr. Li Zhenjun % 90% 2. All interests in the shares of the Company are long position. 2. Save as disclosed above, there was no person known to the directors of the Company, other than a director of the Company, who as at 30 September 2016 had an interest or short position in the shares or underlying shares of the Company as recorded in the register kept under section 336 of the SFO. DIRECTORS INTEREST IN COMPETING BUSINESS 336 None of the Directors has an interest in a business which competes or may compete with the business of the Group. MANAGEMENT CONTRACTS No contracts concerning the management and administration of the whole or any substantial part of the business of the Group were entered into or existed during the six months ended 30 September Tou Rong Chang Fu Group Limited Interim Report

52 Corporate Governance and Other Information PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES Neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company s listed securities during the six months ended 30 September CORPORATE GOVERNANCE The Group is committed to maintain good corporate governance standard and procedures. The Company has adopted the Corporate Governance Code (the Code ) as set out in Appendix 14 of the Listing Rules as the corporate governance codes of the Company. Throughout the six months ended 30 September 2016, the Company has complied with all the code provisions set out in the Code except for the following: Code Provision A.4.1 requires that non-executive directors should be appointed for a specific term, subject to re-election. A.4.1 The Non-executive Directors (including the Independent Non-executive Directors) of the Company are not appointed for specific terms but are subject to retirement by rotation and re-election at the annual general meeting of the Company in accordance with the Company s Articles of Association. AUDIT COMMITTEE The Audit Committee comprises Mr. Chan Shu Kin, Mr. Cheung Kwan Hung and Mr. Chiu Wai Piu, the Independent Non-executive Directors of the Company. The objectives of the Audit Committee are to review and oversee the Group s financial reporting and internal control systems. During the period under review, the Audit Committee has reviewed with the management the accounting principles and practices adopted by the Group and discussed internal controls, risk management and financial matters including the review of the unaudited interim report of the Group for the six months ended 30 September Tou Rong Chang Fu Group Limited Interim Report