CORPORATE INFORMATION BOARD OF DIRECTORS Executive Directors Mr. NGAI Chun Hung (Chairman) Mr. YAU Kwok Fai (Deputy Chairman and Chief Executive Offic

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1 Interim Report 中期業績報告

2 CORPORATE INFORMATION BOARD OF DIRECTORS Executive Directors Mr. NGAI Chun Hung (Chairman) Mr. YAU Kwok Fai (Deputy Chairman and Chief Executive Officer) Independent Non-Executive Directors Professor KO Jan Ming The Hon. IP Kwok Him, GBS, JP Mr. FUNG Pui Cheung, Eugene BOARD COMMITTEES Audit Committee Mr. FUNG Pui Cheung, Eugene (Chairman) Professor KO Jan Ming The Hon. IP Kwok Him, GBS, JP Remuneration Committee Professor KO Jan Ming (Chairman) The Hon. IP Kwok Him, GBS, JP Mr. FUNG Pui Cheung, Eugene Mr. YAU Kwok Fai Nomination Committee Mr. NGAI Chun Hung (Chairman) Professor KO Jan Ming The Hon. IP Kwok Him, GBS, JP Mr. FUNG Pui Cheung, Eugene COMPANY SECRETARY Ms. TSANG Hau Lam, FCCA, CPA AUDITORS Ernst & Young Certified Public Accountants REGISTERED OFFICE Clarendon House, 2 Church Street Hamilton HM 11, Bermuda Clarendon House, 2 Church Street Hamilton HM 11, HEAD OFFICE AND PRINCIPAL PLACE OF BUSINESS No. 155 Waterloo Road, Kowloon Tong Kowloon, Hong Kong 155 Interim Report 中期業績報告 1

3 CORPORATE INFORMATION (continued) SHARE REGISTRAR AND TRANSFER OFFICE Principal Share Registrar and Transfer Office in Bermuda Codan Services Limited Clarendon House, 2 Church Street Hamilton HM 11, Bermuda Codan Services Limited Clarendon House, 2 Church Street Hamilton HM 11, Hong Kong Branch Share Registrar and Transfer Office Tricor Tengis Limited Level 22, Hopewell Centre 183 Queen s Road East Hong Kong SHARE INFORMATION Ordinary share listing Place of listing Main Board of The Stock Exchange of Hong Kong Limited Stock code Board lot size 2,000 shares ,000 WEBSITES Interim Report 中期業績報告

4 The board (the Board ) of directors (the Directors ) of Vantage International (Holdings) Limited (the Company ) presents the unaudited condensed consolidated interim financial information of the Company and its subsidiaries (collectively, the Group ) for the six months ended 30 September 2015 ( this period ) together with comparative figures for the corresponding period in the previous year. The condensed consolidated interim financial information has not been audited, but has been reviewed by the Company s audit committee. CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND COMPREHENSIVE INCOME Six months ended 30 September 2015 Unaudited Six months ended 30 September Notes REVENUE 6 1,724,880 1,110,684 Contract costs (1,624,994) (1,009,092) Property expenses (785) (350) Gross profit 99, ,242 Other income and gains 6 299,317 1,133 Administrative expenses (43,870) (46,022) Finance costs (8,215) (6,804) Share of profits and losses of joint ventures 10,484 9,699 PROFIT BEFORE TAX 7 356,817 59,248 Income tax expense 8 (8,651) (8,878) PROFIT AND TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 348,166 50,370 Profit and total comprehensive income attributable to: Owners of the parent 348,102 47,347 Non-controlling interests 64 3, ,166 50,370 EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT 10 Basic (HK cents) Diluted (HK cents) Interim Report 中期業績報告 3

5 CONSOLIDATED STATEMENT OF FINANCIAL POSITION 30 September 2015 Unaudited Audited 30 September 31 March Notes NON-CURRENT ASSETS Property, plant and equipment , ,825 Properties held for development , ,257 Investment properties 11, , ,200 Investments in joint ventures 148, ,418 Deferred tax assets 4,715 4,260 Total non-current assets 1,942,830 1,941,960 CURRENT ASSETS Gross amount due from customers for contract works 12, ,286 Properties under development , ,282 Accounts receivable , ,770 Dividends receivable from a joint venture 3,600 Prepayments, deposits and other receivables 12,370 43,660 Amount due from a joint venture 6 6 Tax recoverable 1,991 6,940 Cash and cash equivalents 960, ,433 Total current assets 2,075,228 1,752,377 CURRENT LIABILITIES Accounts and bills payable , ,385 Accruals of costs for contract works 284, ,359 Tax payable 12,513 4,079 Other payables and accruals 24,982 20,586 Due to a joint venture 33,800 26,270 Interest-bearing bank loans , ,107 Total current liabilities 1,654,547 1,532,786 NET CURRENT ASSETS 420, ,591 TOTAL ASSETS LESS CURRENT LIABILITIES 2,363,511 2,161,551 4 Interim Report 中期業績報告

6 CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued) 30 September 2015 Unaudited Audited 30 September 31 March Notes NON-CURRENT LIABILITIES Interest-bearing bank loans 15 20,529 23,329 Deferred tax liabilities 4,666 4,524 Total non-current liabilities 25,195 27,853 Net assets 2,338,316 2,133,698 EQUITY Equity attributable to owners of the parent Issued capital 16 43,667 43,667 Reserves 2,294,649 2,033,499 2,338,316 2,077,166 Non-controlling interest 56,532 Total equity 2,338,316 2,133,698 Interim Report 中期業績報告 5

7 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Six months ended 30 September 2015 Attributable to owners of the parent Share Share Property Non- Issued premium Capital Contributed Other option revaluation Retained controlling Total Capital account reserve surplus reserves reserve reserve profits Total interests Equity At 1 April , ,983* 746* 11,421* 19,526* * 204,197* 1,464,626* 2,077,166 56,532 2,133,698 Profit and total comprehensive income for the period 348, , ,166 Disposal of subsidiaries (note 22) 22 (746) 746 (56,596) (56,596) 2015 final dividend (note 9) 9 (87,333) (87,333) (87,333) Equity settled share option arrangements (note 17) At 30 September , ,983* * 11,421* 19,526* 381* 204,197* 1,726,141* 2,338,316 2,338,316 At 1 April , , , ,197 1,347,593 1,940,607 52,564 1,993,171 Profit and total comprehensive income for the period 47,347 47,347 3,023 50, final dividend (note 9) 9 (17,467) (17,467) (17,467) At 30 September , , , ,197 1,377,473 1,970,487 55,587 2,026,074 * These reserve accounts comprise the consolidated reserves of HK$2,294,649,000 (31 March 2015: HK$2,033,499,000) in the consolidated statement of financial position. * 2,294,649,000 2,033,499,000 6 Interim Report 中期業績報告

8 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS Six months ended 30 September 2015 Unaudited Six months ended 30 September Notes Net cash flows from/(used in) operating activities 26,000 (222,979) Cash Flows from Investment Activities Additions of items of property, plant and equipment (54) (2,186) Net proceeds from disposal of items of property, plant and equipment 15 Net proceeds from the Excel Disposal 22(a) 382,553 Net proceeds from the Top Top Integration Integration Disposal 22(b) 96 Other cash flows used in investment activities, net (2,798) Net cash flows from/(used) in investing activities 382,595 (4,969) Cash Flows from Financing Activities Dividend paid 9 (87,333) (17,467) New bank loans 372, ,765 Repayment of bank loans (302,240) (106,767) Net cash flows from/(used in) financing activities (16,860) 59,531 Net increase/(decrease) in cash and cash equivalents 391,735 (168,417) Cash and cash equivalents at beginning of period 568, ,477 Cash and cash equivalents at end of period 960, ,060 Analysis of cash and cash equivalents: Cash and bank balances 428, ,944 Non-pledged time deposits with original maturity of less than three months when acquired 531,574 10,116 Cash and cash equivalents on the consolidated statement of cash flows 960, ,060 Interim Report 中期業績報告 7

9 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION Six months ended 30 September CORPORATE INFORMATION The Company is a limited liability company incorporated in Bermuda and whose shares are publicly traded on The Stock Exchange of Hong Kong Limited (the Stock Exchange ). The registered office of the Company is located at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda. The principal place of business of the Company is located at No. 155 Waterloo Road, Kowloon Tong, Kowloon, Hong Kong. The principal activities of the Group are described in note 5 to the unaudited condensed consolidated interim financial information. 1. Clarendon House, 2 ChurchStreet, Hamilton HM In the opinion of the Directors, the parent and the ultimate holding company of the Company is Winhale Ltd., which is incorporated in the British Virgin Islands. Winhale Ltd. 2. BASIS OF PREPARATION This unaudited condensed consolidated interim financial information for the six months ended 30 September 2015 has 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 the applicable disclosure requirements set out in Appendix 16 of the Rules Governing the Listing of Securities (the Listing Rules ) on The Stock Exchange The accounting policies and basis of preparation adopted in the preparation of this unaudited condensed consolidated interim financial information are consistent with those set out in the Group s audited consolidated financial statements for the year ended 31 March 2015, except as stated in note 3 below. These financial information are presented in Hong Kong dollars ( HK$ ), which is the Company s functional and presentation currency, and all values are rounded to the nearest thousand except when otherwise indicated. 3 This unaudited condensed consolidated interim financial information do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group s audited consolidated financial statements for the year ended 31 March This condensed consolidated interim financial information has not been audited or reviewed by the Company s external auditors, but has been reviewed by the Company s audit committee (the Audit Committee ). 8 Interim Report 中期業績報告

10 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION (continued) Six months ended 30 September PRINCIPAL ACCOUNTING POLICIES In this period, the Group has adopted, for the first time, the following new and revised Hong Kong Financial Reporting Standards ( HKFRSs, which also include HKASs and Interpretations) issued by the HKICPA: 3. Amendments to HKAS 19 Annual Improvements Cycle Annual Improvements Cycle Defined Benefit Plans: Employee Contributions Amendments to a number of HKFRSs Amendments to a number of HKFRSs 19 The adoption of the above new and revised HKFRSs has had no significant impact on the accounting policies of the Group and the methods of computation in the Group s unaudited condensed consolidated interim financial information. The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective. 4. ESTIMATES The preparation of this unaudited condensed consolidated interim financial information requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. 4. In preparing this unaudited 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 applied to the audited consolidated financial statements of the Group as at and for the year ended 31 March SEGMENT INFORMATION The Group is principally engaged in the businesses of building construction, building maintenance, civil engineering, and other contract works, as well as property investment and development businesses in Hong Kong. For management purposes, the Group is organised into business units based on their products and services and has two reportable operating segments as follows: 5. (a) the contract works segment engages in contract works as a main contractor or subcontractor, primarily in respect of building construction, renovation, repairs and maintenance and civil engineering works; (a) (b) the property investment and development segment engages in investment in retail, commercial and residential premises for their rental income potential and the development of properties. (b) Interim Report 中期業績報告 9

11 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION (continued) Six months ended 30 September SEGMENT INFORMATION (continued) The management monitors the results of the Group s operating segments separately for the purpose of making decisions about resources allocation and performance assessment. Segment performance is evaluated based on reportable segment profit, which is a measure of adjusted profit before tax from continuing operations. The adjusted profit before tax is measured consistently with the Group s profit before tax except that interest income, finance costs, share of profits and losses of joint ventures as well as head office and corporate expenses are excluded from such measurement. 5. Inter-segment sales and transfers are transacted with reference to the selling prices used for sales made to third parties at the then prevailing market prices. Unaudited Six months ended 30 September Property investment Contract works and development Eliminations Consolidated Segment revenue: Sales to external customers 1,711,126 1,102,976 13,754 7,708 1,724,880 1,110,684 Inter-segment sales 29,229 12,294 2,733 2,490 (31,962) (14,784) Total 1,740,355 1,115,270 16,487 10,198 (31,962) (14,784) 1,724,880 1,110,684 Segment results 86,132 93,884 15,593 9,601 (2,624) (2,243) 99, ,242 Interest and unallocated income and gains 299,317 1,133 Unallocated expenses (43,870) (46,022) Finance costs (8,215) (6,804) Share of profits and losses of joint ventures 10,484 9,699 10,484 9,699 Profit before tax 356,817 59,248 Income tax expense (8,651) (8,878) Profit for the period 348,166 50, Interim Report 中期業績報告

12 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION (continued) Six months ended 30 September REVENUE, OTHER INCOME AND GAINS 6. Unaudited Six months ended 30 September Revenue Contract revenue 1,711,126 1,102,976 Gross rental income 13,754 7,708 1,724,880 1,110,684 Other income and gains Interest income 6, Consultancy fee income Rental income for machinery and equipment 1,400 Gain on disposal of items of property, plant and equipment 15 Gain on the Excel Disposal, net (note 22 (a)) 22(a) 291,457 Gain on the Top Integration Top Integration Disposal, net (note 22 (b)) 22(b) 85 Sundry income ,317 1, PROFIT BEFORE TAX The Group s profit before tax has been arrived at after charging: 7. Unaudited Six months ended 30 September Depreciation (note 11) 11 3,846 3,546 Employee benefits expenses (exclusive of directors remuneration) 57,073 67,908 Directors remuneration 24,894 19,463 Interim Report 中期業績報告 11

13 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION (continued) Six months ended 30 September INCOME TAX EXPENSE 8. Unaudited Six months ended 30 September Current Hong Kong: Charge for the period 8,956 8,897 Deferred (305) (19) Total tax charge for the period 8,651 8,878 Hong Kong profits tax has been provided at the rate of 16.5% (six months ended 30 September 2014: 16.5%) on the estimated assessable profits arising in Hong Kong during this period. 16.5% 16.5% The Group s share of tax attributable to joint ventures amounting to HK$2,880,000 (six months ended 30 September 2014: HK$2,691,000) for this period has been included in Share of profits and losses of joint ventures on the face of the consolidated statement of profit or loss and other comprehensive income. 2,880,000 2,691, DIVIDEND During the six months ended 30 September 2015, the Company declared and paid a final dividend of HK$0.05 per share for the year ended 31 March 2015, amounting to a total of HK$87,333,000 (six months ended 30 September 2014: HK$0.01 per share, a total of HK$17,467,000) ,333, ,467,000 The Directors do not recommend the payment of an interim dividend for the six months ended 30 September 2015 (six months ended 30 September 2014: Nil). 12 Interim Report 中期業績報告

14 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION (continued) Six months ended 30 September EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT The calculation of basic and diluted earnings per share is based on the following data: 10. Unaudited Six months ended 30 September Earnings Profit attributable to equity holders of the parent, used in the basic and diluted earnings per share calculation 348,102 47,347 Unaudited Number of Shares Shares Weighted average number of ordinary shares in issue during the period, used in the basic earnings per share calculation 1,746,664,400 1,746,664,400 Weighted average number of ordinary shares deemed to be issued for no consideration on assumed exercise of dilutive share options 270,182 Weighted average number of ordinary shares in issue during the period, used in the diluted earnings per share calculation 1,746,934,582 1,746,664,400 No adjustment has been made to the basic earnings per share presented for the six months ended 30 September 2014 in respect of a dilution as the Group had no potentially dilutive ordinary shares in issue during the relevant period. Interim Report 中期業績報告 13

15 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION (continued) Six months ended 30 September MOVEMENTS IN PROPERTY, PLANT AND EQUIPMENT, PROPERTIES HELD FOR DEVELOPMENT, INVESTMENT PROPERTIES AND PROPERTIES UNDER DEVELOPMENT 11. Unaudited Property, Properties Properties plant and held for Investment under equipment development properties development Net carrying amount at 1 April , , , ,282 Additions ,055 Depreciation (note 7) 7 (3,846) The Excel Disposal (note 22(a)) 22(a) (2,097) (800) Disposal Net carrying amount at 30 September , , , ,337 Net carrying amount at 1 April , , , ,791 Additions 2, ,798 29,275 Depreciation (note 7) 7 (3,546) Disposal Net carrying amount at 30 September , , , , INVESTMENT PROPERTIES The carrying amount of the Group s investment properties as of 31 March 2015 was stated based on the valuation of DTZ Debenham Tie Leung Limited, independent professionally qualified valuer, on market value, existing use basis. The Directors have estimated that the fair values of the investment properties as of 30 September 2015 did not vary significantly from the professional valuation as of 31 March Accordingly, no fair value adjustment has been recognised in respect of the Group s investment properties for the six months ended 30 September 2015 (six months ended 30 September 2014: Nil) Interim Report 中期業績報告

16 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION (continued) Six months ended 30 September ACCOUNTS RECEIVABLE Accounts receivable consist of receivables for contract works and rentals under operating leases. The payment terms of contract works receivables are stipulated in the relevant contracts. Rentals are normally receivable in advance. 13. At 30 September 2015, retentions receivable included in accounts receivable amounted to HK$170,927,000 (31 March 2015: HK$247,691,000), which are repayable within terms ranging from two to three years. 170,927, ,691,000 The Group assigned its financial benefits under certain contract works to secure certain general banking facilities granted to the Group (note 15). At 30 September 2015, the aggregate amount of accounts receivable related to such contract works pledged to secure the relevant banking facilities amounted to approximately HK$261,706,000 (31 March 2015: HK$249,709,000) ,706, ,709,000 The aged analysis of the accounts receivable that are not individually nor collectively considered to be impaired is as follows: Unaudited Audited 30 September 31 March Past due but not impaired: One to three months past due 303,138 8,330 Four to six months past due 4,267 Over six months past due 4,058 8, ,196 20,859 Neither past due nor impaired 192, , , ,770 Accounts receivable that were past due but not impaired relate to a number of independent customers that have a good track record with the Group. Based on past experience, the directors of the Company are of the opinion that no allowance for impairment is necessary in respect of these balances as there has not been a significant change in credit quality and the balances are still considered fully recoverable. The Group did not hold any collateral or other credit enhancements over these balances. Accounts receivable that are neither past due nor impaired relate to a number of independent customers for whom there was no recent history of default. Interim Report 中期業績報告 15

17 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION (continued) Six months ended 30 September ACCOUNTS AND BILLS PAYABLE An ageing analysis of the accounts and bills payable as at the end of the reporting period is as follows: 14. Unaudited Audited 30 September 31 March Current to three months 215, ,082 Four to six months 23,601 22,625 Over six months 132, , , ,385 At 30 September 2015, retentions payable included in accounts and bills payable amounted to HK$154,877,000 (31 March 2015: HK$133,280,000), which are normally settled within terms ranging from two to three years. 154,877, ,280,000 At 30 September 2015, included in accounts and bills payable were amounts of total HK$10,495,000 (31 March 2015: HK$11,103,000) due to joint ventures which are non-interest-bearing and are normally settled within one year. 10,495,000 11,103,000 Accounts and bills payable are non-interest-bearing. The payment terms are stipulated in the relevant contracts. 16 Interim Report 中期業績報告

18 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION (continued) Six months ended 30 September INTEREST-BEARING BANK LOANS 15. Unaudited Audited 30 September 31 March Current Bank loans secured and at floating interest rates 420, ,955 Long term bank loans repayable on demand secured and at floating interest rates (note) 506, , , ,107 Non-current Bank loans secured and at floating interest rates 20,529 23, , ,436 Analysed into: Bank loans repayable: Within one year or on demand (note) 927, ,107 In the second year 5,600 5,600 In the third to fifth years, inclusive 14,929 16,802 Beyond five years , ,436 Interim Report 中期業績報告 17

19 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION (continued) Six months ended 30 September INTEREST-BEARING BANK LOANS (continued) Note: At 30 September 2015, the Group s term loans with an aggregate amount of HK$506,570,000 (31 March 2015: HK$$480,152,000) containing an on-demand clause have been classified as current liabilities. For the purpose of the above analysis, the loans are included within current interest-bearing bank loans and analysed into bank loans repayable within one year or on demand ,570, ,152,000 Based on the maturity terms of the loans, the amounts repayable in respect of the loans are: Unaudited Audited 30 September 31 March Within one year or on demand 420, ,955 In the second year 235, ,118 In the third to fifth years, inclusive 183, ,314 Beyond five years 107, , , ,436 The Group s bank loans are denominated in Hong Kong dollars. 18 Interim Report 中期業績報告

20 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION (continued) Six months ended 30 September SHARE CAPITAL Shares 16. Unaudited Audited 30 September 31 March Authorised: 4,000,000,000 (31 March 2015: 4,000,000,000) 4,000,000,000 ordinary shares of HK$0.025 each 4,000,000, , ,000 Issued and fully paid: 1,746,664,400 (31 March 2015: 1,746,664,400) 1,746,664,400 ordinary shares of HK$0.025 each 1,746,664, ,667 43,667 Share options Details of the Company s share option schemes are included in note 17 to the unaudited condensed consolidated interim financial information SHARE OPTION SCHEME Pursuant to an ordinary resolution passed on 7 September 2011, the shareholders of the Company approved the termination of the share option scheme approved in 2002 and the adoption of a new share option scheme (the 2011 Scheme ). Unless otherwise terminated or amended, the 2011 Scheme will remain in force for ten years from the date of adoption. 17. The purpose of the 2011 Scheme is to provide incentives and rewards to eligible participants who contribute to the success of the Group s operations. Eligible participants of the 2011 Scheme include full-time employees, including any executive and non-executive directors of the Group. The maximum number of share options currently permitted to be granted under the 2011 Scheme is an amount equivalent, upon their exercise, to 10% of the total number of shares of the Company in issue as at the date when the 2011 Scheme was approved by the shareholders of the Company in a general meeting. The maximum number of shares issuable under share options to each eligible participant in the 2011 Scheme within any 12-month period is limited to 1% of the shares of the Company in issue at any time. Any further grant of share options in excess of this limit is subject to shareholders approval in a general meeting. 10% 1% Interim Report 中期業績報告 19

21 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION (continued) Six months ended 30 September SHARE OPTION SCHEME (continued) Share options granted to a director, chief executive officer or substantial shareholder of the Company, or to any of their associates, are subject to approval in advance by the independent non-executive directors. In addition, any share options granted to a substantial shareholder or an independent non-executive director of the Company, or to any of their associates, in excess of 0.1% of the shares of the Company in issue at any time and with an aggregate value (based on the price of the Company s shares at the date of grant) in excess of HK$5 million, within any 12-month period, are subject to shareholders approval in advance in a general meeting % 5 The offer of a grant of share options may be accepted within 14 days from the date of the offer, upon payment of a nominal consideration of HK$1 in total by the grantee. The exercise period of the share options granted is determinable by the Directors and ends on a date which is not later than 10 years from the date of the offer of the share options. Share options do not confer rights on the holders to dividends or to vote at shareholders meetings. 1 The exercise price of the share options is determinable by the Directors, but should not be less than the highest of (i) the closing price of the shares of the Company as stated in The Stock Exchange daily quotations sheet on the date of grant of the share options; (ii) the average closing price of the shares of the Company as stated in The Stock Exchange for the five trading days immediately preceding the date of the offer; and (iii) the nominal value of the shares of the Company. (i) (ii) (iii) On 10 September 2015, 25,620,000 share options were granted to employees (including directors) of the Group under the 2011 Scheme. The exercise price of the share options of HK$0.526 per share was equal to the highest of (i) the closing price of HK$0.500 per share as quoted in The Stock Exchange s daily quotations sheet on the date of grant; (ii) the average closing price of HK$0.526 per share as quoted in The Stock Exchange s daily quotations sheets for the five trading days immediately preceding the date of grant; and (iii) the nominal value of HK$0.025 per share. The share options are exercisable for a period commencing from 10 March 2016 and expiring on 9 September 2020 (both days inclusive). There is no cash settlement of the share options. 25,620, (i) 0.500(ii) (iii) Interim Report 中期業績報告

22 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION (continued) Six months ended 30 September SHARE OPTION SCHEME (continued) The following share options were outstanding under the 2011 Scheme during the period: 17. Number of share options Closing price of shares Grant At Exercise Exercise immediately At 1 April during the 30 September Vesting period of price of before the Grantee 2015 period 2015 period share options share options date of grant HK$ per share HK$ per share (note) Directors 16,500 16,500 10/09/2015 to 10/03/2016 to /03/ /09/2020 Other employees 9,120 9,120 10/09/ /03/ /03/ /09/2020 In aggregate 25,620 25,620 Note: The exercise price of the share options is subject to adjustment in the cases of rights or bonus issues, or other similar changes in the Company s share capital. The fair value of equity-settled share options granted during this period was estimated as at the date of grant using a binomial pricing model, taking into account the terms and conditions upon which the options were granted and the following table lists the major inputs used: Expected dividend yield (% per annum) 6.00 Expected volatility (% per annum) Risk-free rate (% per annum) 0.97 % 6.00 % % 0.97 For the six months ended 30 September 2015, the Group recognised HK$381,000 share-based payment expense for the share options granted in the statement of profit or loss (six months ended 30 September 2014: Nil). 381,000 At the end of the reporting period, the Company had 25,620,000 share options outstanding under the 2011 Scheme, which represented approximately 1.47% of the Company s shares in issues as at that date (31 March 2015: Nil). The exercise in full of the outstanding share options would, under the present capital structure of the Company, result in the issue of 25,620,000 additional ordinary shares of the Company and additional share capital of HK$640,500 and share premium of HK$12,836,000 (before issue expenses). 25,620, % 25,620, ,500 12,836,000 Interim Report 中期業績報告 21

23 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION (continued) Six months ended 30 September RELATED PARTY TRANSACTIONS (a) Related party transactions In addition to the transactions and balances detailed elsewhere in this unaudited condensed consolidated interim financial information, the Group had the following transactions with related parties during the period: 18. (a) Unaudited Six months ended 30 September Notes Rental income from Lanon Development Limited ( Lanon Development ) (i) 1,044 1,044 Subcontracting fee expenses paid and payable to Able E & M Engineering Company Limited and Fungs E & M Engineering Company Limited, both being joint ventures of the Group (ii) 38,215 55,544 Notes: (i) Mr. NGAI Wing Yin, the son of Mr. NGAI Chun Hung ( Mr. NGAI, chairman of the Board and the controlling shareholder of the Company), has a controlling interest in Lanon Development. The rental income was determined at a rate mutually agreed between the Group and Lanon Development by reference to the prevailing market rate. (i) (ii) The subcontracting fee expense is determined in accordance with the subcontracting agreement entered into between the Group and the joint ventures. (ii) 22 Interim Report 中期業績報告

24 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION (continued) Six months ended 30 September RELATED PARTY TRANSACTIONS (continued) (b) Compensation of key management personnel 18. (b) Unaudited Six months ended 30 September Short-term employee benefits 28,058 26,840 Post-employment benefits Share-based payments 257 Total compensation paid to key management personnel 28,389 26, CONTINGENT LIABILITIES (a) At 30 September 2015, the guarantees given by the Group to certain banks in respect of performance bonds in favour of certain contract customers amounted to HK$225,626,000 (31 March 2015: HK$248,281,000). 19. (a) 225,626, ,281,000 At 30 September 2015, the Company has given guarantees in favour of certain banks to the extent of HK$2,786,127,000 (31 March 2015: HK$2,882,393,000) in respect of banking facilities granted by those banks to certain subsidiaries of the Company, of which HK$1,173,203,000 (31 March 2015: HK$1,104,062,000) was utilised. 2,786,127,000 2,882,393,000 1,173,203,000 1,104,062,000 (b) In the ordinary course of the Group s construction business, the Group has been subject to a number of claims due to personal injuries suffered by employees of the Group or the Group s subcontractors in accidents arising out of and in the course of their employment. The Directors are of the opinion that such claims are well covered by insurance and would not result in any material adverse impact on the financial position or results and operations of the Group. (b) Interim Report 中期業績報告 23

25 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION (continued) Six months ended 30 September CAPITAL COMMITMENTS The Group had the following capital commitments at the end of the reporting period: 20. Unaudited Audited 30 September 31 March Expenditure for development or redevelopment projects, contracted, but not provided for, in respect of: Properties held for development 6,892 6,892 Properties under development 77,793 18,931 84,685 25, FINANCIAL RISK MANAGEMENT AND FAIR VALUE MEASUREMENT (a) Financial risk management The Group s financial risk management objectives and policies are the same as those disclosed in the Group s annual consolidated financial statements for the year ended 31 March (a) (b) Fair value measurement The management has assessed that the fair values of cash and cash equivalents, accounts receivables, deposits and other receivables, dividends receivable, accounts and bills payable, other payables and accruals, amount due to a joint venture and current portion of interest-bearing bank loans approximate to their carrying amounts largely due to the short term maturities of these instruments. (b) The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. 22. DISPOSAL OF SUBSIDIARIES (a) The Excel Disposal On 5 June 2015, the Group had entered into a sale and purchase agreement (the Excel S&P Agreement ) with an independent third party for the disposal of 150,000,000 shares of Excel Development (Holdings) Limited ( Excel Development, the issued shares of which are listed on the Main Board of The Stock Exchange (stock code: 1372)) held by the Group, representing 75.0% of the entire issued share capital of Excel Development as at the date of the Excel S&P Agreement, at a consideration of HK$485,010,000 (the Excel Disposal ). There is no condition precedent to the Excel S&P Agreement. Completion of the Excel Disposal took place on the date of the Excel S&P Agreement. 22. (a) 150,000, ) 75.0% 485,010, Interim Report 中期業績報告

26 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION (continued) Six months ended 30 September DISPOSAL OF SUBSIDIARIES (continued) (a) The Excel Disposal (continued) Based on the unaudited financial information of Excel Development and its subsidiaries (the Excel Group ) as of the date of completion of the Excel Disposal, the Group recognized an unaudited gain of HK$291,457,000 (after deducting all transaction costs) from the Excel Disposal. 22. (a) 291,457,000 (b) The Top Integration Disposal On 3 June 2015, the Group had entered into a sale and purchase agreement (the Top Integration S&P Agreement ) with an independent third party for the disposal of its entire interest in Top Integration Limited (a then subsidiary of the Group which held 100% interest in Gadelly Construction Company Limited as at the date of the Top Integration S&P Agreement), at a consideration of HK$8,919,000 (the Top Integration Disposal ). There is no condition precedent to the Top Integration S&P Agreement. Completion took place on the date of the Top Integration S&P Agreement. (b) Top Integration Top Integration Top Integration Limited Top Integration Top Integration 8,919,000 Top Integration Top Integration Top Integration Top Integration Based on the unaudited financial information of Top Integration and its subsidiaries (the Top Integration Group ) as of the date of completion of the Top Integration Disposal, the Group recognized an unaudited gain of HK$85,000 from the Top Integration Disposal. Top Integration Top Integration Top Integration Top Integration 85, EVENTS AFTER THE REPORTING PERIOD On 5 November 2015, the Company and Nga Chun Holdings Company Limited ( Nga Chun, stock code: 1462) jointly announced that Team Great Limited ( Team Great, a joint venture of the Group), a company directly interested in 300,000,000 shares of Nga Chun, representing 75.0% of the entire issued share capital of Nga Chun, had been approached by certain independent third party(ies) as potential purchaser(s) (the Potential Purchaser(s) ) of a possible acquisition of all or part of Team Great s shares in Nga Chun (the Possible Transaction ). As at the date of this report, Team Great is in preliminary discussion with the Potential Purchaser(s) regarding the Possible Transaction and no offer or commitment or definitive terms have yet been reached. The Possible Transaction may or may not proceed. 24. APPROVAL OF THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION This unaudited condensed consolidated interim financial information was approved and authorised for issue by the Board on 26 November Team Great Limited Team Great 300,000, % Team Great Team Great 24. Interim Report 中期業績報告 25

27 MANAGEMENT DISCUSSION AND ANALYSIS RESULTS FOR THE INTERIM PERIOD The Directors report that during the six months ended 30 September 2015 ( this period ), the Group recorded a consolidated turnover of HK$1,724,880,000, representing an increase of 55.3% from HK$1,110,684,000 of the previous corresponding period. The Group s gross profit during this period was HK$99,101,000, representing a slightly drop of 2.1% from HK$101,242,000 for the six months ended 30 September Profit attributable to owners of the parent of this period amounted to HK$348,102,000 (six months ended 30 September 2014: HK$47,347,000). The increase in profit for this period was mainly attributable to the one-off net gain of HK$291,457,000 on the Excel Disposal. 1,724,880,000 1,110,684, % 99,101, ,242, % 348,102,000 47,347, ,457,000 DIVIDEND At the Company s annual general meeting held on 27 August 2015, shareholders approved the payment of a final dividend of HK5 Cents per share, which amounted to a total of HK$87,333,000, for the year ended 31 March The dividend was paid on 21 September ,333,000 The Directors do not recommend the payment of an interim dividend for the six months ended 30 September 2015 (six months ended 30 September 2014: Nil). BUSINESS REVIEW Contract Works The Group s contract works segment recorded a turnover of HK$1,711,126,000 for this period, representing an increase of 55.1% from HK$1,102,976,000 for the six month ended 30 September The increase in turnover was mainly resulted from a substantial building construction project which contributed over 50.0% of the Group s contract works revenue in this period. The project is expected to be completed in the year 2015/16. On the other hand, due to the Excel Disposal, the Group ceased its business in civil engineering works that the contract works revenue from civil engineering works recorded a drop in this period. The gross profit margin of contract works segment decreased from approximately 8.5% for the six months ended 30 September 2014 to approximately 5.0% for this period. The decrease was mainly due to the combined effect of a drop in % contribution from civil engineering works, which have a relatively higher gross margin than building construction projects in prior years, to the Group s revenue in current period, the increase in construction costs, the higher than expected cost incurred for previously completed projects, and the immature development of some projects of which project revenue and cost cannot be reliably estimated thus profit was not recognised for these projects according to the Group s accounting policy. 1,711,126,000 1,102,976, % 50.0% 2015/16 8.5% 5.0% 26 Interim Report 中期業績報告

28 MANAGEMENT DISCUSSION AND ANALYSIS (continued) BUSINESS REVIEW (continued) Contract Works (continued) As of 30 September 2015, the estimated total contract values and estimated total outstanding values of the Group s substantial contracts on hand were approximately HK$6,226 million and HK$2,371 million, respectively. These contracts will be completed in around one to three years time Since 1 April 2015 and up to the date of this report, the Group secured the following two substantial contracts, which have an aggregate estimated contract value of approximately HK$2,475 million: Construction of Public Housing Development at Tung Chung Area 39; 39 Redecoration and Laundry Racks Installations at Wan Tsui Estate. Property Investment and Development During this period, the Group recorded a gross rental income of HK$13,754,000 from its properties, representing a 78.4% increase from HK$7,708,000 for the previous corresponding period. During this period, approximately 60.0% of the Group s rental income arose from the leasing of retail shops units. The increase in rental income for the period under review was primarily due to the combined effect of the renewal of the tenancy agreement for the investment properties at Fou Wah Centre in Tsuen Wan, income earned from A Hotel at No. 123 Tung Choi Street, Mongkok and the leasing of part of the Group s properties held for development before the respective redevelopment projects commenced. 13,754,0007,708, % 60.0% 123 A In current period, the Group s residential development project at Nos. 92A-E Pokfulam Road, Hong Kong has been substantial completed while the residential development project at No. 9 Belfran Road, Kowloon is still in the development stage. No income has been generated from the sale of properties in this period. 92A-E 9 Up to 30 September 2015, the development for the Group s properties held for development at No. 28 Lugard Road, The Peak, the properties at Nos. 1 & 1A of Wood Road, Wanchai and the properties at Kam Tin, Yuen Long have not yet been commenced A Interim Report 中期業績報告 27

29 MANAGEMENT DISCUSSION AND ANALYSIS (continued) BUSINESS REVIEW (continued) Other Income and Gains Other income and gains increased substantially from HK$1,133,000 for the six month ended 30 September 2014 to HK$299,317,000 for this period. The increase was mainly attributable to the Excel Disposal which contributed a net gain (after accounted for transaction costs) of HK$291,457,000 to the Group. Meanwhile, the Group also earned gross interest income of approximately HK$5,377,000 from a one-off lending transaction to an independent third party during the six months ended 30 September ,133, ,317, ,457,000 5,377,000 Administrative Expenses Administrative expenses decreased by HK$2,152,000 from HK$46,022,000 for the six month ended 30 September 2014 to HK$43,870,000 for the six months ended 30 September The lower expenses recorded in this period was mainly attributable to the disposal of interest in Excel Group on 5 June 2015 that the expenses of the Excel Group ceased to be consolidated into the Group s account after completion of the Excel Disposal. 46,022,000 2,152,000 43,870,000 Finance Costs For the six months ended 30 September 2015, the Group s finance costs recognised as expenses were HK$8,215,000 (six months ended 30 September 2014: HK$6,804,000) while the total interest on bank loans before interest capitalisation was HK$10,222,000 (six months ended 30 September 2014: HK$8,685,000). The increase in overall finance costs in current year was mainly attributable to the increase in bank loan balances during this period. 8,215,000 6,804,000 10,222,000 8,685,000 Share of Profits and Losses of Joint Ventures The amount of net profits shared from the Group s joint ventures for the six month ended 30 September 2015 were HK$10,484,000, slightly higher than the HK$9,699,000 of the corresponding period ended 30 September The increase was mainly resulted from the increase in profits shared from the Leighton-Able JV. 10,484,000 9,699,000 Income Tax Expense Income tax expense decreased by 2.6% from HK$8,878,000 for the six month ended 30 September 2014 to HK$8,651,000 for this period. 8,878, % 8,651,000 Profit Attributable to Owners of the Parent As a result of the foregoing, profit attributable to owners of the parent increased from HK$47,347,000 for the six months ended 30 September 2014 to HK$348,102,000 for this period. 47,347, ,102, Interim Report 中期業績報告

30 MANAGEMENT DISCUSSION AND ANALYSIS (continued) FINANCIAL REVIEW Liquidity and Financial Resources Due to the Group s net cash inflows generated from operating and investing activities during the period ended 30 September 2015, the Group s cash and cash equivalents as at 30 September 2015 amounted to HK$960,168,000, representing an increase by 68.9% from HK$568,433,000 as at 31 March Current ratio stood at 1.25 at 30 September 2015, while that as at 31 March 2015 was Current ratio is measured at total current assets divided by total current liabilities. Meanwhile, due to the significant increase in cash and cash equivalent balances at period end, the Group s net gearing ratio stood at -0.5% at 30 September 2015 (31 March 2015: 14.9%). Net gearing ratio is measured at net borrowing, which derived from total interest-bearing bank loans less cash and cash equivalents, divided by equity attributable to owners of the parent. 960,168, ,433, % % 14.9% Our banking facilities, comprising primarily bank loans, overdrafts and performance bond, amounted to HK$2,296,516,000 as of 30 September 2015 (31 March 2015: HK$2,532,460,000), of which HK$1,123,313,000 (31 March 2015: HK$1,405,743,000) was unutilised. 2,296,516,000 2,532,460,000 1,123,313,000 1,405,743,000 At 30 September 2015 and 31 March 2015, the Group s bank borrowings were all denominated in Hong Kong dollars and primarily on a floating rate basis. The Group does not engage in any interest rates and currency speculation activities. The Group s bank accounts are operated with principal bankers in Hong Kong. The interest rates of these bank accounts are determined by reference to the respective bank offer rates. The Group maintains sufficient working capital resources to execute its contract works and property investment and development plans and generally takes a prudent and cautious approach to cash application and its capital commitments. Interim Report 中期業績報告 29

31 MANAGEMENT DISCUSSION AND ANALYSIS (continued) FINANCIAL REVIEW (continued) Charges on Assets At 30 September 2015, the following assets of the Group were pledged in favour of certain banks to secure the banking facilities granted by those banks to the Group: investment properties with an aggregate carrying amount of HK$912,000,000 (31 March 2015: HK$912,000,000); land and buildings with an aggregate carrying amount of HK$133,601,000 (31 March 2015: HK$135,606,000); properties held for development with an aggregate carrying amounts of HK$728,477,000 (31 March 2015: HK$728,257,000); properties under development with an aggregate carrying amount of HK$585,337,000 (31 March 2015: HK$536,282,000); and the assignment of the Group s financial benefits under certain contract works with total accounts receivable amounting to HK$261,706,000 (31 March 2015: HK$249,709,000). Contingent Liabilities Details of the Group s contingent liabilities are set out in note 19 to the unaudited condensed consolidated interim financial information. Capital Commitments Details of the Group s capital commitments are set out in note 20 to the unaudited condensed consolidated interim financial information. THE EXCEL DISPOSAL On 5 June 2015, the Group entered into the Excel S&P Agreement with an independent third party for the sales of 150,000,000 shares of Excel Development, representing 75.0% of the entire issued share capital of Excel Development as at the date of the Excel S&P Agreement, held by the Group at a consideration of HK$485,010,000. There is no condition precedent to the Excel S&P Agreement. The Excel Disposal was completed on the same date of the Excel S&P Agreement (the Completion ) and the purchaser had paid the entire amount of the consideration to the Group at Completion. Based on the unaudited financial information of the Excel Group as at the date of Completion, the Group recognized an unaudited net gain of approximately HK$291 million (after deducting transaction costs) from the Excel Disposal. The Group s unaudited net cash inflows from the Excel Disposal amounted to approximately HK$383 million and will be used for general working capital and future business development. 912,000, ,000, ,601, ,606, ,477, ,257, ,337, ,282, ,706, ,709, ,000, % 485,010, Interim Report 中期業績報告