UBA INVESTMENTS LIMITED (Incorporated in the Cayman Islands with limited liability) Interim Report 2014

(Incorporated in the Cayman Islands with limited liability) Interim Report 2014

1 CORPORATE INFORMATION BOARD OF DIRECTORS Executive Directors Mr. CHAU Wai Hing (Chairman) Mr. CHENG Wai Lun, Andrew Dr. WONG Yun Kuen Independent Non-executive Directors Mr. CHAN Chung Yee, Alan, CPA Dr. FUNG Lewis Hung Mr. TANG Hon Bui, Ronald COMPANY SECRETARY Mr. LEUNG Man Lai, CPA AUDITORS LI, TANG, CHEN & CO Certified Public Accountants (Practising) AUDIT COMMITTEE Mr. CHAN Chung Yee, Alan, CPA (Chairman) Dr. FUNG Lewis Hung Mr. TANG Hon Bui, Ronald REMUNERATION COMMITTEE Mr. CHAN Chung Yee, Alan, CPA (Chairman) Dr. FUNG Lewis Hung Mr. TANG Hon Bui, Ronald Mr. CHENG Wai Lun, Andrew NOMINATION COMMITTEE Mr. CHAN Chung Yee, Alan, CPA (Chairman) Dr. FUNG Lewis Hung Mr. TANG Hon Bui, Ronald Mr. CHENG Wai Lun, Andrew CPA CPA CPA CPA CPA PRINCIPAL BANKER OCBC Wing Hang Bank, Limited

2 STOCK CODE Hong Kong Stock Exchange: 768 WEBSITE http://www.uba.com.hk INVESTMENT MANAGER Upbest Assets Management Limited PRINCIPAL PLACE OF BUSINESS IN HONG KONG Flat B, 16th Floor, Wah Kit Commercial Centre 300 Des Voeux Road Central Hong Kong REGISTERED OFFICE P.O. Box 309 Ugland House Grand Cayman KY1-1104 Cayman Islands CAYMAN ISLANDS PRINCIPAL REGISTRAR Royal Bank of Canada Trust Company (Cayman) Limited 4th Floor, Royal Bank House 24 Shedden Road George Town, Grand Cayman KY1-1110 Cayman Islands HONG KONG BRANCH REGISTRAR Tricor Standard Limited Level 22, Hopewell Centre 183 Queen s Road East Hong Kong 768 http://www.uba.com.hk 300 16 B P.O. Box 309 Ugland House Grand Cayman KY1-1104 Cayman Islands Royal Bank of Canada Trust Company (Cayman) Limited 4th Floor, Royal Bank House 24 Shedden Road George Town, Grand Cayman KY1-1110 Cayman Islands 183 22

3 RESULTS The board of directors (the Board ) of UBA Investments Limited (the Company ) is pleased to announce that the unaudited interim results of the Company and its subsidiaries (the Group ) for the six months ended 30 September 2014 and the Group s state of affairs as at that date together with the comparative figures as follows: CONDENSED CONSOLIDATED INCOME STATEMENT For the six months ended 30 September 2014 2013 (unaudited) (unaudited) Note HK$ HK$ Turnover 4 103,420,242 133,720,877 Costs of listed securities disposed (99,881,947) (130,621,923) Other revenues 5 20 232,421 Other net gain 5 33,769,542 4,899,125 Administrative and other operating expenses (1,926,808) (1,963,491) Finance costs 6 (40,344) (21,237) Profit before taxation 7 35,340,705 6,245,772 Income tax expense 8 Profit for the period attributable to equity holders of the Company 35,340,705 6,245,772 Earnings per share Basic 9 3.33 cents 0.59 cents Diluted 9 N/A N/A

4 CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the six months ended 30 September 2014 2013 (unaudited) (unaudited) HK$ HK$ Profit for the period attributable to equity holders of the Company 35,340,705 6,245,772 Other comprehensive (loss)/income Items that may be reclassified subsequently to profit or loss Available-for-sale financial assets: Fair value changes during the period (153,449) 4,242,890 Reclassification adjustments transferred to consolidated income statement Released upon disposal of available-for-sale financial assets (17,937) (29,434) Other comprehensive (loss)/income for the period, net of tax (171,386) 4,213,456 Total comprehensive income attributable to equity holders of the Company 35,169,319 10,459,228

5 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION 30 September 31 March 2014 2014 (unaudited) (audited) Note HK$ HK$ NON-CURRENT ASSETS Property, plant and equipment 21,772 20,606 Available-for-sale financial assets 10 21,335,206 23,486,266 21,356,978 23,506,872 CURRENT ASSETS Amounts due from investee companies 5,830,582 4,446,824 Amounts due from related companies 11 2,012,394 1,081,082 Deposits 66,060 66,060 Financial assets at fair value through profit or loss 12 108,458,804 73,308,138 Cash and bank balances 5,278,027 5,617,202 121,645,867 84,519,306 CURRENT LIABILITIES Accruals 50,000 242,652 Other payables 1,884,200 1,884,200 1,934,200 2,126,852 NET CURRENT ASSETS 119,711,667 82,392,454 NET ASSETS 141,068,645 105,899,326 CAPITAL AND RESERVES Share capital 13 10,597,782 10,597,782 Reserves 130,470,863 95,301,544 TOTAL EQUITY 141,068,645 105,899,326 NET ASSET VALUE PER SHARE 14 0.133 0.10

6 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the six months ended 30 September 2014 Unaudited Share Share Fair Value Retained Capital Premium Reserves Profits Total HK$ HK$ HK$ HK$ HK$ Opening balance as at 1 April 2014 10,597,782 92,564,355 5,897,503 (3,160,314) 105,899,326 Profit for the period 35,340,705 35,340,705 Released upon disposal of available-for-sale financial assets (17,937) (17,937) Fair value change on available-for-sale financial assets (153,449) (153,449) Total comprehensive income for the period (171,386) 35,340,705 35,169,319 Balance as at 30 September 2014 10,597,782 92,564,355 5,726,117 32,180,391 141,068,645 Unaudited Share Share Fair Value Retained Capital Premium Reserves Profits Total HK$ HK$ HK$ HK$ HK$ Opening balance as at 1 April 2013 10,597,782 92,564,355 2,704,679 235,641 106,102,457 Profit for the period 6,245,772 6,245,772 Released upon disposal of available-for-sale financial assets (29,434) (29,434) Fair value change on available-for-sale financial assets 4,242,890 4,242,890 Total comprehensive income for the period 4,213,456 6,245,772 10,459,228 Balance as at 30 September 2013 10,597,782 92,564,355 6,918,135 6,481,413 116,561,685

7 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS For the six months ended 30 September 2014 2013 (unaudited) (unaudited) HK$ HK$ Net cash used in operating activities (796,095) (20,841,099) Cash flows from investing activities Purchase of property, plant and equipment (5,850) Purchase of available-for-sale financial assets (100) (100) Proceeds from sales of available-for-sale financial assets 1,846,627 38,134 Proceeds from disposal of a subsidiary 5,318,289 Advances to investee companies (1,383,758) Net cash from investing activities 456,919 5,356,323 Net decrease in cash and cash equivalents during the period (339,176) (15,484,776) Cash and cash equivalents at the beginning of the period 5,617,203 32,412,976 Cash and cash equivalents at the end of the period 5,278,027 16,928,200 Representing: Cash and bank balance 5,278,027 16,928,200

8 NOTES ON THE CONDENSED FINANCIAL STATEMENTS 1. GENERAL The Company is a public limited company incorporated in the Cayman Islands with its shares listed on The Stock Exchange of Hong Kong Limited (the Stock Exchange ). The address of its registered office is P.O. Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. The principal place of business is Flat B, 16th Floor, Wah Kit Commercial Centre, 300 Des Voeux Road Central, Hong Kong. The Company and its subsidiaries are engaged in investment holding and trading of securities. 1. P.O. Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands 300 16 B 2. BASIS OF PREPARATION These unaudited condensed consolidated interim financial statements have been prepared in accordance with Hong Kong Accounting Standard 34 Interim Financial Reporting issued by the Hong Kong Institute of Certified Public Accountants ( HKICPA ) and with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on the Main Board of The Stock Exchange of Hong Kong Limited. 2. 34 16 The condensed consolidated financial statements do not include all the information and disclosure required in the annual consolidated financial statements, and should be read in conjunction with the Company and its subsidiaries (the Group ) annual consolidated financial statements at 31 March 2014.

9 3. ACCOUNTING POLICIES The unaudited condensed consolidated financial statements have been prepared under the historical cost basis, except for available-for-sale financial assets and financial assets at fair value through profit or loss which are stated at fair values, as appropriate. 3. The accounting policies used in the condensed consolidated financial statement are consistent with those used in the annual consolidated financial statements of the Group for the year ended 31 March 2014, except that in the current period the Group has adopted certain new and revised Hong Kong Financial Reporting Standards ( HKFRSs ) as detailed in note (a) below: (a) (a) Changes in accounting policy and (a) disclosures The Group has also adopted the following new and revised HKFRSs issued by the HKICPA. However, the adoption of these new and revised HKFRSs has had no material effect on these financial statements. HKFRS 10, HKFRS 12 and Amendments to HKFRS 10, HKAS 27 (2011) HKFRS 12 and HKAS 27 (2011) 10 10 Amendments Investment Entities 12 12 27 27 HKAS 32 Amendments Amendments to HKAS 32 Financial 32 Instruments: Presentation 32 Offsetting Financial Assets and Financial Liabilities

10 3. ACCOUNTING POLICIES (Continued) 3. (a) Changes in accounting policy and (a) disclosures (Continued) HKAS 36 Amendments Amendments to HKAS 36 36 Impairment to Assets 36 Recoverable Amount Disclosures for Non-Financial Assets HKAS 39 Amendments Amendments to HKAS 39 Financial 39 Instruments: Recognition and 39 Measurement Novation of Derivatives and Continuation of Hedge Accounting HK(IFRIC)- Int 21 Levies 21 (b) Issued but not yet effective Hong (b) Kong Financial Reporting Standards The Group has not applied the following new and revised HKFRSs, that have been issued but are not yet effective, in these financial statements. HKFRS 9 (2014) Financial Instruments 7 7 9 HKFRS 9 and HKFRS 7 Amendments Mandatory effective date of HKFRS 9 and transition 9 9 disclosures 2 7 2 HKFRS 11 Amendments Amendments to HKFRS 11 Joint Arrangements Accounting for Acquisition of Interest in Joint Operation 5 11 11 5 HKFRS 14 Regulatory Deferral Accounts 4 4 14 HKFRS 15 Revenue from contracts with 6 customers 6 15

11 3. ACCOUNTING POLICIES (Continued) 3. (b) Issued but not yet effective Hong (b) Kong Financial Reporting Standards (Continued) HKAS 19 (2011) Amendments HKAS 16 and HKAS 38 Amendments Amendments to HKAS 19 Employee Benefits Defined Benefit Plans: Employee Contributions 1 Amendments to HKAS 16 Property, Plant and Equipment and HKAS 38 Intangible -Clarification of acceptable methods of 19 19 1 16 16 38 38 deprecation and amortisation 5 5 HKAS 16 and HKAS 41 Amendments Amendments to HKAS 16 Property, Plant and Equipment and HKAS 41 Agriculture 16 16 41 Bearer Plants 5 41 5 HKAS 27 Amendments Amendments to HKAS 27 Separate Financial Statements Equity Method in Separate Financial 27 27 Statement 5 Annual Improvements Amendments to a number of 2010 2012 Cycle HKFRSs issued in December, 5 2013 3 Annual Improvements Amendments to a number of 2011 2013 Cycle HKFRSs issued in December, 2013 1 3 1

12 3. ACCOUNTING POLICIES (Continued) (b) Issued but not yet effective Hong Kong Financial Reporting Standards (Continued) 1 Effective for annual periods beginning on or after 1 July 2014 2 The mandatory effective date will be determined when the outstanding phases of HKFRS 9 are finalised 3 Effective for annual periods beginning on or after 1 July 2014, with limited exception 4 Effective for first annual HKFRS financial statements beginning on or after 1 January 2016 5 Effective for annual periods beginning on or after 1 January 2016 6 Effective for annual periods beginning on or after 1 January 2017 7 Effective for annual periods beginning on or after 1 January 2018 3. (b) 1 2 9 3 4 5 6 7 The Group is in the process of making an assessment of the impact of these new and revised HKFRSs upon initial application. So far, the Group considers that these new and revised HKFRSs are unlikely to have a significant impact on the Group s results of operations and financial position.

13 4. TURNOVER 4. For the six months ended 30 September 2014 2013 (unaudited) (unaudited) HK$ HK$ Proceeds from sale of available- for-sale financial assets listed 1,846,628 38,133 Proceeds from sale of financial assets at fair value through profit or loss listed 99,572,052 131,590,858 Dividend income from listed equity securities 2,001,562 2,091,886 103,420,242 133,720,877 No analysis of the Group s turnover and contribution to operating profit for the period set out by principal activities and geographical markets is provided as the Group has only one single business segment, investment holding and all the consolidated turnover and the consolidated results of the Group are attributable to the markets in Hong Kong. No information about major customers has been disclosed as a substantial portion of the Group s income is derived from the Group s investments and the disclosures of information regarding customers would not be meaningful.

14 5. OTHER REVENUES AND OTHER NET GAIN 5. For the six months ended 30 September 2014 2013 (unaudited) (unaudited) HK$ HK$ Other revenues Interest income 20 17,914 Bad debt recovery 214,507 20 232,421 Other net gain Gain on disposal of a subsidiary 5,690,761 Net unrealised gain/(loss) on financial assets at fair value through profit or loss 33,761,178 (816,291) Net gain from futures and metals trading 8,364 24,655 33,769,542 4,899,125

15 6. FINANCE COSTS 6. For the six months ended 30 September 2014 2013 (unaudited) (unaudited) HK$ HK$ Interest on other borrowings 5 wholly repayable within five years 40,344 21,237 7. PROFIT BEFORE TAXATION Profit before taxation has been arrived at after charging the following: 7. For the six months ended 30 September 2014 2013 (unaudited) HK$ (unaudited) HK$ Depreciation 4,684 4,196 Investment management fee paid to a related company 900,978 866,063 Staff costs, including defined contributions of HK$9,340 (2013: HK$8,400) to 9,340 MPF Scheme 8,400 232,540 224,577 Minimum lease payments on properties under operating leases 132,000 132,000

16 8. INCOME TAX EXPENSE No provision for Hong Kong profits tax has been made as the tax losses brought forward from prior years exceeded the estimated assessable profits of the Group for the period ended 30 September 2014 and 30 September 2013. 9. 9. EARNINGS PER SHARE The calculation of the basic earnings per share for the six months ended 30 September 2014 is based on the Group s profit attributable to equity holders of the Company for the period of HK$35,340,705 (For the six months ended 30 September 2013: HK$6,245,772) and 1,059,778,200 (For the six months ended 30 September 2013: 1,059,778,200) ordinary shares in issue during the period. 9. 35,340,705 6,245,772 1,059,778,200 1,059,778,200 No diluted earnings per share for the six months ended 30 September 2014 and 2013 are presented respectively as the Company does not have dilutive potential ordinary shares.

17 10. AVAILABLE-FOR-SALE FINANCIAL ASSETS 10. 30 September 31 March 2014 2014 (unaudited) (audited) HK$ HK$ Unlisted equity securities, at cost 7,694,000 8,694,000 Less: Provision for impairment loss (4,707,445) (5,707,445) 2,986,555 2,986,555 Listed equity securities in Hong Kong 18,348,651 20,499,711 21,335,206 23,486,266 Market value of listed equity securities 18,348,651 20,499,711 As at the end of the reporting period, all available-for-sale financial assets are stated at fair value except for those unlisted equity securities of which their fair values cannot be measured reliably. Fair values of listed equity securities have been determined by reference to published price quotations in active markets. 11. AMOUNTS DUE FROM RELATED COMPANIES The amounts are unsecured, interest-free and have no fixed terms of repayment. 11.

18 12. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 12. 30 September 31 March 2014 2014 (unaudited) (audited) HK$ HK$ Equity securities, listed in Hong Kong at fair value 107,670,295 72,415,993 Derivative financial instruments at fair value 788,509 892,145 108,458,804 73,308,138 Market value of listed equity securities 107,670,295 72,415,993 Derivative financial assets represent financial instruments for trading of precious metals with a financial institution. These are categorised as financial assets at fair value through profit or loss unless they are designated as hedges.

19 13. SHARE CAPITAL 13. Number of shares Amount Ordinary shares of HK$0.01 each 0.01 Authorised: At 30 September 2014 and 31 March 2014 2,000,000,000 20,000,000 Issued and fully paid: At 30 September 2014 and 31 March 2014 1,059,778,200 10,597,782 14. NET ASSET VALUE PER SHARE The calculation of net asset value per share is based on the net assets of HK$141,068,645 (31 March 2014: HK$105,899,326) and 1,059,778,200 (31 March 2014: 1,059,778,200) ordinary shares in issue as at 30 September 2014. 14. 141,068,645 105,899,326 1,059,778,200 1,059,778,200 15. INTERIM DIVIDEND The Board has resolved not to declare any interim dividend in respect of the six months ended 30 September 2014 (2013: Nil). 15.

20 16. CONNECTED AND RELATED PARTY TRANSACTIONS 16. For the six months ended 30 September 2014 2013 (unaudited) (unaudited) Note HK$ HK$ Investment management fee paid to Upbest Assets Management Limited (a) 900,978 866,063 Brokerage commission paid to Upbest Securities Company Limited (b) 495,973 682,780 Handling fee for dividend collection paid to Upbest Securities Company limited (c) 10,688 10,715 Commission paid to Upbest Gold Limited (d) 2,140 2,635 Interest paid to Upbest Investment Company Limited (e) 40,344 20,169 Interest paid to Upbest Gold Limited (f) 1,068 Storage fee paid to Upbest Bullion Company Limited (g) 2,856 1,404 Handling fee paid to Upbest Bullion Company Limited (h) 2,057 Custodian fee paid to OCBC Wing Hang Bank Limited (i) 30,000 30,000 Rental paid to Champion Assets Limited (j) 132,000 132,000

21 16. CONNECTED AND RELATED PARTY TRANSACTIONS (Continued) Notes: a) The Company and a subsidiary of Upbest Group Limited, Upbest Assets Management Limited ( UAML ) as investment manager, had entered into an Supplemental Investment Management Agreement dated 28 January 2013 ( Supplemental Investment Management Agreement ) and agreed that the original investment management agreement and any supplemental agreements pursuant to which UAML provided investment management services to the Company be extended for a period of three years to 31 March 2016. This agreement can be terminated by either the Company or UAML serving not less than six months notice in writing prior to the expiration. Pursuant to the investment management agreement, monthly investment management fee is payable at 1.5% per annum of the consolidated net asset value of the Group as at the immediately preceding valuation date on the actual number of days in the relevant calendar month over 365 days a year. 16. a) 1.5% 365

22 16. CONNECTED AND RELATED PARTY TRANSACTIONS (Continued) Notes: (continued) a) (continued) In addition to the above, the Company and UAML had on 2 May 2008 entered into a supplemental agreement whereby in addition to the management fee, a performance fee payable in Hong Kong dollars equivalent to 20% of net profit of the Group before taxation and before deduction of the investment management fee payable under the investment management agreements shall be paid to UAML for each financial year. 16. a) 20% The supplemental agreement had further renewed the service period for three years up to 31 March 2016. The annual cap for the management fee and performance fee for the financial years ended 31 March 2014, 2015 and 2016 are HK$8,700,000, HK$10,900,000 and HK$13,600,000 respectively. These continuing connected transactions were approved on the extraordinary general meeting of the shareholders held on 26 March 2013. 8,700,000 1 0, 9 0 0, 0 0 0 13,600,000

23 16. CONNECTED AND RELATED PARTY TRANSACTIONS (Continued) Notes: (continued) b) The Company and two of its subsidiaries and Upbest Securities Company Limited ( USCL ) had separately entered into securities brokerage supplemental agreements for the transaction in relation to the securities brokerage service and agreed that the original agreement was further extended for a period of three years to 31 March 2016. Brokerage commission fee is charged at 0.25% (2013: 0.25%), the prevailing market rate, on the value of the transactions. 16. b) 0.25% 0.25% The annual cap for the securities brokerage commission for each of the financial year up to 31 March 2016 should be HK$2,000,000 (2013: HK$2,000,000) per annum. 2,000,000 2,000,000 c) Handling fee for dividend collection is charged at minimum of HK$30 or 0.5% per transaction amount. c) 30 0.5% d) Commission is charged at a range from US$10 to US$50 per transaction. d) 10 50

24 16. CONNECTED AND RELATED PARTY TRANSACTIONS (Continued) Notes: (continued) e ) The Company and two of its subsidiaries had separately entered into Financial Assistance supplemental agreements with Upbest Investment Company Limited ( UICL ) in relation to the provision of securities margin financing service. According to the supplemental agreements, the respective relevant original agreement is further extended for a period of three years to 31 March 2016. The agreement is subject to renewal by written supplemental agreements between the contracting parties. The securities margin financing services interest rate is charged at 4.25% (2013: 4.25%) above prime rate per annum inclusive of custodian fee; and the provision of IPO financing at an interest rate from 0.2% to 1.5% (2013: 0.2% to 1.5%) per annum above the borrowing costs of UICL. For the period ended 30 September 2014 interest for the securities margin accounts was charged at 9.5% (2013: 9.5%) per annum. No IPO interest paid for the period ended 30 September 2014 and 30 September 2013. 16. e) 4.25% 4.25% 0.2% 1.5% 0.2% 1.5% 9.5% 9.5%

25 16. CONNECTED AND RELATED PARTY TRANSACTIONS (Continued) Notes: (continued) f) A subsidiary of the Company has entered into a supplemental agreement with Upbest Gold Limited ( UGL ) in relation to the provision of precious metal margin financing service by UGL to the subsidiary. According to the supplemental agreement, the subsidiary and UGL agreed that the relevant original agreement was further extended for a period of three years to 31 March 2016. The agreement is subject to renewal by written supplemental agreement between the contracting parties. 16. f) The interest rate for the precious metal financing service was from 0.25% to 1% per annum above the borrowing costs of UGL and 0.25% to 1% less from the borrowing cost of UGL for call and put position respectively. 0.25% 1% 0.25% 1% As part of the internal group restructuring of the Upbest Group, UGL will gradually cease its business in the provision of bullion trading and precious metal margin financing service and Upbest Gold & Silver Trading Limited ( UGS ), a subsidiary of Upbest, will take up the business of UGL. On 29 September 2014, each of UGL, UGS and UBA Gold entered into a deed of novation (the Deed of Novation ) pursuant to which UGS will assume all the obligations and liabilities of UGL under the relevant Financial Assistance Supplemental Agreement and the corresponding original agreement effective from the date of the Deed of Novation and UGS will observe and perform all the terms, conditions and covenants of the relevant Financial Assistance Supplemental Agreement and the corresponding original agreement on the part of UGL in substitution. UBA Gold

26 16. CONNECTED AND RELATED PARTY TRANSACTIONS (Continued) Notes: (continued) f) (continued) For the period ended 30 September 2014 interest for the bullion dealing was charged at the range of 1.5% to 2.3% (2013: 1.5% to 2.3%) per annum. 16. f) 1.5% 2.3% 1.5% 2.3% The annual cap regarding the securities and bullion margin financial assistance for each of the financial year up to 31 March 2016 is HK$150,000,000 (2013: HK$150,000,000). These continuing connected transactions were approved on the extraordinary general meeting of the shareholders held on 26 March 2013. 150,000,000 150,000,000 g) Storage fee for bullion trading is charged at US$2 per day. g) 2 h) Handling fee for bullion trading is charged at 0.25% per transaction amount. h) 0.25% i) Pursuant to a custodian agreement dated 22 December 1999 between the Company and a custodian, the custodian agrees to provide securities custodian services to the Company including the safe custody of the Group s securities and the settlement of the securities of the Group, the collection of dividends and other entitlements on behalf of the Group. The appointment of the custodian commenced on the date of commencement of trading of the Company s shares on the Stock Exchange and will continue in force until it is terminated by either party giving a written notice to the other party at any time. i)

27 16. CONNECTED AND RELATED PARTY TRANSACTIONS (Continued) Notes: (continued) i) (continued) The custodian is regarded as a connected person of the Company under Rule 21.13 of the Listing Rules, but the custodian fee falls below the de-minimis threshold under Rule 14A.31(2) of the Revised Listing Rules. 16. i) 21.13 14A.31(2) j) The Company has entered into a tenancy agreement with Champion Assets Limited since 1 January 2011. On 31 March 2014, the tenancy agreement was renewed and commenced on 1 April 2014 with a term of one year. The total rent paid during the period from 1 April 2014 to 30 September 2014 is amounted to HK$132,000 (2013: HK$132,000). The transactions were carried out at an amount agreed by both parties. The entire issued share capital of Fung Fai Growth Limited, a substantial shareholder of the Company, is owned by a trust of which the discretionary objects are family members of Mr. Cheng Wai Lun, Andrew, including Mr. Cheng Kai Ming, Charles. Mr. Cheng Kai Ming, Charles has beneficial interest in Champion Assets Limited. j) 132,000 132,000 Fung Fai Growth Limited

28 16. CONNECTED AND RELATED PARTY TRANSACTIONS (Continued) Notes: (continued) k) Fung Fai Growth Limited, an investment holding company, holds approximately 32.08% of the Company. CCAA Group Limited, an investment company, holds approximately 73.65% interest in Upbest Group Limited. The ultimate beneficial owner of Fung Fai Growth Limited and CCAA Group Limited is Cheng s Family Trust. Upbest Assets Management Limited, Upbest Securities Company Limited, Upbest Commodities Company Limited, Upbest Gold & Silver Trading Limited and Upbest Investment Company Limited are wholly-owned subsidiaries and Upbest Gold Limited is a 75% owned subsidiary of Upbest Group Limited, a company incorporated in the Cayman Islands with limited liability, the securities of which are listed on the Stock Exchange. 16. k) Fung Fai Growth Limited32.08% CCAA Group Limited 73.65% Fung Fai Growth Limited CCAA Group Limited 75% The above transactions were carried out in the normal course of the Group s business on terms mutually agreed between the parties.

29 17. FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments: 17. Level 1: fair values measured based on quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2: fair values measured based on valuation techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly Level 3: fair values measured based on valuation techniques for which all inputs which have a significant effect on the recorded fair value are not based on observable market data (unobservable inputs) As at 30 September 2014 and 31 March 2014, the Group helds the following financial instruments measured at fair value: 30 September 2014 (unaudited) Level 1 Level 2 Level 3 Total HK$ HK$ HK$ HK$ Financial assets Available-for-sale financial * assets* 16,541,786 16,541,786 Financial assets at fair value through profit or loss* * 108,300,954 108,300,954 124,842,740 124,842,740

30 17. FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS (Continued) 31 March 2014 (audited) 17. Level 1 Level 2 Level 3 Total HK$ HK$ HK$ HK$ Financial assets Available-for-sale financial * assets* 20,249,761 20,249,761 Financial assets at fair value through profit or loss* * 73,297,288 73,297,288 93,547,049 93,547,049 Note* : Net of those with trading suspended on The Stock Exchange of Hong Kong Limited. * During the six months ended 30 September 2014 and year ended 31 March 2014, there were no transfer of fair value measurements between Level 1 and Level 2 and no transfer into or out of Level 3. Fair values of financial instruments carried at other than fair value The carrying amounts of the Group s other financial instruments carried at costs are not materially different from their fair values as at 30 September 2014 and 31 March 2014.

31 MANAGEMENT DISCUSSION AND ANALYSIS Business Review The Group recorded a net profit attributable to equity shareholders of approximately HK$35,340,000 for the six months ended 30 September 2014 as compared to the net profit of approximately HK$6,246,000 in the corresponding period of last year. The significant increase in the net profit was mainly due to the unrealised gain on financial assets at fair value through profit or loss amounting HK$33,760,000. The turnover decreasing 23% from HK$133.7 million to HK$103.4 million compared with the corresponding period of last year was due to the deliberate decision making by the Company on new investment and trading listed securities under the ever changing global markets for the period. Although the turnover dropped, the rise of net assets value of the Group outperformed the Hang Seng Index ( HSI ) during this period. Moreover, the Group maintains a healthy cash and bank balances of approximately HK$5.3 million and HK$5.6 million respectively as at period ended 30 September 2014 and year ended 31 March 2014. The net asset value also increased by 33% to HK$141.1 million from HK$105.9 million. 35,340,000 6,246,000 33,760,000 133,730,000 23% 103,400,000 5,300,000 5,600,000 105,900,000 33% 141,100,000

32 During the corresponding period, the global and local equity markets had experienced intense volatility and these markets, as a whole, dropped at the start of second quarter, and rebounded in May, but slumped during September 2014. The volatility was mainly due to the worry by the investors regarding the serious confrontation between Russia and the West of Ukraine. Political risk in Russia and in Europe led to a general pullback in global equity markets during April 2014. However, the inflation gauge personal consumption expenditures index ( PCE ) in US keeping below 2%, and the continuous implementation of the Quantitative Easing Three scheme ( QE3 ) announced by the Chief of US Federal Reserve (the Fed ) Janet Yellen ( Yellen ) enhanced investors confidence in global equity markets. Dow Jones Index rebounded nearly 7% from 16,015 in April to 17,122 at end of August 2014. In addition, the European Central Bank ( ECB ) Chief Mario Draghi ( Draghi ) suggested keeping their lending rates locked near zero percent for coming years. Draghi cut interest rates 10 basis points to 0.15%, and lowering the deposit facility rate to -0.1% in June which stimulated the European equity markets. However, the Islamic State of Iraq, Syria invasion in Iraq and the referendum on Scotland s independence brought a negative impact on global stock markets at end of third quarter 2014. PCE 2% QE3 16,015 7% 17,122 10 0.15 0.1

33 The mainland stock market sentiment was clouded by the uncertainties at the beginning of second quarter 2014. The slowdown in China property sector dragged gross domestic product ( GDP ) growth to be revised from 7.5% to 7.35-7.4%. The State has said that the economic slow down is within their expectations and as present there is no plan to roll out any large scale of stimulus. The People s Bank of China (PBOC) continues to maintain stable monetary policy and monetary base which aim at easing policy support the agricultural and SME sectors. In order to lower the funding cost, it is reported that the PBOC will inject RMB500 billion to provide liquidity support to the five state banks. The market has expected the PBOC still has room to cut the interest rate by rolling out more fiscal policy stimulus. ( GDP ) 7.5 7.35-7.4 ( ) 5,000 The Hong Kong equity market was sensitive to the news on the weak global economic situation. However, the HSI had dropped in September due to the uncertain political environment of Occupy Central Movement will drag the economy afterwards. And the market is worried about the prolonged protest may have negative impact on the Hong Kong economy and affect its social stability. As well as the Hong Kong GDP growth has slowed to 1.8% in 2Q from 2.6% in 1Q due to the plunge in tourist spending. The Hong Kong Government had revised downward GDP growth to 2-3% for 2014. 2.6% 1.8 2-3

34 Prospects We expect the continuous implementation of QE3 will let the low interest rate trend be kept for some time and will maintain the liquidity in the global stock markets. In addition, the follow up working conference in November after 2014 Fourth Plenary Session of the 18th Central Committee of the Communist Party of China may announce more mini-stimulus plans to stimulate the economic growth in China. Shanghai Hong Kong Stock Connect Programme will also bring more investors and capital inflow into local stock markets. The aforesaid factors may have positive impact toward the global and local equities markets. However, we also remain cautious when to wind down further the scale of QE3 by the Fed and the effect of Occupy Central Movement which may add volatility to the markets. QE3 QE3 The Group will continue to adopt and maintain conservative but proactive investment approach in order to bring better return for our shareholders.

35 FINANCIAL REVIEW Liquidity And Financial Resources As at 30 September 2014, the Group had bank balances and cash of HK$5,278,027 (31 March 2014: HK$5,617,202). The Board believes that the Group has sufficient financial resources to satisfy its commitments and working capital requirements. 5,278,027 5,617,202 As at 30 September 2014, part of the listed equity securities of the Group and the Company had been pledged to secure margin facilities provided by a related company. Gearing Ratio Gearing ratio had not been presented (31 March 2014: nil) as there was no debt as at 30 September 2014 (31 March 2014: HK$ nil). DIVIDEND The Board has resolved not to recommend a payment of interim dividend. CAPITAL STRUCTURE There was no change to the Group s capital structure for the six months ended 30 September 2014.

36 CAPITAL COMMITMENT AND CONTINGENT LIABILITIES As at 30 September 2014, the Group had no material capital commitment and contingent liabilities. FOREIGN CURRENCY FLUCTUATION The Board believes that the foreign exchange risk is minimal as the Group mainly uses Hong Kong dollars to carry out its business transactions. SHARE OPTIONS The Group does not adopt any share option scheme.

37 DIRECTORS AND CHIEF EXECUTIVES INTERESTS AND SHORT POSITIONS IN THE SHARES, UNDERLYING SHARES AND DEBENTURES OF THE COMPANY OR ANY ASSOCIATED CORPORATION As at 30 September 2014, the interests and short positions of the directors of the Company in the shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (the SFO )) which were notified to the Company and The Stock Exchange of Hong Kong Limited (the SEHK ) pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which the directors and the chief executive of the Company were deemed or taken to have under such provisions of the SFO) or which were required to be and were recorded in the register required to be kept pursuant to Section 352 of the SFO or as otherwise notified to the Company and the SEHK pursuant to the Model Code for Securities Transactions by Directors of Listed Companies (the Model Code ) in the Listing Rules were as follows: Number of shares Percentage of issued Personal Family Corporate Other share capital Name of director interests interests interests interests Total Ordinary Shares of HK$0.01 each in the Company 0.01 XV XV 7 8 352 CHENG Wai Lun, Andrew (Note) 340,000,000 340,000,000 32.08%

38 DIRECTORS AND CHIEF EXECUTIVES INTERESTS AND SHORT POSITIONS IN THE SHARES, UNDERLYING SHARES AND DEBENTURES OF THE COMPANY OR ANY ASSOCIATED CORPORATION (Continued) Note: Mr. CHENG Wai Lun, Andrew is one of the discretionary objects of a trust which assets include interests in the entire issued share capital of Fung Fai Growth Limited. Fung Fai Growth Limited holds 340,000,000 shares of the Company. Fung Fai Growth Limited Fung Fai Growth Limited Fu n g Fai Grow th Limited 340,000,000 Save as disclosed above, at no time during the six months ended 30 September 2014 was the Company, its subsidiaries or its associate a party to any arrangement to enable the directors or chief executives of the Company, or their spouses or children under the age of 18, to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or its associated corporation. Save as disclosed above, none of the directors or the chief executives of the Company had or was deemed to have any interests or short positions in the shares, underlying shares or debentures of the Company or any associated corporation (within the meaning of Part XV of the SFO) as recorded in the register required to be kept under section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies contained in the Listing Rules. XV 352

39 SUBSTANTIAL SHAREHOLDER S INTERESTS AND SHORT POSITIONS IN THE SHARES, UNDERLYING SHARES OF THE COMPANY As at 30 September 2014, the following persons or corporations, other than the interest disclosed above in respect of the directors, interest in 5% or more in the shares and underlying shares of the Company have been notified to the Company and recorded in the register of substantial shareholders interests in shares and short positions required to be kept under Section 336 of Part XV of the SFO: XV 336 Approximate percentage of Number the total number Name of shareholders of shares held of shares in issued Ordinary shares of HK$0.01 each in the Company 0.01 Fung Fai Growth Limited (Note (a)) 340,000,000 32.08% Fung Fai Growth Limited ( a) Kingswell Holdings Group Limited (Note (b)) 192,000,000 18.12% Kingswell Holdings Group Limited (b) Notes: (a) The entire issued share capital of Fung Fai (a) Fung Fai Growth Limited Growth Limited is owned by a trust. Mr. CHENG Wai Lun, Andrew and his family members are the beneficiaries of the trust which assets include Fung Fai Growth Limited interests in the entire issued share capital of Fung Fai Growth Limited. (b) The entire issued share capital of Kingswell (b) Kingswell Holdings Group Limited Holdings Group Limited is beneficially owned by Mr. Janusz Mieczyslaw STEMPNOWSKI. Mr. Janusz Mieczyslaw STEMPNOWSKI

40 SUBSTANTIAL SHAREHOLDER S INTERESTS AND SHORT POSITIONS IN THE SHARES, UNDERLYING SHARES OF THE COMPANY (Continued) Save as disclosed above, as at 30 September 2014, the Directors are not aware of any other persons who have interests or short positions in the shares, underlying shares of equity derivatives or debentures of the Company or any associated corporations (within the meaning of Part XV of the SFO) which would be required to be disclosed to the Company pursuant to Part XV of the SFO. XV XV MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS The Company has adopted the Model Code for Securities Transactions by Directors by Listed Issuers (the Model Code ) set out in Appendix 10 of the Listing Rules. Upon enquiry by the Company, all Directors of the Company have confirmed that they have complied with the required standards set out in the Model Code throughout the period. 10

41 AUDIT COMMITTEE The Audit Committee has reviewed with management the accounting principles and practices adopted by the Group and discussed auditing, internal controls and financial reporting matters including a review of the unaudited condensed accounts for the six months ended 30 September 2014 before recommending them to the Board for approval. The Committee comprises three independent non-executive directors, namely Mr. CHAN Chung Yee, Alan, Dr. FUNG Lewis Hung and Mr. TANG Hon Bui, Ronald. EMPLOYMENT AND REMUNERATION POLICIES As at 30 September 2014, the Group employed a total of 4 full-time employees (2013: 4), including the executive directors of the Group. Employees remuneration are fixed and determined with reference to the market rate. 4 4 CORPORATE GOVERNANCE The Company complied with the code provisions as set out in the Corporate Governance Code contained in Appendix 14 to the Listing Rules (the CG Code ) throughout the six months ended 30 September 2014, except for the following.

42 CORPORATE GOVERNANCE (Continued) Code Provision A.4.1 Under the code provision A.4.1, non-executive directors should be appointed for a specific term and subject to re-election. None of the independent non-executive directors of the Company were appointed for a specific term. None of the non-executive directors has entered or proposed to enter into any service contracts with the Company or its subsidiaries. But all directors of the Company are subject to the retirement by rotation according to the provisions under article 157 of the Articles of Association of the Company. As such, the Board considers that sufficient measures have been taken to ensure that the Company s corporate governance practices are no less exacting than those in the CG Code. A.4.1 A.4.1 157 Code Provision A.6.7 Under the code provision A.6.7, independent non-executive directors and other non-executive directors should attend general meetings and develop a balanced understanding of the views of shareholders. The independent non-executive director Mr. CHAN Chung Yee, Alan was unable to attend the annual general meeting ( AGM ) of the Company held on 15 August 2014 due to his other business engagements. This constitutes a deviation from code provision A.6.7 of the CG Code. Moreover, non attendance of this independent non-executive director may also constitute deviation from code provision E.1.2 of the CG Code. Despite of that independent nonexecutive director, all the other directors of the Company were present in the AGM. A.6.7 A.6.7 A.6.7 E.1.2

43 REMUNERATION COMMITTEE The Remuneration Committee was set up on 22 July 2005 and the members comprised of three independent non-executive directors, Mr. CHAN Chung Yee, Alan, Dr. FUNG Lewis Hung and Mr. TANG Hon Bui, Ronald and one executive director, Mr. CHENG Wai Lun, Andrew. The Remuneration Committee has adopted the terms of reference in conformity with the CG Code. During the past one year, the remuneration committee had one meeting. NOMINATION COMMITTEE The Nomination Committee was set up on 21 March 2012, the members comprised of three independent non-executive directors, Mr. CHAN Chung Yee, Alan, Dr. FUNG Lewis Hung and Mr. TANG Hon Bui, Ronald and one executive director, Mr. CHENG Wai Lun, Andrew. The Nomination Committee has adopted the terms of reference in conformity with the CG Code. SUFFICIENCY OF PUBLIC FLOAT According to the information that is publicly available to the Company and within the knowledge of the Board, the percentage of the Company s shares which are in the hands of the public exceeds 25% of the Company s total number of issued shares. 25%

44 REPURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES During the six months ended 30 September 2014, there was no repurchase, sale or redemption of the Company s listed securities by the Company or any of its subsidiaries. PUBLICATION OF THE INTERIM RESULTS AND INTERIM REPORT This results announcement is published on the Stock Exchange s website (http://www.hkex. com.hk) and the Company s website (http:// www.uba.com.hk). The 2014 interim report will be dispatched to the shareholders and will be available on websites of the Stock Exchange and the Company in due course. (http:// www.hkex.com.hk) (http://www.uba.com.hk) By order of the Board CHAU Wai Hing Chairman and Executive Director Hong Kong, 17 November 2014

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