CONTENTS 2 Corporate Information 4 Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income 6 Condensed Consolidated Statemen

INTERIM REPORT 2017

CONTENTS 2 Corporate Information 4 Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income 6 Condensed Consolidated Statement of Financial Position 7 Condensed Consolidated Statement of Cash Flows 8 Condensed Consolidated Statement of Changes in Equity 9 Notes to the Condensed Consolidated Financial Statements 26 Interim Dividend/Closure of Register of Members 27 Business Review and Outlook 29 Management Discussion and Analysis 32 Other Information

CORPORATE INFORMATION Board of Directors Executive directors Dr. Lee Man Chun Raymond SBS JP (Chairman) Mr. Lee Man Bun MH JP (Chief Executive Officer) Mr. Li King Wai Ross Non-executive director Professor Poon Chung Kwong GBS JP Independent non-executive directors Mr. Wong Kai Tung Tony Mr. Peter A. Davies Mr. Chau Shing Yim David Audit Committee Mr. Chau Shing Yim David (Chairman) Mr. Wong Kai Tung Tony Mr. Peter A. Davies Remuneration Committee Mr. Chau Shing Yim David (Chairman) Mr. Wong Kai Tung Tony Mr. Peter A. Davies Nomination Committee Dr. Lee Man Chun Raymond SBS JP (Chairman) Mr. Chau Shing Yim David Mr. Wong Kai Tung Tony Mr. Peter A. Davies Authorised Representatives Dr. Lee Man Chun Raymond SBS JP Mr. Cheung Kwok Keung Company Secretary Mr. Cheung Kwok Keung Registered Office Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands Peter A. Davies Peter A. Davies Peter A. Davies Peter A. Davies Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands 2 Lee & Man Paper Manufacturing Limited 2017 Interim Report

Principal Office 5th Floor, Liven House 61-63 King Yip Street Kwun Tong Kowloon Hong Kong Principal Bankers In Hong Kong and Macau: Hang Seng Bank Standard Chartered Bank Citibank, N.A. HSBC DBS Bank of China (Hong Kong) In the PRC: China Construction Bank Bank of China Agricultural Bank of China Auditor Deloitte Touche Tohmatsu Certified Public Accountants Principal Share Registrar And Transfer Office SMP Partners (Cayman) Limited 3rd Floor, Royal Bank House 24 Shedden Road, P.O. Box 1586 Grand Cayman KY1-1110 Cayman Islands Hong Kong Branch Share Registrar and Transfer Office Tricor Investor Services Limited Level 22 Hopewell Centre 183 Queen s Road East Hong Kong Website http://www.leemanpaper.com 61-63 5 SMP Partners (Cayman) Limited 3rd Floor, Royal Bank House 24 Shedden Road, P.O. Box 1586 Grand Cayman KY1-1110 Cayman Islands 183 22 http://www.leemanpaper.com 3 2017

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the six months ended 30 June 2017 The board of directors of Lee & Man Paper Manufacturing Limited (the Company ) is pleased to announce the unaudited condensed consolidated results of the Company and its subsidiaries (the Group ) for the six months ended 30 June 2017 together with the comparative figures as follows: Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended 30 June 2017 2017 6 306 2017 6 306 Six months ended 30 June 6 306 2017 2016 (unaudited) (unaudited) Notes HK$ 000 HK$ 000 Revenue 3 11,439,571 8,368,758 Cost of sales (8,361,053) (6,424,371) Gross profit 3,078,518 1,944,387 Other income 4 361,405 285,692 Other gains and losses 5 (17,540) 24,635 Distribution and selling expenses (205,299) (113,790) General and administrative expenses (515,330) (408,203) Finance costs 6 (81,176) (87,417) Profit before tax 2,620,578 1,645,304 Income tax expense 7 (426,947) (214,874) Profit for the period 8 2,193,631 1,430,430 Other comprehensive income (expense) Item that may be reclassified subsequently to profit or loss: Exchange differences arising on translation of foreign operations 363,115 (857,523) Total comprehensive income for the period 2,556,746 572,907 4 Lee & Man Paper Manufacturing Limited 2017 Interim Report

Six months ended 30 June 6 306 2017 2016 (unaudited) (unaudited) Notes HK$ 000 HK$ 000 Dividends: 9 Dividend paid 496,830 432,950 Interim dividend declared 767,829 501,226 HK cents HK cents Earnings per share 10 48.42 31.36 5 2017

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION At 30 June 2017 30 June 2017 31 December 2016 2017 6 30 2016 12 31 (unaudited) (audited) Notes HK$ 000 HK$ 000 Non-current assets Property, plant and equipment 11 25,969,202 24,312,225 Prepaid lease payments 885,326 877,980 Investment properties 365,976 371,409 Deposits paid for acquisition of property, plant and equipment 93,250 149,685 Interest in a joint venture 12 Loan to a joint venture 12 118,485 95,953 27,432,239 25,807,252 Current assets Inventories 13 3,439,310 2,914,432 Prepaid lease payments 19,975 21,111 Trade and other receivables 14 6,174,993 4,959,863 Amounts due from related companies 20,453 21,730 Derivative financial instruments 13,446 231 Margin deposits 1,450 Bank balances and cash 1,000,709 1,274,197 10,668,886 9,193,014 Current liabilities Trade and other payables 15 3,963,060 3,549,231 Amounts due to related companies 5,377 4,288 Derivative financial instruments 11,267 Tax payable 200,091 158,938 Bank borrowings 5,055,185 4,240,105 9,223,713 7,963,829 NET CURRENT ASSETS 1,445,173 1,229,185 TOTAL ASSETS LESS CURRENT LIABILITIES 28,877,412 27,036,437 NON-CURRENT LIABILITIES Bank borrowings 9,168,291 9,306,737 Deferred tax liabilities 961,042 906,735 10,129,333 10,213,472 18,748,079 16,822,965 CAPITAL AND RESERVES Share capital 16 112,916 113,642 Reserves 18,635,163 16,709,323 18,748,079 16,822,965 6 Lee & Man Paper Manufacturing Limited 2017 Interim Report

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS For the six months ended 30 June 2017 Six months ended 30 June 6 306 2017 2016 (unaudited) (unaudited) HK$ 000 HK$ 000 Net cash from operating activities 1,417,740 1,839,154 Net cash used in investing activities Purchases of property, plant and equipment (1,714,280) (1,851,010) Loan to a joint venture (22,532) Payment for prepaid lease payments (5,537) (10,228) Interest received 3,894 12,159 Withdrawal of margin deposits 1,450 3,203 Proceeds on disposal of property, plant and equipment 1,078 777 (1,735,927) (1,845,099) Net cash from (used in) financing activities Net bank borrowings raised (repaid) 676,331 (1,002,586) Dividends paid (496,830) (432,950) Payment on repurchase of shares (134,802) (92,874) 44,699 (1,528,410) Net decrease in cash and cash equivalents (273,488) (1,534,355) Cash and cash equivalents brought forward 1,274,197 2,958,656 Cash and cash equivalents carried forward represented by bank balances and cash 1,000,709 1,424,301 7 2017

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the six months ended 30 June 2017 Share Share Translation capital premium reserve Capital contribution Legal Special Other reserve reserve reserve Share repurchase Reserve Retained Total profits equity HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 At 1 January 2017 2017 1 1 113,642 3,409,183 (930,239) 12,552 97 (2,999) (12,060) (42,122) 14,274,911 16,822,965 Profit for the period 2,193,631 2,193,631 Exchange difference arising on translation of foreign operations 363,115 363,115 Total comprehensive income for the period 363,115 2,193,631 2,556,746 Share repurchased and cancelled Dividends recognised as distributions (726) (176,198) 42,122 (134,802) (496,830) (496,830) At 30 June 2017 2017 6 30 112,916 2,736,155 (567,124) 12,552 97 (2,999) (12,060) 16,468,542 18,748,079 At 1 January 2016 2016 1 1 114,475 3,565,525 1,212,253 12,552 97 (2,999) (12,060) 12,346,344 17,236,187 Profit for the period 1,430,430 1,430,430 Exchange difference arising on translation of foreign operations (857,523) (857,523) Total comprehensive (expense) income for the period (857,523) 1,430,430 572,907 Share repurchased and cancelled Dividends recognised as distributions (560) (92,314) (92,874) (432,950) (432,950) At 30 June 2016 2016 6 30 113,915 3,473,211 354,730 12,552 97 (2,999) (12,060) 13,343,824 17,283,270 8 Lee & Man Paper Manufacturing Limited 2017 Interim Report

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the six months ended 30 June 2017 1. Basis of Preparation The condensed consolidated 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 ) as well as with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the Listing Rules ). 2. Principal Accounting Policies The condensed consolidated financial statements have been prepared on the historical cost basis except for derivative financial instruments that are measured at fair values. Except as described below, the accounting policies and methods of computation used in the condensed consolidated financial statements for the six months ended 30 June 2017 are the same as those followed in the preparation of the Group s financial statements for the year ended 31 December 2016. In the current interim period, the Group has applied, for the first time, certain amendments to Hong Kong Financial Reporting Standards ( HKFRSs ) and Interpretations issued by the HKICPA that are mandatorily effective for the current interim period. The application of the amendments to HKFRSs and Interpretations in the current interim period has had no material effect on the amounts reported and/or disclosures set out in these condensed consolidated financial statements. 1. 34 16 2. 2017 6 30 6 2016 12 31 9 2017

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the six months ended 30 June 2017 3. Revenue and Segment Information Segment revenues and results Six months ended 30 June 2017 3. 2017 6 306 Packaging paper Pulp Tissue paper Segment total Eliminations Consolidated HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 REVENUE External sales 10,321,763 12,013 1,105,795 11,439,571 11,439,571 Inter-segment sales 409,516 409,516 (409,516) 10,321,763 421,529 1,105,795 11,849,087 (409,516) 11,439,571 SEGMENT PROFIT 2,508,036 2,371 209,983 2,720,390 2,720,390 Net gain from fair value changes of derivative financial instruments 30,030 Unallocated income 3,876 Unallocated expenses (52,542) Finance costs (81,176) Profit before tax 2,620,578 10 Lee & Man Paper Manufacturing Limited 2017 Interim Report

3. Revenue and Segment Information (Continued) Segment revenues and results (Continued) Six months ended 30 June 2016 3. 2016 6 306 Packaging paper Pulp Tissue paper Segment total Eliminations Consolidated HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 REVENUE External sales 7,825,479 131,145 412,134 8,368,758 8,368,758 Inter-segment sales 142,284 142,284 (142,284) 7,825,479 273,429 412,134 8,511,042 (142,284) 8,368,758 SEGMENT PROFIT 1,640,021 10,782 52,204 1,703,007 1,703,007 Net gain from fair value changes derivative financial instruments 9,507 Unallocated income 48,728 Unallocated expenses (28,521) Finance costs (87,417) Profit before tax 1,645,304 4. Other Income 4. Six months ended 30 June 6 306 2017 2016 HK$ 000 HK$ 000 Value added tax and other tax refund 214,060 157,527 Income from supply of steam and electricity 40,143 34,054 Income from wharf cargo handling 25,193 27,453 Sales of materials and waste paper 20,612 16,315 Interest income from banks 3,894 12,159 Others 57,503 38,184 361,405 285,692 11 2017

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the six months ended 30 June 2017 5. Other Gains or Losses 5. Six months ended 30 June 6 306 2017 2016 HK$ 000 HK$ 000 Net foreign exchange (loss) gain (46,237) 36,569 Net gain from fair value changes of derivative financial instruments Loss on disposal of property, plant and equipment 30,030 9,507 (1,333) (21,441) (17,540) 24,635 6. Finance Costs 6. Six months ended 30 June 6 306 2017 2016 HK$ 000 HK$ 000 Interest on bank borrowings 133,583 159,199 Less: amounts capitalised to property, plant and equipment (52,407) (71,782) 81,176 87,417 12 Lee & Man Paper Manufacturing Limited 2017 Interim Report

7. Income Tax Expense 7. Six months ended 30 June 6 306 2017 2016 HK$ 000 HK$ 000 Income tax recognised in profit or loss: Current tax The PRC Enterprise Income Tax ( EIT ) 372,751 153,287 (Over) under provision in previous year The PRC EIT (111) 1,411 Deferred tax Charge to profit or loss 54,307 60,176 426,947 214,874 The Group s profit is subject to taxation from the place of its operations where its profit is generated and is calculated at the rate prevailing in the relevant jurisdictions. The PRC The Group s subsidiaries in the PRC are subject to corporate income tax at the rate of 25% except that five (2016: five) of these subsidiaries are entitled to preferential rate of 15% for the Group s financial year ending 31 December 2017. 25%2016 2017 12 31 15% Hong Kong No provision for taxation in Hong Kong has been made as the Group s income neither arises in, nor is derived from Hong Kong. 13 2017

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the six months ended 30 June 2017 7. Income Tax Expense (Continued) Macau The Macau subsidiaries incorporated under Decree-Law no.58/99/m are exempted from Macau complementary tax (Macau income tax) as long as they comply with the relevant regulations and do not sell their products to a Macau resident. Vietnam The Vietnam subsidiaries are subjected to Vietnam Corporate Income Tax at a rate of 10%. No provision for Vietnam Corporate Income Tax has been made for both periods as the Vietnam subsidiaries incurred losses for both periods. Other Taxation arising in other jurisdictions is calculated at the rates prevailing in the relevant jurisdictions. 7. 58/99/M 10% 14 Lee & Man Paper Manufacturing Limited 2017 Interim Report

504,804 472,120 164,581 166,940 8,361,053 6,424,371 8,898 6,874 515,613 471,470 8. Profit for the Period 8. Six months ended 30 June 6 306 2017 2016 HK$ 000 HK$ 000 Profit for the period has been arrived at after charging: Directors emoluments 18,863 18,800 Staff salaries and other benefits, excluding those of directors Contributions to retirement benefit schemes, excluding those of directors 458,824 429,552 27,117 23,768 Total employee benefit expense 504,804 472,120 Capitalised in inventories (340,223) (305,180) 164,581 166,940 Cost of inventories recognised as expense 8,361,053 6,424,371 Amortisation of prepaid lease payments 8,898 6,874 Depreciation of property, plant and equipment 501,547 464,596 Depreciation of investment properties 5,168 Total depreciation and amortisation 515,613 471,470 Capitalised in inventories (466,528) (432,521) 49,085 38,949 Operating lease rentals in respect of land and buildings 6,505 5,850 15 2017

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the six months ended 30 June 2017 9. Dividends A final dividend of HK$0.110 per share was paid in respect of the year ended 31 December 2016 (2016: a final dividend of HK$0.095 per share were paid for the year ended 31 December 2015) to shareholders during the current period. The directors determined that an interim dividend of HK$0.170 (2016: HK$0.110) per share should be paid to the shareholders of the Company whose names appear on the Register of Members on 15 September 2017. 10. Earnings Per Share The calculation of earnings per share attributable to the owners of the Company is based on the following data: 9. 2016 12 31 0.110 2016 2015 12 31 0.095 0.170 2016 0.110 2017 9 15 10. Earnings for the purpose of earnings per share Six months ended 30 June 6 306 2017 2016 HK$ 000 HK$ 000 2,193,631 1,430,430 Number of shares Number of shares Weighted average number of ordinary shares for the purpose of earnings per share 4,530,768,249 4,561,052,066 16 Lee & Man Paper Manufacturing Limited 2017 Interim Report

11. Additions to Property, Plant and Equipment During the period, there were additions of HK$1,918 million (2016: HK$2,037 million) to property, plant and equipment to expand its operations. 12. Interest in a Joint Venture 11. 19.18 201620.37 12. 30 June 2017 2017 6 30 HK$ 000 31 December 2016 2016 12 31 HK$ 000 Cost of an unlisted investment in a joint venture Share of profit and other comprehensive income Loan to a joint venture (note ii) ii 118,485 95,953 17 2017

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the six months ended 30 June 2017 12. Interest in a Joint Venture (Continued) notes: 12. (i) Details of the Group s joint venture and its subsidiary at 30 June 2017 are as follows: (i) 2017 6 30 Name of joint venture and its subsidiary Form of entity Place of incorporation and operations Issued and fully paid share capital/ registered capital Proportion of issued and fully paid up capital held by the Group Directly Indirectly Principal Activity Joint Venture: Southern Hill Company Limited Limited incorporated Hong Kong Ordinary shares HK$2 2 50% Investment holding Its wholly-owned subsidiary: (Ruichang Lee & Man Logistics Company Limited) Limited incorporated PRC Registered capital US$12,000,000 12,000,000 50% Provision of port facilities (ii) The loan is provided to the joint venture in form of a shareholder s loan and it forms part of the net investment in the joint venture. Except for an amount of HK$21,168,000 which bears interest at 3.8% per annum and repayable by 31 December 2018, the remaining amount is unsecured, interest-free and has no fixed repayment term and the settlement is neither planned nor likely to occur in the foreseeable future. (ii) 21,168,000 3.8%2018 12 31 18 Lee & Man Paper Manufacturing Limited 2017 Interim Report

13. Inventories 13. 30 June 2017 2017 6 30 HK$ 000 31 December 2016 2016 12 31 HK$ 000 Raw materials 3,063,394 2,689,543 Finished goods 375,916 224,889 3,439,310 2,914,432 14. Trade and Other Receivables 14. 30 June 2017 2017 6 30 HK$ 000 31 December 2016 2016 12 31 HK$ 000 Trade receivables 3,045,660 2,131,788 Less: allowance for doubtful debt (25,856) (30,360) 3,019,804 2,101,428 Bills receivables 1,392,906 1,511,703 Prepayments and deposits for purchase of raw materials 4,412,710 3,613,131 818,507 687,653 Other deposits and prepayments 157,436 50,594 Value added tax receivables 566,182 398,512 Other receivables 220,158 209,973 6,174,993 4,959,863 19 2017

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the six months ended 30 June 2017 14. Trade and Other Receivables (Continued) The Group allows its customers an average credit period of 45 to 90 days. The following is an aged analysis of trade and bills receivables presented based on the invoice date at the end of the reporting period. 14. 4590 30 June 2017 2017 6 30 HK$ 000 31 December 2016 2016 12 31 HK$ 000 Aged: Not exceeding 30 days 30 3,451,975 3,210,017 31 60 days 31 60 735,995 293,645 61 90 days 61 90 131,578 57,991 91 120 days 91 120 34,008 25,873 Over 120 days 120 59,154 25,605 4,412,710 3,613,131 20 Lee & Man Paper Manufacturing Limited 2017 Interim Report

15. Trade and Other Payables 15. 30 June 2017 2017 6 30 HK$ 000 31 December 2016 2016 12 31 HK$ 000 Trade and bills payables 2,839,292 2,555,195 Construction fee payable 553,727 463,646 Accruals 234,110 167,460 Receipt in advance 151,239 122,516 Other payables 184,692 240,414 3,963,060 3,549,231 The average credit period taken for trade purchases ranges from 30 to 120 days. The following is an aged analysis of the trade and bills payables presented based on the invoice date at the end of the reporting period. 30 120 30 June 2017 2017 6 30 HK$ 000 31 December 2016 2016 12 31 HK$ 000 Aged: Not exceeding 30 days 30 1,212,922 1,213,666 31 60 days 31 60 615,715 603,054 61 90 days 61 90 430,896 350,298 91 120 days 91 120 546,560 370,937 Over 120 days 120 33,199 17,240 2,839,292 2,555,195 21 2017

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the six months ended 30 June 2017 16. Share Capital 16. Number of ordinary shares Amount HK$ 000 Authorised: Ordinary shares of HK$0.025 each at 1 January 2016, 31 December 2016 and 30 June 2017 2016 1 1 2016 12 31 2017 6 30 0.025 8,000,000,000 200,000 Issued and fully paid: Ordinary shares of HK$0.025 each at 1 January 2016 2016 1 1 0.025 4,579,000,000 114,475 Shares repurchased and cancelled (33,340,000) (833) Ordinary shares of HK$0.025 each at 31 December 2016 2016 12 31 0.025 4,545,660,000 113,642 Shares repurchased and cancelled (note) (29,020,000) (726) Ordinary shares of HK$0.025 each at 30 June 2017 2017 6 30 0.025 4,516,640,000 112,916 note: Including 7,060,000 shares repurchased in December 2016 and cancelled in January 2017. 2016 122017 1 7,060,000 22 Lee & Man Paper Manufacturing Limited 2017 Interim Report

17. Operating Leases The Group as lessee At the end of the reporting period, the Group had commitments for future minimum lease payments under noncancellable operating leases in respect of land and buildings, which fall due as follows: 17. 30 June 2017 2017 6 30 HK$ 000 31 December 2016 2016 12 31 HK$ 000 Within one year 1 8,467 9,123 In the second to fifth year inclusive 25 9,169 7,455 17,636 16,578 The Group as lessor At the end of the reporting period, the Group had contracted with tenants for the following future minimum lease payments: 30 June 2017 2017 6 30 HK$ 000 31 December 2016 2016 12 31 HK$ 000 Within one year 1 24,526 17,119 In the second to fifth year inclusive 25 100,691 87,449 Over five years 5 121,930 118,848 247,147 223,416 23 2017

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the six months ended 30 June 2017 18. Capital Commitments 18. 30 June 2017 2017 6 30 HK$ 000 31 December 2016 2016 12 31 HK$ 000 Capital expenditures contracted for but not provided in the condensed consolidated financial statements in respect of acquisition of: property, plant and equipment 1,900,935 2,164,178 land use rights 57,636 137,858 1,958,571 2,302,036 19. Related and Connected Party Disclosures During the period, the Group had significant transactions with related parties, certain of which are also deemed to be connected parties pursuant to the Listing Rules. Significant transactions with these parties during the period are as follows: 19. Six months ended 30 June 6 306 2017 2016 Name of parties Nature of transactions HK$ 000 HK$ 000 Lee & Man Industrial Manufacturing Limited (note i) i Finished goods sold by the Group Electricity and steam fee received by the Group Raw materials and other materials purchased by the Group 56,527 42,301 1,172 1,361 1,478 819 Lee & Man Paper Products Company Limited (note i) i Licence fee expenses incurred by the Group 946 997 24 Lee & Man Paper Manufacturing Limited 2017 Interim Report

19. Related and Connected Party Disclosures (Continued) 19. Six months ended 30 June 6 306 2017 2016 Name of parties Nature of transactions HK$ 000 HK$ 000 Jiangsu Lee & Man Chemical Limited (note ii) ii Electricity and steam fee received by the Group Raw materials purchased by the Group Rental income of office spaces 33,303 31,741 12,126 7,023 852 902 Jiangxi Lee & Man Chemical Limited (note ii) ii Electricity and steam fee paid by the Group Rental fee paid by the Group 18,461 18,183 942 659 notes: (i) These companies are indirectly wholly owned by the spouse of Mr. Li King Wai Ross (a director of the Company) who is also a daughter of Dr. Lee Wan Keung Patrick, the ultimate controlling shareholder of the Company. (i) (ii) These companies are beneficially owned and controlled by Dr. Lee Wan Keung Patrick, the ultimate controlling shareholder of the Company. (ii) 20. Review of Interim Accounts The condensed consolidated interim financial statements are unaudited, but have been reviewed by the Audit Committee. 20. 25 2017

INTERIM DIVIDEND/CLOSURE OF REGISTER OF MEMBERS Interim Dividend The Board has resolved to declare an interim dividend of HK$0.170 (2016: HK$0.110) per share for the six months ended 30 June 2017 to shareholders whose names appear on the Register of Members on 15 September 2017. It is expected that the interim dividend will be paid around 27 September 2017. Closure of Register of Members The Register of Members will be closed from 13 September 2017 to 15 September 2017, both days inclusive, during which period no transfer of shares can be registered. In order to qualify for the interim dividend, all transfers accomplished by the relevant share certificates must be lodged with the Company s Branch Share Registrars, Tricor Investor Services Limited, at Level 22 Hopewell Centre, 183 Queen s Road East, Hong Kong for registration no later than 4:30 pm on 12 September 2017. 2017 6 306 0.170 20160.110 2017 9 15 2017 9 27 2017 9 132017 9 15 2017 9 12 4 30 183 22 26 Lee & Man Paper Manufacturing Limited 2017 Interim Report

BUSINESS REVIEW AND OUTLOOK Business Review and Outlook For the six months ended 30 June 2017, the Group recorded total sales volume of 2.77 million tons and total revenue of HK$11.44 billion. Its interim net profit increased significantly by 53% to HK$2.19 billion as compared to last corresponding period, while its net profit per ton was HK$792. The Chinese government s efforts to eliminate obsolete production facilities while embarking on environmental-friendly policies has gradually reduced overcapacity in the industry. The demand recovery within the paper industry has also notably improved the demand and supply situation within the industry. The volume and selling prices of products sold by the Group increased and the profit margin also recorded a satisfactory growth. At present, the total annual production volume of the Group s tissue paper business is 465,000 tons, which includes eight tissue paper manufacturing machines with a total annual production volume of 355,000 tons located in the Chongqing Industrial Park and the tissue paper manufacturing machines with a total annual production volume of 110,000 tons located in Jiangxi Industrial Park. The Group will be able to further reduce the production cost of tissue paper through economies of scale, leveraging the increase in production volume and by utilising its pulp production facilities in Chongqing. Another four production lines with a combined annual production capacity of 220,000 tons located in the Chongqing Industrial Park and Hongmei Guangdong, as well as two newly planned production lines with an annual production capacity of 110,000 tons to be added to Chongqing Industrial Park, will commence production respectively by end of this year and mid next year. After all of the production lines ramp up operation, the Group s annual production capacity for tissue paper will reach 795,000 tons. The tissue paper business is therefore expected to contribute considerable profit to the Group as it becomes another new growth driver in the future. 2017 6 306 277114.4 53% 21.9 792 46.5 835.5 2 11 422 2 11 79.5 27 2017

BUSINESS REVIEW AND OUTLOOK Apart from the tissue paper business, the Group also expanded into the overseas packaging paper markets and invested in the construction of overseas paper factories to keep pace with the expansion of the South East Asian markets. The paper manufacturing machine project in Hau Giang, Vietnam, with an annual production capacity of 400,000 tons began operation during the period. Since the overseas packaging paper market possesses enormous potential, the Group will consider directing more resources to this sector. The PM21 paper manufacturing machine with an annual production volume of 400,000 tons at the Jiangxi plant is also under construction and will begin operation in September this year. Once the machine is fully operational, the annual production capacity of the Group s packaging paper operation will exceed 6 million tons. 40 40 PM21 600 In order to address overcapacity and environmental issues in the paper industry, obsolete production facilities have steadily been eliminated in China as approval standards for new production capacities have become more stringent in recent years. Local government authorities intend to impose more stringent environmental monitoring policies and stricter requirements on environmental protection, which will lead to the shutdown of even more obsolete production facilities that fail to meet environmental standards. Despite the slowdown in economic growth in China, local demand for packaging paper is expected to grow steadily in the long run. In addition, the rapid development of e-commerce and online shopping has led to fundamental changes in the consumption and logistics models, benefitting the packaging paper industry which is currently undergoing consolidation. Looking ahead, overall paper consumption still possesses considerable room for growth, thus the Group is optimistic about the outlook of both the packaging paper segment and the paper industry as a whole. Adhering to its long-held prudent strategies and with debts maintained at a reasonable level, the Group will monitor the pace of economic development in China and across South East Asia, while it continues to bolster the production capacity of packaging and tissue paper, as well as strengthen its presence in Vietnam. The management will also proceed with efforts to enhance production efficiency, strictly control costs and strengthen capital operation in order to maintain the Group s competitiveness in the paper industry. Furthermore, the experienced and capable management team will continue to lead the development of the Group s businesses and exert efforts to enhance profitability. 28 Lee & Man Paper Manufacturing Limited 2017 Interim Report

MANAGEMENT DISCUSSION AND ANALYSIS Results of Operation Revenue and net profit attributable to owners of the Company for the six months ended 30 June 2017 was HK$11,440 million and HK$2,194 million respectively and that for the corresponding period last year was HK$8,369 million and HK$1,430 million respectively. The earnings per share for the period was HK48.42 cents as compared to HK31.36 cents for the corresponding period last year. The Chinese government s efforts to eliminate obsolete production facilities while embarking on environmental-friendly policies has gradually reduced overcapacity in the industry. The demand recovery within the paper industry has also notably improved the demand and supply situation within the industry. The volume and selling prices of products sold by the Group increased and the profit margin also recorded a satisfactory growth. Distribution and Selling Expenses The Group s distribution and selling expenses was HK$205 million for the six months ended 30 June 2017 as compared to HK$114 million for the corresponding period last year. It represented about 1.8% of the revenue for the six months ended 30 June 2017 and was increased as compared to that of 1.4% for the corresponding period last year. More customers required delivery of the finished goods by the Group during the period. General and Administrative Expenses The Group s general and administrative expenses was HK$515 million for the six months ended 30 June 2017 as compared to HK$408 million for the corresponding period last year. It represented about 4.5% of the revenue for the six months ended 30 June 2017 and was comparable to the corresponding period last year. Finance Costs The Group s total finance costs (including the amounts capitalised) was HK$134 million for the six months ended 30 June 2017 as compared to HK$159 million for the corresponding period last year. The decrease was mainly due to the decrease in average interest rate on bank borrowings during the period. 2017 6 306 114.421.94 83.6914.30 48.42 31.36 2017 6 306 2.051.14 2017 6 306 1.8%1.4% 2017 6 306 5.154.08 2017 6 306 4.5% 2017 6 306 1.34 1.59 29 2017

MANAGEMENT DISCUSSION AND ANALYSIS Inventories, Debtors and Creditors Turnover The inventory turnover of the Group s raw materials and finished products were 75 days and 6 days, respectively, for the six months ended 30 June 2017 as compared to 85 days and 3 days, respectively, for the year ended 31 December 2016. This exhibits continued strong demand from our customers. The Group s debtors turnover days were 48 days for the six months ended 30 June 2017 as compared to 42 days for the year ended 31 December 2016. This is in line with the credit terms of 45 days to 90 days granted by the Group to its customers. The Group s creditors turnover days were 69 days for the six months ended 30 June 2017 as compared to 80 days for the year ended 31 December 2016. This is in line with the credit terms granted by the Group s suppliers. Liquidity, Financial Resources and Capital Structure The total shareholders fund of the Group as at 30 June 2017 was HK$18,748 million (31 December 2016: HK$16,823 million). As at 30 June 2017, the Group had current assets of HK$10,669 million (31 December 2016: HK$9,193 million) and current liabilities of HK$9,224 million (31 December 2016: HK$7,964 million). The current ratio was 1.16 as at 30 June 2017 as compared to 1.15 at 31 December 2016. The Group generally finances its operations with internal generated cash flow and credit facilities provided by its principal bankers in Hong Kong, Macau and the PRC. As at 30 June 2017, the Group had outstanding bank borrowings of HK$14,223 million (31 December 2016: HK$13,547 million). These bank loans were secured by corporate guarantees provided by certain subsidiaries of the Company. As at 30 June 2017, the Group maintained bank balances and cash of HK$1,001 million (31 December 2016: HK$1,274 million). The Group s net debt-to-equity ratio (total borrowings net of cash and cash equivalents over shareholders equity) decreased from 0.73 as at 31 December 2016 to 0.71 as at 30 June 2017. Capital expenditure were comparable to last period but there was an increase in translation reserve as a result of Renminbi appreciation during the period. The Group possesses sufficient cash and available banking facilities to meet its commitments and working capital requirements. 2017 6 306 756 2016 12 31 853 2017 6 306 48 2016 12 31 4245 90 2017 6 306 69 2016 12 31 80 2017 6 30 187.482016 12 31168.23 2017 6 30 106.692016 12 3191.93 92.242016 12 3179.64 2017 6 30 1.16 2016 12 31 1.15 2017 6 30 142.232016 12 31135.47 2017 6 30 10.012016 12 3112.74 2016 12 310.73 2017 6 300.71 30 Lee & Man Paper Manufacturing Limited 2017 Interim Report

The Group s transactions and the monetary assets are principally denominated in Hong Kong dollars, Renminbi, United States dollars or Euro. The Group has not experienced any material difficulties or effects on its operations or liquidity as a result of fluctuations in currency exchange rates during the six months ended 30 June 2017. The Group has used currency structured instruments, foreign currency borrowings or other means to hedge its foreign currency exposure. Employees As at 30 June 2017, the Group had a workforce of more than 7,200 employees. Salaries of employees are maintained at a competitive level and are reviewed annually, with close reference to the relevant labour market and economic situation. The Group also provides internal training to staff and provides bonuses based upon staff performance and profits of the Group. 2017 6 306 2017 6 30 7,200 The Group has not experienced any significant problems with its employees or disruption to its operations due to labour disputes nor has it experienced any difficulty in the recruitment and retention of experienced staff. The Group maintains a good relationship with its employees. 31 2017

OTHER INFORMATION Ultimate Suppliers and Buying Agents Besides purchasing directly from the suppliers, the Group also engages certain independent buying agents to source waste paper from their ultimate suppliers mainly supermarkets, paper packing companies and recycling plants. The Group s buying agents in the United States and Europe, namely Ralison International Inc., Mark Lyndon International BV and Mark Lyndon Paper Enterprises (UK) Limited, are ultimately owned by Mr. Albert Chiu Tung- Choi, a distant relative of the Company s ultimate controlling shareholder, Dr. Lee Wan Keung Patrick and his sons, Dr. Lee Man Chun Raymond and Mr. Lee Man Bun, both of whom are executive directors of the Company. These buying agents are not connected persons of the Company pursuant to the Listing Rules. They receive a commission for sourcing the raw materials of waste paper and they did not trade and are contractually obliged not to take a position on or otherwise maintain an inventory of waste paper themselves. Their primary role is to coordinate the logistics in order to have the waste paper delivered to the Group, including on-site inspections and customs clearance, and thereby reduces the regulatory risk for the Group. The total prices paid for the waste paper (including the price of waste paper paid to ultimate suppliers and commission paid to the buying agents) were made on an arm s length basis. The Group sourced 35% and 43% of its total raw materials through these buying agents for the six months ended 30 June 2017 and 2016, respectively. The commission paid to these buying agents amounted to HK$39.1 million and HK$39.9 million for the six months ended 30 June 2017 and 2016, respectively. None of the directors, their associates or any shareholder which owned more than 5% of the Company s issued share capital had any interest in the share capital of the five largest suppliers of the Group. Ralison International Inc. Mark Lyndon International BV Mark Lyndon Paper Enterprises (UK) Limited 20172016 6 306 35% 43% 20172016 6 30639.139.9 5% 32 Lee & Man Paper Manufacturing Limited 2017 Interim Report

Directors and Chief Executives Interests and Short Positions in Equity or Debt Securities As at 30 June 2017, the interests of the directors and the chief executives and their associates in the shares, underlying shares and debentures of the Company and its associated corporations, as recorded in the register maintained by the Company pursuant to section 352 of the Securities and Futures Ordinance ( SFO ), or as otherwise notified to the Company and pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers ( Mode Code ), The Stock Exchange of Hong Kong Limited (the Stock Exchange ) were as follows: 2017 6 30 352 Long positions Ordinary shares of HK$0.025 each of the Company 0.025 Name of director Capacity Number of ordinary shares Percentage of the issued share capital of the Company Dr. Lee Man Chun Raymond Mr. Lee Man Bun Mr. Li King Wai Ross Professional Poon Chung Kwong Beneficial owner Beneficial owner Held by spouse Beneficial owner 282,000,000 6.24% 309,040,000 6.84% 2,867,477 0.06% 100,000 0.002% note: Save as disclosed above, none of the directors or chief executives or their associates had any interests or short positions in any shares, underlying shares or debentures of the Company or any of its associated corporations as at 30 June 2017. 2017 6 30 33 2017

OTHER INFORMATION Substantial Shareholders The register of substantial shareholders maintained by the Company pursuant to Section 336 of the SFO shows that, at 30 June 2017, other than directors and chief executives, the following shareholders had notified the Company of the relevant interests in the issued share capital of the Company. Long positions Ordinary shares of HK$0.025 each of the Company 336 2017 6 30 0.025 Name of shareholder Capacity Number of issued ordinary shares held Percentage of the issued share capital of the Company Gold Best Holdings Ltd. Dr. Lee Wan Keung Patrick Ms. Lee Wong Wai Kuen Beneficial owner Held by controlled corporation (note i) i Held by spouse (note ii) ii 2,536,710,000 56.16% 2,536,710,000 56.16% 2,536,710,000 56.16% notes: (i) Gold Best Holdings Ltd. ( Gold Best ) is wholly owned by Dr. Lee Wan Keung Patrick. (i) Gold Best Holdings Ltd. ( Gold Best ) (ii) Under the SFO, Ms. Lee Wong Wai Kuen is deemed to be interested in these 2,536,710,000 ordinary shares as she is the spouse of Dr. Lee Wan Keung Patrick, the beneficial owner of Gold Best. (ii) Gold Best 2,536,710,000 Other than as disclosed above, the Company had not been notified of any other relevant interests or short positions in the shares or underlying shares of the Company as at 30 June 2017. 2017 6 30 34 Lee & Man Paper Manufacturing Limited 2017 Interim Report

Purchase, Sale or Redemption of the Company s Listed Securities During the six months ended 30 June 2017, the Company repurchased a total of 21,960,000 ordinary shares of HK$0.025 per share through the Stock Exchange at an aggregate consideration of approximately HK$134,802,000 (including transaction costs). All of the shares repurchased were cancelled during the period. Details of shares repurchased during the period are set out as follows: 2017 6 306 21,960,000 0.025 134,802,000 Month of repurchases No. of ordinary shares of HK$0.025 each 0.025 Price paid per share Highest Lowest Aggregate consideration paid (including expenses) HK$ HK$ HK$ 000 March 2017 2017 3 April 2017 2017 4 May 2017 2017 5 11,213,000 6.29 5.87 69,927 2,792,000 5.90 5.86 16,525 7,955,000 6.10 6.01 48,350 21,960,000 134,802 The directors believe that repurchases of shares are in the best interests of the Company and its shareholders and that such repurchases of shares would lead to an enhancement of the earnings per share of the Company. Save as disclosed above, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company s listed securities during the six months ended 30 June 2017. 2017 6 306 35 2017

OTHER INFORMATION Model Code for Securities Transactions The Company has adopted the Model Code as set out in Appendix 10 of the Listing Rules as a code of conduct regarding directors securities transactions. All the members of the board have confirmed, following specific enquiry by the Company that they have complied with the required standard as set out in the Model Code throughout the six months ended 30 June 2017. The Model code also applies to other specified senior management of the Group. Code on Corporate Governance Practices In the opinion of the directors, the Company has complied with the code on Corporate Governance Practices as set out in Appendix 14 of the Listing Rules throughout the six months ended 30 June 2017. Audit Committee The Audit Committee of the Company comprised of three independent non-executive directors namely, Mr. Chau Shing Yim David, Mr. Wong Kai Tung Tony and Mr. Peter A. Davies. The Audit Committee has reviewed with management the accounting principles and practices adopted by the Group and discussed internal control procedures and financial reporting matters including the review of the Group s unaudited interim financial statements for the six months ended 30 June 2017. On behalf of the Board Lee Man Chun Raymond Chairman Hong Kong, 21 August 2017 10 2017 6 306 2017 6 306 14 Peter A. Davies 2017 6 30 6 2017 8 21 36 Lee & Man Paper Manufacturing Limited 2017 Interim Report