Almana Limited — Interim / Quarterly Report 2013

Feb 24, 2016

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IR RESOURCES LIMITED 同仁資源有限公司

(Incorporated in the Bermuda with limited liability)

(Stock Code: 8186)

2013 INTERIM RESULTS

CHARACTERISTICS OF THE GROWTH ENTERPRISE MARKET (“GEM”) OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE “STOCK EXCHANGE”)

GEM is positioned as a market designed to accommodate companies to which a higher investment risk may be attached other than companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and sophisticated investors.

Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board of the Stock Exchange and no assurance is given that there will be a liquid market in the securities traded on GEM.

Hong Kong Exchanges and Clearing Limited and the Stock Exchange take no responsibility for the contents of this report, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

This announcement, for which the board (the “Board”) of directors (the “Directors”) of IR Resources Limited (the “Company”) collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on the GEM (the “GEM Listing Rules”) for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that, to the best of their knowledge and beliefs: (1) the information contained in this announcement is accurate and complete in all material respects and not misleading; (2) there are no other matters the omission of which would make any statement in this announcement misleading.

— 1 —

INTERIM RESULTS (UNAUDITED)

The Board would like to announce the unaudited condensed consolidated results (the “Interim Results”) of the Company and its subsidiaries (the “Group”) for each of the three months and the six months ended 30 June 2013, together with the unaudited comparative figures for the corresponding periods in 2012, as follows:

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS	CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS	CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS
For the three months ended 30 June For the six months ended 30 June 2013 2012 2013 2012 Notes HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenue 2 405 1,331 3,248 1,441 Cost of sales (333) (222) (2,876) (280)
Gross profit 72 Other income and gains 4 92 Selling and distribution costs (247) Administrative expenses (4,133) Finance costs (158) Gain on disposal of subsidiary — Impairment loss on biological assets (747) Share of profit of associates 2,116	1,109 372 1,736 232 (92) (423) (8,268) (9,615) — (176) — — — (1,815) 3,822 3,120	1,161 5,486 (287) (18,288) — 182 — 4,864
Loss before tax 5 (3,005) Income tax expenses 6 —	(1,693) (8,305) — —	(6,882) —
LOSS FOR THE PERIOD, ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY (3,005)	(1,693) (8,305)	(6,882)
2013 HK Cents Basic and diluted loss per share Loss for theperiod 7 (0.11)	2012 2013 HK Cents HK Cents (0.06) (0.32)	2012 HK Cents (0.26)

IR Resources Limited 2

Interim Report 2013

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Note LOSS FOR THE PERIOD OTHER COMPREHENSIVE INCOME Other comprehensive income to be reclassified to profit or loss in subsequent periods: Exchange differences on translation of foreign operations _Less:_Income tax effect	For the three months ended 30 June For the six months ended 30 June 2013 2012 2013 2012 HK$’000 HK$’000 HK$’000 HK$’000 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (3,005) (1,693) (8,305) (6,882) 981 (36) 411 (36) — — — —
OTHER COMPREHENSIVE INCOME FOR THE PERIOD, NET OF TAX	981 (36) 411 (36)
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD, ATTRIBUTABLE TO THE EQUITY HOLDERS OF THE COMPANY	(2,024) (1,729) (7,894) (6,918)

Interim Report 2013 3 IR Resources Limited

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 30 June 2013

	As at	As at
	30 June	31 December
	2013	2012
	Notes HK$’000	HK$’000
Non-current assets	(Unaudited)	(Audited)
Property, plant and equipment	9 22,066	23,634
Biological assets	—	—
Intangible assets	9 307,164	307,164
Goodwill	—	—
Interest in associates	150,802	147,274
Total non-current assets	480,032	478,072
Current assets
Inventories	10 7,489	5,736
Trade receivables	11 —	—
Prepayments, deposits and other receivables	16,326	14,951
Cash and bank balances	4,585	7,161
Total current assets	28,400	27,848
Current liabilities
Other loans, otherpayables and accruals	12 78,546	68,140
Total current liabilities	78,546	68,140
Net current liabilities	(50,146)	(40,292)
Net assets	429,886	437,780
EQUITY
Issued capital	13 131,198	131,198
Reserves	298,691	306,585
Total equity attributable to:
Equity holders of the Company	429,889	437,783
Non-controlling interests	(3)	(3)
Total equity	429,886	437,780

IR Resources Limited 4 Interim Report 2013

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2013

As at 1 January 2012 (audited)	Attributable to equity holders of the Company Share capital Share premium Contributed surplus Share options reserve Exchange reserve Accumulated losses Total Non- controlling interests Total equity HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 131,198 972,987 5,265 3,482 2,118 (73,809) 1,041,241 (3) 1,041,238
Lapse of share options	— — — (1,903) — 1,903 — — —
Loss for the period Other comprehensive income for the period: Exchange differences on translation of foreign operations	— — — — — (6,882) (6,882) — (6,882) — — — — (36) — (36) — (36)
Total comprehensive income for theperiod	— — — — (36) (6,882) (6,918) — (6,918)
As at 30 June 2012 (unaudited)	131,198 972,987 5,265 1,579 2,082 (78,788) 1,034,323 (3) 1,034,320
As at 1 January 2013 (audited)	131,198 972,987 5,265 1,579 (1,221) (672,025) 437,783 (3) 437,780
Loss for the period Other comprehensive income for the period: Exchange differences on translation of foreign operations	— — — — — (8,305) (8,305) — (8,305) — — — — 411 — 411 — 411
Total Comprehensive income for the period	— — — — 411 (8,305) (7,894) — (7,894)
As at 30 June 2013 (unaudited)	131,198 972,987 5,265 1,579 (810) (680,330) (429,889) (3) (429,886)

Interim Report 2013 5 IR Resources Limited

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 June 2013

For the six months ended 30 June 2013 2012 HK$’000 HK$’000 (Unaudited) (Unaudited) NET CASH FLOWS (USED IN)/FROM OPERATING ACTIVITIES (690) 4,689 NET CASH FLOWS USED IN INVESTING ACTIVITIES (1,886) (6,479) NET CASH FLOWS FROM FINANCING ACTIVITIES — —	For the six months ended 30 June 2013 2012 HK$’000 HK$’000 (Unaudited) (Unaudited) NET CASH FLOWS (USED IN)/FROM OPERATING ACTIVITIES (690) 4,689 NET CASH FLOWS USED IN INVESTING ACTIVITIES (1,886) (6,479) NET CASH FLOWS FROM FINANCING ACTIVITIES — —
NET DECREASE IN CASH AND CASH EQUIVALENTS (2,576) Cash and cash equivalents at beginning of the period 7,161 Effect of foreign exchange rate changes —	(1,790) 2,503 (19)
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD 4,585	694
Analysis of cash and cash equivalents Cash and bank balances 4,585	694

IR Resources Limited 6

Interim Report 2013

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2013

1. BASIS OF PREPARATION

The Interim Results for the six months ended 30 June 2013 (the “Reporting Period”) 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 the applicable disclosures required by the GEM Listing Rules.

The Interim Results have been prepared under the historical cost basis, except for biological assets which are stated at fair value. The principal accounting policies used in the preparation of the Interim Results are consistent with those applied in the Company’s annual report for the year ended 31 December 2012.

In the Reporting Period, the Group has adopted all the new and revised HKFRSs issued by the HKICPA that are relevant to its operations and effective for its accounting period beginning on 1 January 2013. HKFRSs comprise Hong Kong Financial Reporting Standards (“HKFRSs”); Hong Kong Accounting Standards (“HKASs”); and Interpretations. The adoption of these new and revised HKFRSs did not result in significant changes to the Group’s consolidated financial statements.

The Group has not applied the new HKFRSs that have been issued but are not yet effective. The Group has already commenced an assessment of the impact of these new HKFRSs but is not yet in a position to state whether these new HKFRSs will have a material impact on its results of operations and financial position.

As at 30 June 2013, the Group had cash and bank balances of approximately HK$4.6 million and recorded a consolidated net current liabilities of approximately HK$50.1 million. The Directors are of the opinion that the Group would be able to continue as a going concern and to meet their financial obligations in full after taken into consideration of the following factors:

(a) Attainment of profitable operations and improvement of operating cash flows

(i) Forestry and agricultural segment

• (1) In July 2015, the Company entered into a subscription agreement as supplemented by a supplemental agreement dated 30 September 2015 (collectively, the “Subscription Agreements”) with six subscribers (the “Subscribers”), who are independent third parties and have substantial experience in the timber industry with sales network. The relevant Subscribers (the “Timber Logging Subscribers”) will collaborate with a team of experienced personnel to establish an operating management team to revitalise the timber logging activities of the Group. Pursuant to the Subscription Agreements, (a) the Company will undergo an internal restructuring (the “Restructuring”); (b) the Timber Logging Subscribers will enter into working capital loan agreements with the Company, pursuant to which, the Timber Logging Subscribers will in aggregate provide an

7

IR Resources Limited

Interim Report 2013

• working capital loan up to HK$51,750,000 for the carrying out of the timber logging activities; and (c) the Timber Logging Subscribers have guaranteed that for the six-month period immediately after completion of the Subscription Agreements, the six-month period commencing on the seventh month after completion of the Subscription Agreements and the twelve-month period commencing on the thirteen month after completion of the Subscription Agreements, revenue derived from the timber logging activities will not be less than HK$50,000,000, HK$50,000,000 and HK$100,000,000, respectively; and

• (2) In November 2015, the Group entered into a cooperation agreement (the “Plantation Cooperation Agreement”) with an experienced plantation operator (the “Plantation Partner”), which has substantial experience in the business of plantation and has operations in Southeast Asia. Pursuant to the Plantation Cooperation Agreement, the Plantation Partner will engage in the plantation business of the Group and, together with the relevant Subscribers (the “Plantation Subscribers”), will provide funding to carry out the plantation business of the three forests and will undertake that the annual plantation volume of each of the three forests will be no less than those required by the local registration under the investment contracts. In addition, the Plantation Partner and the Plantation Subscribers will compensate the Company any penalty imposed by the Cambodian government for reasons that the annual plantation volume cannot be met.

(ii) Disposal of associates

The Group had disposed of its loss-making associates (the “Associates”) which is engaged in the processing and distribution of basic goods for a cash consideration of HK$2,500,000 in August 2015.

(b) Loan facilities

In November 2014, the Company entered into a loan facility agreement with its related company (“RC”, with a director of the Company was also a sole director and sole shareholder of RC who (i) resigned as a sole director of RC; and (ii) disposed of all equity interests in RC on 14 November 2014. RC ceased to be a related company of the Company since then) for a loan amount up to HK$25,000,000 (the “RC Loan”). The lender has agreed not to demand for repayment until the completion of the fund raising exercise after the shares of the Company have been resumed for trading and the Company is in a position to do so.

(c) Rights issue

On 24 February 2016, the Company entered into an underwriting agreement with an underwriter to raise fund of approximately HK$262 million (before expenses) by way of a rights issue (the “Rights Issue”), which, subject to fulfillment of certain conditions precedent pursuant to the underwriting agreement, is expected to be completed in May 2016, for purposes of general working capital and debt repayment.

IR Resources Limited 8 Interim Report 2013

(d) Further funding from the Timber Logging Subscribers, the Plantation Partner and Plantation Subscribers

As mentioned above, the working capital loans provided by the Timber Logging Subscribers and further funding provided by the Plantation Partner and the Plantation Subscribers will be applied to carry out the plantation business of the three forests.

In light of all the measures adopted and arrangements implemented, the Group will have sufficient cash resources to satisfy its future working capital and other financial requirements, the Directors are of the opinion that it is appropriate to prepare the consolidated financial statements on a going concern basis, notwithstanding the Group’s financial and liquidity position as at 30 June 2013. Should the Group be unable to continue as a going concern, adjustments would have to be made to restate the value of assets to their recoverable amounts, to provide for any further liabilities which might arise, and to reclassify noncurrent assets and liabilities as current assets and liabilities, respectively. The effects of these potential adjustments have not been reflected in these consolidated financial statements.

2. REVENUE

Revenue recognised during the period is analysed as follows:

	For the three months	For the six months	For the six months
	ended 30 June	ended 30 June
	2013 2012	2013	2012
Sales of wood and	HK$’000 HK$’000	HK$’000	HK$’000
agricultural products	405 1,331	3,248	1,441
	405 1,331	3,248	1,441

3. OPERATING SEGMENT INFORMATION

For management purposes, the Group is organised into business units based on their products and services and has three reportable operating segments as follows:

• (a) the forestry and agricultural segment is the timber logging, plantation and sales of wood and agricultural products;

• (b) the resources and logistics segment is the provision of resources and logistics business; and

• (c) the basic goods business segment is the processing and distribution of basic goods.

Interim Report 2013 9 IR Resources Limited

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 loss, which is a measure of adjusted loss before tax. The adjusted loss before tax is measured consistently with the Group’s loss before tax except that interest income and finance costs, as well as head office and corporate expenses are excluded from such measurement.

For the six months ended 30 June Forestry and agricultural segment Basic goods business segment Resources and logistics segment HK$’000 HK$’000 HK$’000 Revenue from external customers 3,248 — — Segment results (5,998) — — Share of profit of associates — 3,120 — Other income Impairment loss on biological assets Write-down of inventories to net realisable value Unallocated corporate revenue Unallocated corporate expenses Finance costs	For the six months ended 30 June Forestry and agricultural segment Basic goods business segment Resources and logistics segment HK$’000 HK$’000 HK$’000 Revenue from external customers 3,248 — — Segment results (5,998) — — Share of profit of associates — 3,120 — Other income Impairment loss on biological assets Write-down of inventories to net realisable value Unallocated corporate revenue Unallocated corporate expenses Finance costs	For the six months ended 30 June Forestry and agricultural segment Basic goods business segment Resources and logistics segment HK$’000 HK$’000 HK$’000 Revenue from external customers 3,248 — — Segment results (5,998) — — Share of profit of associates — 3,120 — Other income Impairment loss on biological assets Write-down of inventories to net realisable value Unallocated corporate revenue Unallocated corporate expenses Finance costs	2013 For the six months ended 30 June 2012 Total Forestry and agricultural segment Basic goods business segment Resources and logistics segment Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 3,248 1,441 — — 1,441 (5,998) (11,095) — (1,285) (12,380) 3,120 — 4,864 — 4,864 (1,815) — (166) — — 5,497 (3,270) (4,863) (176) —	012 Total HK$’000 1,441
		Resources and logistics segment
		HK$’000
		—
		—
	3,120	—
Loss before tax
Income tax expenses Loss for the year			— — (8,305) (6,882)

4. OTHER INCOME AND GAINS

For the three months ended 30 June For the s ended 2013 2012 2013 HK$’000 HK$’000 HK$’000 Written back on provision — 50 — Compensation for an acquisition — 1,616 — Others 92 70 232	For the three months ended 30 June For the s ended 2013 2012 2013 HK$’000 HK$’000 HK$’000 Written back on provision — 50 — Compensation for an acquisition — 1,616 — Others 92 70 232	ix months 30 June 2012 HK$’000 3,656 1,616 214
92	1,736 232	5,486

IR Resources Limited 10 Interim Report 2013

5. LOSS BEFORE TAX

Loss before tax is arrived at after charging:

	For the three months	For the six months
	ended 30 June	ended 30 June
	2013 2012 2013		2012
Finance costs	HK$’000 HK$’000 HK$’000 HK$’000
Interest on loans	158	— 176	—
Staff costs (excluding
directors’ emoluments)
Wages and salaries	813 1,764 1,286		3,124
Pension scheme
contributions	19	16 25	32
Other items
Auditors’ remuneration Depreciation of property,	315	110 1,131	221
plant and equipment	613 1,702 1,122		2,920
Impairment loss on
biological assets	747	— 1,815	—
Minimum lease payments
under operating lease:	233	274 516	543
land and building
Amortisation of intangible
assets	— 3,183 —		6,366

Interim Report 2013 11 IR Resources Limited

6. INCOME TAX EXPENSES

(a) Hong Kong Profits Tax

No provision for Hong Kong Profits Tax has been made for the three months and the six months ended 30 June 2013 (2012: Nil) as the Group did not generate any assessable profits arising in Hong Kong during the Reporting Period.

(b) PRC Corporate Income Tax

No provision for the PRC corporate income tax has been made for the subsidiaries of the Company in the People’s Republic of China (the “PRC”) as they did not generate any assessable profits arising in the PRC for the three months and the six months ended 30 June 2013 (2012: Nil) determined in accordance with the relevant income tax rules and regulations in the PRC.

(c) Cambodian Corporate Income Tax

No provision for Cambodian corporate income tax has been made for the subsidiaries of the Company in the Kingdom of Cambodia (“Cambodia”) as they did not generate any assessable profits arising in Cambodia for the three months and the six months ended 30 June 2013 (2012: Nil) determined in accordance with the relevant tax rules and regulations in Cambodia.

(d) Deferred Taxation

No provision for deferred taxation is deemed necessary as the Group does not have any material deductible or taxable temporary differences for the three months and the six months ended 30 June 2013 (2012: Nil).

7. LOSS PER SHARE

The calculation of the basic and diluted loss per share for the three months and the six months ended 30 June 2013 are based on the loss attributable to the equity holders of the Company being HK$3.0 million (2012: HK$1.7 million) and HK$8.3 million (2012: HK$6.9 million), respectively, divided by weighted average numbers of 2,623,950,965 ordinary shares for the three months and the six months ended 30 June 2013 (2012: 2,623,950,965 ordinary shares) in issue for the relevant periods.

No adjustment has been made to the basic loss per share amounts presented for the three months and the six months ended 30 June 2013 and 30 June 2012 in respect of a dilution as the impact of the share options outstanding had an anti-dilutive effect on the basic loss per share amounts presented.

IR Resources Limited 12 Interim Report 2013

8. DIVIDENDS

The Directors do not recommend the payment of interim dividend for the six months ended 30 June 2013 (2012: Nil).

9. MOVEMENT OF PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS

There was no additions to the property, plant and equipment of the Group during the Reporting Period (2012: HK$2.5 million).

There was no additions to the intangible assets of the Group during the Reporting Period (2012: HK$5.5 million).

10. INVENTORIES

As at	As at
30 June	31 December
2013	2012
HK$’000	HK$’000
	(Audited)
Raw materials 382	712
Work in progress 4,414	1,936
Finished goods 2,693	3,088
7,489	5,736

11. TRADE RECEIVABLES

As at	As at
30 June	31 December
2013	2012
HK$’000	HK$’000
	(Audited)
Trade receivables 2,001	2,001
_Less:_Impairment (2,001)	(2,001)
—	—

Interim Report 2013 13 IR Resources Limited

12. OTHER LOANS, OTHER PAYABLES AND ACCRUALS

		As at	As at
		30 June 31 December
		2013	2012
		HK$’000	HK$’000
			(Audited)
Other payables and accrued liabilities		37,478	34,463
Related parties	#
Due to director*		2,022	1,722
Due to related	parties	10,627	8,987
Due to Mr. Zhang Zhenzhong		—	22,968
KW Loan_(notes (a) and 18)_		28,419	—
		78,546	68,140

• The amount due to director is unsecured, interest free and has no fixed terms of repayment.

The amounts due to related parties, of which are the key management and the director of the Company, are unsecured, interest free and have no fixed terms of repayment.

Note:

(a) As detailed in note 18, Keen Wood Group Limited (“Keed Wood”), a wholly owned subsidiary of the Company, entered into a loan agreement (the “KW Loan Agreement”) with Mr. Zhang Zhenzhong (“Mr. Zhang”), a former chief executive officer. Pursuant to the KW Loan Agreement, Mr. Zhang would provide 2 loans facilities in an aggregate principal amount of up to HK$76,300,000 to Keen Wood which was interest bearing at 5% per annum, secured by 100% of the shares in Forest Glen Group Limited (“Forest Glen”) and China Cambodia Resources Limited (“China Cambodia”). As at 30 June 2013, the outstanding balances of the principal drawn down by Keen Wood under the KW Loan Agreement amounted to HK$28,269,000 (collectively, the “KW Loan”).

During the period ended 30 June 2013, the accrued interest regarding the KW Loan of approximately HK$150,000 was recognised. Subsequently, the KW Loan together with the accrued interest had been assigned to RC.

IR Resources Limited 14 Interim Report 2013

13. SHARE CAPITAL

As at 30 June 2013	As at 31 December 2012	As at 31 December 2012	(Audited)
Amount		Amount
No. of Shares per Share Amount	No. of Shares	per Share	Amount
’000 HK$ HK$’000	’000	HK$	HK$’000
Authorised At beginning and at the end of the year/ period 4,000,000 0.05 200,000	4,000,000	0.05	200,000
Issued and fully paid At beginning and at the end of the year/ period 2,623,951 0.05 131,198	2,623,951	0.05	131,198

14. OPERATING LEASE COMMITMENTS

As lessee

The Group leases certain of its office properties under operating lease arrangements. Leases for properties are negotiated for terms of two years.

At 30 June 2013, the Group had total future minimum lease payments under non-cancellable operating leases falling due as follows:

operating leases falling due as follows:
At	At
30 June	31 December
2013	2012
HK$’000	HK$’000
	(Audited)
Within 1 year 270 In the second to fifth years, inclusive 162	— —
432	—

15. COMMITMENTS

Capital commitments

In addition to the operating lease commitments detailed in note 14 above, the Group has the following capital commitments at the end of the reporting period:

As at	As at
30 June	31 December
2013	2012
HK$’000	HK$’000
	(Audited)
Plantation and clearing of forests —	16,123
Property, plant and equipment —	2,090
—	18,213

Interim Report 2013 15 IR Resources Limited

16. RELATED PARTY TRANSACTIONS

• (i) Save as those transactions and balances disclosed elsewhere in the Interim report, the Group had the following material transactions with related parties during the Reporting Period:

	For the six months ended 30 June	For the six months ended 30 June
	2013	2012
	HK$’000	HK$’000
Interest on the KW Loan_(notes_	12a) 150	—
	150	—

The related party transactions were conducted on terms negotiated between the Group and the related parties.

(ii) Outstanding balances with related parties:

As disclosed in note 12, the Group had an amount due to Mr. Zhang of HK$28,419,000 (31 December 2012: HK$22,968,000) as at 30 June 2013, was interest bearing at 5% per annum, secured by 100% of the shares in Forest Glen and China Cambodia. All rights of the KW Loan had been assigned to RC on 31 October 2014, details of which, are set out in note 18 to the Interim report.

• (iii) Compensation of key management personnel of the Group:

	For the six months ended 30 June	For the six months ended 30 June
	2013	2012
	HK$’000	HK$’000
Short term employee benefits	980	710
Post-employment benefits	—	—
Equity-settled share option expenses	—	—
Total compensation paid to key management
personnel	980	710

IR Resources Limited 16 Interim Report 2013

17. EVENTS AFTER THE REPORTING PERIOD

Subsequent to the end of the reporting period, the Group had the following material events:

• (i) As detailed in notes 1(a)(i) and 1(b) to the Interim report, the Company entered into (1) a loan facility of the RC Loan in November 2015; (2) the Subscription Agreements with the Subscribers in July and September 2015; and (3) the Plantation Agreement with the Plantation Planter in November 2015, for the purpose of the attainment of profitable operations and improvement of operating cash flows of the Group;

• (ii) As detailed in note 1(a)(ii) to the Interim report, the disposal of the Associates was completed in August 2015; and

• (iii) As detailed in note 1(c) to the Interim report, the Company entered into an underwriting agreement with an underwriter subsequent to the end of the reporting period on 24 February 2016 regarding the Rights Issue of approximately HK$262 million (before expenses). At the date of the Interim report, the Rights Issue was not yet been completed.

18. LITIGATIONS

Litigation with Mr. Zhang

On 21 May 2013, Keen Wood entered into the KW Loan Agreement with Mr. Zhang to provide the KW Loan in the aggregate principal amount of up to HK$76,300,000 to Keen Wood. The KW Loan bore interest at the rate of 5% per annum, and was secured by 100% of the shares (the “Shares Charges”) in Forest Glen and China Cambodia, in which, as to HK$37,323,000 should be repaid on or before 20 May 2015 and the remaining balances of HK$9,464,000 should be repaid on or before 20 May 2016. If defaults (the “Defaults”) in the KW Loan Agreement is triggered, an additional interest of (i) 15% will be charged for the first 20 business days from said due date; (ii) 30% will be charged for the first 3 months immediately following the first 20 business days; and (iii) 50% will be charged thereafter.

On 10 March 2014, 28 March 2014 and 21 August 2014, respectively, the Group received the letters issued by Mr. Zhang, he purported to declare that Defaults had occurred and the KW Loan would immediately due and payable and the Shares Charges were enforceable. Mr. Zhang also commenced legal proceeds (the ”Litigation”) in the British Virgin Island Court against with Keen Wood, Forest Glen and China Cambodia.

On 31 October 2014, RC acquired the KW Loan from Mr. Zhang. As such, Mr. Zhang is no longer a creditor of the Group in respect of the KW Loan and ceased to have any right to enforce the security under the Shares Charges. The Litigation was withdrawn by Mr. Zhang on 15 December 2014.

Other litigations

Apart from the above, the Group has certain litigations arising from its former landlord and staff regarding the settlement of the accrued salaries, rental and other outstanding balances of approximately HK$2,480,000. The litigations with the former landlord and the staff have been subsequently settled in March 2015 and January 2016. Such amounts have been fully provided in the consolidated financial statements of the Group and did not have further material financial impact of the Group.

Interim Report 2013 17 IR Resources Limited

MANAGEMENT DISCUSSION AND ANALYSIS

FINANCIAL AND BUSINESS REVIEW

The Group is principally engaged in (i) forestry and agricultural business in Cambodia (logging of existing trees from and subsequent plantation of rubber trees or other agricultural produce on the three forests (the “Three Forests”) for which the Group has been granted the exploitation concession right and the subsequent sale of wood and agricultural products); and (ii) resources and logistics business.

Revenue of the Group for the six months ended 30 June 2013 amounted to HK$3.2 million (2012: HK$1.4 million) mainly derived from sale of wood and agricultural products.

The consolidated loss and loss attributable to its equity holders of the Company for the Reporting Period amounted to HK$8.3 million (2012: HK$6.9 million). The increase of the loss over the prior period was mainly resulted from an impairment loss on biological assets.

The basic and diluted loss per share for the six months ended 30 June 2013 was HK0.32 cents (2012: HK0.26 cents).

FINANCIAL RESOURCES, BORROWINGS, BANKING FACILITIES AND LIQUIDITY

During the period ended 30 June 2013, the net cash used in operating activities amounted to HK$0.7 million (2012: cash flow from HK$4.7 million) and the net cash used in investing activities amounted to HK$1.9 million (2012: HK$6.5 million) and net cash inflow from financing activities was Nil (2012: Nil). As a result of the cumulative effect described above, the Group recorded a net cash outflow of HK$2.6 million (2012: HK$1.8 million).

As at 30 June 2013, the Group had total assets of HK$508.4 million (31 December 2012: HK$505.9 million) and total liabilities of HK$78.6 million (31 December 2012: HK$68.1 million). The Groups gearing ratio (calculated as percentage of the Group’s total liabilities to total assets) was 15.5% (31 December 2012: 13.5%). As at 30 June 2013, the Group did not have any outstanding bank borrowings (31 December 2012: Nil).

IR Resources Limited 18 Interim Report 2013

As at 30 June 2013, the Group’s current assets amounted to HK$28.4 million (31 December 2012: HK$27.8 million), of which HK$4.6 million (31 December 2012: HK$7.2 million) was cash and bank deposits, and its current liabilities amounted to HK$78.6 million (31 December 2012: HK$68.1 million).

As at 30 June 2013, the net asset value of the Group amounted to HK$429.9 million (including non-controlling interest) (31 December 2012: HK$437.8 million) and its net asset value per share amounted to HK$0.16 (31 December 2012: HK$0.17).

CAPITAL COMMITMENT

Details of the capital commitment of the Group are disclosed in note 15 to the Interim Report.

SIGNIFICANT INVESTMENTS AND MATERIAL ACQUISITIONS AND DISPOSALS

During the Reporting Period, the Group did not make any significant investment and any material acquisition/disposal.

CHARGE ON ASSETS OF THE GROUP

No asset of the Group was pledged as at 30 June 2013 (31 December 2012: Nil).

RISKS

Exposure to exchange fluctuation

The Group mainly operates in Hong Kong, Cambodia and the PRC and is exposed to foreign exchange risk. Although the Group does not have a foreign currency hedging policy, it continuously monitors its foreign exchange exposure and will consider to apply appropriate measures if necessary. The Group’s forestry business is also subject to a number of risks including the weather conditions, natural hazards, illegal loggings and price movement of the wooden products.

Interim Report 2013 19 IR Resources Limited

CONTINGENT LIABILITIES

As at 30 June 2013, the Group and the Company did not have any material outstanding contingent liabilities (31 December 2012: Nil).

LITIGATION

Details of the litigations of the Group are disclosed in note 18 to the Interim report.

EVENTS AFTER THE REPORTING PERIOD

Details of the events after the reporting period of the Group are disclosed in note 17 to the Interim report.

SUSPENSION IN TRADING IN THE SHARES

Trading in the shares of the Company has been suspended since April 2013 and will remain suspended pending the fulfillment of the resumption conditions.

PROSPECTS

Looking forward, the Group will (i) continue to implement strategies to strengthen its forestry and agricultural business and (ii) seize appropriate investment/business in its resources and logistics business as well as debt/equity fund raising opportunities so as to enhance the financial condition of the Group for continuous development.

EMPLOYEES’ INFORMATION AND BENEFIT SCHEMES FOR THE EMPLOYEES

As at 30 June 2013, the Group had 147 (2012: 116) employees. The Group remunerates its employees based on their performance, working experience and the prevailing market condition.

IR Resources Limited 20 Interim Report 2013

OTHER INFORMATION

DIRECTORS’ AND CHIEF EXECUTIVE’S INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES

As at 30 June 2013, the interests and short positions of the Directors and the chief executive of the Company in the shares, underlying shares and debentures of the Company (within the meaning of Part XV of the Securities and Futures Ordinance (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 minimum standards of dealings by the Directors as referred to in Rules 5.46 to 5.67 of the GEM Listing Rules, were as follows:

				Approximate
				percentage of
				shareholding
		Number of	Number of	in the
Name	Capacity Interest	Shares	Shares	Company
			(Note 1)
Better Day International Limited
(“Better Day”)(Note 2)	Corporate owner	446,370,967	—	17.01%
Mr. Gong Ting_(Note 3)_	Beneficial owner	415,000,000	—	15.82%
Mr. Leung Sze Yuan, Alan_(Note 4)_ Beneficial owner		10,950,917	—	0.42%
		—	5,000,000	0.19%
Mr. Zhang_(Note 5)_	Beneficial owner	27,328,000	—	1.04%
		—	5,000,000	0.19%

Notes:

1. represented the share options granted but not yet exercised.

2. Better Day is wholly and beneficially owned by Ms. Yu Xiao Min, an executive Director.

3. Mr. Gong Ting resigned as an executive Director in September 2014.

4. Mr. Leung Sze Yuan, Alan resigned a Director in March 2015.

5. Mr. Zhang was removed as the chief executive officer of the Company in October 2014.

Interim Report 2013 21 IR Resources Limited

SHARE OPTION SCHEME

Pursuant to an ordinary resolution passed by the shareholders of the Company on 10 June 2011, the Company terminated the previous share option scheme adopted on 14 December 2001 and adopted a new share option scheme (the “Share Option Scheme”), pursuant to which any employees and Directors of the Company and its subsidiaries may be granted options to subscribe for the shares. The principal terms of the Share Option Scheme are set out in the Company’s circular dated 27 April 2011.

Details of the movement in share options granted under the Share Option Scheme and as at 30 June 2013 were as follows:

					Number of	share options
			Exercise	As 1	Granted	Exercised	Lapsed	At 30
		Exercise	price	January	during the	during the	during	June
Grantee	Date of grant	period	per share	2013	period	period	the period	2013
			(HK$)
Director_(Note 1)_	4-6-2010	4-6-2011	0.365	5,000,000	—	—	—	5,000,000
		to 3-6-2014
Employees	4-6-2010	4-6-2011	0.365	7,300,000	—	—	—	7,300,000
		to 3-6-2014
			**total: **	12,300,000	—	—	—	12,300,000

Note 1: represented the share options granted to Mr. Leung Sze Yuan, Alan who resigned as a Director in March 2015.

DIRECTORS’ RIGHTS TO ACQUIRE SHARES OR DEBT SECURITIES

Save as disclosed above, as at 30 June 2013, no other Directors or the chief executive of the Company or their associates had any interests or rights to subscribe for any securities of the Company or any of its associated corporations as defined in the SFO.

At no time during the period was the Company or any of its subsidiaries a party to any arrangement to enable the Directors or the chief executive of the Company or any of their respective associates, including spouses or children under eighteen years of age, to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

IR Resources Limited 22 Interim Report 2013

INTERESTS OF SUBSTANTIAL SHAREHOLDERS

As at 30 June 2013, so far as known to any of the Directors or the chief executive of the Company, no other person (other than a Director and the chief executive of the Company as disclosed above) had any interest or short position in the shares or underlying shares of the Company as recorded in the register required to be kept under Section 336 of the SFO, who is interested in 10% or more of any class of share capital carrying rights to vote at general meetings of the Company.

DIRECTORS’ INTEREST IN CONTRACTS

No contract, commitment or agreement of significance in relation to the Company’s business, to which the Company or any of its subsidiaries was a party and in which any of the Directors had a material interest, either directly or indirectly, subsisted as at 30 June 2013 or during the six months ended 30 June 2013.

PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIES

During the six months ended 30 June 2013, neither the Company nor any of its subsidiaries purchased, redeemed or sold any of the Company’s listed securities.

COMPETING INTERESTS

None of the Directors or the substantial shareholders of the Company or any of their respective associates (as defined in the GEM Listing Rules), engaged in any businesses that compete or may compete with the business of the Group or have any other conflicts of interests with the Group for the six months ended 30 June 2013.

CORPORATE GOVERNANCE

During the six months ended 30 June 2013, the Company has complied with the Code on Corporate Governance Practices as set out in Appendix 15 of the GEM Listing Rules.

Interim Report 2013 23 IR Resources Limited

APPROVAL OF THE INTERIM REPORT 2013

The audit committee of the Company has reviewed this interim report for the six months ended 30 June 2013 and was of the opinion that the preparation of the Interim Results complied with applicable accounting standards, the GEM Listing Rules and that adequate disclosures had been made.

By order of the Board Yu Xiao Min Chairperson of the Board

Hong Kong, 24 February 2016

IR Resources Limited 24 Interim Report 2013