Brockman Mining Limited — Interim / Quarterly Report 2012

Sep 5, 2012

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WONG’S INTERNATIONAL (HOLDINGS) LIMITED 王氏國際（集團）有限公司 *

(Incorporated in Bermuda with limited liability)

INTERIM REPORT FOR 2012

• For identification purpose only

UNAUDITED INTERIM RESULTS

The board of directors (the “Board” or “Directors”) of Wong’s International (Holdings) Limited (the “Company”) is pleased to present the unaudited condensed consolidated interim financial information of the Company and its subsidiaries (the “Group”) as at end for the six months ended 30 June 2012, together with comparative figures, as follows:

CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT

FOR THE SIX MONTHS ENDED 30 JUNE 2012

Unaudited

Note Revenue 3 Other income 4 Changes in inventories of finished goods and work in progress Raw materials and consumables used Employee benefit expense Depreciation and amortisation charges 5 Other operating expenses 5 Change in fair value of investment properties Other (losses)/gains – net 6 Operating profit Finance income 7 Finance costs 7 Share of profit of associates Share of loss of jointly controlled entities Profit before income tax Income tax expense 8 Profit after tax Profit attributable to owners of the Company Non-controlling interests Dividends 9 Earnings per share attributable to owners of the Company during the period Basic earnings per share 10 Diluted earnings per share 10	2012 HK$’000 1,633,147 6,763 3,340 (1,286,460) (198,794) (18,456) (110,185) 7,500 (4,094) 32,761 5,254 (3,122) – (49) 34,844 (6,438) 28,406 28,370 36 28,406 11,894 HK$0.06 HK$0.06	As restated (Note 2) 2011 HK$’000 1,889,685 14,885
		(33,890) (1,465,619)
		(192,436) (22,010) (118,574) 6,010 15,362 93,413 3,501 (4,226) 93 (178) 92,603 (16,412) 76,191 76,191 – 76,191 16,550 HK$0.16 HK$0.16

The notes on pages 9 to 27 are an integral part of this condensed consolidated interim financial information.

1

CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 JUNE 2012

Profit for the period Other comprehensive income: Currency translation differences Changes in fair value of available-for-sale financial assets Surplus on revaluation of property transferred from owner-occupied property to investment property Other comprehensive income for the period, net of tax Total comprehensive income for the period Attributable to: Owners of the Company Non-controlling interests Total comprehensive income for the period	Unaudited As restated (Note 2) 2012 2011 HK$’000 HK$’000 28,406 76,191 (14,331) 11,412 41,817 – 500 – 27,986 11,412 56,392 87,603 56,305 87,603 87 – 56,392 87,603	Unaudited As restated (Note 2) 2012 2011 HK$’000 HK$’000 28,406 76,191 (14,331) 11,412 41,817 – 500 – 27,986 11,412 56,392 87,603 56,305 87,603 87 – 56,392 87,603
		11,412
		87,603
		87,603 –
		87,603

The notes on pages 9 to 27 are an integral part of this condensed consolidated interim financial information.

2

CONDENSED CONSOLIDATED INTERIM BALANCE SHEET

AS AT 30 JUNE 2012

Note ASSETS Non-current assets Property, plant and equipment 11 Investment properties 11 Leasehold land and land use rights 11 Investments in associates Investments in jointly controlled entities 12 Intangible assets 11 Available-for-sale financial assets Deferred income tax assets Current assets Inventories Trade receivables 13 Prepayments, deposits and other receivables Amounts due from associates Financial assets at fair value through profit or loss Current income tax recoverable Cash and cash equivalents Total assets	Unaudited As at 30 June 2012 HK$’000 257,067 54,600 6,615 6,993 341,751 2,048 98,016 15,904 782,994 397,980 751,374 98,352 27,882 2,414 4,338 699,758 1,982,098 2,765,092	Audited As restated (Note 2) As at 31 December 2011 HK$’000 263,124 46,600 6,832 6,993 301,008 – 56,199 15,866
		696,622 348,932 804,638 46,378 27,847 – 1,980 681,432
		1,911,207
		2,607,829

3

CONDENSED CONSOLIDATED INTERIM BALANCE SHEET AS AT 30 JUNE 2012

Note EQUITY Equity attributable to owners of the Company Share capital 16 Other reserves Retained earnings – Dividends – Others Non-controlling interests Total equity LIABILITIES Current liabilities Trade payables 14 Accruals and other payables Amount due to an associate Current income tax liabilities Borrowings 15 Total liabilities Total equity and liabilities Net current assets Total assets less current liabilities	Unaudited As at 30 June 2012 HK$’000 47,577 568,042 11,894 834,663 1,462,176 (575) 1,461,601 741,318 203,028 3,183 9,465 346,497 1,303,491 2,765,092 678,607 1,461,601	Audited As restated (Note 2) As at 31 December 2011 HK$’000 47,308 536,795 18,979 820,584
		1,423,666 (666)
		1,423,000 619,419 231,932 3,183 19,437 310,858
		1,184,829
		2,607,829
		726,378
		1,423,000

The notes on pages 9 to 27 are an integral part of this condensed consolidated interim financial information.

4

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2012

Balance as at 31 December 2010 as previously reported Change in accounting policy – adoption of HKAS12 amendment As at 1 January 2011, as restated Comprehensive income Profit for the period Other comprehensive income Currency translation difference Total other comprehensive income Total comprehensive income Transactions with owners Dividend paid to owners of the Company Employee share option scheme – value of employment services – proceeds from shares issued Total transactions with owners As at 30 June 2011		As	Unaudited restated_(Note 2)_	Unaudited restated_(Note 2)_	Total HK$’000 1,253,419 5,948 1,259,367 76,191 11,412 11,412 87,603 (26,007) 67 1,472 (24,468) 1,322,502
	Share capital HK$’000 46,966 –	Share premium HK$’000 149,848 –	Other reserves HK$’000 1,056,605 5,948	Non- controlling interests HK$’000 – –
	46,966 – –	149,848 – –	1,062,553 76,191 11,412	– – –
	– – – – 320	– – – – 1,152	11,412 87,603 (26,007) 67 –	– – – – –
	320 47,286	1,152 151,000	(25,940) 1,124,216	– –

5

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2012

			Unaudited
		As	restated_(Note 2)_
				Non-
	Share	Share	Other	controlling
	capital	premium	reserves	interests	Total
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Balance as at 31 December 2011 as
previously reported	47,308	151,081	1,217,505	(666)	1,415,228
Change in accounting policy –
adoption of HKAS12 amendment	–	–	7,772	–	7,772
As at 1 January 2012, as restated	47,308	151,081	1,225,277	(666)	1,423,000
Comprehensive income
Profit for the period	–	–	28,370	36	28,406
Other comprehensive income
Currency translation difference	–	–	(14,382)	51	(14,331)
Changes in fair value of available-
for-sale financial assets	–	–	41,817	–	41,817
Surplus on revaluation of property
transferred from owner-occupied
property to investment property	–	–	500	–	500
Total other comprehensive income	–	–	27,935	51	27,986
Total comprehensive income	–	–	56,305	87	56,392
Transactions with owners
Dividend paid to owners of the
Company	–	–	(19,031)	–	(19,031)
Grant of subsidiary’s share to
employee	–	–	–	4	4
Employee share option scheme
– proceeds from shares issued	269	967	–	–	1,236
Total transactions with owners	269	967	(19,031)	4	(17,791)
As at 30 June 2012	47,577	152,048	1,262,551	(575)	1,461,601

The notes on pages 9 to 27 are an integral part of this condensed consolidated interim financial information.

6

CONDENSED CONSOLIDATED INTERIM CASH FLOW STATEMENT

FOR THE SIX MONTHS ENDED 30 JUNE 2012

Cash flows from operating activities Net cash generated from operating activities Cash flows from investing activities Acquisition of property, plant and equipment Increase in intangible assets Proceeds from disposal of property, plant and equipment Increase in amounts due from associates Acquisition of financial assets at fair value through profit or loss Proceeds from disposal of financial assets at fair value through profit or loss Decrease in pledged bank deposits Loans to jointly controlled entities Interest received Net cash (used in)/generated from investing activities Cash flows from financing activities Proceeds from employee share option scheme New bank loans Repayment of bank loans Dividends paid Net cash generated from/(used in) financing activities

Unaudited For the six months ended 30 June 2012 2011 HK$’000 HK$’000 67,180 101,342 (14,535) (15,213) (2,048) – 70 1,936 (35) – (3,429) (3,497) 656 – – 121,166 (40,792) (8,138) 5,254 3,501 (54,859) 99,755 1,236 1,472 201,517 125,695 (165,050) (181,856) (19,031) (26,007) 18,672 (80,696)

7

CONDENSED CONSOLIDATED INTERIM CASH FLOW STATEMENT

FOR THE SIX MONTHS ENDED 30 JUNE 2012

Net increase in cash and cash equivalents Cash and cash equivalents, beginning of the period Exchange differences Cash and cash equivalents, end of the period Analysis of cash and cash equivalents: Cash on hand Cash at banks Cash and cash equivalents, end of the period	Unaudited For the six months ended 30 June 2012 2011 HK$’000 HK$’000 30,993 120,401 681,432 400,251 (12,667) 9,034 699,758 529,686 218 314 699,540 529,372 699,758 529,686	Unaudited For the six months ended 30 June 2012 2011 HK$’000 HK$’000 30,993 120,401 681,432 400,251 (12,667) 9,034 699,758 529,686 218 314 699,540 529,372 699,758 529,686
		529,686
		314 529,372
		529,686

The notes on pages 9 to 27 are an integral part of this condensed consolidated interim financial information.

8

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

1 BASIS OF PREPARATION

This unaudited condensed consolidated interim financial information (“Interim Financial Information”) for the six months ended 30 June 2012 has been prepared in accordance with Hong Kong Accounting Standard (“HKAS”) 34, ‘Interim financial report’ issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) and Appendix 16 of the Rules Governing the Listing of Securities on the Main Board of The Stock Exchange of Hong Kong Limited. The Interim Financial Information should be read in conjunction with the annual financial statements for the year ended 31 December 2011, which have been prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”).

2 SIGNIFICANT ACCOUNTING POLICIES

This Interim Financial Information has been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets, financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss and investment properties, which are carried at fair value.

In December 2010, the HKICPA amended HKAS 12, ‘Income taxes’, to introduce an exception to the principle for the measurement of deferred tax assets or liabilities arising on an investment property measured at fair value. HKAS 12 requires an entity to measure the deferred tax relating to an asset depending on whether the entity expects to recover the carrying amount of the asset through use or sale. The amendment introduces a rebuttable presumption that an investment property measured at fair value is recovered entirely by sale. The amendment is applicable retrospectively to annual periods beginning on or after 1 January 2012 with early adoption permitted.

The Group has adopted this amendment retrospectively for the financial period ended 30 June 2012 and the effects of adoption are disclosed as follows.

The Group has investment properties measured at their fair values totalling HK$46,600,000 as of 1 January 2012. As required by the amendment, the Group has re-measured the deferred tax relating to these investment properties amounting to HK$46,600,000 according to the tax consequence on the presumption that they are recovered entirely by sale retrospectively. The comparative figures for 2011 have been restated to reflect the change in accounting policy, as summarised below.

9

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

2 SIGNIFICANT ACCOUNTING POLICIES (continued)

	As at			As at
	30 June	31	December
	2012			2011
	HK$’000		HK$’000
Effect on consolidated balance sheet
Decrease in deferred tax liabilities	9,010			7,772
Increase in retained earnings	9,010			7,772
	For the six months
	ended 30 June
	2012			2011
	HK$’000		HK$’000
Effect on consolidated income statement
Decrease in income tax expense	1,238			992
Increase in net profit attributable to owners of
the company	1,238			992
Increase in basic earnings per share	HK0.26 cents	HK0.21		cents
Increase in diluted earnings per share	HK0.26 cents	HK0.21		cents

Except for these changes, the accounting policies applied and methods of computation used in the preparation of this Interim Financial Information are consistent with those used in the annual financial statements for the year ended 31 December 2011.

The following amendments to standards are mandatory for the first time for the financial year beginning 1 January 2012.

HKAS 12 (Amendment) Deferred tax: Recovery of underlying assets HKFRS 7 (Amendment) Disclosures – Transfers of financial assets

Standards, amendments and interpretations to existing standards effective in 2012 but not relevant to the Group:

HKFRS 1 (Amendment) Severe hyperinflation and removal of fixed dates for first-time adopters

New standards, amendments and interpretations have been issued but are not effective for the financial year beginning 1 January 2012 and have not been early adopted.

HKAS 19 (Amendment) Employee benefits HKFRS 9 Financial instruments HKFRS 10 Consolidated financial statements HKFRS 12 Disclosures of interests in other entities HKFRS 13 Fair value measurement

10

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

3 SEGMENT INFORMATION

The Group’s senior executive management is considered as the Chief Operating Decision Maker (“CODM”). The Group was organised into two operating divisions:

Electronic Manufacturing Service (“EMS”) – manufacture and distribution of electronic products for EMS customers.

Original Design and Manufacturing (“ODM”) – original design and manufacturing for both EMS and ODM customers.

The CODM reviews the performance of the Group on a regular basis and reviews the Group’s internal reporting in order to assess performance and allocate resources. The CODM assesses the performance of the operating segments based on a measure of segment results. This measurement basis includes profit or loss of the operating segments before other income, other (losses)/gains – net, share of profit/(loss) of associates and jointly controlled entities, finance income, finance cost, tax and change in fair value of investment properties but excludes corporate and unallocated expenses. Other information provided to the Group’s management is measured in a manner consistent with that in the Interim Financial Information.

For the six months ended 30 June 2012 Total gross revenue Inter-segment revenue External revenue Segment results Depreciation and amortisation charges Capital expenditure	Unaudited EMS division HK$’000 1,622,055 (7,641) 1,614,414 41,349 16,999 12,465	Unaudited ODM division HK$’000 18,733 – 18,733 (6,297) 136 655	Unaudited Total HK$’000 1,640,788 (7,641)
			1,633,147
			35,052
			17,135
			13,120

11

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

3 SEGMENT INFORMATION (continued)

For the six months ended 30 June 2011 Total gross revenue Inter-segment revenue External revenue Segment results Depreciation and amortisation charges Capital expenditure Reportable segment assets As at 30 June 2012 As at 31 December 2011	Unaudited EMS division HK$’000 1,886,771 – 1,886,771 74,881 20,703 14,271 Unaudited EMS division HK$’000 2,059,378 2,009,953	Unaudited ODM division HK$’000 2,914 – 2,914 (6,072) 40 68 Unaudited ODM division HK$’000 20,995 15,450	Unaudited Total HK$’000 1,889,685 –
			1,889,685
			68,809
			20,743
			14,339
			Unaudited Total HK$’000 2,080,373
			2,025,403

Segment assets consist primarily of property, plant and equipment, leasehold land and land use rights, intangible assets, inventories, trade receivables, prepayments, deposits and other receivables, and cash and bank deposits, but exclude corporate and unallocated assets.

12

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

3 SEGMENT INFORMATION (continued)

A reconciliation of reportable segment results to profit before income tax is provided as follows:

Reportable segment results Other income Change in fair value of investment properties Other (losses)/gains – net Finance income/(costs) – net Share of profit of associates Share of loss of jointly controlled entities Corporate and unallocated expenses Profit before income tax	Unaudited For the six months ended 30 June 2012 2011 HK$’000 HK$’000 35,052 68,809 6,763 14,885 7,500 6,010 (4,094) 15,362 2,132 (725) – 93 (49) (178) (12,460) (11,653) 34,844 92,603	Unaudited For the six months ended 30 June 2012 2011 HK$’000 HK$’000 35,052 68,809 6,763 14,885 7,500 6,010 (4,094) 15,362 2,132 (725) – 93 (49) (178) (12,460) (11,653) 34,844 92,603
		92,603

Reportable segments assets are reconciled to total assets as follows:

Reportable segment assets Investment properties Investments in associates Investments in jointly controlled entities Available-for-sale financial assets Deferred income tax assets Amounts due from associates Financial assets at fair value through profit or loss Corporate and unallocated assets Total assets per condensed consolidated balance sheet	Unaudited As at 30 June 2012 HK$’000 2,080,373 54,600 6,993 341,751 98,016 15,904 27,882 2,414 137,159 2,765,092	Audited As at 31 December 2011 HK$’000 2,025,403 46,600 6,993 301,008 56,199 15,866 27,847 – 127,913 2,607,829

13

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

3 SEGMENT INFORMATION (continued)

Reconciliations of other material items are as follows:

Depreciation and amortisation charges – Reportable segment total – Corporate headquarters Capital expenditure – Reportable segment total – Corporate headquarters	Unaudited For the six months ended 30 June 2012 2011 HK$’000 HK$’000 17,135 20,743 1,321 1,267 18,456 22,010 13,120 14,339 1,415 874 14,535 15,213	Unaudited For the six months ended 30 June 2012 2011 HK$’000 HK$’000 17,135 20,743 1,321 1,267 18,456 22,010 13,120 14,339 1,415 874 14,535 15,213
		22,010
		14,339 874
		15,213

The Company is domiciled in Bermuda. Analysis of the Group’s revenue by geographical market, which is determined by the destination of the invoices billed, is as follows:

North America Asia (excluding Hong Kong) Europe Hong Kong	Unaudited For the six months ended 30 June 2012 2011 HK$’000 HK$’000 212,127 183,055 931,392 1,050,329 299,129 306,479 190,499 349,822 1,633,147 1,889,685	Unaudited For the six months ended 30 June 2012 2011 HK$’000 HK$’000 212,127 183,055 931,392 1,050,329 299,129 306,479 190,499 349,822 1,633,147 1,889,685
		1,889,685

For the six months ended 30 June 2012, revenues of approximately HK$493,208,000 (2011: HK$603,376,000) and HK$391,677,000 (2011: HK$420,660,000) were derived from the top two external customers respectively. These customers individually account for 10 percent or more of the Group’s revenue. These revenues are attributable to the EMS division.

14

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

3 SEGMENT INFORMATION (continued)

Analysis of the Group’s non-current assets by geographical market is as follows:

	Unaudited	Audited
	As at	As at
	30 June	31 December
	2012	2011
	HK$’000	HK$’000
North America	1,432	949
Asia (excluding Hong Kong)	134,686	140,693
Europe	38	42
Hong Kong	630,934	539,072
	767,090	680,756

Non-current assets comprise property, plant and equipment, investment properties, leasehold land and land use rights, investments in associates, investments in jointly controlled entities, intangible assets and available-for-sale financial assets. They exclude deferred income tax assets.

4 OTHER INCOME

	Unaudited
	For the six months
	ended 30 June
	2012	2011
	HK$’000	HK$’000
Scrap and spare parts sales	1,158	8,486
Tooling income	4,518	4,140
Sundry income	1,087	2,259
	6,763	14,885

15

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

5 PROFIT BEFORE INCOME TAX

Profit before income tax is analysed as follows:

Depreciation of property, plant and equipment Amortisation on leasehold land and land use rights Depreciation and amortisation charges Operating lease rental in respect of land and buildings Utility expense Transportation Chemicals and consumables Others Other operating expenses Total depreciation, amortisation and other operating expenses	Unaudited For the six months ended 30 June 2012 2011 HK$’000 HK$’000 18,377 21,933 79 77 18,456 22,010 6,673 9,658 15,529 15,487 16,748 18,792 21,846 23,623 49,389 51,014 110,185 118,574 128,641 140,584	Unaudited For the six months ended 30 June 2012 2011 HK$’000 HK$’000 18,377 21,933 79 77 18,456 22,010 6,673 9,658 15,529 15,487 16,748 18,792 21,846 23,623 49,389 51,014 110,185 118,574 128,641 140,584
		22,010
		9,658 15,487 18,792 23,623 51,014
		118,574
		140,584

16

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

6 OTHER (LOSSES)/GAINS – NET

Fair value change on financial instruments, net Gains on disposal of property, plant and equipment Exchange losses, net Write-back of trade payables 7 FINANCE INCOME/(COSTS) – NET Finance income Interest income on short-term bank deposits Finance costs Interest expenses on bank borrowings Finance income/(costs) – net	Unaudited For the six months ended 30 June 2012 2011 HK$’000 HK$’000 (359) 243 70 160 (3,805) (374) – 15,333 (4,094) 15,362 Unaudited For the six months ended 30 June 2012 2011 HK$’000 HK$’000 5,254 3,501 (3,122) (4,226) 2,132 (725)

17

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

8 INCOME TAX EXPENSE

The Company is exempted from taxation in Bermuda until 2016.

Hong Kong profits tax has been provided at the rate of 16.5% (2011: 16.5%) on the estimated assessable profit arising in or derived from Hong Kong.

The new Corporate Income Tax Law in the People’s Republic of China increases the corporate income tax rate for foreign investment enterprises from previous preferential rates to 25% with effect from 1 January 2008. Companies established in Mainland China before 16 March 2007 and previously taxed at the rate lower than 25% may be offered a gradual increase of tax rate to 25% within 5 years. Certain subsidiaries of the Company established in Mainland China will enjoy preferential income tax rate from 2008 to 2011 and be taxed at the rate of 25% from 2012 when the preferential treatment expires.

The amount of income tax charged to the condensed consolidated interim income statement represents:

	Unaudited
	For the six months
	ended 30 June
		As restated
		(Note 2)
	2012	2011
	HK$’000	HK$’000
Current income tax
– Hong Kong profits tax	1,344	5,467
– Overseas taxation	6,915	13,852
Deferred income tax	(242)	(3,481)
(Over)/under-provision in prior periods
– Current income tax	(1,525)	574
– Deferred income tax	(54)	–
	6,438	16,412

Income tax expense is recognised based on management’s best estimate of the weighted average annual income tax rate expected for the full financial year.

18

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

9 DIVIDENDS

	Unaudited
	For the six months
	ended 30 June
	2012	2011
	HK$’000	HK$’000
Interim dividend – HK$0.025
(2011: HK$0.035) per share	11,894	16,550

The Board has resolved to pay an interim dividend of HK$0.025 per share (2011: HK$0.035 per share) on Friday, 28 September 2012 to the shareholders whose names appear on the Register of Members of the Company on Friday, 14 September 2012.

10 EARNINGS PER SHARE

(a) Basic

Basic earnings per share is calculated by dividing the profit attributable to owners of the Company by the weighted average number of ordinary shares in issue during the period.

Profit attributable to owners of the Company_(HK$’000) Weighted average number of ordinary shares in issue(in thousands) Basic earnings per share(HK$)_	Unaudited For the six months ended 30 June As restated (Note 2) 2012 2011 28,370 76,191 474,634 471,484 0.06 0.16	Unaudited For the six months ended 30 June As restated (Note 2) 2012 2011 28,370 76,191 474,634 471,484 0.06 0.16
		471,484
		0.16

19

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

10 EARNINGS PER SHARE (continued)

(b) Diluted

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has outstanding share options, which are of dilutive potential. For share options, a calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company’s shares) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.

Profit attributable to owners of the Company_(HK$’000) Weighted average number of ordinary shares in issue(in thousands) Adjustment for share options (in thousands) Weighted average number of ordinary shares for diluted earnings per share(in thousands) Diluted earnings per share(HK$)_	Unaudited For the six months ended 30 June As restated (Note 2) 2012 2011 28,370 76,191 474,634 471,484 1,859 4,525 476,493 476,009 0.06 0.16	Unaudited For the six months ended 30 June As restated (Note 2) 2012 2011 28,370 76,191 474,634 471,484 1,859 4,525 476,493 476,009 0.06 0.16
		471,484 4,525
		476,009
		0.16

20

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

11 CAPITAL EXPENDITURE

For the six months ended 30 June 2011 Opening net book amount as at 1 January 2011 Additions Disposals Fair value gains Depreciation/amortisation Exchange difference Closing net book amount as at 30 June 2011 For the six months ended 30 June 2012 Opening net book amount as at 1 January 2012 Additions Surplus on revaluation of property transferred from owner-occupied property to investment property Transfer from owner- occupied property Fair value gains Depreciation/amortisation Exchange difference Closing net book amount as at 30 June 2012	Unaudited Unaudited Unaudited Property, plant and equipment Investment properties Leasehold land and land use rights HK$’000 HK$’000 HK$’000 262,485 35,550 6,659 15,213 – – (1,776) – – – 6,010 – (21,933) – (77) 1,786 – 141 255,775 41,560 6,723 Unaudited Unaudited Unaudited Unaudited Property, plant and equipment Investment properties Leasehold land and land use rights Intangible assets HK$’000 HK$’000 HK$’000 HK$’000 263,124 46,600 6,832 – 14,535 – – 2,048 500 – – – (500) 500 – – – 7,500 – – (18,377) – (79) – (2,215) – (138) – 257,067 54,600 6,615 2,048	Unaudited Leasehold land and land use rights HK$’000 6,659 – – – (77) 141	Unaudited Leasehold land and land use rights HK$’000 6,659 – – – (77) 141
			6,723
			Unaudited Intangible assets HK$’000 – 2,048 – – – – –
			2,048

21

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

12 INVESTMENTS IN JOINTLY CONTROLLED ENTITIES

Share of net assets Loans to jointly controlled entities	Unaudited As at 30 June 2012 HK$’000 1,361 340,390 341,751	Audited As at 31 December 2011 HK$’000 1,410 299,598
		301,008

As at 30 June 2012, the Group had interests in the following principal jointly controlled entities, which are unlisted:

		Proportion
	Place of	of ownership
Name of company	incorporation	interest	Principal activities
		%
Easywise Limited	Hong Kong	35.7%	Property holding
Crown Opal Investment Limited	Hong Kong	35.7%	Property holding

The loans to jointly controlled entities are unsecured, interest-free and will not be repaid in the coming twelve months. The Directors consider that the carrying amounts of the loans to the jointly controlled entities approximate their fair values. The amounts are denominated in Hong Kong dollars.

As at 30 June 2012, there were neither capital commitments nor contingent liabilities related to the development project.

22

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

13 TRADE RECEIVABLES

The credit period allowed by the Group to its trade customers mainly ranges from 30 days to 90 days and no interest is charged.

Ageing analysis of the Group’s trade receivables by invoice date is as follows:

0–60 days 61–90 days Over 90 days	Unaudited As at 30 June 2012 HK$’000 552,274 162,996 36,104 751,374	Audited As at 31 December 2011 HK$’000 637,486 121,013 46,139
		804,638

The carrying amounts of the Group’s trade receivables approximated their fair values as at 30 June 2012.

14 TRADE PAYABLES

Ageing analysis of the Group’s trade payables by invoice date is as follows:

0–60 days 61–90 days Over 90 days	Unaudited As at 30 June 2012 HK$’000 723,335 1,409 16,574 741,318	Audited As at 31 December 2011 HK$’000 573,361 31,279 14,779
		619,419

The carrying amounts of the Group’s trade payables approximated their fair values as at 30 June 2012.

23

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

15 BORROWINGS

Unaudited As at 30 June 2012 HK$’000 Collateralised bank loans, unsecured 12,017 Short-term bank loans, unsecured 279,280 Portion of a mortgage loan from bank due for repayment within one year 6,900 Portion of a mortgage loan from bank due for repayment after one year which contains a repayment on demand clause 48,300 Total borrowings 346,497 Movements in borrowings are analysed as follows: For the six months ended 30 June 2011 Opening amount at 1 January 2011 Inceptions of borrowings Repayments of borrowings Exchange difference Closing amount at 30 June 2011 For the six months ended 30 June 2012 Opening amount at 1 January 2012 Inceptions of borrowings Repayments of borrowings Exchange difference Closing amount at 30 June 2012	Audited As at 31 December 2011 HK$’000 72,100 180,108 6,900 51,750
	310,858
	Unaudited HK$’000 436,259 125,695 (181,856) 762 380,860 310,858 201,517 (165,050) (828) 346,497

24

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

16 SHARE CAPITAL

Ordinary shares of HK$0.10 each Authorised: At 1 January 2011 and 31 December 2011 At 1 January 2012 and 30 June 2012 Issued and fully paid: At 1 January 2011 New shares issued At 31 December 2011 At 1 January 2012 New shares issued At 30 June 2012	Number of shares 700,000,000 700,000,000 469,657,794 3,426,000 473,083,794 473,083,794 2,686,000 475,769,794	Nominal value HK$’000 70,000
		70,000
		46,966 342
		47,308
		47,308 269
		47,577

17 COMMITMENTS

• (a) Capital commitments in respect of property, plant and equipment are as follows:

Contracted but not provided for Authorised but not contracted for	Unaudited As at 30 June 2012 HK$’000 2,751 – 2,751	Audited As at 31 December 2011 HK$’000 1,839 –
		1,839

25

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

17 COMMITMENTS (continued)

• (b) The Group’s future aggregate minimum lease payments under various noncancellable operating lease agreements in respect of rented premises are analysed as follows:

Within one year In the second to fifth year inclusive Over five years	Unaudited As at 30 June 2012 HK$’000 11,051 20,562 – 31,613	Audited As at 31 December 2011 HK$’000 11,902 26,220 –
		38,122

Operating lease payments represent rentals payable by the Group for certain of its office premises. Leases and rentals are negotiated and fixed for an average of 2 years.

• (c) The Group’s future rental income receivables under various non-cancellable operating leases in respect of rented premises are analysed as follows:

Within one year In the second to fifth year inclusive	Unaudited As at 30 June 2012 HK$’000 1,660 2,996 4,656	Audited As at 31 December 2011 HK$’000 13 –
		13

Operating lease income represents rentals receivable by the Group for leasing its investment properties. Leases and rentals are negotiated and fixed for an average of 3 year.

26

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

18 RELATED PARTY TRANSACTIONS

The Group was controlled by W. S. Wong & Sons Company Limited and Salop Investment Limited. As at 30 June 2012, W. S. Wong & Sons Company Limited and Salop Investment Limited beneficially owned 21.80% and 27.04% of the issued shares of the Company respectively.

(a) Balances with related parties

The amounts due from/to associates repayable on demand are unsecured, interest-free and without pre-determined repayment terms.

(b) Key management compensation

Salaries and allowances Bonus Pension costs – defined contribution schemes Employee share option scheme – value of employment services	Unaudited For the six months ended 30 June 2012 2011 HK$’000 HK$’000 8,555 7,735 6,818 881 63 59 – 31 15,436 8,706	Unaudited For the six months ended 30 June 2012 2011 HK$’000 HK$’000 8,555 7,735 6,818 881 63 59 – 31 15,436 8,706
		8,706

27

INTERIM DIVIDEND

The Board has resolved to pay an interim dividend of HK$0.025 per share (2011: HK$0.035 per share) on Friday, 28 September 2012 to the shareholders whose names appear on the Register of Members of the Company on Friday, 14 September 2012.

CLOSURE OF REGISTER OF MEMBERS

The Register of Members of the Company will be closed from Wednesday, 12 September 2012 to Friday, 14 September 2012, both days inclusive, during which period no transfer of shares shall be effected. To qualify for the above interim dividend, all transfers accompanied by the relevant share certificates must be lodged with the Company’s Hong Kong branch share registrars, Tricor Standard Limited, at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong for registration not later than 4:30 p.m. on Tuesday, 11 September 2012.

REVIEW OF BUSINESS ACTIVITIES

Electronic Manufacturing Service (“EMS”) and Original Design and Manufacturing (“ODM”) Divisions

For the first six months ended 30 June 2012, the Group’s turnover was HK$1.63 billion, decreased by 13.6% when comparing with 2011, which resulted from the continuing financial instability of Euro area and far-from-satisfactory economic recovery in US. These unfavourable factors have generally impacted our customer demand although they were firmly staying with us.

During the period, our value added (sales revenue less material cost) percentage remained on the same level as last year. However, the decreased sales volume led to the decreased profit attributable to owners of the Company from HK$76.2 million in 2011 to HK$28.4 million in 2012.

Following the minimum wage regulatory requirement and the shortage of labour force, our manpower cost in PRC continued to increase, which has been eroding our profit. Nevertheless, our utmost effort in up-keeping the high operational efficiency would help offset the impact of such cost increase.

28

REVIEW OF BUSINESS ACTIVITIES (continued)

Electronic Manufacturing Service (“EMS”) and Original Design and Manufacturing (“ODM”) Divisions (continued)

For the first six months ended 30 June 2012, sales revenue of EMS Division decreased 14.4% to HK$1.61 billion from HK$1.89 billion for the same period of 2011. Sales revenue for Shajing factory in Shenzhen was down by 29% but the factory at Suzhou continued its growth by 13.8% as compared with 2011’s first half year. The decrease in the overall sales at EMS Division was generally across electronic products in industrial automation, energy and computer peripheral products. The segment results attributable to EMS Division was HK$41.3 million (2011 interim: HK$74.9 million).

For the ODM Division, sales revenue significantly increased to HK$18.7 million, which was 6.4 times of 2011 interim. The revenue increase was mainly attributed to the sales of iCarte for Apple iPhone in Europe, South Korea, and Australia. The iCarte business started its making profit in the first half year.

However, due to research and development and pre-production cost of a new private-label-brand project, the ODM Division recorded a segment loss HK$6 million (2011 interim: HK$6 million loss) for the period.

Property Development

Kwun Tong project

The Group has two jointly controlled entities with Sun Hung Kai Properties Limited on the development of two sites. The Group has paid its proportional share of the land premium for lease modification on one of the sites. Construction of the first site was on schedule. In respect of the second site, the land premium is still in discussion.

Mid-level residential

The project development company sold out all the residential unit and car park spaces in the first half year.

29

REVIEW OF BUSINESS ACTIVITIES (continued)

Media Network

The Group currently has an investment in Focus Media Network Limited (“FMN”) for 18.75%, which was listed in mid-2011 on the GEM board of the Hong Kong Stock Exchange. FMN is on out-of-home digital screen network business, which is one of the fastest growing advertising sectors after the internet. FMN has extensive network at office buildings and renowned retail outlets. According to the accounting standard, its book value was adjusted through the other comprehensive income as per the market value of 30 June 2012.

FINANCE

As at 30 June 2012, the Group had HK$1,517.2 million of total banking facilities. Total bank borrowings were HK$346.5 million, of which a loan of HK$29.3 million was arranged by an overseas subsidiary.

Cash and cash equivalents were HK$699.8 million at 30 June 2012 (2011 December: HK$681.4 million).

As at 30 June 2012, the Group had a net cash surplus of HK$353.3 million in excess of the bank borrowings, as compared to the net cash surplus of HK$370.5 million at 31 December 2011.

Most of the Group’s sales are conducted in United States dollars and costs and expenses are mainly in United States dollars, Hong Kong dollars, Japanese Yen and Renminbi. Forward contracts are used to hedge foreign exchange exposures where it is necessary or practicable.

CAPITAL STRUCTURE

There had been no material change in the Group’s capital structure since 31 December 2011 which consists of bank borrowings, cash and cash equivalents and equity attributable to owners of the parent, comprising issued share capital and reserves.

30

EMPLOYEES

As at 30 June 2012, the Group employed approximately 5,300 employees of whom approximately 4,400 were production workers. In addition to the provision of annual bonuses, medical and life insurances, discretionary bonuses are also available to employees based on individual performance. The remuneration packages and policies are reviewed periodically.

The Group also provides in-house and external training programs to its employees.

AWARD & RECOGNITION

The Company and its wholly-owned subsidiary, Wong’s Electronics Company Limited were awarded the Caring Company Logo 2011/2012 by the Hong Kong Council of Social Service in recognition of their active participation in community activities and good corporate citizenship.

PROSPECTS

In the second half of 2012, the Group continues to face the challenges from vulnerable economic environment worldwide and labour cost increase in PRC. In addition, the Group has started its transformation process to convert Shajing’s contract-processing factory to an imported-processing wholly owned foreign enterprise in line with Shenzhen’s mandatory requirement. The transformation is expected to complete by the end of this year.

Based on the current level of orders and forecast provided by our customers, the Group’s business is expected to improve in the second half of the current year in spite of US’s slow economic recovery and Euro area’s financial instability.

As to the iCarte business, international sales are expected to be a key driver in the second half year though PRC business development has started. The iCarte business has started making profit since early this year but will remain cautiously optimistic due to increased competition in the market.

The private-label project is still in research and development stage. It is not expected any revenue contribution in the second half of the year.

On behalf of the Directors, I would like to sincerely thank our customers, suppliers and business partners for their continued confidence in and support to the Group. I would also like to pay a special tribute to all of our employees for their loyal, diligent and professional services to the Group.

31

INTERESTS OF DIRECTORS AND CHIEF EXECUTIVES

As at 30 June 2012, the interests or short positions of the Directors and chief executives of the Company in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (“SFO”)) as recorded in the register required to be kept under Section 352 of the SFO or as otherwise notified to the Company and The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”), were as follows:

Long positions in shares and underlying shares of the Company

					Approximate
		Number of	Underlying	Total number	percentage of
		ordinary	shares	of ordinary	the issued
Name of Directors	Capacity	shares	(share options)	shares	shares
Wong Chung Mat, Ben	Beneficial owner and interest	129,630,911	–	129,630,911	27.25%
	of controlled corporation
	(Note)
Wong Yin Man, Ada	Beneficial owner	750,000	250,000	1,000,000	0.21%
Chan Tsze Wah, Gabriel	Beneficial owner	1,687,500	150,000	1,837,500	0.39%
Tan Chang On, Lawrence	Beneficial owner	760,000	250,000	1,010,000	0.21%
Wan Man Keung	Beneficial owner	750,000	250,000	1,000,000	0.21%

Note:

Mr. Wong Chung Mat, Ben was deemed (by virtue of the SFO) to be interested in 129,630,911 shares in the Company. These shares were held in the following capacity:

• (a) 1,000,000 shares were held by Mr. Wong Chung Mat, Ben personally.

• (b) 128,630,911 shares were held by Salop Investment Limited, which was wholly owned and controlled by Mr. Wong Chung Mat, Ben.

Save as disclosed herein, as at 30 June 2012, none of the Directors or chief executives of the Company or their respective associates had any interests or short positions in the shares, underlying shares or debentures of the Company or any of its associated corporations (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.

32

INTERESTS OF SUBSTANTIAL SHAREHOLDERS

So far as is known to the Directors or chief executives of the Company, as at 30 June 2012, persons (other than the Directors or chief executives of the Company) who had interests or short positions in the shares or underlying shares of the Company as recorded in the register required to be kept under Section 336 of the SFO were as follows:

Long positions in shares of the Company

			Approximate
			percentage of
Name of substantial		Number of	the issued
shareholders	Capacity	ordinary shares	shares
Salop Investment Limited	Beneficial owner_(Note 1)_	128,630,911	27.04%
W. S. Wong & Sons	Beneficial owner_(Note 2)_	103,698,379	21.80%
Company Limited
Wong Chung Yin, Michael	Interest of controlled	75,504,172	15.87%
	corporations and
	founder of a
	discretionary trust
	(Note 3)
Levy Investment Limited	Beneficial owner	46,620,212	9.80%
	(Note 3(a))
Wong Chung Ah, Johnny	Beneficial owner, interest	40,693,487	8.55%
	of spouse and founder
	of a discretionary trust
	(Note 4)
Kong King International	Beneficial owner	38,458,487	8.08%
Limited	(Note 4(c))
Mountainview International	Trustee_(Note 4(c))_	38,458,487	8.08%
Limited
HSBC Trustee (Cook	Trustee_(Note 4(c))_	38,458,487	8.08%
Islands) Limited
HSBC International Trustee	Trustee_(Note 5)_	32,957,546	6.93%
Limited

33

INTERESTS OF SUBSTANTIAL SHAREHOLDERS (continued)

Long positions in shares of the Company (continued)

Notes:

1. Salop Investment Limited was a company wholly owned and controlled by Mr. Wong Chung Mat, Ben. Please refer to the Note under the section headed “Interests of directors and chief executives”.

2. W. S. Wong & Sons Company Limited was a company controlled by the Wong’s family.

3. Mr. Wong Chung Yin, Michael was deemed (by virtue of the SFO) to be interested in 75,504,172 shares in the Company. These shares were held in the following capacity:

4. (a) 46,620,212 shares were held by Levy Investment Limited, which was wholly owned and controlled by Mr. Wong Chung Yin, Michael.

5. (b) 17,584,960 shares were held by Levy Pacific Limited under a discretionary trust, of which Mr. Wong Chung Yin, Michael was regarded as the founder (by virtue of the SFO) and HSBC International Trustee Limited was the trustee. Please see Note 5(a) below.

6. (c) 11,299,000 shares were held by Pacific Way Limited, which was owned by Mr. Wong Chung Yin, Michael and his wife, Ms. Woo Sin Ming, in equal share.

7. Mr. Wong Chung Ah, Johnny was deemed (by virtue of the SFO) to be interested in 40,693,487 shares in the Company. These shares were held in the following capacity:

8. (a) 1,000,000 shares were held by Mr. Wong Chung Ah, Johnny personally.

9. (b) 1,235,000 shares were held by Ms. Luk Kit Ching, wife of Mr. Wong Chung Ah, Johnny.

10. (c) 38,458,487 shares were held by Kong King International Limited under a discretionary trust, of which Mr. Wong Chung Ah, Johnny was regarded as the founder (by virtue of the SFO). Kong King International Limited was wholly owned by Mountainview International Limited, which was wholly owned by HSBC Trustee (Cook Islands) Limited. Each of Mr. Wong Chung Ah, Johnny, Kong King International Limited, Mountainview International Limited and HSBC Trustee (Cook Islands) Limited was deemed to be interested in the same block of 38,458,487 shares.

34

INTERESTS OF SUBSTANTIAL SHAREHOLDERS (continued)

Long positions in shares of the Company (continued)

Notes: (continued)

1. HSBC International Trustee Limited was deemed (by virtue of the SFO) to be interested in 32,957,546 shares in the Company. These shares were held in the following capacity:

2. (a) 17,584,960 shares were held by Levy Pacific Limited (which was wholly owned by HSBC International Trustee Limited) under a discretionary trust, of which Mr. Wong Chung Yin, Michael was regarded as the founder (please refer to Note 3(b) above) and HSBC International Trustee Limited was the trustee.

3. (b) 11,357,150 shares were held by Floral (PTC) Inc. (which was wholly owned by HSBC International Trustee Limited) under a discretionary trust of which HSBC International Trustee Limited was the trustee.

4. (c) 4,015,436 shares were held by Sycamore Assets Limited (which was wholly owned by HSBC International Trustee Limited) under a discretionary trust of which HSBC International Trustee Limited was the trustee.

Save as disclosed, the Directors are not aware of any other persons who, as at 30 June 2012, had interests or short positions in the shares or underlying shares of the Company as recorded in the register required to be kept under Section 336 of the SFO.

35

SHARE OPTIONS

The Company’s employee share option scheme came into effect on 30 July 2000 (the “Old Scheme”) was expired at the close of business on 29 July 2010 and a new share option scheme was adopted on 2 June 2010 (the “New Scheme”). During the six months ended 30 June 2012, movements of the options granted under the Old Scheme were as follows:

Grantee Date of grant Exercise price per share Exercisable period		Numb	er of share options	er of share options
	At 1 January 2012	Granted during the period	Exercised during the period Lapsed during the period		At 30 June 2012
Directors Wong Yin Man, Ada 22 December 2008 HK$0.46 22 December 2009 to 21 December 2013 Chan Tsze Wah, Gabriel 22 December 2008 HK$0.46 22 December 2009 to 21 December 2013 Tan Chang On, Lawrence 22 December 2008 HK$0.46 22 December 2009 to 21 December 2013 Wan Man Keung 22 December 2008 HK$0.46 22 December 2009 to 21 December 2013 Employees 22 December 2008 HK$0.46 22 December 2009 to 21 December 2013 TOTAL:	500,000 300,000 500,000 500,000	– – – –	(250,000)1 – (150,000)2 – (250,000)2 – (250,000)3 – (900,000) – (1,786,000)4 (225,000) (2,686,000) (225,000)		250,000 150,000 250,000 250,000
	1,800,000 3,825,000	– –			900,000 1,814,000
	5,625,000	–	(2,686,000)	(225,000)	2,714,000

Notes:

1. The weighted average closing price of the shares immediately before the respective exercise date of the options was HK$1.49.

2. The weighted average closing price of the shares immediately before the respective exercise date of the options was HK$1.43.

3. The weighted average closing price of the shares immediately before the respective exercise date of the options was HK$1.34.

4. The weighted average closing price of the shares immediately before the respective exercise date of the options was HK$1.46.

36

SHARE OPTIONS (continued)

Notes: (continued)

1. Options granted are vested as follows:

2. (1) In the year commencing on and including the date of the first anniversary of the date of grant up to and excluding the second anniversary of the date of grant.

3. up to 25% of the total number of shares comprised in the option

4. (2) In the year commencing on and including the date of the second anniversary of the date of grant up to and excluding the third anniversary of the date of grant.

5. an additional 25% and any unexercised

6. portion of the previous year’s 25%

7. (3) In the year commencing on and including the date of the third anniversary of the date of grant up to and excluding the fourth anniversary of the date of grant.

8. an additional 25% and any unexercised

9. portion of the previous two years’ 50%

10. (4) In the year commencing on and including the date of the fourth anniversary of the date of grant up to and excluding the fifth anniversary of the date of grant.

11. the balance of the total number of shares comprised in the option

Upon expiration of the Old Scheme, no further options shall be granted but in all other aspects, the provisions of the Old Scheme shall remain in force and all options granted prior to its expiration shall continue to be valid and exercisable in accordance with the provisions of the Old Scheme.

No option has been granted under the New Scheme since its adoption date and up to 30 June 2012.

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

During the six months ended 30 June 2012, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company’s listed securities.

37

CORPORATE GOVERNANCE CODE

During the six months ended 30 June 2012, the Company has complied with the code provisions under the Code on Corporate Governance Practices (the “Former CG Code”, effective until 31 March 2012) and the Corporate Governance Code (the “Existing CG Code”, effective on 1 April 2012) as set out in Appendix 14 to the Rules Governing the Listing of Securities on the Stock Exchange (the “Listing Rules”), except for the following deviations:

Deviations from Former CG Code and Existing CG Code

Code provision A.2.1

Code provision A.2.1 provides that the roles of chairman and chief executive should be separate and should not be performed by the same individual.

Mr. Wong Chung Mat, Ben is the Group’s Chairman and Chief Executive Officer and has occupied these two positions since February 2003. In allowing the two positions to be occupied by the same person, the Company has considered the following:

• (a) Both positions require in-depth knowledge and considerable experience of the Group’s business. Candidates with the suitable knowledge, experience and leadership are difficult to find both within and outside the Group. If either of the positions is occupied by an unqualified person, the Group’s performance could be gravely compromised.

• (b) The Company believes that the supervision of the Board and its Independent Non-executive Directors can provide an effective check and balance mechanism and ensures that the interests of the shareholders are adequately represented.

Code provision A.4.1

Code provision A.4.1 provides that non-executive directors should be appointed for a specific term, subject to re-election.

None of the existing Non-executive Directors of the Company is appointed for a specific term. However, every Director of the Company is now subject to retirement by rotation under Bye-law 112 of the Bye-laws of the Company. As such, the Company considers that sufficient measures have been taken to ensure that the Company’s corporate governance practices are no less exacting than those in the Former CG Code and the Existing CG Code.

38

CORPORATE GOVERNANCE CODE (continued)

Deviation from Existing CG Code

Code provisions A.5.1 to A.5.4

Code provisions A.5.1 to A.5.4 provide that a nomination committee should be established with specific terms of reference which should be made available on the websites of the Stock Exchange and the listed issuer, and that sufficient resources should be provided to such committee to perform its duties.

The Company does not have present intention to establish a Nomination Committee in view that the Board itself shall discharge all duties expected to be dealt with by a Nomination Committee. In addition, the policy and procedure for nomination of directors have been set out in writing and adopted by the Board to serve as a guideline in order to ensure that there is a formal, considered and transparent procedure for the appointment of new directors with suitable experience and capabilities to maintain and improve the competitiveness of the Company.

COMPLIANCE WITH THE MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS OF LISTED ISSUERS

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) as set out in Appendix 10 to the Listing Rules. Having made specific enquiry to all Directors, all Directors confirmed that they had complied with the required standard set out in the Model Code during the six months ended 30 June 2012.

UPDATE ON DIRECTORS’ INFORMATION UNDER RULE 13.51B(1) OF THE LISTING RULES

During the period concerned, Mr. Wan Man Keung, an Executive Director of the Company, is responsible for sales and marketing and overall business development of the Group.

Dr. Li Ka Cheung, Eric, an Independent Non-executive Director of the Company, had ceased to be an advisor to the Ministry of Finance on international accounting standards of the People’s Republic of China upon expiry of his term of service.

39

AUDIT COMMITTEE

The Audit Committee, which comprises all Independent Non-executive Directors, 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 interim financial information for the six months ended 30 June 2012.

By order of the Board

WONG CHUNG MAT, BEN

Chairman and Chief Executive Officer

Hong Kong, 23 August 2012

BOARD OF DIRECTORS

Executive Directors:

• Mr. Wong Chung Mat, Ben (Chairman and Chief Executive Officer)

• Ms. Wong Yin Man, Ada

• Mr. Chan Tsze Wah, Gabriel

• Mr. Tan Chang On, Lawrence

• Mr. Wan Man Keung

Non-executive Director:

Mr. Mak King Mun, Philip

Independent Non-executive Directors:

Dr. Li Ka Cheung, Eric, GBS, OBE, JP Dr. Yu Sun Say, GBS, JP

• Mr. Alfred Donald Yap, JP

40