Brockman Mining Limited — Interim / Quarterly Report 2016

Sep 14, 2016

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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 2016

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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”) for the six months ended 30 June 2016 as follows:

CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT

FOR THE SIX MONTHS ENDED 30 JUNE 2016

		Unaudited	Unaudited
		2016	2015
	Note	HK$’000	HK$’000
Revenue	6	1,625,209	1,902,963
Other income	7	5,544	4,886
Changes in inventories of finished
goods and work in progress		16,030	12,444
Raw materials and consumables used		(1,249,992)	(1,476,326)
Employee benefit expenses		(210,444)	(242,628)
Depreciation and amortisation charges	8	(20,474)	(24,330)
Other operating expenses	8	(75,103)	(99,514)
Change in fair value of investment
properties	14	–	701
Other losses – net	9	(8,912)	(3,636)
Operating profit		81,858	74,560
Finance income	10	2,995	6,062
Finance costs	10	(8,276)	(9,655)
Share of profit of joint ventures	15	148,362	414,124
Profit before income tax		224,939	485,091
Income tax expense	11	(21,974)	(16,750)
Profit after income tax		202,965	468,341
Profit attributable to
owners of the Company		202,965	468,341
Non-controlling interests		–	–
		202,965	468,341
Dividends	12	14,355	14,355
Earnings per share attributable to
owners of the Company during
the period
Basic earnings per share	13	HK$0.42	HK$0.98
Diluted earnings per share	13	HK$0.42	HK$0.98

The notes on pages 7 to 28 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 2016

Profit for the period Other comprehensive income: Items that may be reclassified to profit or loss: Currency translation differences Reclassification adjustment of translation reserve upon de-registration of a subsidiary Changes in fair value of available-for-sale financial assets Reclassification adjustment on impairment of available-for-sale financial assets Reclassification adjustment on disposal of available-for-sale financial assets Other comprehensive (loss)/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 2016 2015 HK$’000 HK$’000 202,965 468,341 (16,988) 1,400 – 11,553 (10,875) 28,552 10,855 – – (6,458) (17,008) 35,047 185,957 503,388 185,957 503,388 – – 185,957 503,388

The notes on pages 7 to 28 are an integral part of this condensed consolidated interim financial information.

2

CONDENSED CONSOLIDATED INTERIM BALANCE SHEET

AS AT 30 JUNE 2016

Note ASSETS Non-current assets Property, plant and equipment 14 Investment properties 14 Leasehold land and land use rights 14 Interests in joint ventures 15 Available-for-sale financial assets Deferred income tax assets Deposits and other receivables Restricted cash Current assets Inventories Trade receivables 16 Prepayments, deposits and other receivables Available-for-sale financial assets Amounts due from associates Current income tax recoverable Non-current assets held for sale 17 Short-term bank deposits Cash and cash equivalents Total assets EQUITY Equity attributable to owners of the Company Share capital 20 Other reserves Retained earnings – Dividends – Others Non-controlling interests Total equity	Unaudited As at 30 June 2016 HK$’000 282,233 27,238 18,845 2,287,768 48 11,169 9,844 3,518 2,640,663 424,303 755,909 52,675 2,060 9 8,809 – 362,456 616,651 2,222,872 4,863,535 47,848 514,426 14,355 2,222,402 2,799,031 4 2,799,035	Audited As at 31 December 2015 HK$’000 280,237 27,471 19,367 2,098,576 68 10,727 1,920 3,560 2,441,926 366,365 695,439 63,738 12,915 6 8,809 – 218,823 807,973 2,174,068 4,615,994 47,848 523,904 21,532 2,041,322 2,634,606 4 2,634,610

3

CONDENSED CONSOLIDATED INTERIM BALANCE SHEET AS AT 30 JUNE 2016

(continued)

Note LIABILITIES Non-current liabilities Derivative financial instrument Deferred income tax liabilities Borrowings 19 Current liabilities Trade payables 18 Accruals and other payables Current income tax liabilities Borrowings 19 Total liabilities Total equity and liabilities Net current assets Total assets less current liabilities	Unaudited As at 30 June 2016 HK$’000 814 1,451 505,000 507,265 759,120 280,042 36,193 481,880 1,557,235 2,064,500 4,863,535 665,637 3,306,300	Audited As at 31 December 2015 HK$’000 731 655 420,000 421,386 657,280 276,613 34,111 591,994 1,559,998 1,981,384 4,615,994 614,070 3,055,996

The notes on pages 7 to 28 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 2016

As at 1 January 2016 Comprehensive income Profit for the period Other comprehensive income Currency translation differences Changes in fair value of available-for-sale financial assets Reclassification adjustment on impairment of available-for-sale financial assets Total other comprehensive loss Total comprehensive income Transactions with owners Dividend paid to owners of the Company Total transactions with owners As at 30 June 2016 As at 1 January 2015 Comprehensive income Profit for the period Other comprehensive income Currency translation differences Reclassification adjustment of translation reserve upon de-registration of a subsidiary Changes in fair value of available-for-sale financial assets Reclassification adjustment on disposal of available-for-sale financial assets Total other comprehensive income Total comprehensive income Transactions with owners Dividend paid to owners of the Company Total transactions with owners As at 30 June 2015		Unaudited
	Attributable	to owners of the Company Share premium Other reserves HK$’000 HK$’000 153,025 2,433,733 – 202,965 – (16,988) – (10,875) – 10,855 – (17,008) – 185,957 – (21,532) – (21,532) 153,025 2,598,158 153,025 1,946,572 – 468,341 – 1,400 – 11,553 – 28,552 – (6,458) – 35,047 – 503,388 – (23,924) – (23,924) 153,025 2,426,036	Non– Controlling interests HK$’000 4 – – – – – – – – 4 4 – – – – – – – – – 4	Total HK$’000 2,634,610 202,965
	Share capital HK$’000 47,848 – – – – – – – – 47,848 47,848 – – – – – – – – – 47,848	Share premium HK$’000 153,025 – – – – – – – – 153,025 153,025 – – – – – – – – – 153,025
				(16,988) (10,875) 10,855
				(17,008)
				185,957
				(21,532)
				(21,532)
				2,799,035
				2,147,449 468,341
				1,400 11,553 28,552 (6,458)
				35,047
				503,388
				(23,924)
				(23,924)
				2,626,913

The notes on pages 7 to 28 are an integral part of this condensed consolidated interim financial information.

5

CONDENSED CONSOLIDATED INTERIM CASH FLOW STATEMENT

FOR THE SIX MONTHS ENDED 30 JUNE 2016

Cash flows from operating activities Net cash generated from operating activities Cash flows from investing activities Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Net proceeds from disposal of available-for-sale financial assets Net proceeds from disposal of nil-paid rights shares of an available-for-sale financial asset Decrease in amounts due from associates Increase in short-term bank deposits Loans to joint ventures Interest received Net cash used in investing activities Cash flows from financing activities Decrease in trust receipt bank loans – net New bank loans Repayment of bank loans Dividends paid Net cash used in financing activities Net decrease 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 bank Cash and cash equivalents, end of the period

Unaudited For the six months ended 30 June 2016 2015 HK$’000 HK$’000 69,191 22,393 (25,346) (26,194) 1,475 566 – 22,102 789 – (3) (4) (148,264) (62,658) (40,830) (13,851) 2,995 6,062 (209,184) (73,977) (74,917) (1,709) 122,770 – (53,450) (3,450) (21,532) (23,924) (27,129) (29,083) (167,122) (80,667) 807,973 655,643 (24,200) 190 616,651 575,166 318 348 616,333 574,818 616,651 575,166

The notes on pages 7 to 28 are an integral part of this condensed consolidated interim financial information.

6

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

1 GENERAL INFORMATION

Wong’s International Holdings Limited (the “Company”) and its subsidiaries (together the “Group”) are principally engaged in the development, manufacture, marketing and distribution of electronics products as well as property investment.

This condensed consolidated interim financial information has not been audited.

2 BASIS OF PREPARATION

This unaudited condensed consolidated interim financial information (“Interim Financial Information”) for the six months ended 30 June 2016 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”). The unaudited Condensed Consolidated Interim Financial Information should be read in conjunction with the annual financial statements for the year ended 31 December 2015, which have been prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”).

3 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.

Except as described below, the accounting policies applied are consistent with those of the annual financial statements for the year ended 31 December 2015, as described in those annual financial statements.

HKFRSs (Amendment)	Annual Improvements 2012–2014 Cycle
HKAS 1(Amendment)	Disclosure Initiative
HKFRS 14	Regulatory Deferral Accounts
HKFRS 10 and HKAS 28	Sale or Contribution of Assets Between an Investor
(Amendment)	and Its Associate or Joint Venture
HKFRS 10, HKFRS 12 and	Investment Entities: Applying the consolidation
HKAS28 (Amendment)	Exception
HKFRS 11 (Amendment)	Accounting for Acquisitions of Interests in Joint
	Operations
HKAS 16 and HKAS 38	Clarification of Acceptable Methods of Depreciation
(Amendment)	and Amortisation
HKAS 16 and HKAS 41	Agriculture: Bearer Plants
(Amendment)
HKAS 27 (Amendment)	Equity method in separate Financial Statements

There are no other amended standards or interpretations that are effective for the first time for this interim period that could be expected to have a material impact on the Group.

7

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

3 SIGNIFICANT ACCOUNTING POLICIES (continued)

The Group has not applied any new standards and interpretations that are not effective for current accounting period.

4 ESTIMATES

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing this condensed consolidated interim financial information, the significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 December 2015.

5 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS

5.1 Financial risk factors

The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk and cash flow interest rate risk), credit risk and liquidity risk.

The condensed consolidated interim financial information do not include all financial risk management information and disclosures required in the annual financial statements, and should be read in conjunction with the Group’s annual financial statements as at 31 December 2015.

There have been no changes in the risk management department since year end.

5.2 Fair value estimation

The table below analyses financial instruments carried at fair value by valuation method. The different levels have been defined as follows:

• Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).

• Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).

• Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).

8

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

5 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued)

5.2 Fair value estimation (continued)

The following table presents the Group’s financial assets and liabilities that are measured at fair value at 30 June 2016.

Assets Available-for-sale financial assets Liabilities Derivative financial instrument	Level 1 HK$’000 2,108 –	Level 2 HK$’000 – 814	Level 3 HK$’000 – –	Total HK$’000 2,108
				814

The following table presents the Group’s financial assets and liabilities that are measured at fair value at 31 December 2015.

Assets Available-for-sale financial assets Liabilities Derivative financial instrument	Level 1 HK$’000 12,983 –	Level 2 HK$’000 – 731	Level 3 HK$’000 – –	Total HK$’000 12,983
				731

There were no transfers between Levels 1, 2 and 3 during the period.

There were no other changes in valuation techniques during the period.

5.3 Valuation techniques used to derive Level 2 fair values

Level 2 derivative financial instruments comprise interest rate swaps. The fair value of interest rate swaps is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates.

9

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

5 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (continued)

5.4 Group’s valuation processes

The Group’s finance team performs the valuations of financial assets required for financial reporting purposes. This team reports directly to the management. Discussions of valuation processes and results are held between the management and the team at least once bi-annually, in line with the Group’s reporting dates.

The fair value of the following financial assets and liabilities approximate their carrying amounts:

• Trade and other receivables

• Short-term bank deposits

• Cash and cash equivalents

• Trade and other payables

6 SEGMENT INFORMATION

The Group’s senior executive management is considered as the Chief Operating Decision Maker (“CODM”). The Group is organised into three 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.

Property Investment – development, sale and lease of properties.

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 – net, interest income, interest expense and income tax expense but excludes corporate and unallocated expenses. Other information provided to the CODM is measured in a manner consistent with that in the Interim Financial Information.

10

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

6 SEGMENT INFORMATION (continued)

For the six months ended 30 June 2016 Total gross revenue Inter-segment revenue External revenue Segment results Depreciation and amortisation charges Share of profit of joint ventures Change in fair value of investment properties Rental income Capital expenditure Loans to joint ventures	EMS division HK$’000 1,625,282 (82) 1,625,200 97,979 19,253 – – – 25,346 –	ODM division Property investment division HK$’000 HK$’000 9 – – – 9 – (376) 147,886 2 – – 148,362 – – – 603 – – – 40,830	Total HK$’000 1,625,291 (82) 1,625,209 245,489 19,255 148,362 – 603 25,346 40,830

11

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

6 SEGMENT INFORMATION (continued)

For the six months ended 30 June 2015 Total gross revenue Inter-segment revenue External revenue Segment results Depreciation and amortisation charges Share of profit of joint ventures Change in fair value of investment properties Rental income Capital expenditure Loans to joint ventures As at 30 June 2016 Segment assets Interests in joint ventures Total reportable segment assets As at 31 December 2015 Segment assets Interests in joint ventures Total reportable segment assets	EMS division HK$’000 1,903,014 (1,115) 1,901,899 93,134 23,009 – – – 26,194 – EMS division HK$’000 2,410,739 – 2,410,739 2,343,289 – 2,343,289	ODM division Property investment division HK$’000 HK$’000 1,064 – – – 1,064 – (3,642) 414,398 11 – – 414,124 – 701 – 419 – – – 13,851 ODM division Property investment division HK$’000 HK$’000 9,026 34,736 – 2,287,768 9,026 2,322,504 8,669 35,391 – 2,098,576 8,669 2,133,967	Total HK$’000 1,904,078 (1,115) 1,902,963 503,890 23,020 414,124 701 419 26,194 13,851 Total HK$’000 2,454,501 2,287,768 4,742,269 2,387,349 2,098,576 4,485,925

12

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

6 SEGMENT INFORMATION (continued)

Segment assets consist primarily of property, plant and equipment, investment properties, leasehold land and land use rights, interests in joint ventures, restricted cash, inventories, trade receivables, prepayments, deposits and other receivables, non-current assets held for sale, cash and cash equivalents and short-term bank deposits, but exclude available-for-sale financial assets, deferred income tax assets, amounts due from associates and corporate and unallocated assets.

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

Reportable segment results Other income Other losses – net Finance costs – net Corporate and unallocated expenses Profit before income tax	For the six months ended 30 June 2016 2015 HK$’000 HK$’000 245,489 503,890 5,544 4,886 (8,912) (3,636) (5,281) (3,593) (11,901) (16,456) 224,939 485,091	For the six months ended 30 June 2016 2015 HK$’000 HK$’000 245,489 503,890 5,544 4,886 (8,912) (3,636) (5,281) (3,593) (11,901) (16,456) 224,939 485,091
		485,091

Reportable segments assets are reconciled to total assets as follows:

	As at	As at
	30 June	31 December
	2016	2015
	HK$’000	HK$’000
Reportable segment assets	4,742,269	4,485,925
Available-for-sale financial assets	2,108	12,983
Deferred income tax assets	11,169	10,727
Amounts due from associates	9	6
Corporate and unallocated assets	107,980	106,353
Total assets per condensed consolidated
balance sheet	4,863,535	4,615,994

13

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

6 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	For the six months ended 30 June 2016 2015 HK$’000 HK$’000 19,255 23,020 1,219 1,310 20,474 24,330 25,346 26,194	For the six months ended 30 June 2016 2015 HK$’000 HK$’000 19,255 23,020 1,219 1,310 20,474 24,330 25,346 26,194
		24,330
		26,194

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	For the six months ended 30 June 2016 2015 HK$’000 HK$’000 319,937 249,648 713,885 963,841 257,140 334,157 334,247 355,317 1,625,209 1,902,963	For the six months ended 30 June 2016 2015 HK$’000 HK$’000 319,937 249,648 713,885 963,841 257,140 334,157 334,247 355,317 1,625,209 1,902,963
		1,902,963

For the six months ended 30 June 2016, revenues of approximately HK$475,406,000 (2015: HK$511,988,000), HK$376,295,000 (2015: HK$361,455,000) and HK$236,162,000 (2015: HK$231,435,000) were derived from the top three 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

6 SEGMENT INFORMATION (continued)

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

North America Asia (excluding Hong Kong) Europe Hong Kong	As at 30 June 2016 HK$’000 18 244,020 50 2,385,406 2,629,494	As at 31 December 2015 HK$’000 26 233,669 71 2,197,433
		2,431,199

Non-current assets comprise property, plant and equipment, investment properties, leasehold land and land use rights, interests in joint ventures, available-for-sale financial assets, deposits and other receivables and restricted cash. They exclude deferred income tax assets.

7 OTHER INCOME

	For the six months	For the six months
	ended	30 June
	2016	2015
	HK$’000	HK$’000
Rental income	603	419
Others	4,941	4,467
	5,544	4,886

15

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

8 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	For the six months ended 30 June 2016 2015 HK$’000 HK$’000 20,170 24,011 304 319 20,474 24,330 5,926 6,498 12,505 14,430 12,977 17,690 13,232 20,228 30,463 40,668 75,103 99,514 95,577 123,844	For the six months ended 30 June 2016 2015 HK$’000 HK$’000 20,170 24,011 304 319 20,474 24,330 5,926 6,498 12,505 14,430 12,977 17,690 13,232 20,228 30,463 40,668 75,103 99,514 95,577 123,844
		24,330
		6,498 14,430 17,690 20,228 40,668
		99,514
		123,844

9 OTHER LOSSES – NET

Losses on financial instrument – net – Unrealised – Realised Gains on disposal of property, plant and equipment Exchange losses – net Write-back of trade and other payables Write-back of trade receivables previously written-off Translation reserve reclassified to profit or loss on de-registration of a subsidiary Impairment on available-for-sale financial assets Gain on disposal of available-for-sale financial assets Gain on disposal of nil-paid rights shares of an available-for-sale financial asset	For the six months ended 30 June 2016 2015 HK$’000 HK$’000 (83) (118) (270) (334) 1,117 566 (224) (154) 328 – 286 – – (11,553) (10,855) – – 7,957 789 – (8,912) (3,636)	For the six months ended 30 June 2016 2015 HK$’000 HK$’000 (83) (118) (270) (334) 1,117 566 (224) (154) 328 – 286 – – (11,553) (10,855) – – 7,957 789 – (8,912) (3,636)
		(3,636)

16

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

10 FINANCE COSTS – NET

Finance income Interest income on short-term bank deposits Finance costs Interest expenses on bank borrowings Finance costs – net	For the six months ended 30 June 2016 2015 HK$’000 HK$’000 2,995 6,062 (8,276) (9,655) (5,281) (3,593)

11 INCOME TAX EXPENSE

Hong Kong profits tax has been provided at the rate of 16.5% (2015: 16.5%) on the estimated assessable profit arising in or derived from Hong Kong.

The Group’s subsidiaries in Mainland China are subject to the China Corporate Tax (“CIT”) at the rate of 25% (2015: 25%) on the estimated profits, except for Welco Technology (Suzhou) Limited (“WTSZ”), a wholly owned subsidiary of the Group. WTSZ is eligible for preferential CIT Rate of 15% under the New and High Technology Enterprises status.

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

Current income tax – Hong Kong profits tax – Overseas taxation Deferred income tax (Over)/under-provision in prior periods – Current income tax	For the six months ended 30 June 2016 2015 HK$’000 HK$’000 – 4,634 21,768 11,950 209 (1,291) (3) 1,457 21,974 16,750

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.

17

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

12 DIVIDENDS

	For the six months	For the six months
	ended 30 June
	2016	2015
	HK$’000	HK$’000
Interim dividend – HK$0.03 (2015: HK$0.03)
per share	14,355	14,355

On 25 August 2016, the Board has resolved to pay an interim dividend of HK$0.03 per share (2015: HK$0.03 per share) which is payable on Thursday, 29 September 2016 to the shareholders whose names appear on the Register of Members of the Company on Thursday, 15 September 2016. This interim dividend, amounting to HK$14,355,000 (2015: HK$14,355,000) has not been recognised as a liability in this Interim Financial Information. It will be recognised in shareholders’ equity in the year ending 31 December 2016.

13 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$’000) Weighted average number of ordinary shares in issue_(in thousands) Basic earnings per share(HK$)_ (b) Diluted	For the six months ended 30 June 2016 2015 202,965 468,341 478,484 478,484 0.42 0.98	For the six months ended 30 June 2016 2015 202,965 468,341 478,484 478,484 0.42 0.98
		0.98

No diluted earnings per share is presented for both periods because there is no dilutive potential ordinary shares outstanding throughout both periods.

18

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

14 CAPITAL EXPENDITURE

			Leasehold
	Property,		land and
	plant and	Investment	land use
	equipment	properties	rights
	HK$’000	HK$’000	HK$’000
For the six months
ended 30 June 2016
Opening net book amount as at
1 January 2016	280,237	27,471	19,367
Additions	25,346	–	–
Disposals	(358)	–	–
Depreciation/amortisation	(20,170)	–	(304)
Currency translation differences	(2,822)	(233)	(218)
Closing net book amount as at
30 June 2016	282,233	27,238	18,845
			Leasehold
	Property,		land and
	plant and	Investment	land use
	equipment	properties	rights
	HK$’000	HK$’000	HK$’000
For the six months
ended 30 June 2015
Opening net book amount as at
1 January 2015	286,357	27,920	21,111
Additions	26,194	–	–
Fair value gains	–	701	–
Depreciation/amortisation	(24,011)	–	(319)
Currency translation differences	255	23	21
Closing net book amount as at
30 June 2015	288,795	28,644	20,813

19

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

14 CAPITAL EXPENDITURE (continued)

The valuations of the investment properties at 30 June 2016 were carried out by an independent firm of surveyors, Roma Appraisals Limited, who is a fellow member of the Hong Kong Institute of Surveyors. The fair value measurement information for these investment properties in accordance with HKFRS 13 is given below.

Fair value measureme Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) HK$’000 HK$’000 As at 30 June 2016 Recurring fair value measurements Investment properties – – As at 31 December 2015 Recurring fair value measurements Investment properties – –	nts Significant unobservable inputs (Level 3) HK$’000 27,238
	27,471

There were no transfers among Level 1, Level 2 and 3 during the period.

20

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

14 CAPITAL EXPENDITURE (continued)

Fair value measurements using significant unobservable inputs (Level 3)

At 1 January 2016 Currency translation differences At 30 June 2016 Total unrealised gains for the period included in the condensed consolidated income statement for assets held at the end of the period, under ‘Change in fair value of investment properties’ At 1 January 2015 Fair value gains Currency translation differences At 30 June 2015 Total unrealised gains for the period included in the condensed consolidated income statement for assets held at the end of the period, under ‘Change in fair value of investment properties’

Investment properties Hong Kong Outside Hong Kong Total HK$’000 HK$’000 HK$’000 7,300 20,171 27,471 – (233) (233) 7,300 19,938 27,238 – – – 7,100 20,820 27,920 200 501 701 – 23 23 7,300 21,344 28,644 200 501 701

Fair values of completed investment properties have been valued by the direct comparison approach assuming sale of the properties in their existing states with the benefit of vacant possession and by making reference to comparable sales transactions as available in the relevant market and also considered the basis of capitalisation of the net income receivable, if necessary.

21

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

14 CAPITAL EXPENDITURE (continued)

Fair value measurements using significant unobservable inputs (Level 3) (continued)

The valuation have been made on the assumption that the owners sell the properties in the open market without the benefit of deferred term contracts, leasebacks, joint ventures, management agreements or any similar arrangements which would serve to increase the values of such properties. In addition, no account has been taken of any option or right of pre-emption concerning or affecting the sale of the properties and no allowance has been made for the properties to be sold in one lot or to a single purchaser.

There were no changes in valuation techniques during the period.

As at 30 June 2016, certain bank borrowings are secured on land and buildings with a carrying amount of approximately HK$89,496,000 (31 December 2015: HK$90,615,000) (Note 19).

15 INTERESTS IN JOINT VENTURES

Share of net assets Loans to joint ventures	As at 30 June 2016 HK$’000 994,672 1,293,096 2,287,768	As at 31 December 2015 HK$’000 846,310 1,252,266
		2,098,576

Movements in share of net assets is analysed as follows:

	2016	2015
	HK$’000	HK$’000
At 1 January	846,310	420,300
Share of profit of joint ventures	148,362	414,124
At 30 June	994,672	834,424

Share of profit of joint ventures included the share of fair value gain of investment properties owned by the joint ventures of approximately HK$141,368,000 (2015: HK$347,600,000).

22

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

15 INTERESTS IN JOINT VENTURES (continued)

As at 30 June 2016, the Group had interests in the following principal joint ventures, which are unlisted:

		Proportion of
	Place of	ownership		Nature of the	Measurement
Name of company	incorporation	interest %	Principal activities	relationship	method
Bollardbay Limited	BVI	35.70	Investment holding	Note 1	Equity
Easywise Limited	Hong Kong	35.70	Property development	Note 1	Equity
			and leasing of
			properties
Talent Chain Investments LimitedBVI		35.70	Investment holding	Note 2	Equity
Crown Opal Investment Limited Hong Kong		35.70	Property development	Note 2	Equity

Note 1: Easywise Limited, a subsidiary of Bollardbay Limited, is engaged in the business of property development and leasing of properties.

Note 2: Crown Opal Investment Limited, a subsidiary of Talent Chain Investments Limited, is engaged in the business of property development.

The loans to joint ventures 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 joint ventures approximate their fair values. The amounts are denominated in Hong Kong dollars.

23

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

16 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	As at 30 June 2016 HK$’000 591,265 124,679 39,965 755,909	As at 31 December 2015 HK$’000 535,481 105,482 54,476
		695,439

The carrying amounts of the Group’s trade receivables approximated their fair values as at 30 June 2016.

17 NON-CURRENT ASSETS HELD FOR SALE

	As at	As at
	30 June	31 December
	2016	2015
	HK$’000	HK$’000
Non-current assets held for sale	–	–

Movements in non-current assets held for sale is analysed as follows:

	2016	2015
	HK$’000	HK$’000
At 1 January	–	18,203
Currency translation differences	–	(361)
At 30 June	–	17,842

On 23 August 2013, the Group entered into a sale and purchase agreement with an independent third party for the disposal of the property and the leasehold land use rights in Vietnam for a consideration of US$2,800,000. The property and the related land use rights were classified as non-current assets held for sale. The transaction was completed in October 2015 and a disposal gain of approximately HK$3,547,000 was recognised to the profit or loss for the year ended 31 December 2015.

24

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

18 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	As at 30 June 2016 HK$’000 700,325 33,664 25,131 759,120	As at 31 December 2015 HK$’000 590,521 59,705 7,054
		657,280

The carrying amounts of the Group’s trade payables approximated their fair values as at 30 June 2016.

19 BORROWINGS

Long-term bank loans, secured Trust receipt bank loans, unsecured Short-term bank loans, unsecured Portion of a long-term loan due for repayment within one year, secured Portion of a long-term loan due for repayment after one year, secured Portion of a mortgage loan from bank due for repayment within one year Portion of a mortgage loan from bank due for repayment after one year which contains a repayment on demand clause Total borrowings Non-current Current Total borrowings	As at 30 June 2016 HK$’000 420,000 288,735 150,545 15,000 85,000 6,900 20,700 986,880 505,000 481,880 986,880	As at 31 December 2015 HK$’000 420,000 363,652 197,292 – – 6,900 24,150
		1,011,994
		420,000 591,994
		1,011,994

25

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

19 BORROWINGS (continued)

As at 30 June 2016, mortgage loan of approximately HK$27,600,000 (31 December 2015: HK$31,050,000) was secured by the land and buildings of the Group with a carrying amount of HK$89,496,000 (31 December 2015: HK$90,615,000).

As at 30 June 2016, the long-term bank loan of HK$420,000,000 (31 December 2015: HK$420,000,000) was secured by the following:

• A share mortgage over the Group’s entire interest in Talent Chain Investments Limited, a joint venture of the Group;

• An assignment of shareholder’s loan advanced by Ubiquitous International Limited to Talent Chain Investments Limited;

• A share mortgage over all the issued and fully paid-up shares of Ubiquitous International Limited, a wholly owned subsidiary of the Group; and

• A subordination of all shareholder or intra-group loan to Ubiquitous International Limited.

20 SHARE CAPITAL

Ordinary shares of HK$0.10 each Authorised: At 1 January 2015 and 30 June 2015 At 1 January 2016 and 30 June 2016 Issued and fully paid: At 1 January 2015 and 30 June 2015 At 1 January 2016 and 30 June 2016	Number of shares 700,000,000 700,000,000 478,483,794 478,483,794	Nominal value HK$’000 70,000
		70,000
		47,848
		47,848

26

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

21 COMMITMENTS

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

	As at	As at
	30 June	31 December
	2016	2015
	HK$’000	HK$’000
Contracted but not provided for	1,438	3,188

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

	As at	As at
	30 June	31 December
	2016	2015
	HK$’000	HK$’000
Within 1 year	11,098	10,975
In the 2nd to 5th year inclusive	11,023	16,067
	22,121	27,042

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 1 year In the 2nd to 5th year inclusive	As at 30 June 2016 HK$’000 1,487 1,371 2,858	As at 31 December 2015 HK$’000 1,502 2,239
		3,741

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 1.5 years.

27

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

22 RELATED PARTY TRANSACTIONS

The Group was controlled by Mr. Wong Chung Mat, Ben (personally and via Salop Investment Limited, a company wholly-owned and controlled by him) and W. S. Wong & Sons Company Limited (a company controlled by the Wong’s family). As at 30 June 2016, Mr. Wong Chung Mat, Ben (together with Salop Investment Limited) and W. S. Wong & Sons Company Limited beneficially owned 28.06% and 19.66% of the issued shares of the Company respectively.

(a) Balances with related parties

The amounts due from associates are repayable on demand, unsecured, interestfree and without pre-determined repayment terms.

The loans to joint ventures are set out in note 15 to the condensed consolidated interim financial information. .

(b) Key management compensation

Salaries and allowances Bonus Pension costs – defined contribution schemes	For the six months ended 30 June 2016 2015 HK$’000 HK$’000 9,118 8,583 6,445 7,620 62 54 15,625 16,257	For the six months ended 30 June 2016 2015 HK$’000 HK$’000 9,118 8,583 6,445 7,620 62 54 15,625 16,257
		16,257

23 SUBSEQUENT EVENT

Subsequent to the period, on 22 August 2016, the Company has entered into a share purchase agreement pursuant to which the Company conditionally agreed to subscribe for 10% of the enlarged share capital in Semk International Enterprises Limited (“SIEL”) at a consideration of HK$30,800,000 by way of cash. SIEL will operate a business to license and commercialize the “B Duck” design as well as consultancy and design service for other brands. The consideration will be adjusted according to the net profit of the licensing business of SIEL for the year ending 31 December 2016, and in any event will be capped at HK$50,000,000.

28

INTERIM DIVIDEND

On 25 August 2016, the Board has resolved to pay an interim dividend of HK$0.03 per share (2015: HK$0.03 per share) which is payable on Thursday, 29 September 2016 to the shareholders whose names appear on the Register of Members of the Company on Thursday, 15 September 2016.

CLOSURE OF REGISTER OF MEMBERS

The Register of Members of the Company will be closed from Tuesday, 13 September 2016 to Thursday, 15 September 2016, 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 registrar, Tricor Standard Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong for registration not later than 4:30 p.m. on Monday, 12 September 2016.

REVIEW OF BUSINESS ACTIVITIES

Review of Results

The profit attributable to owners of the Company for the six months ended 30 June 2016 amounted to HK$203.0 million, as compared to HK$468.3 million for the corresponding period last year. The decrease was mainly attributable to the decrease in the Group’s share of profit in the Group’s property development joint venture as there were no sales of office units or car parking spaces and less valuation increase from the investment properties held by the joint venture during the period. Earnings per share for the six months were HK$0.42 as compared to HK$0.98 for the corresponding period last year.

The Group’s revenue for the six months ended 30 June 2016 was HK$1,625.2 million, as compared to HK$1,903.0 million for the corresponding period last year. Operating profit for the six months ended 30 June 2016 was HK$81.9 million or 5.0% of revenue, as compared to HK$74.6 million or 3.9% of revenue for the corresponding period last year. The operating profit for the interim period under review was maintained at a stable level owing to a slight improvement in gross profit percentage and cost control measures.

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

Revenue for the EMS Division for the six months ended 30 June 2016 was HK$1,625.2 million, as compared to HK$1,901.9 million for the corresponding period last year. The segment profit attributable to the EMS Division was HK$98.0 million, a 5.2% increase as compared to HK$93.1 million for the corresponding period last year. The increase in the segment net profit was attributable to a slight improvement in gross profit percentage and cost control measures.

29

REVIEW OF BUSINESS ACTIVITIES (continued)

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

Revenue for the ODM Division for the six months ended 30 June 2016 was HK$9 thousand, as compared to the HK$1.1 million for the corresponding period last year. The sale for the tablets was slow as the market plateaued. However, the research and development efforts in tablets have provided technological innovations and opportunities of value added services to the EMS Division.

Property Investment Division

The Group has two property development joint ventures with Sun Hung Kai Properties Limited on two sites for office buildings in Kwun Tong. The development project at the first site was officially completed in January 2014 and launched into the market in April 2014 under the name of “One Harbour Square”. Market reception for the building was favourable and units were sold steadily in 2014 and 2015. During the interim period under review, there were no sales of office units or car parking spaces but one office was leased, resulting in an increase in equity value of the joint venture, of which the Group’s share was HK$148.4 million, as compared to the gains from sales and leased properties of HK$414.1 million for the corresponding period last year.

The construction work for the second development project is proceeding as planned and the foundation and diaphragm wall were completed in February 2015. The site was handed over to the main contractor to commence the development construction in March 2015. The construction of the second site is targeted to be completed in 2017.

LIQUIDITY AND FINANCIAL RESOURCES

As at 30 June 2016, the Group had a total of HK$2,930.3 million of banking facilities. Total bank borrowings were HK$986.9 million (2015 December: HK$1,012.0 million) and no borrowing was arranged by an overseas subsidiary. Cash and cash equivalents and short-term bank deposits were HK$979.1 million at 30 June 2016 (2015 December: HK$1,026.8 million). Cash flow generated from operations for the period was HK$69.2 million.

As at 30 June 2016, the Group had net bank borrowings of HK$7.8 million (net cash surplus in 2015 December: HK$14.8 million). Sufficient banking facilities and bank balance are available to meet the cash needs of the Group for its manufacturing operations as well as property development activities.

The Group’s net gearing ratio as at 30 June 2016 stayed at low level of approximately 0.3% (2015 December: net cash surplus), which was calculated as net debt divided by total equity. Net debt is calculated as total borrowings less cash and cash equivalents and short-term bank deposits.

30

FOREIGN EXCHANGE AND RISK MANAGEMENT

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 Chinese Renminbi. Consistent with the prudent policy in financial risk management, the Group does not engage in any foreign exchange hedging products. The Group will closely monitor and actively manage the currency risk involved.

CAPITAL STRUCTURE

There has been no material change in the Group’s capital structure since 31 December 2015 which consists of bank borrowings, cash and cash equivalents, short-term bank deposits and equity attributable to owners of the parent, comprising issued share capital and reserves.

EMPLOYEES

The Group employed approximately 4,300 employees as at 30 June 2016. The Group adopts a remuneration policy which is commensurate with job nature, qualification and experience of employees. In addition to the provision of annual bonuses, medical and life insurances, discretionary bonuses are also rewarded to employees based on individual performance. The remuneration packages and policies are reviewed periodically. The Group also provides in-house and external training programmes to its employees.

31

PROSPECTS

Based on the current level of orders received and the forecasts provided by our customers, the Company expects that sales with the EMS business in the second half of 2016 will be comparable to the first half. We are cautious about the general business and economic conditions. The outcome of the referendum in the United Kingdom in June 2016 in favor of leaving the European Union implies an important downside risk for the global economy. The investment environment becomes more complex and difficult. This continues to present challenges to our EMS business in terms of its impact on the consumer and business sentiment, investment decisions, commodity prices, operating expenses and ultimately our competitiveness. The Company shall continue to improve operation efficiency through automation, lean, energy conservation and stringent cost control initiatives to meet the challenges. We strive to provide high quality, value-added services for our customers and continue to expand and enhance our service offering to meet industry needs.

As a result of the near completion of the first property development project in Kwun Tong, namely One Harbour Square, the share of profit from the property development joint venture in the second half of 2016 is expected to be minimal. Same as indicated previously, it is the Group’s preference to hold its interest in the property development projects for long term and for leasing purposes after taking into consideration the market conditions and the financing requirements. The Company has been discussing with Sun Hung Kai Properties Limited a proposal to separate the parties’ interests in One Harbour Square. These discussions are ongoing and no binding agreements have yet been signed. A further announcement will be made when and if agreement is reached. The above arrangements do not affect the second property development project at an adjacent site in Kwun Tong. Construction of the second project is targeted to be completed in late 2017. Sufficient funding in the form of committed bank loans have been arranged to complete the second project.

AWARD AND RECOGNITION

The Company and its wholly-owned subsidiary, Wong’s Electronics Company Limited, have been awarded the Caring Company Logo by the Hong Kong Council of Social Service since March 2012. In addition, Wong’s F&B Limited, which is also a wholly-owned subsidiary of the Company, has also been awarded the Caring Company Logo in March 2016. These serve as recognition of the Group’s active participation in community activities and good corporate citizenship.

32

INTERESTS OF DIRECTORS AND CHIEF EXECUTIVES

As at 30 June 2016, 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 of the Company

			Approximate
			percentage of
		Number of	the issued
Name of Directors	Capacity	ordinary shares	shares
Wong Chung Mat, Ben	Beneficial owner and	134,304,740	28.06%
	interest of controlled
	corporation_(Note)_
Wong Yin Man, Ada	Beneficial owner	1,000,000	0.21%
Chan Tsze Wah, Gabriel	Beneficial owner	1,837,500	0.38%
Wan Man Keung	Beneficial owner	1,000,000	0.21%
Yu Sun Say	Beneficial owner	500,000	0.10%
Note:

Mr. Wong Chung Mat, Ben was deemed (by virtue of the SFO) to be interested in 134,304,740 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) 133,304,740 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 2016, 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.

33

INTERESTS OF SUBSTANTIAL SHAREHOLDERS

So far as is known to the Directors or chief executives of the Company, as at 30 June 2016, 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
		Number of	percentage of
Name of substantial		ordinary	the issued
shareholders	Capacity	shares	shares
Salop Investment Limited	Beneficial owner	133,304,740	27.85%
	(Note 1)
W. S. Wong & Sons Company	Beneficial owner	94,052,019	19.66%
Limited	(Note 2)
Wong Chung Yin, Michael	Beneficial owner, joint	78,546,001	16.41%
	interest, interest of
	spouse and interest of
	controlled corporation
	(Note 3)
Woo Sin Ming	Joint interest, interest of	78,546,001	16.41%
	spouse and interest of
	controlled corporation
	(Note 3)
Levy Investment Limited	Beneficial owner	45,820,212	9.58%
	(Note 3(d))
Wong Chung Ah, Johnny	Beneficial owner, interest	44,343,317	9.26%
	of spouse and founder
	of a discretionary
	trust_(Note 4)_
Kong King International	Beneficial owner	42,108,317	8.80%
Limited	(Note 4(c))
Mountainview International	Trustee_(Note 4(c))_	42,108,317	8.80%
Limited
HSBC International Trustee	Trustee_(Note 5)_	46,123,753	9.63%
Limited

34

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 and his wife, Ms. Woo Sin Ming, were deemed (by virtue of the SFO) to be interested in the same block of 78,546,001 shares in the Company. These shares were held in the following capacity:

4. (a) 4,247,829 shares were held by Mr. Wong Chung Yin, Michael personally.

5. (b) 10,893,000 shares were held by Mr. Wong Chung Yin, Michael and Ms. Woo Sin Ming jointly.

6. (c) 17,584,960 shares were held by Levy Pacific Limited, which was wholly owned and controlled by Ms. Woo Sin Ming.

7. (d) 45,820,212 shares were held by Levy Investment Limited, which was wholly owned and controlled by Mr. Wong Chung Yin, Michael. Each of Mr. Wong Chung Yin, Michael, Ms. Woo Sin Ming and Levy Investment Limited was deemed to be interested in the same block of 45,820,212 shares.

8. Mr. Wong Chung Ah, Johnny was deemed (by virtue of the SFO) to be interested in 44,343,317 shares in the Company. These shares were held in the following capacity:

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

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

11. (c) 42,108,317 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) and HSBC International Trustee Limited was the trustee. Kong King International Limited was wholly owned by Mountainview International Limited, which was wholly owned by HSBC International Trustee Limited. Each of Mr. Wong Chung Ah, Johnny, Kong King International Limited, Mountainview International Limited and HSBC International Trustee Limited was deemed to be interested in the same block of 42,108,317 shares. Please refer to Note 5(a) below.

12. HSBC International Trustee Limited was deemed (by virtue of the SFO) to be interested in 46,123,753 shares in the Company. These shares were held in the following capacity:

13. (a) 42,108,317 shares were held by Kong King International Limited under a discretionary trust, of which HSBC International Trustee Limited was the trustee. Please refer to Note 4(c) above.

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

35

INTERESTS OF SUBSTANTIAL SHAREHOLDERS (continued)

Long positions in shares of the Company (continued)

Save as disclosed, the Directors are not aware of any other persons who, as at 30 June 2016, 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.

SHARE OPTIONS

The Company has adopted a share option scheme (the “Scheme”) on 2 June 2010. No option has been granted under the Scheme since its adoption date and up to 30 June 2016.

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

During the six months ended 30 June 2016, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company’s listed securities.

CORPORATE GOVERNANCE CODE

During the six months ended 30 June 2016, the Company has complied with the code provisions under the Corporate Governance Code (the “CG Code”) 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:

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.

36

CORPORATE GOVERNANCE CODE (continued)

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 Independent 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 and re-election 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 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, a 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 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 2016.

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

Directors’ relationship with substantial shareholder

Mr. Wong Chung Mat, Ben, Chairman and Chief Executive Officer of the Company, is the brother-in-law of Ms. Woo Sin Ming who has become a substantial shareholder of the Company in March 2016. Ms. Wong Yin Man, Ada, Executive Director of the Company, is a niece of Ms. Woo Sin Ming.

37

AUDIT COMMITTEE

The Audit Committee, which comprises of three Independent Non-executive Directors, has reviewed with management the accounting principles and practices adopted by the Group and discussed auditing, risk management and internal control systems and financial reporting matters including a review of the unaudited interim financial information for the six months ended 30 June 2016.

By order of the Board WONG CHUNG MAT, BEN Chairman and Chief Executive Officer

Hong Kong, 25 August 2016

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. Wan Man Keung Mr. Hung Wing Shun, Edmund

Independent Non-executive Directors: Dr. Li Ka Cheung, Eric GBS, OBE, JP Dr. Yu Sun Say GBM, JP Mr. Alfred Donald Yap JP Mr. Cheung Chi Chiu, David

38