Brockman Mining Limited — Interim / Quarterly Report 2017

Sep 13, 2017

==> picture [64 x 69] intentionally omitted <==

WONG’S INTERNATIONAL HOLDINGS LIMITED 王氏國際集團有限公司

(Incorporated in Bermuda with limited liability)

INTERIM REPORT FOR 2017

==> picture [76 x 32] intentionally omitted <==

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 2017 as follows:

CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT

FOR THE SIX MONTHS ENDED 30 JUNE 2017

Note Revenue 6 Other income 7 Changes in inventories of finished goods and work in progress Raw materials and consumables used Employee benefit expenses Depreciation and amortisation charges 8 Other operating expenses 8 Change in fair value of investment properties 14 Other losses – net 9 Operating profit Finance income 10 Finance costs 10 Share of loss of an associate Share of (loss)/profit of joint ventures 15 Profit before income tax Income tax expense 11 Profit after income tax Profit attributable to owners of the Company Non-controlling interests Dividends 12 Earnings per share attributable to the owners of the Company during the period Basic earnings per share 13 Diluted earnings per share 13	Unaudited 2017 2016 HK$’000 HK$’000 1,798,259 1,625,209 5,089 5,544 26,594 16,030 (1,353,559) (1,249,992) (222,289) (210,444) (23,670) (20,474) (99,176) (75,103) 52,642 – (16,119) (8,912) 167,771 81,858 4,717 2,995 (20,429) (8,276) (1,255) – (184) 148,362 150,620 224,939 (21,370) (21,974) 129,250 202,965 129,250 202,965 – – 129,250 202,965 19,139 14,355 HK$0.27 HK$0.42 HK$0.27 HK$0.42	Unaudited 2017 2016 HK$’000 HK$’000 1,798,259 1,625,209 5,089 5,544 26,594 16,030 (1,353,559) (1,249,992) (222,289) (210,444) (23,670) (20,474) (99,176) (75,103) 52,642 – (16,119) (8,912) 167,771 81,858 4,717 2,995 (20,429) (8,276) (1,255) – (184) 148,362 150,620 224,939 (21,370) (21,974) 129,250 202,965 129,250 202,965 – – 129,250 202,965 19,139 14,355 HK$0.27 HK$0.42 HK$0.27 HK$0.42
		16,030 (1,249,992)
		(210,444) (20,474) (75,103) – (8,912) 81,858 2,995 (8,276) – 148,362 224,939 (21,974) 202,965 202,965 – 202,965 14,355 HK$0.42 HK$0.42

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 2017

Profit for the period Other comprehensive income: Items that may be reclassified to profit or loss: Currency translation differences Changes in fair value of available-for-sale financial assets Reclassification adjustment on impairment of available-for-sale financial assets Cash flow hedge – fair value loss for the period Cash flow hedge – deferred income tax recognised Other comprehensive income/(loss) 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 2017 2016 HK$’000 HK$’000 129,250 202,965 35,430 (16,988) (405) (10,875) 397 10,855 (13,271) – 2,190 – 24,341 (17,008) 153,591 185,957 153,591 185,957 – – 153,591 185,957

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 2017

Note ASSETS Non-current assets Property, plant and equipment 14 Investment properties 14 Leasehold land and land use rights 14 Investments in associates Interests in joint ventures 15 Available-for-sale financial assets Deferred income tax assets Deposits and other receivables Restricted cash Current assets Inventories Stock of completed properties Trade receivables 16 Prepayments, deposits and other receivables Available-for-sale financial assets Amounts due from associates Current income tax recoverable Short-term bank deposits Cash and cash equivalents Total assets EQUITY Equity attributable to owners of the Company Share capital 19 Other reserves Retained earnings – Dividends – Others Non-controlling interests Total equity	Unaudited As at 30 June 2017 HK$’000 299,889 1,944,676 17,880 32,541 951,642 23 15,659 16,274 3,448 3,282,032 531,507 732,310 861,010 73,437 725 9 7,706 464,481 482,775 3,153,960 6,435,992 47,848 486,935 19,139 2,561,036 3,114,958 4 3,114,962	Audited As at 31 December 2016 HK$’000 282,000 1,891,536 17,720 33,796 951,826 31 12,656 11,526 3,362
		3,204,453
		396,528 732,310 830,844 70,332 1,122 9 7,706 469,657 594,606
		3,103,114
		6,307,567
		47,848 460,693 23,924 2,452,826
		2,985,291 4
		2,985,295

3

CONDENSED CONSOLIDATED INTERIM BALANCE SHEET AS AT 30 JUNE 2017

(continued)

Note LIABILITIES Non-current liabilities Derivative financial instrument Deferred income tax liabilities Borrowings 18 Current liabilities Trade payables 17 Accruals and other payables Amount due to an associate Current income tax liabilities Borrowings 18 Total liabilities Total equity and liabilities Net current assets Total assets less current liabilities	Unaudited As at 30 June 2017 HK$’000 13,589 94,834 951,973 1,060,396 797,881 317,199 – 51,189 1,094,365 2,260,634 3,321,030 6,435,992 893,326 4,175,358	Audited As at 31 December 2016 HK$’000 234 94,815 1,312,500
		1,407,549
		724,438 329,375 11,622 213,131 636,157
		1,914,723
		3,322,272
		6,307,567
		1,188,391
		4,392,844

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 2017

D 30 JUNE	2017
	Unaudited
Attributable			Total HK$’000 2,985,295 129,250
			35,430 (405) 397 (13,271) 2,190
			24,341
			153,591
			(23,924)
			(23,924)
			3,114,962
			2,634,610 202,965
			(16,988) (10,875) 10,855
			(17,008)
			185,957
			(21,532)
			(21,532)

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 2017

Cash flows from operating activities Net cash (used in)/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 nil-paid rights shares of an available-for-sale financial asset Additional investment in an associate Decrease in amounts due from associates Decrease/(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 generated from/(used in) 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 2017 2016 HK$’000 HK$’000 (165,028) 69,191 (36,503) (25,346) 464 1,475 – 789 (11,622) – – (3) 17,046 (148,264) – (40,830) 4,717 2,995 (25,898) (209,184) (40,571) (74,917) 270,000 122,770 (131,748) (53,450) (23,924) (21,532) 73,757 (27,129) (117,169) (167,122) 594,606 807,973 5,338 (24,200) 482,775 616,651 293 318 482,482 616,333 482,775 616,651

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 2017 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 2016, 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 2016, as described in those annual financial statements.

Amended standards adopted by the Group

HKAS 7 (Amendment)	Disclosure Initiative
HKAS 12 (Amendment)	Recognition of Deferred Tax Assets for
	Unrealised Losses
Annual Improvements Project	Annual Improvements 2014–2016 Cycle
(Amendment)

These amended standards have not had a significant impact on the Group’s condensed consolidated interim financial information for the six months ended 30 June 2017.

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)

Impact of standards issued but not yet applied by the Group

• (a) HKFRS 9, “Financial instruments”

HKFRS 9 Financial Instruments addresses the classification, measurement and derecognition of financial assets and financial liabilities, introduces new rules for hedge accounting and a new impairment model for financial assets. The Group has decided not to adopt HKFRS 9 until it becomes mandatory on 1 January 2018.

The Group does not expect the new guidance to have a significant impact on the classification and measurement of its financial assets for the following reason:

• Equity investments currently measured at fair value through profit or loss (FVPL) will likely continue to be measured on the same basis under HKFRS 9.

There will be no impact on the Group’s accounting for financial liabilities, as the new requirements only affect the accounting for financial liabilities that are designated at fair value through profit or loss and the Group does not have any such liabilities. The derecognition rules have been transferred from HKAS 39 Financial Instruments: Recognition and Measurement and have not been changed.

The new impairment model requires the recognition of impairment provisions based on expected credit losses (ECL) rather than only incurred credit losses as is the case under HKAS 39. It applies to financial assets classified at amortised cost, debt instruments measured at fair value through other comprehensive income (FVOCI), contract assets under HKFRS 15 Revenue from Contracts with Customers, lease receivables, loan commitments and certain financial guarantee contracts.

The new standard also introduces expanded disclosure requirements and changes in presentation. These are expected to change the nature and extent of the Group’s disclosures about its financial instruments particularly in the year of the adoption of the new standard.

Management is still assessing the financial impact. The standard is mandatory for first interim periods within annual reporting periods beginning on or after 1 January 2018. At this stage, the Group does not intend to adopt the standard before its effective date.

8

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

3 SIGNIFICANT ACCOUNTING POLICIES (continued)

Impact of standards issued but not yet applied by the Group (continued)

• (b) HKFRS 15, “Revenue from contracts with customers”

The HKICPA has issued a new standard for the recognition of revenue. This will replace HKAS 18 which covers revenue arising from the sale of goods and the rendering of services and HKAS 11 which covers construction contracts.

The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer.

The standard permits either a full retrospective or a modified retrospective approach for the adoption. The new standard is effective for first interim periods within annual reporting periods beginning on or after 1 January 2018. The Group will adopt the new standard from 1 January 2018.

Management has identified the following areas that are likely to be affected:

• accounting for costs incurred in fulfilling a contract – certain costs which are currently expensed may need to be recognised as an asset under HKFRS 15, and

• rights of return – HKFRS 15 requires separate presentation on the consolidated statement of financial position of the right to recover the goods from the customer and the refund obligation.

Management is still assessing the financial impact. The standard is mandatory for first interim periods within annual reporting periods beginning on or after 1 January 2018. At this stage, the Group does not intend to adopt the standard before its effective date.

• (c) HKFRS 16, “Leases”

HKFRS 16 was issued in January 2016. It will result in almost all leases being recognised on the consolidated statement of financial position, as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals are recognised. The only exceptions are short-term and low-value leases.

The standard will affect primarily the accounting for the Group’s operating leases. As at the reporting date, the Group has non-cancellable operating lease commitments of HK$13,592,000 (Note 20). However, the Group has not yet determined to what extent these commitments will result in the recognition of an asset and a liability for future payments and how this will affect the Group’s profit and classification of cash flows.

9

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

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 2016.

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 currency 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 2016.

The Group has entered into an interest rate swap contract to partially hedge against the risk of interest increase from the Group’s variable rate borrowings.

There has been no changes in the risk management department since 31 December 2016.

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).

10

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 2017.

Assets Available-for-sale financial assets Liabilities Derivative financial instrument	Level 1 HK$’000 748 –	Level 2 HK$’000 – 13,589	Level 3 HK$’000 – –	Total HK$’000 748
				13,589

The following table presents the Group’s financial assets and liabilities that are measured at fair value at 31 December 2016.

Assets Available-for-sale financial assets Liabilities Derivative financial instrument	Level 1 HK$’000 1,153 –	Level 2 HK$’000 – 234	Level 3 HK$’000 – –	Total HK$’000 1,153
				234

There were no transfers among Level 1, Level 2 and Level 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.

11

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 has changed the composition of the reportable segments by the inclusion of the activities of the previous “Original Design and Manufacturing” segment in the “Electronic Manufacturing Service” segment. The comparative segment information as at 31 December 2016 has been reclassified to align with the presentation of the latest segment information disclosure. The Group is currently organised into two operating divisions:

Electronic Manufacturing Service (“EMS”) – manufacture and distribution of electronic products for EMS 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, finance costs, share of loss of an associate 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.

12

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

6 SEGMENT INFORMATION (continued)

For the six months ended 30 June 2017 External revenue Segment results Depreciation and amortisation charges Share of loss of joint ventures Change in fair value of investment properties Capital expenditure Loans to joint ventures For the six months ended 30 June 2016 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$’000 1,770,947 118,418 22,465 – – 36,503 – EMS division HK$’000 1,625,209 97,603 19,255 – – – 25,346 –	Property investment division HK$’000 27,312 72,406 – (184) 52,642 – – Property investment division HK$’000 – 147,886 – 148,362 – 603 – 40,830	Total HK$’000 1,798,259 190,824 22,465 (184) 52,642 36,503 – Total HK$’000 1,625,209 245,489 19,255 148,362 – 603 25,346 40,830

13

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

6 SEGMENT INFORMATION (continued)

As at 30 June 2017 Segment assets Interests in joint ventures Total reportable segment assets As at 31 December 2016 Segment assets Interests in joint ventures Total reportable segment assets	EMS division HK$’000 2,627,393 – 2,627,393 2,537,186 – 2,537,186	Property investment division HK$’000 2,702,702 951,642 3,654,344 2,663,054 951,826 3,614,880	Total HK$’000 5,330,095 951,642
			6,281,737
			5,200,240 951,826
			6,152,066

Segment assets consist primarily of property, plant and equipment, investment properties, leasehold land and land use rights, interests in joint ventures, restricted cash, inventories, stock of completed properties, trade receivables, prepayments, deposits and other receivables, short-term bank deposits and cash and cash equivalents, but exclude investments in associates, 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 Share of loss of an associate Corporate and unallocated expenses Profit before income tax	For the six months ended 30 June 2017 2016 HK$’000 HK$’000 190,824 245,489 5,089 5,544 (16,119) (8,912) (15,712) (5,281) (1,255) – (12,207) (11,901) 150,620 224,939	For the six months ended 30 June 2017 2016 HK$’000 HK$’000 190,824 245,489 5,089 5,544 (16,119) (8,912) (15,712) (5,281) (1,255) – (12,207) (11,901) 150,620 224,939
		224,939

14

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

6 SEGMENT INFORMATION (continued)

Reportable segments assets are reconciled to total assets as follows:

	As at		As at
	30 June	31	December
	2017		2016
	HK$’000		HK$’000
Reportable segment assets	6,281,737		6,152,066
Investment in associates	32,541		33,796
Available-for-sale financial assets	748		1,153
Deferred income tax assets	15,659		12,656
Amounts due from associates	9		9
Corporate and unallocated assets	105,298		107,887
Total assets per condensed consolidated
balance sheet	6,435,992		6,307,567
Reconciliations of other material items are as follows:
	For the six months
	ended 30 June
	2017		2016
	HK$’000		HK$’000
Depreciation and amortisation charges
– Reportable segment total	22,465		19,255
– Corporate headquarters	1,205		1,219
	23,670		20,474
Capital expenditure
– Reportable segment total	36,503		25,346

15

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

6 SEGMENT INFORMATION (continued)

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 2017 2016 HK$’000 HK$’000 419,476 319,937 775,225 713,885 281,964 257,140 321,594 334,247 1,798,259 1,625,209	For the six months ended 30 June 2017 2016 HK$’000 HK$’000 419,476 319,937 775,225 713,885 281,964 257,140 321,594 334,247 1,798,259 1,625,209
		1,625,209

For the six months ended 30 June 2017, revenues of approximately HK$531,589,000 (2016: HK$475,406,000), HK$345,206,000 (2016: HK$376,295,000), HK$204,292,000 (2016: HK$155,157,000) and HK$184,688,000 (2016: HK$236,162,000) were derived from the top four 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.

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

	As at	As at
	30 June	31 December
	2017	2016
	HK$’000	HK$’000
North America	25	23
Asia (excluding Hong Kong)	295,554	271,884
Europe	24	31
Hong Kong	2,970,770	2,919,859
	3,266,373	3,191,797

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

16

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

7 OTHER INCOME

Rental income Others	For the six months ended 30 June 2017 2016 HK$’000 HK$’000 – 603 5,089 4,941 5,089 5,544	For the six months ended 30 June 2017 2016 HK$’000 HK$’000 – 603 5,089 4,941 5,089 5,544
		5,544

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 2017 2016 HK$’000 HK$’000 23,380 20,170 290 304 23,670 20,474 5,776 5,926 12,025 12,505 17,845 12,977 16,050 13,232 47,480 30,463 99,176 75,103 122,846 95,577	For the six months ended 30 June 2017 2016 HK$’000 HK$’000 23,380 20,170 290 304 23,670 20,474 5,776 5,926 12,025 12,505 17,845 12,977 16,050 13,232 47,480 30,463 99,176 75,103 122,846 95,577
		20,474
		5,926 12,505 12,977 13,232 30,463
		75,103
		95,577

17

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

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 Impairment on available-for-sale financial assets Gain on disposal of nil-paid rights shares of an available-for-sale financial asset 10 FINANCE COSTS – NET Finance income Interest income on short-term bank deposits Finance costs Interest expenses on bank borrowings Interest expenses on interest rate swap Finance costs – net

For the six months ended 30 June 2017 2016 HK$’000 HK$’000 (84) (83) (177) (270) 438 1,117 (15,899) (224) – 328 – 286 (397) (10,855) – 789 (16,119) (8,912) For the six months ended 30 June 2017 2016 HK$’000 HK$’000 4,717 2,995 (17,953) (8,276) (2,476) – (20,429) (8,276) (15,712) (5,281)

18

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

11 INCOME TAX EXPENSE

Hong Kong profits tax has been provided at the rate of 16.5% (2016: 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% (2016: 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 Under/(over)-provision in prior periods – Current income tax	For the six months ended 30 June 2017 2016 HK$’000 HK$’000 6,359 – 15,056 21,768 (447) 209 402 (3) 21,370 21,974	For the six months ended 30 June 2017 2016 HK$’000 HK$’000 6,359 – 15,056 21,768 (447) 209 402 (3) 21,370 21,974
		21,974

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.

12 DIVIDENDS

	For the six months	For the six months
	ended 30 June
	2017	2016
	HK$’000	HK$’000
Interim dividend – HK$0.04
(2016: HK$0.03) per share	19,139	14,355

On 24 August 2017, the Board has resolved to pay an interim dividend of HK$0.04 per share (2016: HK$0.03 per share) which is payable on Thursday, 28 September 2017 to the shareholders whose names appear on the Register of Members of the Company on Thursday, 14 September 2017. This interim dividend, amounting to HK$19,139,000 (2016: 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 2017.

19

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

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$’000) Weighted average number of ordinary shares in issue(in thousands) Basic earnings per share(HK$)_	For the six months ended 30 June 2017 2016 129,250 202,965 478,484 478,484 0.27 0.42	For the six months ended 30 June 2017 2016 129,250 202,965 478,484 478,484 0.27 0.42
		478,484
		0.42

(b) Diluted

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

14 CAPITAL EXPENDITURE

	Property,		Leasehold
	plant and	Investment	land and
	equipment	properties	land use rights
	HK$’000	HK$’000	HK$’000
For the six months ended
30 June 2017
Opening net book amount
as at 1 January 2017	282,000	1,891,536	17,720
Additions	36,503	–	–
Fair value gains	–	52,642	–
Disposals	(26)	–	–
Depreciation/amortisation	(23,380)	–	(290)
Currency translation differences	4,792	498	450
Closing net book amount as at
30 June 2017	299,889	1,944,676	17,880

20

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

14 CAPITAL EXPENDITURE (continued)

	Property,		Leasehold
	plant and	Investment	land and
	equipment	properties	land use 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

The valuations of the investment properties at 30 June 2017 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 2017 Recurring fair value measurements Investment properties – – As at 31 December 2016 Recurring fair value measurements Investment properties – –	Fair value measureme	Fair value measureme	nts
		Significant other observable inputs (Level 2) HK$’000 – –	Significant unobservable inputs (Level 3) HK$’000 1,944,676
			1,891,536

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

21

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

14 CAPITAL EXPENDITURE (continued)

Fair value measurements using significant unobservable inputs (Level 3)

At 1 January 2017 Currency translation differences At 30 June 2017 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 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’	Investment properties Hong Kong Outside Hong Kong Total HK$’000 HK$’000 HK$’000 1,924,450 19,728 1,944,178 – 498 498 1,924,450 20,226 1,944,676 52,300 342 52,642 7,300 20,171 27,471 – (233) (233) 7,300 19,938 27,238 – – –	Investment properties Hong Kong Outside Hong Kong Total HK$’000 HK$’000 HK$’000 1,924,450 19,728 1,944,178 – 498 498 1,924,450 20,226 1,944,676 52,300 342 52,642 7,300 20,171 27,471 – (233) (233) 7,300 19,938 27,238 – – –
	Hong Kong HK$’000 1,924,450 – 1,924,450 52,300 7,300 – 7,300 –	Outside Hong Kong HK$’000 19,728 498 20,226 342 20,171 (233) 19,938 –

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.

22

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 2017, certain bank borrowings are secured on land and buildings with a carrying amount of approximately HK$2,003,908,000 (31 December 2016 HK$1,953,027,000) (Note 18).

15 INTERESTS IN JOINT VENTURES

Share of net liabilities Loans to joint ventures	As at 30 June 2017 HK$’000 (954) 952,596 951,642	As at 31 December 2016 HK$’000 (770) 952,596
		951,826

The loans to joint ventures are unsecured, interest-free and will not be repaid in the coming 12 months.

Movements in share of net (liabilities)/assets is analysed as follows:

	2017	2016
	HK$’000	HK$’000
At 1 January	(770)	846,310
Share of (loss)/profit of joint ventures	(184)	148,362
At 30 June	(954)	994,672

Share of (loss)/profit of joint ventures included the share of fair value gain of investment properties owned by the joint ventures of approximately HK$nil (2016: HK$141,368,000).

23

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

15 INTERESTS IN JOINT VENTURES (continued)

As at 30 June 2017, 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
Talent Chain Investments Limited	BVI	35.70	Investment holding	Note	Equity
Crown Opal Investment Limited	Hong Kong	35.70	Property development	Note	Equity
Open Vantage Limited	BVI	35.70	Property investment	N/A	Equity

Note: 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.

16 TRADE RECEIVABLES

The credit period allowed by the Group to its trade customers mainly ranges from 30 days to 120 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 2017 HK$’000 639,355 169,072 52,583 861,010	As at 31 December 2016 HK$’000 703,808 100,336 26,700
		830,844

The carrying amounts of the Group’s trade receivables approximated their fair values as at 30 June 2017.

24

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

17 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 2017 HK$’000 680,404 60,000 57,477 797,881	As at 31 December 2016 HK$’000 613,632 98,044 12,762
		724,438

The carrying amounts of the Group’s trade payables approximated their fair values as at 30 June 2017.

18 BORROWINGS

Trust receipt bank loans, unsecured Short-term bank loans, unsecured Portion of long-term loans due for repayment within one year, secured Portion of long-term loans 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 2017 HK$’000 377,611 210,000 486,054 951,973 6,900 13,800 2,046,338 951,973 1,094,365 2,046,338	As at 31 December 2016 HK$’000 418,182 127,771 66,054 1,312,500 6,900 17,250
		1,948,657
		1,312,500 636,157
		1,948,657

25

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

18 BORROWINGS (continued)

As at 30 June 2017, mortgage loan of approximately HK$20,700,000 (31 December 2016: HK$24,150,000) was secured by the land and buildings of the Group with a carrying amount of HK$87,258,000 (31 December 2016: HK$88,377,000).

As at 30 June 2017, the long-term bank loans of HK$951,973,000 (31 December 2016: HK$1,312,500,000) were secured by the following:

• A guarantee limited to HK$760,000,000 from Easywise Limited supported by charge over investment properties with carrying amount of approximately HK$992,650,000 (31 December 2016: HK$962,650,000) and stock of completed properties with carrying amount of approximately HK$732,310,000 (31 December 2016: HK$732,310,000) owned by Easywise Limited;

• Some storeys of investment properties with carrying amount of HK$924,000,000 (31 December 2016: HK$902,000,000) owned by Easywise Limited; and

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

19 SHARE CAPITAL

Ordinary shares of HK$0.10 each Authorised: At 1 January 2016 and 30 June 2016 At 1 January 2017 and 30 June 2017 Issued and fully paid: At 1 January 2016 and 30 June 2016 At 1 January 2017 and 30 June 2017	Number of shares 700,000,000 700,000,000 478,483,794 478,483,794	Nominal value HK$’000 70,000
		70,000
		47,848
		47,848

26

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

20 COMMITMENTS

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

	As at	As at
	30 June	31 December
	2017	2016
	HK$’000	HK$’000
Contracted but not provided for	17,726	6,008

• (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
	2017	2016
	HK$’000	HK$’000
Within 1 year	12,693	12,183
In the 2nd to 5th year inclusive	899	6,572
	13,592	18,755

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 2017 HK$’000 45,351 73,093 118,444	As at 31 December 2016 HK$’000 46,610 71,140
		117,750

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 2.4 years.

27

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

21 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 2017, Mr. Wong Chung Mat, Ben (together with Salop Investment Limited) and W. S. Wong & Sons Company Limited beneficially owned 28.59% 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 2017 2016 HK$’000 HK$’000 8,322 9,118 3,650 6,445 27 62 11,999 15,625	For the six months ended 30 June 2017 2016 HK$’000 HK$’000 8,322 9,118 3,650 6,445 27 62 11,999 15,625
		15,625

28

INTERIM DIVIDEND

On 24 August 2017, the Board has resolved to pay an interim dividend of HK$0.04 per share (2016: HK$0.03 per share) which is payable on Thursday, 28 September 2017 to the shareholders whose names appear on the Register of Members of the Company on Thursday, 14 September 2017.

CLOSURE OF REGISTER OF MEMBERS

The Register of Members of the Company will be closed from Tuesday, 12 September 2017 to Thursday, 14 September 2017, 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, 11 September 2017.

REVIEW OF BUSINESS ACTIVITIES

Review of Results

The profit attributable to owners of the Company for the six months ended 30 June 2017 amounted to HK$129.3 million, as compared to HK$203.0 million for the corresponding period last year. The significant decrease was mainly due to reduction in share of profit of joint ventures in the sum of HK$148.2 million offsetting by the “change in fair value of investment properties” in the sum of HK$52.6 million. Earnings per share for the six months were HK$0.27 as compared to HK$0.42 for the corresponding period last year.

The Group’s revenue for the six months ended 30 June 2017 was HK$1,798.3 million, as compared to HK$1,625.2 million for the corresponding period last year. Operating profit for the six months ended 30 June 2017 was HK$167.8 million or 9.3% of revenue, as compared to HK$81.9 million or 5.0% of revenue for the corresponding period last year. The increase in operating profit was driven by a growth in the sales revenue, a slight improvement in gross profit percentage, cost control measures and the booking of “change in fair value of investment properties” in the sum of HK$52.6 million as an operating item following the termination of the joint venture for One Harbour Square in September, last year.

29

REVIEW OF BUSINESS ACTIVITIES (continued)

Electronic Manufacturing Service (“EMS”) Division

Revenue for the EMS Division for the six months ended 30 June 2017 was HK$1,770.9 million, as compared to HK$1,625.2 million for the corresponding period last year. The segment profit attributable to the EMS Division was HK$118.4 million, a 21.3% increase as compared to HK$97.6 million for the corresponding period last year. The increase in the segment net profit was attributable to a growth of sales, a slight improvement in gross profit percentage and cost control measures.

As the tablet sales market has plateaued with not much growth opportunity, the Group has decided to merge the Original Design and Manufacturing (“ODM”) Division with the EMS Division. It is envisaged that the merger will heighten the focus on research and development efforts and technological innovations and enable the Group to enhance its value-added services to EMS customers.

Property Investment Division

The Property Investment Division reported revenue of HK$27.3 million. The segment profit for the period was HK$72.4 million as compared to HK$147.9 million for the corresponding period last year. The significant decrease was mainly attributable to the less fair value gain from the investment properties during the period as compared to the Group’s share of profit from the property development joint venture for One Harbour Square, which mainly comprised of fair value gain from units held as investment property in the corresponding period last year. The joint venture was terminated in September last year and the Group retained 11 office floors and a number of parking spaces which are held for leasing purpose.

The construction work for the second development project, namely Two Harbour Square, has completed and occupation permit was obtained in July 2017.

30

LIQUIDITY AND FINANCIAL RESOURCES

As at 30 June 2017, the Group had a total of HK$3,566.9 million of banking facilities. Total bank borrowings were HK$2,046.3 million (2016 December: HK$1,948.7 million). Cash and cash equivalents and short-term bank deposits were HK$947.3 million at 30 June 2017 (2016 December: HK$1,064.3 million). Cash flow used in operations for the period was HK$165.0 million.

As at 30 June 2017, the Group had net bank borrowings of HK$1,099.1 million (2016 December: HK$884.4 million). Sufficient facilities from financial institutions and bank balance are available to meet the cash needs of the Group for its manufacturing operations as well as property development activities.

Net gearing ratio for the Group as at 30 June 2017 is 0.35 (2016 December: 0.30). The net gearing ratio 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.

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. The Group has decided not to engage in any foreign exchange hedging products, but will closely monitor and actively manage the currency risk involved in its business.

CAPITAL STRUCTURE

There has been no material change in the Group’s capital structure since 31 December 2016 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 4,600 employees as at 30 June 2017. 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 and employee related insurance benefits, 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 programs to its employees.

31

PROSPECTS

Based on the current orders and forecasts received from our customers, the Company anticipates that sales with the EMS business in the second half of 2017 will be comparable to result of the first half. Various trade indicators also showed that global trade is expanding moderately. Nevertheless, the Company will continue to keep close attention to market condition changes including any changes in the US trade policy, interest rate increases, etc., which are capable of impacting our EMS business significantly in terms of customer demands and price competitiveness. The Company shall take various measures to expand the customer base, strengthen our value-added services to the customers and improve operation efficiency to meet the industry needs.

The construction of Two Harbour Square has completed and it has been decided that it will be held by the joint venture for leasing purpose.

AWARD AND RECOGNITION

The Company and its wholly-owned subsidiary, Wong’s Electronics Company Limited, were awarded the Caring Company Logo by the Hong Kong Council of Social Service for the fifth consecutive year. In addition, Wong’s F&B Limited, a wholly-owned subsidiary of the Company, was 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 2017, 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	136,828,569	28.59%
	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 136,828,569 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) 135,828,569 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 2017, 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 2017, 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		Number of	the issued
substantial shareholders	Capacity	ordinary shares	shares
Salop Investment Limited	Beneficial owner_(Note 1)_	135,828,569	28.38%
W. S. Wong & Sons Company	Beneficial owner_(Note 2)_	94,052,019	19.66%
Limited
Wong Chung Yin, Michael	Beneficial owner, joint	78,658,001	16.43%
	interest and interest of
	controlled corporation
	(Note 3)
Woo Sin Ming	Joint interest and interest	78,658,001	16.43%
	of spouse_(Note 3)_
Levy Investment Limited	Beneficial owner	45,820,212	9.58%
	(Note 3(c))
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 own_er_	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 78,658,001 shares in the Company. These shares were held in the following capacity:

4. (a) 4,449,829 shares were held by Mr. Wong Chung Yin, Michael personally.

5. (b) 28,387,960 shares were held by Mr. Wong Chung Yin, Michael and Ms. Woo Sin Ming jointly.

6. (c) 45,820,212 shares were held by Levy Investment Limited, which was whollyowned 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.

7. 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:

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) 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.

11. 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:

12. (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.

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

Save as disclosed herein, the Directors are not aware of any other persons who, as at 30 June 2017, 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 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 2017.

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

During the six months ended 30 June 2017, 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 2017, 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 2017.

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, internal controls and financial reporting matters including a review of the unaudited interim financial information for the six months ended 30 June 2017.

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

Hong Kong, 24 August 2017

BOARD OF DIRECTORS

Executive Directors: Mr. Wong Chung Mat, Ben (Chairman and Chief Executive Officer) Ms. Wong Yin Man, Ada Dr. 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