Comtec Solar Systems Group Limited — Interim / Quarterly Report 2017

Dec 22, 2016

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UNISPLENDOUR TECHNOLOGY (HOLDINGS) LIMITED
紫光科技（控股）有限公司
(Incorporated in Bermuda with limited liability)
Stock Code: 365
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INTERIM REPORT 2016
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CORPORATE INFORMATION

CONTENTS

01

02

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

03 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

05 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

06 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

07

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS

18 CHAIRMAN’S STATEMENT

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20 MANAGEMENT DISCUSSION AND ANALYSIS

25 DISCLOSURE OF INTERESTS

27 CORPORATE GOVERNANCE AND OTHER INFORMATION

29 CAUTION STATEMENT

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CORPORATE INFORMATION

BOARD OF DIRECTORS

Executive Directors

Mr. QI Lian (Chairman) Mr. XIA Yuan (Chief Executive Officer) Mr. BUT Tin Fu (resigned on 29 November 2016)

Non-executive Directors

Mr. LI Zhongxiang (Vice Chairman) (appointed on 31 October 2016) Mr. WANG Huixuan (appointed on 31 October 2016)

Independent Non-executive Directors

Mr. CUI Yuzhi Mr. BAO Yi Mr. PING Fan

PRINCIPAL PLACE OF BUSINESS

(effect from 31 October 2016)

Unit 02-03, 69/F International Commerce Centre 1 Austin Road West Tsim Sha Tsui Kowloon Hong Kong

PRINCIPAL BANKER

DBS Bank (Hong Kong) Limited Units 1208-18 Miramar Tower 132-134 Nathan Road Tsim Sha Tsui, Kowloon Hong Kong

AUDITOR

Audit Committee

Mr. CUI Yuzhi (Chairman) Mr. WANG Huixuan Mr. BAO Yi

Remuneration Committee

Mr. BAO Yi (Chairman) Mr. QI Lian Mr. PING Fan

Nomination Committee

Mr. QI Lian (Chairman) Mr. CUI Yuzhi Mr. PING Fan

COMPANY SECRETARY

Mr. LIU Wei

REGISTERED OFFICE

Clarendon House 2 Church Street Hamilton HM 11 Bermuda

PricewaterhouseCoopers Certified Public Accountants 22nd Floor, Prince’s Building Central, Hong Kong

PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICE

Codan Services Limited Clarendon House 2 Church Street Hamilton HM 11 Bermuda

HONG KONG BRANCH SHARE REGISTRAR AND TRANSFER OFFICE

Tricor Tengis Limited Level 22, Hopewell Centre 183 Queen’s Road East Hong Kong

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CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Notes Revenue 4, 5 Cost of sales Gross (loss)/profit Other income and gains 4 Selling and distribution expenses General and administrative expenses Other expenses 6 Finance costs 7 (Loss)/profit before income tax 8 Income tax expense 9 (Loss)/profit for the Period attributable to owners of the Company Other comprehensive income, including reclassification adjustments and net of tax Item that may be reclassified subsequently to profit or loss: Exchange differences on translation of financial statements of foreign operations Total comprehensive income for the Period attributable to owners of the Company (Loss)/earnings per share for profit attributable to owners of the Company 11 – Basic – Diluted	Six months ended 30 September 2016 2015 (Unaudited) (Unaudited) HK$’000 HK$’000 197,994 446,214 (198,483) (385,510)
	(489) 60,704 10,481 9,862 (45,945) (32,879) (71,653) (28,624) (54,082) – (7,652) (3,325)
	(169,340) 5,738 (21,305) (102)
	(190,645) 5,636
	(3,278) (12,266)
	(193,923) (6,630)
	(16.58) cents 1.07 cents
	(13.63) cents N/A

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Interim Report 2016

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CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Notes ASSETS AND LIABILITIES Non-current assets Property, plant and equipment Prepaid land lease payments Finance lease receivables Current assets Inventories Trade and bills receivables 12 Prepayments, deposits and other receivables Finance lease receivables Derivative financial instruments Tax reserve certificates Taxes recoverable Pledged deposits Cash and bank balances Current liabilities Trade and bills payables 13 Other payables and accruals Bank borrowings Finance lease liabilities Taxes payable	As at As at 30 September 31 March 2016 2016 (Unaudited) (Audited) HK$’000 HK$’000 145,260 151,892 9,858 10,275 785 1,776
	155,903 163,943
	125,939 112,717 231,069 338,329 42,331 45,867 6,360 3,107 – 183 3,600 3,600 191 191 10,149 14,680 473,200 71,905
	892,839 590,579
	67,513 166,194 135,148 80,633 127,875 143,219 – 98 51,334 31,871
	381,870 422,015

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CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Continued)

(Continued)
Notes Net current assets Total assets less current liabilities Non-current liabilities Finance lease liabilities Convertible bonds 14 Deferred tax liabilities Accrued liabilities 15 Net assets EQUITY Equity attributable to owners of the Company Share capital 16 Reserves Total equity	As at As at 30 September 31 March 2016 2016 (Unaudited) (Audited) HK$’000 HK$’000 510,969 168,564
	666,872 332,507 – 164 91,510 – 13,163 13,163 9,658 –
	114,331 13,327
	552,541 319,180
	145,500 52,500 407,041 266,680
	552,541 319,180

Interim Report 2016 4

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CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the six months ended 30 September 2016

Balance at 1 April 2015 (Unaudited) Profit for the Period Other comprehensive income: Exchange loss on translation of financial statements of foreign operations Total comprehensive income for the Period Balance at 30 September 2015 (Unaudited) Balance at 1 April 2016 (Unaudited) Capital contribution from non-controlling interests Loss for the Period Transaction with owners: Convertible bonds-equity component Exchange loss on translation of financial statements of foreign operations Total comprehensive income for the period Balance at 30 September 2016 (Unaudited)	Statutory reserve and Asset enterprise Share Share Contributed revaluation Other Exchange expansion Retained Total capital premium surplus reserve reserve reserve funds profits equity HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 52,500 87,728 4,800 65,456 0 24,558 9,945 98,065 343,052 5,636 5,636 (12,266) (12,266)
	0 0 0 0 0 (12,266) 0 5,636 (6,630)
	52,500 87,728 4,800 65,456 0 12,292 9,945 103,701 336,422
	52,500 87,728 4,800 67,200 0 7,378 11,225 88,349 319,180 93,000 274,592 367,592 (190,645) (190,645) 59,693 59,693 (3,278) (3,278)
	93,000 274,592 0 0 59,693 (3,278) 0 (190,645) 233,362
	145,500 362,320 4,800 67,200 59,693 4,100 11,225 (102,297) 552,541

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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 September 2016

NET CASH (USED IN)/FROM OPERATING ACTIVITIES NET CASH (USED IN)/FROM INVESTING ACTIVITIES NET CASH FROM/(USED IN) FINANCING ACTIVITIES NET INCREASE IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at beginning of the period Effect of foreign exchange rate changes on cash and cash equivalents CASH AND CASH EQUIVALENTS AT END OF THE PERIOD	Six months ended 30 September 2016 2015 (Unaudited) (Unaudited) HK$’000 HK$’000 (135,320) 71,457 (418) (12,984) (540,547) (20,212)
	404,809 38,261 71,905 51,700 (3,514) 1,988
	473,200 91,949

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Interim Report 2016

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NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS

1. GENERAL INFORMATION

Unisplendour Technology (Holdings) Limited (the “Company”) is a limited liability company incorporated in Bermuda. Its registered office is located at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda and its principal place of business is located at Unit 02-03, 69/F, ICC-International Commerce Centre, 1 Austin Road West, Tsim Sha Tsui, Kowloon, Hong Kong. The Company’s shares are listed on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).

2. BASIS OF PREPARATION

The unaudited condensed consolidated interim financial statements of the Group for the six months ended 30 September 2016 have been prepared in accordance with the applicable disclosure requirements set out in Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and with Hong Kong Accounting Standard (“HKAS”) 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants (HKICPA). The unaudited condensed consolidated interim financial statement should be read in conjunction with the annual financial statements for the year ended 31 March 2016.

3. PRINCIPAL ACCOUNTING POLICIES

The condensed consolidated interim financial statements have been prepared on the historical cost basis, except for leasehold land and buildings, which are stated at fair value.

The Interim Financial Information does not include all of the information and disclosures required in annual financial statements in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”), which comprises all applicable individual Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards and Interpretations issued by the HKICPA, and should be read in conjunction with the Group’s annual financial statements for the year ended 31 March 2016.

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NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (Continued)

3. PRINCIPAL ACCOUNTING POLICIES (Continued)

Except as for the adoption of new and revised HKFRSs issued by the HKICPA, which are effective for the Company’s financial year beginning on 1 April 2016, the accounting policies applied in preparing this Interim Financial Information are consistent with those of the annual financial statements for the year ended 31 March 2016, as described in the annual financial statements. The application of these new and revised HKFRSs has had no material impact on the Interim Financial Information of the Group.

The Group has not early applied the new and revised HKFRSs that have been issued by the HKICPA but are not yet effective. The Directors anticipate that the application of these new and revised HKFRSs will not have material impact on the Interim Financial Information of the Group.

The preparation of Interim Financial Information requires the Company’s management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.

In preparing the Interim Financial Information, the significant judgements made by the Company’s management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the annual financial statements for the year ended 31 March 2016.

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Interim Report 2016

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NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (Continued)

4. REVENUE, OTHER INCOME AND GAINS

Revenue – sale of goods Other income: Bank interest income Recovery of trade receivables previously written off Government grant Others Gain or loss: Exchange loss, net	Six months ended 30 September 2016 2015 (Unaudited) (Unaudited) HK$’000 HK$’000 197,994 446,214
	169 152 2,000 – 5,801 10,067 4,302 1,962
	12,272 12,181 (1,791) (2,319)
	10,481 9,862

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NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (Continued)

5. SEGMENT INFORMATION

Segment revenue: Sales to external customers Other revenue – external Reportable segment revenue Reportable segment Results Depreciation and amortisation Provision for accrued liabilities and impairment of trade and bills receivables	Production lines and Brand name production equipment production equipment Six months ended Six months ended Six months ended 30 September 30 September 30 September (Unaudited) (Unaudited) (Unaudited) 2016 2015 2016 2015 2016 2015 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 103,112 264,832 94,882 181,382 197,994 446,214 5,370 3,947 4,942 5,763 10,312 9,710
	108,482 268,779 99,824 187,145 208,306 455,924
	(84,284) 3,622 (77,573) 5,289 (161,857) 8,911
	4,923 5,347 – – 4,923 5,347 54,082 – – – 54,082 –

Interim Report 2016 10

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NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (Continued)

5. SEGMENT INFORMATION

The totals presented for the Group’s segment Result, reconcile to the Group’s key financial figures as presented in the condensed interim financial statements as follows:

Reportable segment Results Interest and other income Finance costs (Loss)/profit before income tax	Six months ended 30 September 2016 2015 (Unaudited) (Unaudited) HK$’000 HK$’000 (161,857) 8,911 169 152 (7,652) (3,325)
	(169,340) 5,738

6. OTHER EXPENSE

Provision for receivables Lawsuit expenses	Six months ended 30 September 2016 2015 (Unaudited) (Unaudited) HK$’000 HK$’000 44,424 – 9,658 –

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NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (Continued)

7. FINANCE COSTS

Interest on bank borrowings Interest on convertible bonds	Six months ended 30 September 2016 2015 (Unaudited) (Unaudited) HK$’000 HK$’000 4,450 3,325 3,202 –

8. PROFIT BEFORE INCOME TAX

(Loss)/profit before income tax has been arrived at after charging/(credit): Cost of inventories sold Depreciation Staff costs (including directors’ remunerations) – wages and salaries – termination benefits – defined contribution scheme Amortisation of prepaid land lease payments Research and development costs Loss/(gain) on disposal of property, plant and equipment Minimum lease payments under operation lease in respect of leasehold land and buildings Provision for impairment of trade and bills receivables

Six months ended 30 September 2016 2015 (Unaudited) (Unaudited) HK$’000 HK$’000 198,483 385,510 4,606 5,201 42,093 59,596 16,868 – 24,611 5,469 143 146 3,825 2,993 200 (42) 1,658 1,436 44,424 –

Interim Report 2016 12

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NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (Continued)

9. INCOME TAX EXPENSE

Hong Kong Elsewhere Total income tax expense	Six months ended 30 September 2016 2015 (Unaudited) (Unaudited) HK$’000 HK$’000 20,867 – 438 102
	21,305 102

A provision for Hong Kong profits tax of HK$20,867,000 (2015: Nil) was made based on the assessment by the management of the Group. Taxes assessable in elsewhere have been calculated at the prevailing rates of tax based on existing legislation, interpretations and practices.

10. INTERIM DIVIDEND

The Directors do not recommend the payment of an interim dividend for the Period (2015: Nil).

11. EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the loss attributable to owners of the Company of approximately HK$190,645,000 (2015: profit of HK$5,636,000) by the weighted average number of 1,150,081,967 (2015: 525,000,000) ordinary shares in issue during the period. Diluted earnings per share are calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares, the convertible bonds were assumed to have been converted into ordinary shares.

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NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (Continued)

12. TRADE AND BILLS RECEIVABLES

The Group’s trading terms with its customers are mainly on credit, except for new customers, where payment in advance is normally required. The normal credit period granted by the Group to its customers ranges from 30 to 180 days.

Ageing analysis of the trade and bills receivables as at the reporting dates, based on the date of revenue recognition and net of provision, is as follows:

Within 90 days 91 to 120 days 121 to 180 days 181 to 360 days Over 360 days	As at As at 30 September 31 March 2016 2016 (Unaudited) (Audited) HK$’000 HK$’000 44,479 85,150 34,969 16,368 14,092 34,152 33,418 74,823 104,111 127,836
	231,069 338,329

Interim Report 2016 14

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NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (Continued)

13. TRADE AND BILLS PAYABLES

Ageing analysis of the trade and bills payables as at the reporting dates, based on invoice date, is as follows:

Within 90 days 91 to 120 days Over 120 days	As at As at 30 September 31 March 2016 2016 (Unaudited) (Audited) HK$’000 HK$’000 52,120 89,198 2,896 23,266 12,497 53,730
	67,513 166,194

14. CONVERTIBLE BONDS

On 30 May 2016, the Company issued convertible bonds with an aggregate principal amount of HK$148,000,000, which can be converted into 370,000,000 ordinary shares at a conversion price of HK$0.4 per share.

15. ACCRUED LIABILITIES

During the Period, a judgment was received concerning the dispute of a subsidiary with its contractor in relation to the product quality, ruling that the subsidiary of the Group has to pay a compensation of approximately HK$9,658,000.

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NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (Continued)

16. SHARE CAPITAL

Authorised: 2,000,000,000 ordinary shares of HK$0.10 each Issued and fully paid: 1,455,000,000 (31 March 2016: 525,000,000) ordinary shares of HK$0.10 each	As at As at 30 September 31 March 2016 2016 (Unaudited) (Audited) HK$’000 HK$’000 200,000 200,000
	145,500 52,500

17. COMMITMENTS

At the reporting date, the Group had the following outstanding commitments

Operating lease commitments – as lessee

The Group had total future minimum lease payment under non cancellable operating lease falling due as follows:

Within one year In the second to fifth years, inclusive	As at As at 30 September 31 March 2016 2016 (Unaudited) (Audited) HK$’000 HK$’000 1,349 1,673 226 1,334
	1,575 3,007

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Interim Report 2016

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NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (Continued)

17. COMMITMENTS (Continued)

Capital Commitments

Contracted but not accounted for in respect of acquisition of property, plant and equipment	As at As at 30 September 31 March 2016 2016 (Unaudited) (Audited) HK$’000 HK$’000 31 –

18. CONTINGENT LIABILITIES

There were no material contingent liabilities as at 30 September 2016.

17 Unisplendour Technology (Holdings) Limited

CHAIRMAN’S STATEMENT

Dear Shareholders,

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On behalf of the Board of Directors of Unisplendour Technology (Holdings) Limited, I present the interim results of the Company and its subsidiaries (the “Company”) for the six months ended 30 September 2016.

Review of results

In the past six months, the market condition of our products remained tough, and as affected by historical burdens, the overall performance of the Company’s results was unsatisfactory. The poor handling by the original management prior to the change of controlling shareholder of the Company and misjudgment of the market trend led to a substantial increase in the provision for trade receivables, loss on inventory and provision for inventory. The Company had actively adopted measures to integrate the businesses of the traditional brand name production equipment, OEM, automated and logistic, with main purposes to phase out outmoded production capacities, optimize the sales strategies of the existing products and the human resources structure in order to further increase the incentive award levels of the staff with a hope to turn the adverse operation around. The business integration and handling of the issues and hidden problems accumulated during the previous operation of the original management led to loss which were not conclusive to the results of the current period. However, it had positive effect on the long-term sustainable development of the Company.

Outlook

In the future, the Company will continue to invest in the technological research and development of products, enhance the competitiveness of products and place emphasis on exploring emerging markets along the route of “One Belt, One Road” including India and Southeast Asian countries in order to explore new sales channels. In addition, under the environment of rapid development of the global high-technology, it is a new industrial trend for global collaborative innovation. Therefore, the ability of professional capital operation and utilization in full of various financial instruments have become important driving forces to promote the rapid development of the industry. The Company will continue to create a model with industry and finance as dual driving forces for business development based on

Interim Report 2016 18

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its traditional business. Furthermore, the Company will actively search for new business growth points in sectors including assets management, financial investment and services and finance lease while continuing to develop the existing traditional business. Currently, as the only overseas listed company controlling by Tsinghua Unigroup Co., Ltd. ( 紫光集 團有限公司 ) (“Tsinghua Unigroup”), the Company will become an important platform for overseas investment, financing and capital operation of Tsinghua Unigroup. As such, the Company will closely align with Tsinghua Unigroup in its core strategies and industry layout, integrating the industrial resources by way of mergers and acquisitions, restructurings and direct investments for synergetic development. The Company will extensively develop in-depth cooperation with major financial institutions and take full advantage of capital operation. As for internal management, the Company will fully upgrade the existing system platform of office informatization to further increase the management effectiveness and recruit high-caliber personnel to achieve new strategic goals. As Tsinghua Unigroup has become the beneficial controller of the Company, the name of the Company was changed to Unisplendour Technology (Holdings) Limited (“Unis Holdings”) to reflect such change. The structures of the board of directors and management of the Company had also undergone adjustments. Currently, the Company is in strong capital position. I believe that the Company will open a greater path of development under the leadership of the new management team.

Appreciation

The past six months was a period when the Company experienced hardships and stepped onto the path of business rebirth. On behalf of the Board, I would like to express our gratitude to our shareholders and partners for standing with the Company in hard times and also for the effort and contribution of all the staff of the Company!

19 Unisplendour Technology (Holdings) Limited

MANAGEMENT DISCUSSION AND ANALYSIS

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BUSINESS REVIEW

Brand Production Equipment Business

As the economic growth of China was still slowing down, the market of our products remained depressed, which together with the business integration implemented by the Group during the Period, had led to a significant decline in sales comparing to the same period of last year. The Group will increase investment in research and development and actively develop overseas market to gradually improve sales and profitability.

The sales of SMT and welding related equipment amounted to approximately HK$161.7 million, representing a decrease of approximately 40.8% when compared to approximately HK$273.1 million in the same period last year. The gross profit margin was 23.6%, increase by 8.5% from 15.1% of last year. Besides that, as a result of misjudgment of market by the original management, the SMT and welding related equipment were overstocked, which led to the loss on inventory as the market price declines continuously overtime.

OEM Business

In line with the overall development strategy of the Group, the outmoded and low valueadded OEM business was gradually reduced as planned during the Period. Compared with the corresponding period last year, sales decreased from approximately HK$22.8 million to approximately HK$17.8 million, representing a decrease of approximately 21.9%.

Automated and Logistic Business

The insufficient management and technical ability of the automated and logistic business led to a substantial amount of delays of project delivery and the increase of receivables risk. During the Period, the Group suspended the project development process of the business and mainly focused on the delivery of existing work in progress. Compared with the corresponding period last year, sales decreased from approximately HK$150.3 million to approximately HK$18.5 million, representing a decrease of approximately 87.7%.

Interim Report 2016 20

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MANAGEMENT DISCUSSION AND ANALYSIS (Continued)

FINANCIAL REVIEW

Turnover and Gross Profit

During the Period, the turnover of the Group reached approximately HK$198 million and represented a decrease of approximately 55.6% when compared with approximately HK$446.2 million in the same period of 2015. Of which, the automated and logistic business decreased by approximately 87.7% and brand production equipment business decreased by approximately 47.9%.

Because of the excessive cost of the brand production equipment business and the expenses incurred by the delays of project delivery of the automated and logistic business, during the Period, the gross profit ratio was approximately 0%, representing a decrease of approximately 13.6%, as compared with approximately 13.6% of the corresponding period last year.

Other Income and Gains

During the Period, the Group recorded other income and gains of approximately HK$10.5 million, which included government grant under import discount interest refund scheme of approximately HK$4.5 million, government R&D subsidies of approximately HK$1.3 million, reversal of bad debt written off of approximately HK$2 million and income from sales of scrap materials of approximately HK$1.4 million.

Selling and Distribution Expenses

During the Period, the Group recorded a selling and distribution cost at approximately HK$45.9 million and it represents approximately 23.2% of the turnover which increased by approximately 15.8% from 7.4% of the corresponding period last year. The increase is mainly because of the significant decrease in turnover.

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MANAGEMENT DISCUSSION AND ANALYSIS (Continued)

FINANCIAL REVIEW (Continued)

General and Administrative Expenses

The management of the Group implemented various measures to adjust its human resources structure and reduce the headcount with the aim of reducing its general and administrative expenses in the future. This, however, caused a one-off increase in expenses during the Period. During the period under review, general and administrative expenses were approximately HK$71.7 million, which increased by approximately HK$43.1 million as compared with approximately HK$28.6 million of the corresponding period last year. Of which, termination benefits increased approximately HK$16.9 million, social security contributions and housing fund increased approximately HK$20.6 million.

Finance Costs

Finance costs for the Period amounted to approximately HK$7.7 million, representing an increase of approximately HK$4.4 million, as compared with approximately HK$3.3 million of the corresponding period last year. The increase was mainly due to the increase in interest expense of approximately HK$3.2 million on convertible bonds.

Profit for the Period

As result of the foregoing, the loss attributable to the owners of the Company for the Period was approximately HK$190.6 million, representing a decrease of approximately HK$196.2 million, as compared with a profit of approximately HK$5.6 million in corresponding period. The net loss margin was approximately 96.3% for the Period as compared with a net profit margin of approximately 1.3% in corresponding period last year.

Interim Report 2016 22

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MANAGEMENT DISCUSSION AND ANALYSIS (Continued)

EBITDA

The following table illustrates the Group’s EBITDA for the respective Periods. The Group’s EBITDA margin was a loss of approximately 79.2% for the Period as compared with a profit of approximately 3.2% in corresponding period last year.

(Loss)/profit for Period attributable to owners of the Company Finance cost Income tax expenses Depreciation and amortization EBITDA	Six months ended 30 September 2016 2015 HK$’000 HK$’000 (190,645) 5,636 7,652 3,325 21,305 102 4,923 5,347
	(156,765) 14,410

Financial Resource, Liquidity and Gearing Ratio

During the Period, the Group issued new shares and convertible bonds on 30 May 2016, raising HK$372 million and HK$148 million respectively. Moreover, the Group had sufficient cash and banking facilities from its main bankers. Therefore, the Group had sufficient working capital. The Group maintained high value of net current assets at approximately HK$511 million and healthy current ratio at 2.31 times. The total equity ratio attributable to the owners of the Company was calculated with reference to the total borrowings as at 30 September 2016, and the gearing ratio of the Group was 39.7 (31 March 2016: 44.9%).

Working Capital Management

As at 30 September 2016, the Group held approximately HK$473.2 million cash and bank balances, which increased by approximately HK$401.3 million from approximately HK$71.9 million at the beginning of the Period. The Group’s average inventory turnover days was approximately 134 days (31 March 2016 approximately 40 days). The Group’s average debtors turnover days was approximately 279 days (31 March 2016 approximately 89 days). The Group’s average creditors turnover days was approximately 113 days (31 March 2016 approximately 50 days).

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MANAGEMENT DISCUSSION AND ANALYSIS (Continued)

EBITDA (Continued)

Capital Expenditure on Property, Plant and Equipment

Total capital expenditure for the Period was approximately HK$0.95 million, out of which approximately HK$0.07 million was spent on the acquisition of machinery and equipment, HK$0.12 million on restruction and decoration of office and HK$0.76 million on acquisition of transportation equipment.

Charges on Group Assets

As at 30 September 2016, the Group’s banking facilities including its import/export, letter of credit, documentary credits, and trust receipt and bank borrowings are secured by:

• (i) a first legal charge on certain of the Group’s leasehold land and buildings, which had an aggregate net carrying amount at the reporting date of HK$144.4 million;

• (ii) bank deposits approximately HK$10.1 million;

• (iii) cross guarantee provided by subsidiaries in the Group; and

• (iv) corporate guarantees provided by the Company.

EMPLOYEES

At 30 September 2016, the Group employed approximately 716 staff and workers in the PRC and approximately 20 staff were employed from Hong Kong. The Group remunerates its employees based on industry’s practice. In the PRC, the Group provides staff welfare and bonuses to its employees in accordance with the prevailing labour law. In Hong Kong, the Group provides staff benefits including defined contribution scheme and performance related bonuses.

Interim Report 2016 24

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DISCLOSURE OF INTERESTS

Directors’ Interests in Shares

As at 30 September 2016, the interests of the directors in the share capital of the Company or its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (the “SFO”)), as recorded in the register required to be kept by the Company pursuant to 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, were as follows:

Long position in the shares

Name of Directors But Tin Fu (“BTF”) (Note 2)	Number of the Approximate ordinary shares percentage of total beneficially held Capacity/Nature shareholding % 39,525,200 Beneficial owner 2.72 50,341,968 Interest of controlled 3.46 corporation (Note 1) 89,867,168 6.18	Number of the Approximate ordinary shares percentage of total beneficially held Capacity/Nature shareholding % 39,525,200 Beneficial owner 2.72 50,341,968 Interest of controlled 3.46 corporation (Note 1) 89,867,168 6.18
		6.18

• Note 1: BTF is the beneficial owner of 50% of the issued shares in Sun East Group Limited (which holds 3,796,000 Shares) and 100% of the issued shares in Sum Win Management Corp. (which holds 2,424,800 Shares). He is also the beneficial owner of 100% of the issued shares in Mind Seekers Investment Limited (“Mind Seekers”) (which holds 44,121,168 Shares). Therefore, he is deemed, or taken to be interested in 89,867,168 Shares for the purposes of the SFO.

Note 2: BTF has resigned as an executive director of the Company, as well as all positions held with the Company’s subsidiaries, with effect from 29 November 2016.

Save as disclosed above, as at 30 September 2016, none of the directors had registered an interest or short position in the shares, underlying shares or debentures of the Company or any of its associated corporations that was required to be recorded pursuant to Section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers.

25

Unisplendour Technology (Holdings) Limited

DISCLOSURE OF INTERESTS (Continued)

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Directors’ Rights to Acquire Shares or Debentures

At no time during the period were rights to acquire benefits by means of the acquisition of shares in or debentures of the Company granted to any director or their respective spouse or minor children, or were any such rights exercised by them; or was the Company, or any of its subsidiaries a party to any arrangement to enable the directors to acquire such rights in any other body corporate.

SUBSTANTIAL SHAREHOLDERS

As at 30 September 2016, so far as was known to the Directors or chief executive of the Company, the following persons (other than the Directors or chief executive of the Company) had an interest or short position in the Shares and underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO were as follow:

Long position in the shares

			Approximate
		Number of	percentage of
	Nature of	the ordinary	total
Name of Shareholder	interest	shares held	shareholding
			%
Substantial Shareholders
Unis Technology Strategy	Beneficial owner	1,024,659,420	70.42
Investment Limited
Reach General (Note)	Beneficial owner	100,000,000	6.87
Chen Ping	Beneficial owner	100,000,000	6.87
But Tin Fu	Beneficial owner/Interest of	89,867,168	6.18
	controlled corporation

Note: Reach General International Limited (“Reach General”) is 100% beneficially owned by Mr. Wu Xin.

Save for the interests disclosed above, the directors are not aware of any person who had, directly or indirectly, registered an interest in the issued share capital and underlying shares of the Company that was required to be recorded under Section 336 of the SFO.

26

Interim Report 2016

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CORPORATE GOVERNANCE AND OTHER INFORMATION

CORPORATE GOVERNANCE PRACTICES

The Company acknowledges the importance of good corporate governance practices and procedures and regards a pre-eminent board of directors, sound internal controls and accountability to all shareholders as the core elements of its corporate governance principles. The Company endeavors to ensure that its businesses are conducted in accordance with rules and regulations, and applicable codes and standards. The Company has adopted the Code Provisions of the Corporate Governance Code (the “Code”) as set out in Appendix 14 to the Listing Rules.

The Board periodically reviews the corporate governance practices of the Company to ensure its continuous compliance with the Code. The Company was in compliance with the Code for the six months ended 30 September 2016, except for the following deviations.

Code Provision A.6.7

Pursuant to the Code Provision A.6.7, all Directors of the Company should attend general meetings. However, one Executive Director and one Independent Non-Executive Director were absent from the annual general meeting held on 29 August 2016 and two Independent Non-Executive Directors were absent from the special general meeting held on 9 May 2016, all due to other business commitments. To ensure compliance with the Code in the future, the Company has arranged and will continue to arrange to furnish all Directors with appropriate information on all general meetings and take all reasonable measures to arrange the schedule in such a cautious way that all Directors can attend the general meetings.

Audit Committee

The Company has an Audit Committee (the “Committee”) which was established in accordance with the requirements of the Code, for the purpose of reviewing and providing supervision over the Group’s financial reporting process and internal controls. The Committee comprises one non-executive director and two independent non- executive directors of the Company. The Group’s interim Results for the six months ended 30 September 2016 has been reviewed by the Committee. The Committee is of the opinion that these statements comply with the applicable accounting standards, and the Stock Exchange and legal requirements, and that adequate disclosures have been made.

27 Unisplendour Technology (Holdings) Limited

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CORPORATE GOVERNANCE AND OTHER INFORMATION (Continued)

PURCHASE, REDEMPTION OR SALE OF LISTED SECURITIES OF THE COMPANY

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There was no purchase, sale or redemption of the Company’s listed securities by the Company or any of its subsidiaries during the Period.

MODEL CODE FOR SECURITIES TRANSACTIONS

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) as set out in Appendix 10 to the Listing Rules as a code of conduct regarding directors’ securities transactions. All the members of the Board have confirmed, following specific enquiry by the Company, that they have complied, with the required standards set out in the Model Code throughout the six months ended 30 September 2016.

PUBLICATION OF INTERIM REPORT ON THE STOCK EXCHANGE’S WEBSITE

The Company’s interim report containing all the information required by the Listing Rules will be published on the website of the Stock Exchange of Hong Kong Limited (www.hkex.com.hk) and the website of the Company (www.suneasthk.com) and be despatched to Shareholders in due course.

28

Interim Report 2016

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CAUTION STATEMENT

The Board wishes to remind investors that the above unaudited interim financial results and operational statistics for the six months ended 30 September 2016 and the corresponding period in 2015 are based on the Group’s internal information. Investors should note that undue reliance on or use of such information may cause investment risks. Investors are advised to exercise caution when dealing in the securities of the Company.

This report contains forward-looking statements regarding the objectives and expectations of the Group with respect to its opportunities and business prospects. Such forward-looking statements do not constitute guarantees of future performance of the Group and are subject to factors that could cause the Company’s actual results, plans and objectives to differ materially from those expressed in the forward-looking statements. These factors include, but not limited to, general industry and economic conditions, shifts in customer demands, and changes in government policies. The Group undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances.

• For identification purpose only

29 Unisplendour Technology (Holdings) Limited