Dragon Mining Limited — Annual Report 2013

Jun 25, 2013

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

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SAMSON PAPER HOLDINGS LIMITED 森信紙業集團有限公司 *

(Incorporated in Bermuda with limited liability)

(Stock Code: 731)

ANNOUNCEMENT OF RESULTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2013

The board of directors (the “Board”) of Samson Paper Holdings Limited (the “Company”) is pleased to announce the consolidated results of the Company and its subsidiaries (the “Group”) for the financial year ended 31 March 2013 and consolidated balance sheet as at that date together with comparative figures for the financial year ended 31 March 2012. The annual results have been reviewed by the Company’s audit committee.

CONSOLIDATED PROFIT AND LOSS ACCOUNT

For the year ended 31 March 2013

Note Revenue 2 Cost of sales Gross profit Other gains and income, net Selling expenses Administrative expenses Other operating expenses Operating profit 3 Finance costs Profit before taxation Taxation 4 Profit for the year	2013 2012 HK$’000 HK$’000 (Restated) 4,669,835 5,025,024 (4,208,853) (4,569,795) 460,982 455,229 111,872 54,734 (177,283) (174,023) (197,515) (179,688) (25,480) (2,656) 172,576 153,596 (88,943) (82,311) 83,633 71,285 (18,626) (15,221) 65,007 56,064

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Note Attributable to: Owners of the Company Non-controlling interests Earnings per share 5 Basic Diluted Dividends 6	2013 HK$’000 63,661 1,346 65,007 HK 5.4 cents HK 5.0 cents 19,097	2012 HK$’000 (Restated) 56,710 (646) 56,064 HK 4.8 cents HK 4.5 cents 18,843

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 31 March 2013

Profit for the year Other comprehensive income Currency translation differences Revaluation of land and buildings, net of deferred tax Reversal of deferred tax on fair value gains upon transfer from property, plant and equipment to investment properties Revaluation of available-for-sale financial assets Other comprehensive income for the year, net of tax Total comprehensive income for the year Attributable to: — Owners of the Company — Non-controlling interests Total comprehensive income for the year	2013 HK$’000 65,007 22,130 8,290 6,720 114 37,254 102,261 99,423 2,838 102,261	2012 HK$’000 (Restated) 56,064 44,841 49,009 9,758 112 103,720 159,784 160,304 (520) 159,784

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CONSOLIDATED BALANCE SHEET

As at 31 March 2013

Note Non-current assets Property, plant and equipment Prepaid premium for land leases Investment properties Intangible assets Available-for-sale financial assets Non-current deposit Deferred tax assets Current assets Inventories Accounts receivable, deposits and prepayments 7 Financial assets at fair value through profit or loss Taxation recoverable Restricted bank deposits Bank balances and cash Non-current asset held for sale Current liabilities Accounts payable and other payables 8 Trust receipt loans Taxation payable Derivative financial instruments Borrowings Net current assets Total assets less current liabilities	31 March 2013 HK$’000 1,695,826 157,483 163,601 47,536 5,624 8,165 8,249 2,086,484 704,536 1,768,326 675 890 182,948 392,307 3,049,682 110,000 3,159,682 1,339,738 774,408 12,523 769 680,482 2,807,920 351,762 2,438,246	31 March 2012 HK$’000 (Restated) 1,521,326 159,762 165,997 44,653 5,258 15,400 4,940 1,917,336 706,662 1,630,971 2,673 3,014 174,446 765,045 3,282,811 76,000 3,358,811 1,326,672 839,292 15,158 795 749,286 2,931,203 427,608 2,344,944	1 April 2011 HK$’000 (Restated) 1,330,148 42,343 150,000 45,168 4,327 14,863 7,195
			1,594,044
			836,973 1,431,250 6,282 6,004 152,258 682,724
			3,115,491 —
			3,115,491
			1,362,261 815,841 15,239 — 520,572
			2,713,913
			401,578
			1,995,622

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Note Equity Equity attributable to owners of the Company Share capital Reserves Proposed final dividend Non-controlling interests Total equity Non-current liabilities Accounts payable and other payables 8 Borrowings Deferred tax liabilities	31 March 2013 HK$’000 127,315 1,476,646 14,005 1,490,651 1,617,966 107,446 1,725,412 1,486 641,581 69,767 712,834 2,438,246	31 March 2012 HK$’000 (Restated) 127,315 1,399,037 12,477 1,411,514 1,538,829 104,801 1,643,630 73,869 559,375 68,070 701,314 2,344,944	1 April 2011 HK$’000 (Restated) 127,315
			1,086,176 12,731
			1,098,907 1,226,222 10,144 1,236,366 — 720,986 38,270 759,256 1,995,622

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Notes :

1. BASIS OF PREPARATION

The consolidated accounts of the Group have been prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRS”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”). The consolidated accounts have been prepared under the historical cost convention, as modified by the revaluation of properties, available-for-sale financial assets and financial assets/liabilities (including derivative financial instruments) at fair value through profit or loss, which are carried at fair value.

(a) New and amended standards adopted by the Group

The Group has adopted the following new standards, amendments and interpretations on 1 April 2012:

• (a) Changes in accounting policy and disclosures on the provision of deferred tax on revaluation of investment properties:

The HKICPA has amended Hong Kong Accounting Standard (“HKAS”) 12, “Income Taxes”, to introduce an exception to the principle for the measurement of deferred tax assets or liabilities arising on an investment property measured at fair value. HKAS 12 requires an entity to measure the deferred tax relating to an asset depending on whether the entity expects to recover the carrying amount of the asset through use or sale. The amendment introduces a rebuttable presumption that an investment property measured at fair value is recovered entirely by sale. The amendment is applicable retrospectively to annual periods beginning on or after 1 January 2012.

The Group has adopted this amendment retrospectively for the financial year ended 31 March 2013 and the effects of adoption are disclosed as follows.

The Group has investment properties measured at their fair values totalling HK$165,997,000 (1 April 2011: HK$150,000,000) as of 1 April 2012. As required by the amendment, the Group has re-measured the deferred tax relating to certain investment properties amounting to HK$165,997,000 (1 April 2011: HK$150,000,000) as of 1 April 2012 according to the tax consequence on the presumption that they are recovered entirely by sale retrospectively. The comparative figures for the year ended 31 March 2012 have been restated to reflect the change in accounting policy, as summarised below.

	31 March	31 March	1 April
Effect on consolidated balance sheet	2013	2012	2011
	HK$’000	HK$’000	HK$’000
Decrease in deferred tax liabilities	45,860	26,952	14,081
Increase in retained earnings	23,204	10,564	8,055
Increase in asset revaluation reserve	22,656	16,388	6,026
		Year ended	31 March
Effect on consolidated profit and loss account		2013	2012
		HK$’000	HK$’000
Decrease in income tax expense		12,640	2,509
Increase in net profit attributable to owners of the Company		12,640	2,509
Increase in basic earnings per share (“EPS”)		HK 1.1 cents	HK 0.2 cent
Increase in diluted EPS		HK 1.0 cent	HK 0.2 cent

• (b) The following amended standards are mandatory for the first time for the financial year beginning 1 April 2012 but either have no significant impact to the Group’s results and financial position or are not currently relevant to the Group:

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

• (b) New and amended standards have been issued but are not effective for the financial year beginning 1 April 2012 and have not been early adopted by the Group

The following new and amended standards have been issued but are not effective for the financial year beginning 1 April 2012 and the Group has not early adopted:

		Effective for
		accounting periods
		beginning
		on or after
HKAS 1 (Amendment)	Presentation of financial statements	1 July 2012
HKAS 19 (Amendment)	Employee benefits	1 January 2013
HKAS 27 (Revised 2011)	Separate financial statements	1 January 2013
HKAS 28 (Revised 2011)	Associates and joint ventures	1 January 2013
HKAS 32 (Amendment)	Offsetting financial assets and financial liabilities	1 January 2014
HKFRS 1 (Amendment)	First time adoption — government loans	1 January 2013
HKFRS 7 (Amendment)	Financial instruments: Disclosures	1 January 2013
	— Offsetting financial assets and liabilities
HKFRS 7 and HKFRS 9	Mandatory effective date and transition disclosures	1 January 2015
(Amendment)
HKFRS 9	Financial instruments	1 January 2015
HKFRS 10	Consolidated financial statements	1 January 2013
HKFRS 10, HKFRS 11	Consolidated financial statements,	1 January 2013
and HKFRS 12	Joint arrangements and disclosure of
(Amendments)	interests in other entities transitional guidance
HKFRS 10, HKFRS 12	Investment entities	1 January 2014
and HKFRS 27 (2011)
(Amendments)
HKFRS 11	Joint arrangements	1 January 2013
HKFRS 12	Disclosures of interests in other entities	1 January 2013
HKFRS 13	Fair value measurements	1 January 2013
HK (IFRIC) — Int 20	Stripping costs in the production phase of	1 January 2013
	a surface mine
Fourth annual	Improvements to HKFRS published in June 2012	1 January 2013
improvement project

The directors are currently assessing the impact on their adoption and the impact of adoption of these new standards, revised standards and amendments and interpretations to existing standards in future periods is not currently known or cannot be reasonably estimated.

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2. SEGMENT INFORMATION

As at 31 March 2013, the Group is organised on a worldwide basis into three main business segments:

• (1) Paper trading: trading and marketing of paper products;

• (2) Paper manufacturing: manufacturing of paper products in Shandong, the PRC;

• (3) Others: including trading and marketing of aeronautic parts and provision of related services and the provision of marine services to marine, oil and gas industries.

The segment information for the year ended and as at 31 March 2013 is as follows:

Total segment revenue Inter-segment revenue Revenue from external customers Reportable segment results Corporate expenses Operating profit Finance costs Profit before taxation Taxation Profit for the year Other items for the year ended 31 March 2013 Interest income Depreciation of property, plant and equipment Amortisation of prepaid premium for land leases Amortisation of intangible assets Reportable segment assets Taxation recoverable Deferred tax assets Corporate assets Total assets Reportable segment liabilities Taxation payable Deferred tax liabilities Corporate liabilities Total liabilities	Paper trading HK$’000 4,097,377 (153,815) 3,943,562 132,580 9,321 10,143 178 721 Paper trading HK$’000 2,930,047 1,652,817	Paper manufacturing HK$’000 843,631 (249,302) 594,329 47,735 1,566 39,102 3,237 38 Paper manufacturing HK$’000 2,134,514 427,751	Others HK$’000 139,746 (7,802) 131,944 2,193 10 8,375 72 — Others HK$’000 172,387 35,368	Total HK$’000 5,080,754 (410,919) 4,669,835 182,508 (9,932) 172,576 (88,943) 83,633 (18,626) 65,007 10,897 57,620 3,487 759 Total HK$’000 5,236,948 890 8,249 79 5,246,166 2,115,936 12,523 69,767 1,322,528 3,520,754

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The segment information for the year ended and as at 31 March 2012 is as follows:

Total segment revenue Inter-segment revenue Revenue from external customers Reportable segment results Corporate expenses Operating profit Finance costs Profit before taxation Taxation Profit for the year Other items for the year ended 31 March 2012: Interest income Depreciation of property, plant and equipment Amortisation of prepaid premium for land leases Amortisation of intangible assets Reportable segment assets Taxation recoverable Deferred tax assets Corporate assets Total assets Reportable segment liabilities Taxation payable Deferred tax liabilities Corporate liabilities Total liabilities	Paper trading HK$’000 4,199,128 (145,683) 4,053,445 92,049 9,425 11,776 837 541 Paper trading HK$’000 3,198,780 1,798,387	Paper manufacturing HK$’000 1,041,901 (190,627) 851,274 71,078 2,226 34,082 550 30 Paper manufacturing HK$’000 1,901,982 410,165	Others HK$’000 134,713 (14,408) 120,305 5,506 17 7,673 72 — Others HK$’000 167,350 31,483	Total HK$’000 (Restated) 5,375,742 (350,718) 5,025,024 168,633 (15,037) 153,596 (82,311) 71,285 (15,221) 56,064 11,668 53,531 1,459 571 Total HK$’000 (Restated) 5,268,112 3,014 4,940 81
				5,276,147
				2,240,035 15,158 68,070 1,309,254
				3,632,517

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The Group’s operating segments operate in the following geographical areas, even though they are managed on a worldwide basis.

Hong Kong The PRC2 Singapore Korea Malaysia USA	Group Revenue Non-current assets1 2013 2012 2013 2012 HK$’000 HK$’000 HK$’000 HK$’000 1,070,755 1,423,808 259,386 266,307 3,051,142 3,094,932 1,730,755 1,558,148 125,092 112,768 72,502 87,054 357,696 323,472 1,298 638 60,520 63,084 14,277 239 4,630 6,960 17 10 4,669,835 5,025,024 2,078,235 1,912,396	Group Revenue Non-current assets1 2013 2012 2013 2012 HK$’000 HK$’000 HK$’000 HK$’000 1,070,755 1,423,808 259,386 266,307 3,051,142 3,094,932 1,730,755 1,558,148 125,092 112,768 72,502 87,054 357,696 323,472 1,298 638 60,520 63,084 14,277 239 4,630 6,960 17 10 4,669,835 5,025,024 2,078,235 1,912,396
		1,912,396

1 Non-current assets excluded deferred tax assets.

2 The PRC, for the presentation purpose in these accounts, excludes Hong Kong Special Administrative Region of the PRC, Macau Special Administrative Region of the PRC and Taiwan.

3. OPERATING PROFIT

Operating profit is stated after charging and crediting the following:

Charging Cost of inventories sold Depreciation of property, plant and equipment Amortisation of prepaid premium for land leases Amortisation of intangible assets Operating lease rentals in respect of: — land and buildings Transportation costs Unrealised losses on derivative financial instruments Provision for impairment on inventories Provision for impairment on receivables Employee benefits expenses Auditor’s remuneration Loss on disposal of non-current asset held for sale Crediting Gains on disposal of property, plant and equipment Net exchange gains Realised and unrealised gains on derivative financial instruments Provision for impairment on inventories written back Provision for impairment on receivables written back	Group 2013 2012 HK$’000 HK$’000 3,757,519 4,538,163 57,620 53,531 3,487 1,459 759 571 17,196 15,432 120,917 121,765 — 795 25,979 — 11,272 6,461 123,068 110,089 2,620 2,522 726 — 174 96 5,865 953 — 396 — 42 6,830 2,143	Group 2013 2012 HK$’000 HK$’000 3,757,519 4,538,163 57,620 53,531 3,487 1,459 759 571 17,196 15,432 120,917 121,765 — 795 25,979 — 11,272 6,461 123,068 110,089 2,620 2,522 726 — 174 96 5,865 953 — 396 — 42 6,830 2,143
		96 953 396 42 2,143

4. TAXATION

Hong Kong profits tax has been provided at the rate of 16.5% (2012: 16.5%) on the estimated assessable profit for the year. Taxation on overseas profit has been calculated on the estimated assessable profit for the year at the rates of taxation prevailing in the countries in which the Group operates.

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The amount of taxation charged to the consolidated profit and loss account represents:

Hong Kong profits tax Overseas taxation Over provision in previous years Deferred taxation relating to origination and reversal of temporary differences	Group 2013 2012 HK$’000 HK$’000 (Restated) 4,619 6,535 9,370 5,806 (30) — 4,667 2,880 18,626 15,221	Group 2013 2012 HK$’000 HK$’000 (Restated) 4,619 6,535 9,370 5,806 (30) — 4,667 2,880 18,626 15,221
		15,221

5. EARNINGS PER SHARE

(a) Basic

Basic earnings per share is calculated by dividing the profit attributable to the owners of the Company less preference dividends of HK$61,839,000 (2012 restated: HK$54,729,000) by the weighted average number of 1,141,076,000 (2012: 1,141,076,000) ordinary shares in issue during the year.

(b) Diluted

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has one category of dilutive potential ordinary shares-preference shares. The Company has a share option scheme but no share option (2012: Nil) has been granted under the scheme.

Profit attributable to the owner of the Company_(HK$’000) Weighted average number of ordinary shares in issue(’000) Adjustment for: — Preference shares(’000) Weighted average number of shares for diluted earnings per share(’000)_ Diluted earnings per share	Group 2013 2012 (Restated) 63,661 56,710 1,141,076 1,141,076 132,065 132,065 1,273,141 1,273,141 HK 5.0 cents HK 4.5 cents	Group 2013 2012 (Restated) 63,661 56,710 1,141,076 1,141,076 132,065 132,065 1,273,141 1,273,141 HK 5.0 cents HK 4.5 cents
		1,141,076 132,065
		1,273,141
		HK 4.5 cents

6. DIVIDENDS

Interim — HK$0.004 (2012: HK$0.0050) per ordinary share Interim — HK$0.004 (2012: HK$0.0050) per preference share Proposed final — HK$0.011 (2012: HK$0.0098) per ordinary share Proposed final — HK$0.011 (2012: HK$0.0098) per preference share	Group and Company 2013 2012 HK$’000 HK$’000 4,564 5,706 528 660 12,552 11,183 1,453 1,294 19,097 18,843	Group and Company 2013 2012 HK$’000 HK$’000 4,564 5,706 528 660 12,552 11,183 1,453 1,294 19,097 18,843
		18,843

At a meeting held on 25 June 2013, the directors proposed a final dividend of HK$0.011 per share. This proposed dividend is not reflected as a dividend payable in these accounts, but will be reflected as an appropriation of retained earnings for the year ending 31 March 2014.

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7. ACCOUNTS RECEIVABLE, DEPOSITS AND PREPAYMENTS

ACCOUNTS RECEIVABLE, DEPOSITS AND PREPAYMENTS
Accounts receivable — net of provision Other receivables, deposits and prepayments The aging analysis of accounts receivable is as follows: Current to 60 days 61 to 90 days Over 90 days	Group 2013 2012 HK$’000 HK$’000 1,100,971 1,088,457 667,355 542,514 1,768,326 1,630,971 Group 2013 2012 HK$’000 HK$’000 838,037 771,218 136,097 132,868 126,837 184,371 1,100,971 1,088,457
		1,088,457

The Group normally grants credit to customers ranging from 30 to 90 days.

8. ACCOUNTS PAYABLE AND OTHER PAYABLES

ACCOUNTS PAYABLE AND OTHER PAYABLES
Accounts and bills payables Accruals and other payables Less: non-current portions: Accounts payable and other payables	Group 2013 2012 HK$’000 HK$’000 1,154,538 1,167,892 186,686 232,649 1,341,224 1,400,541 (1,486) (73,869) 1,339,738 1,326,672
		1,400,541 (73,869)
		1,326,672

The aging analysis of accounts and bills payables is as follows:

Current to 60 days 61 to 90 days Over 90 days	Group 2013 2012 HK$’000 HK$’000 922,722 900,106 126,027 170,658 105,789 97,128 1,154,538 1,167,892	Group 2013 2012 HK$’000 HK$’000 922,722 900,106 126,027 170,658 105,789 97,128 1,154,538 1,167,892
		1,167,892

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MANAGEMENT DISCUSSION AND ANALYSIS

The Economy

During the financial year under review, the business environment was bleak. In Europe, the sovereign debt crisis lingered stubbornly and a number of countries continued to adopt austerity policies. In the United States, the recovery of economy was still rife with uncertainties and high unemployment rate. Under the effects of globalization, the real economies in different countries worldwide, including Hong Kong and Mainland China, had great negative impact.

In the Mainland, exports and foreign investments dropped sharply while domestic demand was anaemic because of weak consumer confidence and tight money supplies.

In Hong Kong, the economy experienced a modest growth, with real GDP in the first quarter of 2013 up by 2.8% over the preceding year, similar to that in the fourth quarter of 2012. Exports remained weak in the face of an unsteady global economic conditions that affected the motherland.

The Paper Industry

Amid the stagnant market situation, customers were cautious in procurement and kept less stock for their operation and thus led to weaker demand for paper products. As new capacities from paper mills in the PRC kept starting up, this further exacerbated the imbalance situation of supply and demand in the industry. Under the market condition, prices of book printing paper and packaging board decreased 5% and 15% respectively as compared to those in the beginning of the year. However, the price has been stabilized from a downward trend towards the end of the financial year.

The slowdown in demand growth as a result of the tight monetary policy and the feeble consumer confidence has caused competition to intensify and thus margins are under pressure in the industry.

Under the tight monetary supply situation in the PRC, the liquidity of customers was seriously affected and the risk of credit default became much higher for those customers in a weak financial position.

Overview of Operations

Financial Performance

Against this challenge business climate, the Group strategically shifted its focus to serving quality customers and optimizing earning quality instead of seeking turnover growth. As a result, the Group’s turnover decreased by 7.1% year on year from HK$5,025 million to HK$4,670 million but sales volume rose by 2% with actively consolidation of the existing sales network in the PRC. Attaining favourable pricing from suppliers, streamlining the logistic and warehousing arrangement with customers and suppliers as well as an aggressive procurement strategy adopted in the PRC market, the gross profit margin recovered during the second half of the year and thus the overall gross profit margin improved 8.9% from 9.1% to 9.9%. After provision made for slow moving stocks of HK$26 million and doubtful debts of HK$11 million, consistent with group accounting policies, profit for the year increased 16% to HK$65 million. Net profit margin stood at 1.4% compared to 1.1% last year. Earning per share were HK5.4 cents, compared to HK4.8 cents (restated) for the preceding year.

The Board has recommended the payment of a final dividend of HK1.1 cents per share. Together with an interim dividend of HK0.4 cent per share already paid, total dividend for the year will amount to HK1.5 cents per share, translating to a dividend payout ratio of 30%.

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The Group has always been committed to controlling costs, improving operating efficiency and minimizing credit risk. With tight monetary supply and more stringent credit policies in China, the management has maintained an appropriate level of cash and bank balance (including restricted bank deposit), which reached HK$575 million as at 31 March 2013. This enables the Group to tap its own resources when necessary, lower interest costs and maintain a healthy gearing ratio — currently at approximately 46.9%. In terms of provisions for doubtful debt, it presently represents 0.1% of the Group’s total revenue after taking into account of the write back of the provision of HK$6.8 million. All of the measures taken also serve to highlight the Group’s healthy financial position.

By business segment, paper trading, paper manufacturing and other businesses accounted for 84.4%, 12.8% and 2.8% of the Group’s total turnover respectively.

Paper Business

The Group focused its sales strategy on serving quality customers to mitigate the credit risk and the effect of the downward price trend. The Group’s paper product business reported a decrease of 7.5% in turnover to HK$4,538 million compared with HK$4,905 million last year but in volume term, the Group’s sales of paper products has a rise of 2% to 833,400 metric tonnes supported by the strong extensive sales network in the PRC. Operating profit amounted to HK$180 million, representing an increase of 10% when compared to HK$163 million last year.

The Group’s effort to expand its presence in China has achieved notable results. The PRC continues to be the Group’s largest market, accounting for 67% of total turnover of paper products. Hong Kong — the Group’s second largest market — accounted for approximately 23.6% of total paper products sales whereas other Asian markets accounted for the remaining 9.4%.

As at 31 March 2013, the Group has sales offices in 20 cities across the country. While continuously strengthening its presence in China, the Group has also sought to optimize the efficiency of individual offices, and has started to reap the benefits of such effort. Turnover of the paper trading business reported a decrease of 2.7% to HK$3,944 million but with a 7.9% rise in sales tonnage, despite sluggish economic conditions.

As the domestic market became stabilized in the second half of the year and sales efforts targeted on quality customers, the sales revenue and tonnage of paper manufacturing business has picked up significantly. The paper manufacturing business recorded a decrease of 19% in turnover of HK$844 million and 4.1% drop in sales tonnage. With the soften fibre costs, the effective of cost control measures and streamlining work flow procedures, operating profit of HK$48 million was recorded for the year while operating profit margin slightly decreased by 3.9% to 8.0%.

Other Businesses

The aeronautic parts and services business and marine services business recorded turnover of HK$49 million and HK$76 million respectively during the year.

Prospects

With the current global economic conditions, to mitigate the current market instability and uncertainties, the management believes that a prudent with visionary approach on business development shall be continued to adopt as the overall group policy. The Group’s core business, paper trading business, will set its effort on expansion of sales network by setting up more sales offices in the central part of China in the coming years. By expanding the sales coverage, the Group will be able to speedily leverage its extensive sales network upon the economy picking up and capture

– 14 –

the market share further in the domestic market. For the other core business, paper manufacturing business, the management will continue to optimize the productivity and efficiency of the business to enhance its profitability continuously. With the intensified environmental protection effort of the PRC government, the speed of closing down the inefficient paper production capacities is expected to be escalated, and thus to alleviate the market imbalance, this will give a great opportunity to fully exert the potential of the paper manufacturing business.

Urbanisation in the PRC increased in speed following the initiation of the national reform policy. By the end of 2012, the PRC had a big portion of total urban population, highly rising from 1990. The government believes that it will continue to expand in latitude in the coming years. This will effectively boost domestic demand and serves as a structural adjustment for the future sustainable and stable growth of China’s economy. Consequently, the overall businesses of the Group will definitely be benefited by this fundamental element.

FINAL DIVIDEND

The Board has resolved to recommend a final dividend of HK1.1 cents per share (2012: HK0.98 cent) payable on or around 18 October 2013 to persons who are registered shareholders of the Company on 30 September 2013 subject to the approval of shareholders at the forthcoming annual general meeting. Together with the interim dividend of HK0.4 cent per share (2012: HK0.5 cent), the total dividend for the financial year is HK1.5 cents per share (2012: HK1.48 cents).

CLOSURE OF REGISTER OF MEMBERS

The Register of Members of the Company will be closed from 19 September 2013 to 24 September 2013 (both days inclusive) and 2 October 2013 to 4 October 2013 (both days inclusive) respectively, during which period no transfer of shares will be effected. In order to qualify for the entitlement to attend and vote at the Meeting, all transfer of shares accompanied by the relevant share certificates must be lodged with the Company’s Hong Kong branch share registrar Computershare Hong Kong Investor Services Limited at Shop 1712–1716, 17/F, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong for registration not later than 4:30 p.m. on 18 September 2013. In order to qualify for the proposed final dividend, all transfer of shares accompanied by the relevant share certificates must be lodged with the Company’s Hong Kong branch share registrar Computershare Hong Kong Investor Services Limited at Shop 1712–1716, 17/F, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong for registration not later than 4:30 p.m. on 30 September 2013.

EMPLOYEES AND REMUNERATION POLICIES

As at 31 March 2013, the Group employed 1,813 staff members, 125 of whom are based in Hong Kong and 1,360 are based in the PRC and 328 are based in other Asian countries. The Group’s remuneration policies are primarily based on prevailing market salary levels and the performance of the Group and of the individuals concerned. Remuneration policies are reviewed regularly to ensure that the Group is offering competitive employment packages. In addition to salary payments, other staff benefits include performance bonuses, education subsidies, provident fund, medical insurance and the use of a share option scheme to reward high-calibre staff. Training for various levels of staff is undertaken on a regular basis, consisting of development in the strategic, implementation, sales and marketing disciplines.

– 15 –

LIQUIDITY AND FINANCIAL RESOURCES

The Group normally finances short term funding requirements with cash generated from operations, credit facilities available from suppliers and banking facilities (both secured and unsecured) provided by our bankers. The Group uses cash flow generated from operations, long term borrowings and shareholders’ equity for the financing of long-term assets and investments. As at 31 March 2013, short term deposits plus bank balances amounted to HK$575 million (2012: HK$939 million) (including restricted bank deposits of HK$183 million (2012: HK$174 million)) and bank borrowings amounted to HK$2,096 million (2012: HK$2,148 million).

The Group continues to implement prudent financial management policy and strives to maintain a reasonable gearing ratio during expansion. As at 31 March 2013, the Group’s gearing ratio was 46.9% (2012 (restated): 42.4%), calculated as net debt divided by total capital. Net debt of HK$1,521 million (2012: HK$1,209 million) is calculated as total borrowings of HK$2,096 million (2012: HK$2,148 million) (including trust receipt loans, short term and long term borrowings, and finance lease obligations) less cash on hand and restricted deposits of HK$575 million (2012: HK$939 million). Total capital is calculated as total equity of HK$1,725 million (2012 (restated): HK$1,644 million) plus net debt. The current ratio (current assets divided by current liabilities) was 1.13 times (2012: 1.15 times).

With bank balances and other current assets amounted to HK$3,160 million (2012: HK$3,359 million) as well as available banking and trade facilities, the directors of the Company (the “Directors”) believe the Group has sufficient working capital for its present requirement.

FOREIGN EXCHANGE RISK

The Group’s transaction currencies are principally denominated in Renminbi, United States dollar and Hong Kong dollar. The Group hedged its position with foreign exchange contracts and options when considered necessary. The Group has continued to obtain Renminbi loans which provide a natural hedge against currency risks. As at 31 March 2013, bank borrowings in Renminbi amounted to HK$482 million (2012: HK$439 million). The remaining borrowings are mainly in Hong Kong dollar. The majority of the Group’s borrowings bear interest costs which are based on floating interest rates. The Group has entered an interest rate swap contract, the notional principal amount of the outstanding interest rate swap contract as at 31 March 2013 was HK$20,000,000 (2012: HK$20,000,000).

CONTINGENT LIABILITIES AND CHARGE OF ASSETS

As at 31 March 2013, the Company continued to provide corporate guarantees on banking facilities granted to the Group’s subsidiaries. The amount of bank borrowings utilised by the subsidiaries as at 31 March 2013 amounted to HK$2,090 million (2012: HK$2,145 million).

Certain land and buildings, investment properties and non-current asset held for sale of the Company’s subsidiaries, with a total carrying value of HK$328 million as at 31 March 2013 (2012: HK$308 million) were pledged to banks as securities for bank loans of HK$71 million (2012: HK$96 million) and trust receipt loans of HK$71 million (2012: HK$280 million) granted to the Group.

AUDIT COMMITTEE

The audit committee of the Company (the “Committee”) comprises two independent non-executive directors of the Company, namely Mr. Pang Wing Kin, Patrick and Mr. Tong Yat Chong and one non-executive director of the Company, namely Mr. Lau Wang Yip, Eric. The principal activities of the Committee include the review and supervision of the Group’s financial reporting process and

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internal controls. The Committee has met with the senior management of the Company and the Company’s external auditor to review the annual financial statements as at 31 March 2013 before recommending them to the Board for approval.

PURCHASE, SALE OR REDEMPTION OF SHARES

The Company has not redeemed any of its shares during the year. Neither the Company nor any of its subsidiaries has purchased or sold any of the Company’s shares during the year.

MODEL CODE FOR SECURITIES TRANSACTIONS

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) as the Company’s code of conduct for dealings in securities of the Company by the Directors. Having made specific enquiry of all the Directors, the Directors confirmed that they have complied with the required standard set out in the Model Code throughout the accounting period covered by the annual results.

COMPLIANCE WITH THE CODE ON CORPORATE GOVERNANCE PRACTICES OF THE LISTING RULES

In the opinion of the Directors, the Company was in compliance with the Code of Corporate Governance Practices as set out in Appendix 14 of Rules Governing the Listing of Securities (the “Listing Rules”) on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) during the accounting period covered by the annual results except that the non-executive Directors were not appointed for a specific term but are subject to retirement by rotation and re-election at the Company’s annual general meetings in accordance with the bye-laws of the Company.

PUBLICATION OF DETAILED RESULTS ANNOUNCEMENT ON THE STOCK EXCHANGE’S WEBSITE

The 2012/2013 Annual Report of the Company containing all information required by the Listing Rules will be published on the Stock Exchange’s website (www.hkexnews.com.hk) and the Company’s website (www.samsonpaper.com) in due course.

BOARD OF DIRECTORS

As at the date of this announcement, the Board comprises five executive Directors, namely Mr. SHAM Kit Ying, Mr. LEE Seng Jin, Mr. CHOW Wing Yuen, Ms. SHAM Yee Lan, Peggy and Mr. LEE Yue Kong, Albert, one non-executive Director, Mr. LAU Wang Yip, Eric and three independent non-executive Directors, namely Mr. PANG Wing Kin, Patrick, Mr. TONG Yat Chong and Mr. NG Hung Sui, Kenneth.

By Order of the Board SHAM Kit Ying Chairman

Hong Kong, 25 June 2013

• for identification purpose only

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