Dragon Mining Limited — Annual Report 2015

Jul 30, 2015

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Annual Report 2015

Contents

Corporate Information	2
Financial Highlights	3
Chairman’s Statement	5
Management Discussion and Analysis	8
Corporate Governance	11
Corporate and Social Responsibility	16
Report of the Directors	17
Independent Auditor’s Report	25
Consolidated Profit and Loss Account	27
Consolidated Statement of Comprehensive Income	28
Consolidated Balance Sheet	29
Balance Sheet	31
Consolidated Statement of Changes in Equity	32
Consolidated Statement of Cash Flows	34
Notes to the Consolidated Financial Statements	35
Contacts	92

2

Corporate Information

Board of Directors

Executive Directors

SHAM Kit Ying (Chairman) (alias SHAM Kit) LEE Seng Jin (Deputy Chairman) CHOW Wing Yuen SHAM Yee Lan, Peggy LEE Yue Kong, Albert

Non-executive Director

LAU Wang Yip, Eric

Independent Non-executive Directors

PANG Wing Kin, Patrick TONG Yat Chong NG Hung Sui, Kenneth

Company Secretary

LEE Yue Kong, Albert

Principal Bankers

Bank of Tokyo-Mitsubishi UFJ BNP Paribas Hong Kong Branch China CITIC Bank International Limited DBS Bank Ltd., Hong Kong Branch Hang Seng Bank Limited The Hongkong and Shanghai Banking Corporation Limited Industrial and Commercial Bank of China (Asia) Limited Mizuho Bank, Ltd., Hong Kong Branch Oversea-Chinese Banking Corporation Limited Standard Chartered Bank (Hong Kong) Limited

Independent Auditor

PricewaterhouseCoopers Certified Public Accountants

Registered Office

Canon’s Court 22 Victoria Street Hamilton HM12 Bermuda

Head Office and Principal Place of Business

3/F, Seapower Industrial Centre 177 Hoi Bun Road Kwun Tong Kowloon, Hong Kong

Principal Share Registrar and Transfer Office

Butterfield Corporate Services Limited 6 Front Street Hamilton Bermuda

Hong Kong Share Registrar and Transfer Office

Boardroom Share Registrars (HK) Limited 31/F, 148 Electric Road North Point Hong Kong

SAMSON PAPER HOLDINGS LIMITED

3

Financial Highlights

CONSOLIDATED PROFIT AND LOSS ACCOUNT

CONSOLIDATED PROFIT AND LOSS ACCOUNT
	For the year	ended 31 March
	2015	2014
	HK$’000	HK$’000
		(Note 40)
Revenue	5,277,933	4,982,417
Operating profit	245,300	179,650
Finance costs	92,708	92,235
Profit before taxation	152,592	87,415
Profit attributable to owners of the Company	114,225	57,196

CONSOLIDATED BALANCE SHEET

CONSOLIDATED BALANCE SHEET
	As at 31 March
	2015	2014
	HK$’000	HK$’000
Non-current assets	2,528,480	2,268,786
Current assets	3,355,423	3,331,178
Current liabilities	2,938,488	3,011,758
Shareholders’ funds	1,833,346	1,743,604
Non-current liabilities	933,182	674,603
SHARE STATISTICS
Earnings per share — basic	HK9.86 CENTS	HK4.84 CENTS
Earnings per share — diluted	HK8.97 CENTS	HK4.49 CENTS
Dividends per share	HK2.90 CENTS	HK1.30 CENTS
Net asset value per ordinary share	HK161 CENTS	HK152 CENTS

ANNUAL REPORT 2015

4

Financial Highlights

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REVENUE
HK$
Million
6,000
5,278
5,033 4,982
5,000 4,683 4,679
4,000
3,000
2,000
1,000
0
10/11 11/12 12/13 13/14 14/15
(restated)(restated)(restated)(Note 40)
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PROFIT ATTRIBUTABLE TO OWNERS OF THE COMPANY

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HK$
Million
120 114
110
100
90
79
80
70 64
57 57
60
50
40
30
20
10
0
10/11 11/12 12/13 13/14 14/15
(restated) (restated)
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SHAREHOLDERS’ FUNDS

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HK$
Million
2,000
1,833
1,744
1,800
1,618
1,539
1,600
1,400
1,226
1,200
1,000
800
600
400
200
0
10/11 11/12 12/13 13/14 14/15
(restated) (restated)
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RETURN ON SHAREHOLDERS’ FUNDS

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%
10
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8
6.44% 6.23%
6
4 3.70% [3.96%]
3.30%
2
0
10/11 11/12 12/13 13/14 14/15
(restated) (restated)
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SAMSON PAPER HOLDINGS LIMITED

5

Chairman’s Statement

The Economy

During the financial year under review, with the exception of the United States, the global economy has stayed weak. China’s gross domestic product growth dropped to 7.4% in 2014, which was slightly below the target of 7.5% and the weakest expansion in 24 years. The growth was down to 7.0% in the first quarter of 2015 which showed the economy was continuously at downturn pace.

In Hong Kong, the economy experienced a modest growth, with real GDP 2.1% growth in the first quarter of 2015, slightly slower than the 2.4% growth in the preceding quarter. Exports remained weak in the face of the same sluggish global economic conditions that affected the mainland China.

The Paper Industry

For the year under review, paper and board prices have been generally stable but lingering at low levels, as demand for most grades has not seen obvious improvements on the back of slack economic situation in China while oversupply pressure remained. Market sentiment has been continuously cautious and tight liquidity position still persisted in the industry which caused severe competition in the market. Margin and profitability of the industry were still under pressure.

Overview of Operations

Financial Performance

In response to the intensified and volatile market uncertainties experienced in the year under review, Samson Group (the “Group”) took a prudent approach in its sales and procurement strategies to strike a balance between growth in turnover and profitability. At the same time, the Group monitored closely the customer credit risk in the midst of an economic slowdown in China and its export market. During the year, the Group’s turnover registered a growth of 5.9% reaching a record high of HK$5,277,933,000. In terms of sales volume, the growth was even as high as 14.0%. The gross profit increased by 7.3% to HK$497,430,000. Despite the difficult market conditions, with the strong performance of the Group’s paper manufacturing segment and significant gain on fair value of investment properties of HK$121,300,000 (2014: HK$32,399,000), net profit of the Company rose by 103.9% to HK$123,336,000 (2014: HK$60,499,000). This was after the offset of the loss of the newly food retail business of HK$12,369,000. Before taking into account of the impact of fair value gain on investment properties, the initial investment on the establishment of the Group’s food retail business and the net impairment on account receivable, the profit of the Company increased by 1.3% to HK$23,600,000 compared to the previous year. Basic earnings per share were HK9.9 cents (2014: HK4.8 cents).

The Board has recommended the payment of a final dividend of HK2.5 cents per share. Together with an interim dividend of HK0.4 cent per share already paid, total dividend for the year will amount to HK2.9 cents per share, translating to a dividend payout ratio of 32%.

While the Group continues to maintain a healthy financial position, the Group intends to keep an appropriate level of cash reserve to enhance the working capital position under the volatile market environment. As at 31 March, 2015, the Group had cash and bank balance (including restricted bank deposit) of HK$629,270,000 with a gearing ratio at a healthy level of 43.0%. This enables the Group to maintain interest costs at the level of HK$92.7 million. During the year under review, the Group continued to exercise a stringent credit policy as well as to lower the level of inventory even with the Group attaining a growth in revenue. Despite the worsening operating environment, the inventory turnover day was shortened by 5 days. In terms of provisions for doubtful debts, it currently represents 0.19% of the Group’s total revenue before taking into account of the write back of the provision of HK$1 million. This further indicates that the Group’s financial policy is able to fend off unstable market sentiment.

By business segment, the Group’s four operating segments, namely paper trading, paper manufacturing, property investment and other businesses represented 79.3%, 17.3%, 0.3% and 3.1% of the Group’s total turnover respectively.

ANNUAL REPORT 2015

Chairman’s Statement

6

Paper Business

With the sales network spreading across the PRC region, coupled with a significant growth in the revenue of paper manufacturing segment, the Group’s paper product business achieved an increase of 5.7% in turnover from HK$4,822,284,000 to HK$5,098,745,000. In volume terms, the sales tonnage rose by 14.0% from 949,516 metric tonnes to 1,082,860 metric tonnes. Operating profit dropped 8.19% to HK$131,030,000

For paper trading business, against a backdrop of severe operating environment, the Group reported a slight decrease of 1.4% in turnover of HK$4,184,982,000, arising from a contraction of export sales to overseas and weak domestic sales in the Group’s other Asian countries due to an aggressive Chinese mills sales out of China, but a 1.0% rise in sales tonnage.

The PRC market continued to be the faster growth region of the segment. With an aim to reduce the credit exposure, the pace of growth in the market is slower compared to previous year. Despite this concern, turnover from paper trading business in the market increased by 4.7% to HK$2,982,892,000 with a growth of 7.3% in volume. The Hong Kong market, being the Group’s second key market, represented approximately 21.1% of its total paper trading sales, attained a turnover of HK$885,030,000, a decrease of 2.8% compared to last year. As for other Asian countries, the business dropped 34.6% in sales to HK$317,061,000 as compared to last year. Less orders were made by the Korea office for export markets resulting from the fierce competition from the Chinese mills which tried to absorb their excess production capacity and also a weak domestic market faced by the Malaysia office in the year.

For paper manufacturing business, during the year, the segment successfully expanded its market share in the region and continued its growth momentum for the second half of the financial year and recorded a strong performance. The segment registered a significant rise of 29.2% in turnover, including inter-segment revenue, to HK$992,101,000 with a growth of 37.8% in the sales tonnage. The achieved result is due to the success of sales and production strategies that focus on developing customers extensively at the mill’s proximity and product customization to the needs of customers. With the competitive quality of products, the mill’s brand is well recognized among customers in the region. Operating profit increased 61.7% to HK$85,109,000 compared to last year with operating profit margin stood at 9.3%.

Property Investment

To support the Group’s continuing business growth since the financial year ended 31 March 2008, the Group strategically enhanced the efficiency and profitability of its warehousing facilities. Through the consolidation of warehouses located in the Hong Kong, the Group leased out its investment properties to third parties bringing in additional rental income to generate an inflow of steady and recurring income. At the same time, the value of the investment properties has been reflected at fair value in the Group’s balance sheet, which enhanced the Group’s financial position. For the year under review, the Group recorded a gain on fair value changes of investment properties of HK$121,300,000. The value of these investment properties amounted to HK$465,300,000 as at 31 March 2015. For the year under review, the rental income amounted to HK$15,123,000 compared to HK$13,300,000 in previous year.

Other Businesses

These business segments include the aeronautic parts and service business, marine services business, food retail business and logistic services.

The aeronautic parts and services business and marine services business recorded turnover of HK$50,687,000 and HK$65,951,000 respectively during the year under review.

During the year under review, the Group has tapped into the local food retail market, through its Hong Kong based chain of food stores under the brand “FoodWise” which is committed to delivering healthy and high quality food products for consumers through the vision ‘Eat Right, Every Day’ and is principally engaged in the sale of a selection of wholesome, affordable and convenient food. As at 31 March 2015, the Group is operating seven shop locations in Hong Kong including several strategic shopping malls. Such retail business segment contributed HK$43,227,000 to the Group’s turnover for the year under review while incurring an operating loss of HK$12,369,000 as initial investment on the business.

SAMSON PAPER HOLDINGS LIMITED

Chairman’s Statement

7

Prospects

In the context of a slackening economy, the paper industry will remain weak in the coming year. China’s policy makers are planning to make 2015 a year of reform sacrificing some growth speed in exchange for a better quality growth model. The country has paid more attention on environmental issues and fight against pollution. The government has tightened its environmental protection measures, eliminating a lot of outdated pulp and paper capacity from the market. In the long run, these efforts will benefit the development of the paper industry, in helping ease oversupply pressures. The market will firm up in the future. Facing the present operating environment, for the paper business, the Group will pursue more on profitability rather than on growth in turnover and is cautious on the credit quality of customers as banks are still tightening on the customers’ credit. The Group continues to enhance efficiency and product quality through making investment on upgrading equipment and process re-engineering.

In previous years, the strategy on consolidation of warehouses located in Hong Kong proved a successful way to enhance the value of investment properties held by the Group. In the coming years, the Group plans to continue consolidating its existing warehouses and lease out the premises to third parties to earn additional rental income as well as increase the value of the properties. In addition, the Group is looking for lands to construct warehouses for leasing.

The food retail business is a more capable and better equipped business than it was a year ago. The strength of our existing overseas purchasing network and comprehensive cold storage infrastructure have been the two key drivers for the rapid growth and expansion of FoodWise and will continue to underpin the Group’s strategy. The Group will continue to strive for the growth in the food retail business and further enhance the margins, cash generation and cash flow. The Group will further invest in upgrading the ERP system to establish a fundamental platform for shop network expansion and developing, enriching and expanding the scope of FoodWise’s business model.

The Group continues to seek for opportunities for diversification and create more value to shareholders.

Appreciation

On behalf of the Board, I would like to take this opportunity to express my sincere gratitude to our shareholders, business partners and customers for their continuous support. Appreciation must also be extended to the management team and the entire Group’s workforce.

By Order of the Board SHAM Kit Ying Chairman

Hong Kong, 25 June 2015

ANNUAL REPORT 2015

8

Management Discussion and Analysis

Turnover by Geographical Area

For the financial year under review, the Group recorded turnover of HK$5,278 million, an increase of 5.9% compared to last year.

With a significant growth in the business of paper manufacturing segment, turnover of paper business reported an increase of 5.7% to HK$5,098.7 million. In volume terms, the total sales tonnage of paper business in all geographical regions rose by 14% to 1,082,860 metric tonnes. Sales in the PRC recorded a rise of 13.7% to HK$3,896.7 million, making up 76.4% of the Group’s total revenue from paper products. Sales of paper products in Hong Kong contributed 17.4% while those in Malaysia and other countries contributed the remaining 6.2% of the Group’s revenue from paper business.

In addition to the paper business, the Group has involved in the property investment, food retail business, the distribution business of consumable aeronautic parts and provision of related services and marine services business. These business segments together contributed HK$175.0 million, 3.3% (2014:HK$154.6 million, 3.1%) of the Group’s total revenue.

To generate an inflow of steading and recurring income by providing the rental services, the Group has been leasing out its investment properties to third parties by consolidating the warehouses.

2015 2014 HK$ million HK$ million (note 40) Hong Kong Paper trading 885.0 910.5 Rental services 15.1 13.3 Food retail business 43.2 — Logistics services and others — 5.5 The PRC Paper trading 2,982.9 2,850.0 Paper manufacturing 913.8 577.6 Logistics services 4.2 5.6 Singapore Marine services 66.0 77.2 Aeronautic parts and services 50.7 58.1 Other regions Paper trading 317.1 484.6 Total revenue 5,278.0 4,982.4 Hong Kong Paper and Board Import/Re-export Statistics (January to December) (in ‘000 Metric Tonnes) 2014 2013 Import 700 756 Re-export 162 184 Local consumption 538 572	% change –2.8% 13.5% 100.0% –100.0% 4.7% 58.2% –25.0% –14.5% –12.7% –34.6%
	5.9%
	+/- –7.4% –12.0% –5.9%

SAMSON PAPER HOLDINGS LIMITED

Management Discussion and Analysis

9

Sales by Geographical Area (continued)

Import Statistics of Paper & Board to the Mainland China (January to December)

(in ‘000 Metric Tonnes) Newsprint Woodfree Coated paper Corrugated board Duplex board Corrugating medium Others	2014 50 310 340 1,060 640 50 370 2,820	2013 110 280 320 1,030 650 70 370 2,830	+/- –54.5% 10.7% 6.3% 2.9% –1.5% –28.6% 0.0%
			–0.3%

Major Product Analysis

As a national paper distributor in the Mainland China and one of the largest paper traders in Hong Kong, the Group currently maintains a stock of over 100 paper brands. The Group’s two main product categories, book printing papers and packaging boards, accounted for 41.4% and 47.9% of the Group’s turnover of paper products respectively. For the year under review, sales of book printing papers and sales of packaging boards increased by 2.9% and 7.1% respectively.

Working Capital and Inventory Management

Against the complex and volatile market situation, the management continued to adopt a prudent credit policy on customers’ selection. For the year under review, while the Group is expanding its business further, the Group is paying more attention on the credit exposure of the selection of customers. As a result, the collection period was maintained at the same level as last year. Under the stringent credit policy taken by the PRC banks, customers had difficulties to obtain bank financing which resulted higher credit risk among customers. The management has taken measures including pricing policy to contain the debtors’ risk. As a part of risk management, the Group also entered credit insurance coverage on the accounts receivable of paper business in Hong Kong and the PRC. However, for prudent accounting purpose, the Group continued to take conservative approach to make provision for doubtful debts to cover the credit exposure. Impaired receivable provision of HK$10 million was made, which is at 0.19% of the Group’s total revenue in view of the adverse market condition, while a write back of impaired receivable provision of HK$1 million was recorded.

To maintain a strong working capital position and minimize the risk exposure of the value of stocks against paper price, the Group has kept a low level of stocks at HK$721.4 million as at 31 March 2015 with the turnover days being shortened by 5 days.

ANNUAL REPORT 2015

10

Management Discussion and Analysis

Employees and Remuneration Policies

As at 31 March 2015, the Group employed 1,737 staff members, 148 of whom are based in Hong Kong and 1,290 are based in the PRC and 299 are based in other 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 and medical insurance. Training for various levels of staff is undertaken on a regular basis, consisting of development in the strategic, implementation, sales and marketing disciplines.

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 flows generated from operations, long term borrowings and shareholders’ equity for the financing of long-term assets and investments. As at 31 March 2015, short term deposits plus bank balances amounted to HK$629 million (2014: HK$493 million) (including restricted bank deposits of HK$218 million (2014: HK$206 million)) and bank borrowings amounted to HK$2,148 million (2014: HK$2,046 million).

The Group continues to implement prudent financial management policy and strives to maintain a reasonable gearing ratio during expansion. As at 31 March 2015, the Group’s gearing ratio was 43.0% (2014: 44.8%), calculated as net debt divided by total capital. Net debt of HK$1,519 million (2014: HK$1,553 million) is calculated as total borrowings of HK$2,148 million (2014: HK$2,046 million) (including trust receipt loans, short term and long term borrowings, finance lease obligations and bank overdraft) less cash on hand and restricted deposits of HK$629 million (2014: HK$493 million). Total capital is calculated as total equity of HK$2,012 million (2014: HK$1,914 million) plus net debt. The current ratio (current assets divided by current liabilities) was 1.14 times (2014: 1.11 times).

With bank balances and other current assets amounted to HK$3,355 million (2014: HK$3,331 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 2015, bank borrowings in Renminbi amounted to HK$340 million (2014: HK$496 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 2015 was HK$20,000,000 (2014: HK$20,000,000).

Contingent Liabilities and Charge of Assets

As at 31 March 2015, 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 2015 amounted to HK$2,139 million (2014: HK$2,041 million).

Certain land and buildings, investment properties and non-current assets held for sale of the Company’s subsidiaries, with a total carrying value of HK$519 million as at 31 March 2015 (2014: HK$400 million) were pledged to banks as securities for bank loans of HK$51 million (2014: HK$91 million) and trust receipt loans of HK$117 million (2014: HK$78 million) granted to the Group.

SAMSON PAPER HOLDINGS LIMITED

11

Corporate Governance

Corporate Governance Practices

The Company has always recognised the importance of transparency in governance and accountability to shareholders. It is the belief of the Board that good corporate governance practices are essential for the growth of the Group and for safeguarding and maximising shareholders’ interests.

The Board is committed to maintaining high standards of corporate governance and endeavours in following the code provisions (the “Code Provisions”) of the “Code on Corporate Governance Practices” (the “Code”) as set out in Appendix 14 to the Rules (the “Listing Rules”) Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”). The Company periodically reviews its corporate governance practices to ensure that these continue to meet the requirements of the Code. Throughout the financial year of 2015, the Company has met the Code Provisions set out in the Code except that the nonexecutive Directors were not appointed for a specific term but are subject to retirement by rotation and reelection pursuant to the Company’s bye-laws.

Board of Directors

The Board currently comprises five executive and four non-executive Directors of whom three are independent as defined by the Stock Exchange. (The biographies of the Directors, together with information about the relationship among them, are set out on page 19). Independent non-executive Directors are one-third of the Board. Under the Company’s bye-laws, every Director is subject to retirement by rotation at least once every three year. One-third of the Directors, who have served the longest on the Board, must retire from office at each Annual General Meeting and their re-election is subject to a vote of shareholders.

The Board is responsible for the leadership and control of the Company and oversees the Group’s businesses, strategic decisions and financial performance. Day-to-day management of the Group’s businesses is delegated to the executive Director or officer in charge of each division. The functions and authority that are so delegated are reviewed periodically to ensure that they remain appropriate.

Matters that reserved for the Board are those affecting the Group’s overall strategic policies, finances and shareholders including financial statements, dividend policy, significant changes in accounting policy, material contracts and major investments. All Board members have access to the advice and services of the Company Secretary. All Directors have separate and independent access to the Management for enquiries and to obtain information when required. Independent professional advice can be sought at the Group’s expense upon reasonable requests. The Directors are covered by appropriate insurance on Directors’ liabilities from risk exposures arising from the management of the Company.

Directors’ Training and Professional Development

Directors keep abreast of responsibilities as a director of the Company and of the conduct, business activities and development of the Company.

Continuing briefings and professional development for Directors are arranged whenever necessary. In addition, reading materials on new or changes to salient laws and regulations applicable to the Group are provided to Directors from time to time for their studying and references. All Directors are encouraged to attend relevant training courses at the Company’s expenses.

During the year ended 31 March 2015, the Company has organized training sessions provided by external professional firm to the Board.

ANNUAL REPORT 2015

Corporate Governance

12

Board of Directors (continued)

The Board meets regularly to review the financial and operating performance of the Group and approve future strategies. Details of the number of Board meetings held in the year and attendance of each Board member at those meetings and meetings of the Audit Committee, the Remuneration Committee and the Nomination Committee are set out below:

	Attendance/Number of Meetings	Attendance/Number of Meetings	Attendance/Number of Meetings	Attendance/Number of Meetings
		Audit	Remuneration	Nomination
Directors	Board	Committee	Committee	Committee
Executive Directors
Mr. SHAM Kit Ying (Chairman)	4/4
Mr. LEE Seng Jin
(Deputy Chairman and Chief Executive Officer)
(note 3)	4/4		1/1	1/1
Mr. CHOW Wing Yuen	4/4
Ms. SHAM Yee Lan, Peggy	4/4
Mr. LEE Yue Kong, Albert	4/4
Independent Non-executive Directors
Mr. PANG Wing Kin, Patrick (note 2)	4/4	3/3		1/1
Mr. TONG Yat Chong (note 1)	4/4	3/3	1/1
Mr. NG Hung Sui, Kenneth	3/4		1/1	1/1
Non-executive Director
Mr. LAU Wang Yip, Eric	3/4	2/3
Note 1: Chairman of Remuneration Committee
Note 2: Chairman of Audit Committee
Note 3: Chairman of Nomination Committee

To implement the strategies and plans adopted by the Board effectively, an executive committee of selected executive Directors and senior managers meet monthly to review the performance of the businesses of the Group and make financial and operational decisions.

Chairman and Chief Executive Officer

The Group has appointed a Chairman, Mr. Sham Kit Ying and a Chief Executive Officer, Mr. Lee Seng Jin. The roles of the Chairman and the Chief Executive Officer are segregated. The primary role of the Chairman is to provide leadership for the Board and to ensure that it works effectively in the discharge of its responsibilities. The Chief Executive Officer is a Board member and has executive responsibilities over the business direction and operational decisions of the Group.

Non-executive Directors

There are currently four non-executive Directors of whom three are independent. As a deviation from the Code, the term of office for non-executive Directors is not fixed but subject to retirement from office by rotation and be eligible for re-election in accordance with the provisions of the Company’s bye-laws. At every Annual General Meeting, one-third of the Directors for the time being, who have served the longest on the Board, or if their number is not a multiple of three, then the number nearest to but not less than one-third shall retire from office. As such, the Company considers that such provisions are sufficient to meet the underlying objectives of the relevant provisions of the Code.

SAMSON PAPER HOLDINGS LIMITED

Corporate Governance

13

Remuneration of Directors

The Remuneration Committee has clear terms of reference and is accountable to the Board. The principle role of the Remuneration Committee is to make recommendations to the Board on the Company’s policies and structure for all remuneration of Directors and senior management and on the establishment of a formal and transparent procedure for developing policy on such remuneration. The Remuneration Committee comprises three members including the Deputy Chairman and two independent non-executive Directors. The current Committee members are:

Mr. Lee Seng Jin Mr. Tong Yat Chong Mr. Ng Hung Sui, Kenneth

The Remuneration Committee met once in the year with the attendance rate of 100%.

During the year, the Remuneration Committee reviewed the remuneration policies and approved the salaries and bonuses of the executive Directors and certain key executives. No executive Director has taken part in any discussion about his/her own remuneration.

The Directors’ emoluments paid or payable to the Directors during the year are set out on an individual and named basis, in note 13 to the accounts of this Annual Report.

Pursuant to B.1.5 of the Corporate Governance Code, the remuneration of the members of the Senior Management (including executive directors) by band for the year ended 31 March 2015 is set out below:

	Number of
Remuneration band (HK$)	persons
1 to 2,000,000	5
above 2,000,000	2

Nomination Committee

The Board established a Nomination Committee on 28 March 2012. The Nomination Committee comprises one executive Director, Mr. Lee Seng Jin and two independent non-executive Directors, Mr. Pang Wing Kin, Patrick and Mr. Ng Hung Sui, Kenneth. The full terms of reference are available on the Stock Exchange’s website. Its written terms of reference cover recommendations to the Board on the appointment of Directors, evaluation of board composition, assessment of the independence of Independent Non-executive Directors and the management of board succession.

The Nomination Committee has considered a number of aspects, including but not limited to genders, age, cultural and education background, ethnicity, professional experience, skills, knowledge and length of services. The Nomination Committee will also consider factors based on the Company’s business model and specific needs from time to time in determining the optimum composition of the Board.

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 internal controls. The Committee has met with the senior management of the Company and the Company’s external auditor to review the final results for the year ended 31 March 2015 before recommending them to the Board for approval.

ANNUAL REPORT 2015

Corporate Governance

14

Company Secretary

The company secretary is a full time employee of the Company and has day-to-day knowledge of the Company’s affairs. The company secretary reports to the board chairman and the chief executive. During the year 2014/2015, the company secretary has taken no less than 15 hours of relevant professional training.

Internal Control and Risk Management

The Board maintains a sound and effective system of internal controls in the Group and reviews its effectiveness through the Audit Committee. The system is set up to address key business risks of failure to meet corporate objectives. The purpose of such system is to manage and control risks properly, but not eliminate it. The Board decides the overall policies and strategies which are implemented by the executive management as well as the review of material controls including the financial, operational and compliance controls and risk management functions.

The Group carries out the businesses under an established control environment which is consistent with the principles stated in Internal Control and Risk Management — A Basic Framework issued by the Hong Kong Institute of Certified Public Accountants. The internal control of the Group is designed to provide reasonable assurance regarding the achievements of effectiveness and efficiency of operation, reliability of financial reporting and compliance with applicable laws and regulations.

The Group’s internal audit team under the supervision of Internal Audit Manager independently reviews the internal controls and evaluates their adequacy, effectiveness and compliance. The team comprises qualified personnel to maintain and monitor the system of controls on an ongoing basis. The Internal Audit Department reports the major findings and recommendations to the Audit Committee on a regular basis.

In the year 2014/2015, the internal audit reports of the Group were completed regularly and sent to the Audit Committee to review. According to the assessments made by the Board and the Group’s Internal Audit team in 2014, the Audit Committee is satisfied that:

• The internal controls and accounting systems of the Group have been functioning effectively. They provide the reasonable assurance that the business risks are detected and monitored. The material assets are protected and the accounts are reliable. They help to ensure compliance with applicable laws and regulations.

• There is an ongoing basis of identifying and managing the risks existing in the Group.

Business Planning and Budgeting

The Group’s budget meeting is held annually in the beginning of each year. It is a key control process in business planning. The budget meeting of the year 2015/2016 was held in February 2015. The scope of the meeting included the following areas:

1. Sales/product strategy;

2. Market analysis and competitor profile;

3. Purchasing strategy; and

4. Customers analysis.

On the other hand, the half-yearly performance review for the year 2014/2015 (i.e. April to September 2014) was conducted in October 2014. The monthly performance reviews for the same year were carried out as well. It is important to monitor results and progress against the budget. Revenue and expenditures were compared with the budget and projections were revised when considered necessary.

SAMSON PAPER HOLDINGS LIMITED

Corporate Governance

15

Auditor’s Remuneration

The Company’s external auditor is PricewaterhouseCoopers, Hong Kong. During the year, PricewaterhouseCoopers, Hong Kong provided the following audit and non-audit services to the Group:

Service	Fee charged
	HK$’000
(a) Audit services	2,590
(b) Non-audit services (note)	108

Note: Non-audit services include certain agreed-upon procedures, limited assurance engagement and taxation related services.

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.

Financial Reporting

Management provides such explanation and information to the Board so as to enable the Board to make an informed assessment of the financial and other information put before the Board for approval.

The Board is responsible for presenting a clear and balanced view of the Company’s annual and interim reports, price-sensitive announcements, disclosures required under the Listing Rules, and other regulatory requirements. The Directors acknowledge their responsibility for the preparation of the financial statements of the Group. In preparing the financial statements, the generally accepted accounting standards in Hong Kong have been adopted, appropriate accounting policies have been used and applied consistently, and reasonable and prudent judgments and estimates have been made.

The Board is not aware of any material uncertainties relating to events or conditions which may cast significant doubt over the Group’s ability to continue as a going concern. Accordingly, the Board has continued to adopt the going concern basis in preparing the financial statements.

The statement of the external auditor of the Company about their reporting responsibilities on the financial statements of the Group is set out in the Independent Auditor’s Report on page 25.

Communication with Shareholders

The Board and senior management recognise their responsibilities to look after the interests of the shareholders of the Company. The Company reports on its financial and operating performance to the shareholders through interim and annual reports. At the Annual General Meeting, shareholders can raise any questions relating to the performance and future directions of the Company to the Directors. Our corporate website which contains information, interim and annual reports, announcements and circulars issued by the Company as well as the recent development of the Group, enables the Company’s shareholders to access information on the Group on a timely basis.

Shareholders’ Rights

Under the Company’s Bye-laws, two or more shareholders holding not less than one-tenth of the paid-up capital of the Company can, by deposit a written requisition signed by the shareholders concerned to the Board or the Company Secretary to the principal place of business of the Company at 3/F, Seapower Industrial Centre, 177 Hoi Bun Road, Kwun Tong, Kowloon, Hong Kong, require a special general meeting to be called by the Board for the transaction of any business specified in such requisition.

Changes in Constitutional Documents

There is no significant change in the Company’s constitutional documents during the year ended 31 March 2015. These documents are published on the website of the Company and the Stock Exchange.

ANNUAL REPORT 2015

16

Corporate and Social Responsibility

Environment

Environmental protection is always one of the Group’s priorities. To make the business successful and sustainable, committing to building an environmental-friendly business is necessary, especially in paper industry. The management believes the contribution to protect the environment will not only benefit to our own business, but will also benefit to our future generation.

Throughout the years, the Group has established series of policies to protect our environment, including minimize pollution, efficient utilize energy, reduce waste and expand recycling. The mind set of environmental protection is being cultivated among employees throughout the business. The Group has also implemented many exercises to practise the policy, such as promote and manage fuel and electricity consumption, change to more energy efficient equipment and turn off sectional lights applied to the whole company.

The PRC’s environmental policies are being strictly complied. It also goes to great lengths to ensure that proper environmentally friendly administration is in place and vigorously promotes clean and safe production. By the efficient effluent treatment facility and thermal power station with desulphurization capabilities, the waste water and pollutants are being dealt with in accordance with both local and national emission standards.

The Group’s manufacturing business has got the award of “Leading unit in energy saving “ from the Shandong Province in September 2014, obtained the ISO14001 of the environment management system in October 2014 and also received the “Chain-of-custody” certification issued by Rainforest Alliance in March 2014.

The Group’s trading business has received “Chain-of-Custody” certification by using FSC-approved paper and that brings along to our customers as well. Moreover, one of our group companies is awarded of 2014 CarbonCare[®] Label from Carbon Care Asia (“CCA”) by undertaking a sophisticated process of measuring to make sure carbon emissions is in control and monitored. It also shows the Group’s attention to promote a low-carbon environment, commended the Group’s efforts to reduce carbon emissions and promote sustainable development, filling its corporate social responsibility and leadership in the industry perspective.

Human Resource Management

Staff is always valuable to the Group’s development. Every staff in the company is acting as an important element to the road of success. So, fairness and respect must be the core value that the management is continuing focusing and enforcing on. Over the years, the Group endeavours to provide training and support to develop staff’s professional knowledge and encourages them to participate in seminars and expos to upgrade their standard and confidence.

Staff’s job satisfaction and loyalty is a concern of the management. The management of the Group believes that better communication would bring higher performance in the means of providing interactive channels to improve the communications between management and staff at all levels.

In order to maintain the sense of belonging and morality, the Group’s manufacturing site provides dormitory, fully furnished with recreational and fitness facilities, for employees whose home is not nearby. Team-building activities, sports competitions, work competency exercises, in house seminars and annual dinner functions are to be held frequently. All of them are to foster the team spirit and enrich our peoples’ lives.

Contributions to Society

Besides making optimal profits for the business, the management cares the society and willing to make contribution to make a better tomorrow. Hence, the Group has been participating in charity activities to support people in need, especially provide financial assistance to children in China and those in need after natural disasters.

SAMSON PAPER HOLDINGS LIMITED

17

Report of the Directors

The Directors submit their report together with the audited accounts for the year ended 31 March 2015.

Principal Activities and Geographical Analysis of Operations

The principal activity of the Company is investment holding. The principal activities of the subsidiaries are manufacturing, trading and marketing of paper products as set out in note 39 to the accounts. The Group also engages in trading of consumable aeronautic parts and provision of related services, provision of logistic services and marine services. The Group’s customers are mainly based in Hong Kong and the PRC.

An analysis of the Group’s performance for the year by business and geographical segments is set out in note 5 to the accounts.

Results and Appropriations

The results of the Group for the year are set out in the consolidated profit and loss account on page 27.

The Directors have declared an interim dividend of HK0.4 cent per share, totalling HK$5,092,000, which was paid on 8 January 2015.

The Directors recommend the payment of a final dividend of HK2.5 cents per share, totalling HK$31,829,000.

Reserves

Movements in the reserves of the Group and of the Company during the year are set out in note 30 to the accounts.

Donations

Charitable and other donations made by the Group during the year amounted to HK$597,000.

Property, Plant and Equipment

Details of the movements in property, plant and equipment of the Group during the year are set out in note 14 to the accounts.

Share Capital

Details of the movements in share capital of the Company are set out in note 29 to the accounts.

Distributable Reserves

Distributable reserves of the Company at 31 March 2015, calculated under the Companies Act of 1981 of Bermuda (as amended), amounted to HK$287,596,000 (2014: HK$267,010,000).

Pre-emptive Rights

There is no provision for pre-emptive rights under the Company’s bye-laws and there is no restriction against such rights under the laws of Bermuda, which would oblige the Company to offer new shares on a pro-rata basis to existing shareholders.

ANNUAL REPORT 2015

Report of the Directors

18

Five Year Financial Summary

A summary of the results, assets and liabilities of the Group for the last five financial years is set out below:

Revenue (note) Profit attributable to owners of the Company Total assets Total liabilities Total equity	2011 HK$’000 (restated) 4,683,429 79,225 4,709,535 3,473,169 1,236,366	2012 HK$’000 (restated) 5,033,421 56,710 5,276,147 3,632,517 1,643,630	2013 HK$’000 (restated) 4,678,519 63,661 5,246,166 3,520,754 1,725,412	2014 HK$’000 (Note 40) 4,982,417 57,196 5,599,964 3,686,361 1,913,603	2015 HK$’000 5,277,933
					114,225
					5,883,903 3,871,670
					2,012,233

Note: To conform to the current year’s presentation, rental income HK$6,530,000, HK$8,397,000 and HK$8,684,000 respectively for the financial years 2011, 2012 and 2013, has been reclassified from “Other gains and income, net” to “Revenue”.

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.

Directors

The Directors during the year and up to the date of this report were:

Executive Directors

Mr. SHAM Kit Ying (Chairman) (alias SHAM Kit) (note) Mr. LEE Seng Jin (Deputy Chairman) Mr. CHOW Wing Yuen Ms. SHAM Yee Lan, Peggy (note) Mr. LEE Yue Kong, Albert

Non-executive Director

Mr. LAU Wang Yip, Eric (note)

Independent non-executive Directors

Mr. PANG Wing Kin, Patrick Mr. TONG Yat Chong Mr. NG Hung Sui, Kenneth

Note: Mr. SHAM Kit Ying, Ms. SHAM Yee Lan, Peggy and Mr. LAU Wang Yip, Eric retire in accordance with clause 99 of the Company’s bye-laws and, being eligible, offer themselves for re-election.

SAMSON PAPER HOLDINGS LIMITED

Report of the Directors

19

Directors’ Service Contracts

Each of the executive Directors has entered into a service contract with the Company for a term of three years from the date of their respective contract and each of such service contracts will continue thereafter until terminated by either party concerned with not less than three month’s notice in writing.

Apart from the above, none of the Directors has an unexpired service contract with the Company which is not determinable by the Company within one year without payment of compensation other than under statutory compensation.

Directors’ Interests in Contracts

No contracts of significance in relation to the Group’s business to which the Company, its holding company or its subsidiaries was a party and in which a Director of the Company had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the year.

Biographical Details of Directors and Senior Management

Brief biographical details of the Directors and senior management of the Group are set out as follows:

Executive Directors

Mr. SHAM Kit Ying (alias SHAM Kit), aged 89, is the founder and Chairman of the Group. Mr. Sham is responsible for the Group’s corporate vision and corporate development. He has over 56 years of experience in the paper distribution industry in Hong Kong.

Mr. LEE Seng Jin, aged 58, is the Deputy Chairman and Chief Executive Officer of the Group. Mr. Lee is responsible for the formulation of the Group’s corporate strategies and development. He joined the Group in 1997. He is the husband of Ms. Sham Yee Lan, Peggy and a son-in-law of Mr. Sham Kit Ying.

Mr. CHOW Wing Yuen, aged 56, is the Chief Operating Officer of the Group. Mr. Chow joined the Group in 1978 and is responsible for the overall management of the Group’s operation in Hong Kong and the PRC. Mr. Chow has over 37 years of experience in the paper distribution industry in Hong Kong.

Ms. SHAM Yee Lan, Peggy, aged 49, is a Director of the Group. Ms. Sham joined the Group in 1989 and is responsible for the Group’s overall credit and administrative management. Ms. Sham is the wife of Mr. Lee Seng Jin and a daughter of Mr. Sham Kit Ying.

Mr. LEE Yue Kong, Albert, aged 59, is the Chief Financial Officer of the Group and the Company Secretary of the Company. Mr. Lee is responsible for the Group’s financial and accounting management. He has over 32 years of experience in the finance, auditing and accounting fields. Prior to joining the Group in June 1997, Mr. Lee was an independent non-executive Director of the Company. He is an associate member of the Institute of Chartered Accountants in Australia and the Hong Kong Institute of Certified Public Accountants.

Non-executive Directors

Mr. PANG Wing Kin, Patrick, aged 59, is a qualified accountant and has over 32 years of working experience in the auditing, finance and general management areas. Mr. Pang is currently a financial consultant to an Australian company which has investment in China. Mr. Pang was appointed independent non-executive Director of the Company in 1995. He is a member of the CPA Australia and the Hong Kong Institute of Certified Public Accountants.

Mr. LAU Wang Yip, Eric, aged 48, is a solicitor practising in Hong Kong. He was appointed non-executive Director of the Company in 1997 and is currently a partner of a local law firm. Mr. Lau holds a Bachelor’s degree in Laws and has been admitted as a solicitor in England and Wales. He has also been admitted as a legal practitioner in Tasmania, Australia.

ANNUAL REPORT 2015

Report of the Directors

20

Biographical Details of Directors and Senior Management (continued)

Non-executive Directors (continued)

Mr. TONG Yat Chong, aged 58, is a qualified accountant and has over 30 years of experience in finance, accounting and management. Mr. Tong was appointed independent non-executive Director of the Company in 2004. Mr. Tong holds a Master of Business Administration degree from the University of Wales. He is a fellow member of The Association of Chartered Certified Accountants in the United Kingdom and a Certified Public Accountant in Hong Kong.

Mr. NG Hung Sui, Kenneth, aged 48, is a solicitor practising in Hong Kong. He was appointed independent non-executive Director of the Company in 2005 and is currently a partner of a local law firm. Mr. NG holds a Bachelor’s degree in Laws and has been admitted as a solicitor in Hong Kong. He was also admitted as a solicitor in England and Wales and as a legal practitioner in Tasmania, Australia. He was appointed as a Notary Public of Hong Kong on 3 April 2008.

Mr. Ng was appointed as an independent non-executive Director of Mexan Limited (stock code: 22) on 19 April 2007. He has been a member of the Criminal Law and Procedure Committee of the Law Society of Hong Kong since January 2007. He has also been a member of the Standing Committee on External Affairs since 2009 and appointed member of Standing Committee on Practitioners’ Affairs of the Law Society of Hong Kong in February, 2012.

Senior Management

Mr. CHU Wai Kwong, aged 58, is a Sales Director of Samson Paper (China) Company Limited. He joined the Group in 1976. He has over 28 years of sales experience in the paper distribution industry and is responsible for the purchases of packaging boards and overseeing the general operations in China.

Mr. CHAN Kwok Keung, aged 55, is a Sales Director of Samson Paper (China) Company Limited. He joined the Group in 1990 and has over 28 years of working experience in the paper distribution industry and is responsible for the purchases of printing paper and overseeing the general operations in China.

Directors’ and Chief Executives’ Interests and Short Positions in the Shares, Underlying Shares and Debentures of the Company or any Associated Corporation

As at 31 March 2015, the interests and short positions of each Director and Chief Executive of the Company in the shares, underlying shares and debentures of the Company and 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 under Section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code are as follows:

(a) Long position in shares of the Company

Ordinary shares of HK$0.10 each

Mr. LEE Seng Jin Ms. SHAM Yee Lan, Peggy Mr. CHOW Wing Yuen	Number of ordinaryshares beneficiallyheld
	Capacity Personal interest Corporate interest Family interest Total Percentage Beneficial owner 128,459,688 688,533,247 33,425,112 850,418,047 74.53% Beneficial owner 1,145,112 32,280,000 816,992,935 850,418,047 74.53% Beneficial owner 1,080,000 — — 1,080,000 0.09%

SAMSON PAPER HOLDINGS LIMITED

Report of the Directors

21

Directors’ and Chief Executives’ Interests and Short Positions in the Shares, Underlying Shares and Debentures of the Company or any Associated Corporation (continued)

(a) Long position in shares of the Company (continued)

Convertible non-voting preference shares (“CP shares”) of HK$0.10 each

Mr. LEE Seng Jin	Number of CP shares beneficiallyheld
	Capacity Personal interest Corporate interest Family interest Total Percentage Beneficial owner — 132,064,935 — 132,064,935 100%

Save as disclosed above, as at 31 March 2015, none of the Directors and Chief Executives had any interests or short positions in the shares, underlying shares or debentures of, or had been granted, or exercised any rights to subscribe for shares (or warrants or debentures, if applicable) of, the Company and any of its associated corporation (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO), or which had been 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.

Other than those interests disclosed above, the Directors and Chief Executives also hold shares of certain subsidiaries solely for the purpose of ensuring that the relevant subsidiary has more than one member.

At no time during the year was the Company, its holding company, its subsidiaries or its associated companies a party to any arrangement to enable any Director or Chief Executive of the Company to acquire benefits by means of acquisition of shares in, or debentures of, the Company and its associated corporations as defined in the SFO.

(b) Short positions in shares and underlying shares of the Company

None of the Directors and the Chief Executive of the Company or their associates had any short positions in the shares, underlying shares and debentures of the Company or any of its associated corporation (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.

ANNUAL REPORT 2015

Report of the Directors

22

Substantial Shareholders’ Interests and Short Positions in the Shares, Underlying Shares of the Company

At 31 March 2015, the interests and short positions of the shareholders other than a Director or Chief Executive of the Company, in the shares and underlying shares of the Company as recorded in the register which were required to be kept by the Company under Section 336 of the SFO are as follows:

Long position in ordinary shares of HK$0.10 each in the Company

Name of shareholder	Number of ordinary shares	Percentage
Quinselle Holdings Limited (note)	688,533,247	60.34%
Long position in CP shares of HK$0.10 each in the Company
Name of shareholder	Number of CP shares	Percentage
Quinselle Holdings Limited (note)	132,064,935	100%

Note: Quinselle Holdings Limited is wholly owned by Mr. Lee Seng Jin.

Save as disclosed above, the register which is required to be kept under Section 336 of the SFO shows that the Company had not been notified of any interests or short positions in the shares or underlying shares of the Company as at 31 March 2015.

Public Float

Based on the information that is publicly available to the Company and within the knowledge of the Directors of the Company, as at the date of this Report, there is sufficient public float of more than 25% of the Company’s issued Shares as required under the Listing Rules.

Management Contracts

No contracts concerning the management and administration of the whole or any substantial part of the business of the Company were entered into or existed during the year.

Major Customers and Suppliers

During the year, the Group purchased less than 30% of its goods and services from its five largest suppliers and therefore no additional disclosure with regard to major suppliers is made.

During the year, the Group sold less than 30% of its goods and services to its five largest customers and therefore no additional disclosure with regard to major customers is made.

SAMSON PAPER HOLDINGS LIMITED

Report of the Directors

23

Related Party Transactions and Continuing Connected Transactions

Details on related party transactions for the year are set out in note 37 to the consolidated accounts. Details of any related party transaction which constitute continuing connected transaction not fully exempted under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) are disclosed below. The Company has complied with the applicable requirements in accordance with Chapter 14A of the Listing Rules in respect of such transactions.

Continuing connected transactions

On 25 July 2013, Samson Paper Company Limited (a subsidiary of the Company) and DaiEi Papers (H.K.) Limited (a subsidiary of Kokusai-Pulp and Paper Company Limited (“KPP”)) entered into the master agreement (the “KPP Master Agreement”) pursuant to which the Group and KPP and its subsidiaries (“KPP Group”) may sell and purchase the paper products to and from each other. As KPP and its subsidiaries (being associates of KPP) are connected persons of the Group by virtue of KPP’s 22.30% interest as a substantial shareholder in Mission Sky Group Limited (a subsidiary of the Company), the supply and purchase transactions with KPP Group under the KPP Master Agreement constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.

During the financial year ended 31 March 2015, the actual amount of sale and purchase transactions were HK$1,450 million in respect of the total purchases by the Group from KPP Group and HK$81 million in respect of the total sales to KPP Group by the Group. Of such purchase transactions, HK$388.5 million was purchased from Keishin Papers Trade (Shanghai) Company Limited, a subsidiary of KPP, which is a related party of the Group under the relevant Hong Kong Accounting Standards and a connected person of the Group under the Listing Rules. Such related party transactions, which also constituted continuing connected transactions, were also disclosed on page 89 of this Annual Report under note 37 to the consolidated financial statement.

The terms and pricing of all such transactions were determined by reference to the prevailing market terms. Payment was generally settled by the purchaser in cash or by banker’s acceptance drafts within a payment period of not more than 120 days in accordance with market practice.

Annual review of continuing connected transactions

The independent non-executive Directors of the Company have reviewed the aforesaid continuing connected transactions for the year ended 31 March 2015 (the “Transactions”) and confirmed that the Transactions were entered into:

• (i) In the ordinary and usual course of business of the Group;

• (ii) On normal commercial terms or on terms no less favorable to the Group than terms available to or from (as appropriate) independent third parties; and

• (iii) In accordance with the relevant agreements governing them on terms that are fair and reasonable and in the interests of the shareholders of the Company as a whole.

The Company’s auditor was engaged to report on the above continuing connected transactions in accordance with Hong Kong Standard on Assurance Engagements 3000 “Assurance Engagements Other Than Audits or Reviews of Historical Financial Information” and with reference to Practice Note 740 “Auditor’s Letter on Continuing Connected Transactions under the Hong Kong Listing Rules” issued by the Hong Kong Institute of Certified Public Accountants. The auditor issued an unqualified letter containing findings and conclusions in respect of the continuing connected transactions disclosed by the Group in page 23 of this annual report in accordance with Rule 14A.56 of the Listing Rules. A copy of the auditor’s letter has been provided by the Company to the Stock Exchange.

ANNUAL REPORT 2015

24

Report of the Directors

Independence of Independent Non-executive Directors

The Company has received, from each of the Independent Non-executive Directors of the Company, an annual confirmation of his independence pursuant to Rules 3.13 of the Listing Rules. The Company considers all of the Independent Non-executive Directors are independent.

Compliance with the Continuing Disclosure Requirement under Chapter 13 of the Listing Rules

In accordance with the continuing disclosure requirements under Rule 13.21 of Chapter 13 of the Listing Rules (as amended on 31 March 2004), the Directors reported below details of the Group’s loan agreements, which contains covenants requiring performance obligations of the controlling shareholder of the Company.

A subsidiary of the Company has been granted a three and a half-year revolving credit and term loan facility amounting to HK$728,000,000 in March 2015. The loan facility requires that (i) Mr. Sham Kit Ying, Mr. Lee Seng Jin, Ms. Sham Yee Lan, Peggy and members of their respective immediate family shall in aggregate maintain not less than 100% of the direct or indirect legal and beneficial interest in Quinselle Holdings Limited; and maintain management control over Quinselle Holdings Limited; and (ii) Quinselle Holdings Limited shall maintain at least 51% of the direct or indirect legal and beneficial interest in the Company and remain the single largest shareholder of the Company.

Independent Auditor

The accounts have been audited by PricewaterhouseCoopers who retire and, being eligible, offer themselves for re-appointment.

On behalf of the Board

SHAM Kit Ying Chairman

Hong Kong, 25 June 2015

SAMSON PAPER HOLDINGS LIMITED

Independent Auditor’s Report

25

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Independent Auditor’s Report

To the shareholders of Samson Paper Holdings Limited

(Incorporated in Bermuda with limited liability)

We have audited the consolidated financial statements of Samson Paper Holdings Limited (the “Company”) and its subsidiaries (together, the “Group”) set out on pages 27 to 91, which comprise the consolidated and the Company balance sheets as at 31 March 2015, and the consolidated profit and loss account, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

DIRECTORS’ RESPONSIBILITY FOR THE CONSOLIDATED FINANCIAL STATEMENTS

The directors of the Company are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants and the disclosure requirements of the predecessor Hong Kong Companies Ordinance (Cap.32), and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

AUDITOR’S RESPONSIBILITY

Our responsibility is to express an opinion on these consolidated financial statements based on our audit and to report our opinion solely to you, as a body, in accordance with Section 90 of the Companies Act 1981 of Bermuda and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

We conducted our audit in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of consolidated financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

PricewaterhouseCoopers, 22/F, Prince’s Building, Central, Hong Kong T: +852 2289 8888, F: +852 2810 9888, www.pwchk.com

ANNUAL REPORT 2015

Independent Auditor’s Report

26

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OPINION

In our opinion, the consolidated financial statements give a true and fair view of the state of affairs of the Company and of the Group as at 31 March 2015, and of the Group’s profit and cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards and have been properly prepared in accordance with the disclosure requirements of the predecessor Hong Kong Companies Ordinance (Cap.32).

PricewaterhouseCoopers Certified Public Accountants

Hong Kong, 25 June 2015

SAMSON PAPER HOLDINGS LIMITED

27

Consolidated Profit and Loss Account

For the year ended 31 March 2015

Note Revenue 5 Cost of sales Gross profit Fair value gain on investment properties and non-current assets held for sale 5 Other gains and income, net 5 Selling expenses Administrative expenses Other operating (expense)/income Operating profit 6 Finance costs 7 Profit before taxation Taxation 8 Profit for the year Attributable to: Owners of the Company Non-controlling interests Earnings per share Basic 11 Diluted 11 Dividends 10	2015 HK$’000 5,277,933 (4,780,503) 497,430 121,300 27,420 (185,391) (207,797) (7,662) 245,300 (92,708) 152,592 (29,256) 123,336 114,225 9,111 123,336 HK9.9 cents HK9.0 cents 36,921	2014 HK$’000 (Note 40) 4,982,417 (4,518,687)
		463,730 32,399 26,995 (163,824) (197,620) 17,970
		179,650 (92,235)
		87,415 (26,916)
		60,499
		57,196 3,303
		60,499
		HK4.8 cents
		HK4.5 cents
		16,551

The notes on pages 35 to 91 are an integral part of these consolidated financial statements.

ANNUAL REPORT 2015

28

Consolidated Statement of Comprehensive Income

For the year ended 31 March 2015

Profit for the year Other comprehensive income Items that will not be reclassified to profit or loss 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 Items that may be reclassified to profit or loss Currency translation differences Revaluation of available-for-sale financial assets Other comprehensive (loss)/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	2015 HK$’000 123,336 — — — (7,618) (537) (8,155) (8,155) 115,181 106,293 8,888 115,181	2014 HK$’000 60,499 94,210 5,400 99,610 (12,282) 118 (12,164) 87,446 147,945 144,735 3,210 147,945

The notes on pages 35 to 91 are an integral part of these consolidated financial statements.

SAMSON PAPER HOLDINGS LIMITED

29

Consolidated Balance Sheet

As at 31 March 2015

Note Non-current assets Property, plant and equipment 14 Prepaid premium for land leases 15 Investment properties 16 Intangible assets 17 Available-for-sale financial assets 18 Non-current deposits and prepayments 19 Deferred tax assets 31 Current assets Inventories 22 Accounts receivable, deposits and prepayments 23 Financial assets at fair value through profit or loss 24 Taxation recoverable Restricted bank deposits 25 Bank balances and cash 26 Non-current assets held for sale 21 Current liabilities Accounts payable and other payables 27 Trust receipt loans 28 Taxation payable Derivative financial instruments 32 Borrowings 28 Net current assets Total assets less current liabilities	31 March 2015 HK$’000 1,841,074 166,105 465,300 41,788 4,953 5,715 3,545 2,528,480 721,431 1,998,650 786 913 218,000 411,270 3,351,050 4,373 3,355,423 1,571,600 752,466 32,617 293 581,512 2,938,488 416,935 2,945,415	31 March 2014 HK$’000 1,808,574 153,876 226,000 46,323 5,490 21,403 7,120 2,268,786 760,655 1,950,079 726 3,749 205,893 287,303 3,208,405 122,773 3,331,178 1,394,695 639,453 26,575 413 950,622 3,011,758 319,420 2,588,206

ANNUAL REPORT 2015

30

Consolidated Balance Sheet

As at 31 March 2015

Note Equity Equity attributable to owners of the Company Share capital 29 Reserves 30 Proposed final dividend 30 Non-controlling interests Total equity Non-current liabilities Accounts payable and other payables 27 Borrowings 28 Deferred tax liabilities 31	31 March 2015 HK$’000 127,315	31 March 2014 HK$’000 127,315
	1,674,202 31,829	1,604,830 11,459
	1,706,031 1,833,346 178,887 2,012,233 23,808 813,857 95,517 933,182 2,945,415	1,616,289 1,743,604 169,999 1,913,603 126,702 456,382 91,519 674,603 2,588,206

The notes on pages 35 to 91 are an integral part of these consolidated financial statements.

The financial statements on pages 35 to 91 were approved by the Board of Directors on 25 June 2015 and were signed on its behalf.

SHAM Kit Ying Name of director

SHAM Yee Lan, Peggy Name of director

SAMSON PAPER HOLDINGS LIMITED

31

Balance Sheet

As at 31 March 2015

Note Non-current assets Investments in subsidiaries 20 Current assets Amounts due from subsidiaries 20 Bank balances and cash 26 Current liabilities Accruals Net current assets Total assets less current liabilities Equity Equity attributable to owners of the Company Share capital 29 Reserves 30 Proposed final dividend 30 Total equity	2015 HK$’000 249,897 326,627 84 326,711 436 436 326,275 576,172 127,315 417,028 31,829 448,857 576,172	2014 HK$’000 249,897 306,061 57 306,118 428 428 305,690 555,587 127,315
		416,813 11,459
		428,272 555,587

Total equity

The notes on pages 35 to 91 are an integral part of these consolidated financial statements.

The financial statements on pages 35 to 91 were approved by the Board of Directors on 25 June 2015 and were signed on its behalf.

SHAM Kit Ying Name of director

SHAM Yee Lan, Peggy Name of director

ANNUAL REPORT 2015

32

Consolidated Statement of Changes in Equity

For the year ended 31 March 2015

Balance at 1 April 2013 Comprehensive income 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 Total other comprehensive income, net of tax Total comprehensive income Transactions with owners Loan from non-controlling interests Transfer to statutory reserve 2012–2013 final dividend paid 2013–2014 interim dividend paid Reserves Proposed 2013–2014 final dividend Balance at 31 March 2014	Attributable to own	Attributable to own	ers of the Company Retained earnings Subtotal HK$’000 HK$’000 737,216 1,617,966 57,196 57,196 — (12,189) — 94,210 — 5,400 — 118 — 87,539 57,196 144,735 — — (682) — (14,005) (14,005) (5,092) (5,092)	ers of the Company Retained earnings Subtotal HK$’000 HK$’000 737,216 1,617,966 57,196 57,196 — (12,189) — 94,210 — 5,400 — 118 — 87,539 57,196 144,735 — — (682) — (14,005) (14,005) (5,092) (5,092)	Non- controlling interests HK$’000 107,446 3,303 (93) — — — (93) 3,210 59,343 — — —	Total HK$’000 1,725,412 60,499 (12,282) 94,210 5,400 118 87,446 147,945 59,343 — (14,005) (5,092)
	Share capital HK$’000 127,315 — — — — — — — — — — —	Other reserves HK$’000 753,435 — (12,189) 94,210 5,400 118 87,539 87,539 — 682 — —	Retained earnings HK$’000 737,216 57,196 — — — — — 57,196 — (682) (14,005) (5,092)
	127,315 —	841,656 —	763,174 11,459	1,732,145 11,459	169,999 —	1,902,144 11,459
	127,315	841,656	774,633	1,743,604	169,999	1,913,603

SAMSON PAPER HOLDINGS LIMITED

33

Consolidated Statement of Changes in Equity

For the year ended 31 March 2015

Balance at 1 April 2014 Comprehensive income Profit for the year Other comprehensive income Currency translation differences Revaluation of available-for-sale financial assets Total other comprehensive loss, net of tax Total comprehensive income Transfer to statutory reserve 2013–2014 final dividend paid 2014–2015 interim dividend paid Reserves Proposed 2014–2015 final dividend Balance at 31 March 2015	Attributable to own	Attributable to own	ers of the Company Retained earnings Subtotal HK$’000 HK$’000 774,633 1,743,604 114,225 114,225 — (7,395) — (537) — (7,932) 114,225 106,293 (746) — (11,459) (11,459) (5,092) (5,092)	ers of the Company Retained earnings Subtotal HK$’000 HK$’000 774,633 1,743,604 114,225 114,225 — (7,395) — (537) — (7,932) 114,225 106,293 (746) — (11,459) (11,459) (5,092) (5,092)	Non- controlling interests HK$’000 169,999 9,111 (223) — (223) 8,888 — — —	Total HK$’000 1,913,603 123,336 (7,618) (537) (8,155) 115,181 — (11,459) (5,092)
	Share capital HK$’000 127,315 — — — — — — — —	Other reserves HK$’000 841,656 — (7,395) (537) (7,932) (7,932) 746 — —	Retained earnings HK$’000 774,633 114,225 — — — 114,225 (746) (11,459) (5,092)
	127,315 —	834,470 —	839,732 31,829	1,801,517 31,829	178,887 —	1,980,404 31,829
	127,315	834,470	871,561	1,833,346	178,887	2,012,233

The notes on pages 35 to 91 are an integral part of these consolidated financial statements.

ANNUAL REPORT 2015

34

Consolidated Statement of Cash Flows

For the year ended 31 March 2015

Note Operating activities Cash generated from operations 33(a) Interest paid Hong Kong profits tax paid Overseas taxation paid Net cash generated from operating activities Investing activities Purchase of property, plant and equipment Purchase of prepaid premium for land leases Purchase of intangible assets Proceeds from disposal of property, plant and equipment 33(c) Proceeds from disposal of leasehold land and land use rights 33(c) Proceeds from disposal of available-for-sale financial assets Decrease/(increase) in non-current deposits and prepayments Interest received Net cash used in investing activities Financing activities Bank loans raised 33(b) Repayment of bank loans 33(b) Repayment of finance lease liabilities Increase in restricted bank deposits Increase/(decrease) in trust receipt loans Dividends paid to shareholders Net cash generated from/(used in) financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the year Effect of changes in exchange rates on cash and cash equivalents Cash and cash equivalents at end of the year 26	2015 HK$’000 259,903 (96,153) (7,109) (5,051) 151,590 (104,368) (17,385) (87) 2,390 3,071 — 15,688 8,880 (91,811) 1,600,753 (1,620,132) (2,614) (12,107) 113,013 (16,551) 62,362 122,141 287,303 (476) 408,968	2014 HK$’000 199,509 (95,551) (2,664) (3,175)
		98,119
		(109,070) (970) (278) 3,074 — 252 (13,238) 9,134
		(111,096)
		1,098,228 (1,007,479) (2,355) (22,945) (134,955) (19,097)
		(88,603)
		(101,580) 389,452 (569)
		287,303

The notes on pages 35 to 91 are an integral part of these consolidated financial statements.

SAMSON PAPER HOLDINGS LIMITED

Notes to the Consolidated Financial Statements

35

1 GENERAL INFORMATION

The principal activity of the Company is investment holding. The principal activities of the subsidiaries are manufacturing, trading and marketing of paper products as well as leasing of investment properties. The Group is also engaged in the trading of consumable aeronautic parts and provision of marine services. Detailed analysis of these business segments are set out in note 5 to the consolidated financial statements.

The Company is a limited liability company incorporated in Bermuda. The address of its registered office is 3/F Seapower Industrial Centre, 177 Hoi Bun Road, Kwun Tong, Hong Kong.

The Company has its listing on The Stock Exchange of Hong Kong Limited.

These consolidated financial statements are presented in Hong Kong dollars, unless otherwise stated. These financial statements have been approved for issue by the Board of Directors on 25 June 2015.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below.

These policies have been consistently applied to all the years presented, unless otherwise stated.

2.1 Basis of preparation

The consolidated financial statements 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 financial statements 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.

In accordance with the transitional and saving arrangements for Part 9 of the Hong Kong Companies Ordinance (Cap. 622), “Accounts and Audit” as set out in sections 76 to 87 of Schedule 11 to the Hong Kong Companies Ordinance (Cap. 622), the consolidated financial statements are prepared in accordance with the applicable requirements of the predecessor Companies Ordinance (Cap. 32) for this financial year and the comparative period.

In the current year, management has revisited the Group’s operating activities and identified rental income generated from investment properties as a separate business segment of the Group’s principal activities. The Group changed presentation of the rental income and reclassified it from other gains and income, net to revenue in the consolidated profit and loss account. Management believes that the change in presentation will result in a more appropriate presentation of the financial information of the Group. The change in presentation has been accounted for retrospectively and the revenue, cost of sales, other gain and income, net and segment information have been restated in prior year.

There was no impact on profit for the year and earnings per share for the year ended 31 March 2015 and 2014. Consolidated balance sheet was not affected by this reclassification and no consolidated balance sheet as at 1 April 2013 was presented.

ANNUAL REPORT 2015

Notes to the Consolidated Financial Statements

36

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.1 Basis of preparation (continued)

The preparation of the financial statements in conformity with HKFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in note 4.

• (a) The following amended standards are mandatory for the first time for the financial year beginning 1 April 2014 but either have no significant impact to the Group’s results and financial position or are not currently relevant to the Group:

HKAS 32 (Amendment)	Offsetting financial assets and financial liabilities
HKAS 36 (Amendment)	Recoverable amount disclosures for non-financial assets
HKAS 39 (Amendment)	Novation of derivatives and continuation of hedge accounting
HKFRS 10, HKFRS 12	Investment entities
and HKAS 27
HK(IFRIC) — Int 21	Levies

• (b) The following new and amended standards have been issued but are not effective for the financial year beginning 1 April 2014 and the Group has not early adopted:

		Effective for
		accounting
		periods beginning
		on or after
HKAS 19 (Amendment)	Defined benefit plans: employee contributions	1 July 2014
Annual improvements	Improvements to HKASs and HKFRSs	1 July 2014
2010 to 2012
Annual improvements	Improvements to HKASs and HKFRSs	1 July 2014
2011 to 2013
Annual improvements	Improvements to HKASs and HKFRSs	1 January 2016
2012 to 2014
HKFRS 7, HKFRS 9	Disclosures: Mandatory effective date of HKFRS	1 January 2015
(Amendment)	and transactional disclosures
HKFRS 14	Regulatory deferral accounts	1 January 2016
HKFRS 10 and HKAS 28	Sale or contribution of assets between an investor and	1 January 2016
(Amendment)	its associate or joint venture
HKFRS 11 (Amendment)	Accounting for acquisitions of interests in joint	1 January 2016
	operations
HKAS 16 and HKAS 38	Clarification of acceptable methods of depreciation and	1 January 2016
(Amendment)	amortisation
HKAS 27 (Amendment)	Equity method in separate financial statements	1 January 2016
HKFRS 15	Revenue from contracts with customers	1 January 2017
HKFRS 9	Financial instruments	1 January 2018

The Group has commenced an assessment of the impact of the above new and amended standards and interpretations and considers that they will not have any significant impact on the results of the Group’s operations and financial position. The Group plans to adopt the above new and amended standard and interpretations when they become effective.

SAMSON PAPER HOLDINGS LIMITED

Notes to the Consolidated Financial Statements

37

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.2 Subsidiaries

2.2.1 Consolidation

A subsidiary is an entity (including a structured entity) over which the group has control. The group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases.

(a) Business combinations

The group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets.

Acquisition-related costs are expensed as incurred.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. If the total of consideration transferred, non-controlling interest recognised and previously held interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the profit and loss account.

Intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated. When necessary, amounts reported by subsidiaries have been adjusted to conform with the group’s accounting policies.

• (b) Changes in ownership interests in subsidiaries without change of control Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions — that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

2.2.2 Separate financial statements

In the Company’s balance sheet, investments in subsidiaries are accounted for at cost less impairment. Cost also includes direct attributable costs of investment. The results of subsidiaries are accounted for by the Company on the basis of dividend received and receivable.

Impairment testing of the investments in subsidiaries is required upon receiving dividends from these investments if the dividend exceeds the total comprehensive income of the subsidiary in the period the dividend is declared or if the carrying amount of the investment in the separate financial statements exceeds the carrying amount in the consolidated financial statements of the investee’s net assets including goodwill.

ANNUAL REPORT 2015

Notes to the Consolidated Financial Statements

38

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.3 Foreign currency translation

• (a) Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in Hong Kong dollars (HK$), which is the Company’s functional and the Group’s presentation currency.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the profit and loss account.

Foreign exchange gains and losses are presented in the profit and loss account within “other operating income/(expenses)”.

Translation differences on non-monetary financial assets and liabilities, such as equity instruments held at fair value through profit or loss are recognised in profit and loss account as part of the fair value gain or loss. Translation differences on non-monetary financial assets, such as equity instruments classified as available-for-sale, are included in other comprehensive income.

(c) Group companies

The results and financial position of all the group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

• (i) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;

• (ii) income and expenses for each profit and loss account are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rates on the dates of the transactions); and

• (iii) all resulting exchange differences are recognised in other comprehensive income.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Exchange differences arising are recognised in other comprehensive income.

(d) Disposal of foreign operation and partial disposal

On the disposal of a foreign operation (that is, a disposal of the Group’s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation, a disposal involving loss of joint control over a jointly controlled entity that includes a foreign operation, or a disposal involving loss of significant influence over an associate that includes a foreign operation), all of the exchange differences accumulated in equity in respect of that operation attributable to the equity holders of the Company are reclassified to profit and loss account.

In the case of a partial disposal that does not result in the Group losing control over a subsidiary that includes a foreign operation, the proportionate share of accumulated exchange differences are reattributed to non-controlling interests and are not recognised in profit and loss account.

SAMSON PAPER HOLDINGS LIMITED

Notes to the Consolidated Financial Statements

39

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.4 Property, plant and equipment

Land and buildings comprise mainly warehouses and offices. Subsequent to initial recognition, leasehold land classified as financial leases and buildings are carried at their revalued amounts less subsequent accumulated depreciation and impairment losses. Valuation of land and buildings in and outside Hong Kong are valued by external independent valuers on a regular basis with an interval of not more than 3 years. In the intervening years, the directors review the carrying value of the land and buildings and adjustment is made where they consider that there has been a material change. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset.

Increases in the carrying amount arising on revaluation of land and buildings are credited to other comprehensive income. Decreases that offset previous increases of the same asset are charged against other comprehensive income; all other decreases are expensed in the profit and loss account.

All other property, plant and equipment are stated at historical cost less depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are expensed in the profit and loss account during the financial period in which they are incurred.

Leasehold land classified as finance lease commences amortisation from the time when the land interest becomes available for its intended use. Amortisation on leasehold land classified as finance lease and depreciation on other assets is calculated using the straight-line method to allocate their cost to their residual values over their estimated lives, as follows:

Leasehold land classified as finance lease	Shorter of remaining lease term of 50 years or useful life
Buildings	2.5% to 5.9%
Furniture and fixtures Machinery and equipment	10% to 25% 4% to 20%
Office and computer equipment	10% to 20%
Motor vehicles and vessels	20%
Leasehold improvements	20% or over the unexpired lease term, whichever is shorter

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (note 2.10).

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the profit and loss account. When revalued assets are sold, the amounts included in “asset revaluation reserve” are transferred to retained earnings.

ANNUAL REPORT 2015

Notes to the Consolidated Financial Statements

40

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.5 Construction-in-progress

Construction-in-progress represents property, plant and equipment under construction and pending installation and is stated at cost less accumulated impairment losses, if any. Cost includes the cost of construction of buildings, the cost of plant and machinery and interest charges arising from borrowings used to finance these assets during the period of construction or installation and testing, if any. No provision for depreciation is made on construction in progress until such time as the relevant assets are completed and are available for intended use. When the assets concerned are brought into use, the costs are transferred to property, plant and equipment and depreciated in accordance with the policy as stated in note 2.4.

2.6 Intangible assets

• (a) Goodwill

Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred over the Group’s interest in net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquiree and the fair value of the non-controlling interest in the acquiree.

For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units (“CGUs”), or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.

Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs to sell. Any impairment is recognised immediately as an expense and is not subsequently reversed.

• (b) Computer software

Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software.

Costs associated with developing or maintaining computer software programmes are recognised as an expense as incurred.

Costs incurred to acquire and bring specific computer software licences to working condition are capitalised and amortised over their estimated useful lives of ten years.

2.7 Investment properties

Investment property is defined as property held to earn rentals or for capital appreciation or both, rather than for: (a) use in the production of supply of goods or services or for administrative purposes; or (b) sale in the ordinary course of business.

Investment property, principally comprising leasehold land and office buildings, is held for long-term rental yields and is not occupied by the Group. Investment property is carried at fair value, representing open market value determined annually by external valuers. Fair value is based on active market prices, adjusted, if necessary, for any difference in the nature, location or condition of the specific asset. If the information is not available, the Group uses alternative valuation methods such as recent prices on less active markets or discounted cash flow projections. Changes in fair values are recorded in the profit and loss account.

SAMSON PAPER HOLDINGS LIMITED

Notes to the Consolidated Financial Statements

41

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.8 Financial assets

2.8.1 Classification

The Group classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables, and available-for-sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

• (a) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if expected to be settled within 12 months; otherwise, they are classified as non-current.

• (b) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current assets. The Group’s loans and receivables are classified as “accounts receivable and deposits”, “restricted bank deposits” and “bank balances and cash” in the balance sheet.

• (c) Available-for-sale financial assets

• Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless the investment matures or management intends to dispose of it within 12 months of the balance sheet date.

2.8.2 Recognition and measurement

Regular way purchases and sales of financial assets are recognised on the trade-date — the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in the profit and loss account. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are subsequently carried at amortised cost using the effective interest method.

Gains and losses arising from changes in the fair value of the “financial assets at fair value through profit or loss” category are included in the profit and loss account within ‘other gains and income -net’ in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognised in the profit and loss account as part of other income when the Group’s right to receive payments is established.

ANNUAL REPORT 2015

Notes to the Consolidated Financial Statements

42

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.8 Financial assets (continued)

2.8.2 Recognition and measurement (continued)

The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models, making maximum use of market inputs and relying as little as possible on entity-specific inputs.

Changes in the fair value of monetary and non-monetary securities classified as available-for-sale are recognised in other comprehensive income.

When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments recognised in equity are included in the profit and loss account as “other gains and income, net”.

Interest on available-for-sale securities calculated using the effective interest method is recognised in the profit and loss account as part of other income. Dividends on available-for-sale equity instruments are recognised in the profit and loss account as part of other income when the Group’s right to receive payments is established.

2.8.3 Offsetting

Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

2.9 Derivative financial instruments

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Assets and liabilities are classified as current if expected to be settled within 12 months; otherwise, they are classified as non-current.

Gains or losses arising from changes in the fair value of the derivatives are presented in the profit and loss account within “other gains and income, net” in the period in which they arise.

2.10 Impairment of non-financial assets

Assets that have an indefinite useful life, for example, goodwill, are not subject to amortisation and are tested at least annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

SAMSON PAPER HOLDINGS LIMITED

Notes to the Consolidated Financial Statements

43

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.11 Impairment of financial assets

• (a) Assets carried at amortised cost

The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a “loss event”) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

For loans and receivables category, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The asset’s carrying amount of the asset is reduced and the amount of the loss is recognised in the profit and loss account. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the Group may measure impairment on the basis of an instrument’s fair value using an observable market price.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in the profit and loss account.

• (b) Assets classified as available-for-sale

The Group assesses at the balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is also evidence that the assets are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss — measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss — is removed from equity and recognised in profit and loss account. Impairment losses recognised in the consolidated profit and loss account on equity instruments are not reversed through the consolidated profit and loss account.

2.12 Non-current assets held for sale

Non-current assets are classified as held for sale when their carrying amounts are to be recovered principally through sale transactions and sales are considered highly probable. It is stated at the lower of carrying amount and fair value less costs to sell. Deferred tax assets, assets arising from employee benefits, financial assets (other than investments in subsidiaries and associates) and investment properties, even if held for sale, would continue to be measured in accordance with the policies set out elsewhere in Note 2.

ANNUAL REPORT 2015

Notes to the Consolidated Financial Statements

44

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.13 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost for trading merchandise is determined using the first-in, first-out method and cost for manufactured merchandise is determined using the weighted-average method. The cost of finished goods and work-in-progress comprises raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity). It excludes borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.

2.14 Accounts and other receivables

Accounts receivable are amounts due from customers for merchandise sold or services performed in the ordinary course of business. If collection of accounts and other receivables is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.

Accounts and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.

2.15 Cash and cash equivalents

In the consolidated statement of cash flows, cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. In the consolidated balance sheet, bank overdrafts are shown within borrowings in current liabilities.

2.16 Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the profit and loss account over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least twelve months after the end of the reporting period.

2.17 Borrowing costs

General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

2.18 Accounts payable

Accounts payable are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

Accounts payable are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

SAMSON PAPER HOLDINGS LIMITED

Notes to the Consolidated Financial Statements

45

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.19 Share capital

Ordinary shares and convertible non-voting preference shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or warrants are shown in equity as a deduction, net of tax, from the proceeds.

2.20 Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group’s activities. Revenue is shown, net of value added tax, returns, rebates and discounts and after eliminating sales within the Group.

The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Group’s activities as described below. The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved. The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. Revenue is recognised as follows:

Sales of goods and scrap materials are recognised when a group entity has delivered products to the customer, the customer has accepted the products and collectability of the related receivables is reasonably assured.

Service income is recognised when the relevant services are rendered.

Operating lease rental income is recognised on a straight-line basis over lease period of the lease. When the properties provide incentives to its tenants, the cost of incentives will be recognised over the lease term, on a straight-line basis, as a reduction of rental income.

Interest income is recognised on a time proportion basis, taking into account the principal amounts outstanding and the interest rates applicable.

Dividend income is recognised when the right to receive payment is established.

2.21 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Executive Directors who make strategic decisions.

2.22 Employee benefits

(a) Employee leave entitlements Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees up to the end of the reporting period.

Employee entitlements to sick leave and maternity leave are not recognised until the time of leave.

ANNUAL REPORT 2015

Notes to the Consolidated Financial Statements

46

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.22 Employee benefits (continued)

(b) Retirement benefit obligations

The Group operates a number of defined contribution schemes for all its employees in Hong Kong and overseas. A defined contribution scheme is a pension scheme that the Group pays fixed contribution into a separate entity. The Group’s contributions to the defined contribution retirement schemes are expensed as incurred and are not reduced by contributions forfeited by those employees who leave the schemes prior to vesting fully in the contributions.

The Group also contributes on a monthly basis to various defined contribution schemes, organised by relevant municipal and provincial governments in the Peoples’ Republic of China (the “PRC”) for all its employees in the PRC. The municipal and provincial governments undertake to assume the retirement benefit obligations payable to all existing and future retired employees for post-retirement benefits beyond the contributions made. The assets of these plans are held separately from those of the Group in independently administered funds managed by the PRC government. Contributions to these schemes are expensed as incurred.

(c) Bonus plan

The Group recognises a provision for bonus when contractually obligated or when there is a past practice that have created a constructive obligation.

2.23 Leases (as lessee)

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor), including upfront payment made for leasehold land and land use rights, are charged to the profit and loss account on a straight-line basis over the period of the lease.

The Group leases certain property, plant and equipment. Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease’s commencement at the lower of the fair value of the leased property and the present value of the minimum lease payments.

Each lease payment is allocated between the liability and the finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in borrowings. The interest element of the finance cost is charged to the profit and loss account over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases is depreciated over the shorter of the useful life of the asset and the lease term.

SAMSON PAPER HOLDINGS LIMITED

Notes to the Consolidated Financial Statements

47

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.24 Leases (as lessor)

A lease is an agreement whereby the lessor conveys to the lessee in return for a payment, or series of payments, the right to use an asset for an agreed period of time.

When assets are leased out under a finance lease, the present value of the lease payments is recognised as a receivable. The difference between the gross receivable and the present value of the receivable is recognised as unearned finance income.

The method for allocating gross earnings to accounting periods is referred to a as the ’actuarial method’. The actuarial method allocates rentals between finance income and repayment of capital in each accounting period in such a way that finance income will emerge as a constant rate of return on the lessor’s net investment in the lease.

When assets are leased out under an operating lease, the asset is included in the balance sheet based on the nature of the asset.

Lease income on operating leases is recognised over the term of the lease on a straight-line basis.

2.25 Current and deferred income tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in the profit and loss account, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

(a) Current income tax

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

(b) Deferred income tax

Inside basis differences

Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

ANNUAL REPORT 2015

Notes to the Consolidated Financial Statements

48

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.25 Current and deferred income tax (continued)

(b) Deferred income tax (continued)

Outside basis differences

Deferred income tax liabilities are provided on taxable temporary differences arising from investments in subsidiaries, associates and joint arrangements, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the group and it is probable that the temporary difference will not reverse in the foreseeable future. Generally the group is unable to control the reversal of the temporary difference for associates. Only where there is an agreement in place that gives the group the ability to control the reversal of the temporary difference not recognised.

Deferred income tax assets are recognised on deductible temporary differences arising from investments in subsidiaries, associates and joint arrangements only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available against which the temporary difference can be utilised.

(c) Offsetting

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

2.26 Dividend distribution

Dividend distribution to the Company’s owners is recognised as a liability in the Group’s and the Company’s financial statements in the period in which the dividends are approved by the Company’s owners.

3 FINANCIAL RISK MANAGEMENT

3.1 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 Group’s overall risk management policy focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance. The Group uses derivative financial instruments to reduce certain risk exposures.

Risk management policies approved by the Board of Directors are carried out by a central treasury department (“Group Treasury”). Group Treasury identifies, evaluates and hedges financial risks in close cooperation with the Group’s operating units.

SAMSON PAPER HOLDINGS LIMITED

Notes to the Consolidated Financial Statements

49

3 FINANCIAL RISK MANAGEMENT (continued)

3.1 Financial risk factors (continued)

(a) Market risk

(i) Currency risk

The Group operates in various countries and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the Renminbi and United States dollars. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations, primarily with respect to the United States dollars and Renminbi. In addition, the conversion of Renminbi into foreign currencies is subject to the rules and regulations of foreign exchange control promulgated by the People’ s Republic of China. Any change in the exchange rates of these currencies to Hong Kong dollar will impact the Group’s operating results.

The carrying amounts of the Group’s accounts receivable are mainly denominated in Hong Kong dollars and Renminbi. The carrying amounts of the Group’s accounts payable and accruals are mainly denominated in Hong Kong dollars, Renminbi and United States dollars. The carrying amounts of cash and bank balances are mainly denominated in Hong Kong dollars, Renminbi and United States dollars. The carrying amounts of trust receipt loans are mainly denominated in Hong Kong dollars.

The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. Currency exposure arising from the net assets of the Group’s foreign operations is managed primarily through borrowings and trust receipt loans denominated in the relevant foreign currencies. The Group is presently not using any forward exchange contracts to hedge against foreign exchange risk as management considers its exposure is minimal.

At 31 March 2015, if Hong Kong dollars had weakened/strengthened by 5% against the Renminbi with all other variables held constant, post-tax profit for the year would have been HK$24,381,000 (2014: HK$2,703,000) higher/lower, mainly as a result of the foreign exchange gains/losses on translation of Renminbi-denominated bank balances and cash, accounts and other receivables, and the foreign exchange gains/losses on translation of Renminbi denominated borrowings and trade and other payables.

Hong Kong dollars is pegged to United States dollars, the foreign exchange exposure between United States dollars and Hong Kong dollars is therefore limited.

(ii) Cash flow interest-rate risk

As the Group and the Company has no significant interest-bearing assets, the Group’s and the Company’s income and operating cash flows are substantially independent of changes in market interest rates.

The Group’s interest-rate risk arises from bank borrowings. As at 31 March 2015 and 2014, borrowings are primarily at floating interest rates. In order to manage the cash flow interest-rate risk, the Group sometimes enters into interest rate swap.

At 31 March 2015, if interest rates on Hong Kong dollar-denominated borrowings had been 50 basis points higher/lower with all other variables held constant, the Group’s post-tax profit for the year would have been HK$6,412,000 (2014: HK$6,418,000) lower/higher, mainly as a result of higher/lower interest expense on floating rate borrowings.

ANNUAL REPORT 2015

Notes to the Consolidated Financial Statements

50

3 FINANCIAL RISK MANAGEMENT (continued)

3.1 Financial risk factors (continued)

(b) Credit risk

Credit risk is managed on a group basis. The Group’s credit risk is primarily attributable to cash and bank deposits, accounts receivable, other receivables, financial assets at fair value through profit or loss and available-for-sale financial assets.

The Group’s cash and bank deposits are entered into with a diversified portfolio of reputable financial institutions. Counterparties’ credit risks are carefully reviewed and in general, the Group only deals with financial institutions with low credit risk. The amount of counterparties’ lending exposure to the Group is also an important consideration as a means to control credit risk.

Credit risk on trade debtors is managed by management of the individual business units and monitored by the Group’s management on a group basis. The Group’s trade debtors are mainly market leaders in their industries with low credit risk. For other smaller customers, management assesses their credit quality by considering its financial position, past experience and other relevant factors. The utilisation of credit limits is regularly monitored. Debtors with overdue balances will be requested to settle their outstanding balance.

The Group has put in place policies to ensure that sales of products are made to customers with an appropriate credit history and the Group performs periodic credit evaluations of its customers. The Group’s historical experience in collection of accounts and other receivables falls within the recorded allowances. There was no individual customer with balance representing more than 10% of the Group’s total accounts receivable from third parties, thus there was no concentration of credit risk with respect to accounts receivable as there were a large number of customers. In addition, majority of the Group’s open credit sales are covered by credit insurance.

The carrying amount of cash and bank deposits, accounts receivable, other receivables, financial assets at fair value through profit or loss and available-for-sale financial assets included in the consolidated balance sheet represents the Group’s maximum exposure to credit risk in relation to its financial assets.

The Company has no significant concentrations of credit risk. The carrying amounts of bank balances and balances with group companies included in the balance sheet represent the Company’s maximum exposure to credit risk in relation to its financial assets.

As at 31 March 2015, management does not expect any major impairment on receivables from group companies.

SAMSON PAPER HOLDINGS LIMITED

Notes to the Consolidated Financial Statements

51

3 FINANCIAL RISK MANAGEMENT (continued)

3.1 Financial risk factors (continued)

(c) Liquidity risk

The Group has been prudent in liquidity risk management by maintaining sufficient cash and the availability of funding through an adequate amount of available credit facilities. Management aims to maintain flexibility in funding by keeping credit lines available.

Management monitors rolling forecasts of the Group’s liquidity reserve (comprises undrawn borrowing facilities (note 28) and bank balances and cash (note 26)) on the basis of expected cash flow.

The table below analyses the Group’s and the Company’s financial liabilities and net settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances, as the impact of discounting is not significant.

Specifically, for term loans which contain a repayment on demand clause which can be exercised at the bank’s sole discretion, the analysis shows the cash outflow based on the earliest period in which the entity can be required to pay, that is if the lenders were to involve their unconditional rights to call the loans with immediate effect. The maturity analysis for other borrowings is prepared based on the scheduled repayment dates.

			Between	Between
	On	Less than	1 and 2	2 and 5	Over
	demand	1 year	years	years	5 years
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Group
At 31 March 2015 Term loans subject to a repayment
on demand clause	86,379	—	—	—	—
Derivative financial instruments	—	293	—	—	—
Other bank borrowings1	—	501,425	204,265	658,074	8,917
Trust receipt loans1	—	756,692	—	—	—
Accounts payable and other payables	—	1,571,600	23,808	—	—
Finance lease liabilities1	—	2,765	2,583	3,259	508
At 31 March 2014
Term loans subject to a repayment on demand
clause	109,715	—	—	—	—
Derivative financial instruments	—	413	—	—	—
Other bank borrowings1	—	854,509	433,160	36,551	14,810
Trust receipt loans1	—	643,453	—	—	—
Accounts payable and other payables	—	1,394,695	126,702	—	—
Finance lease liabilities1	—	2,274	1,634	1,894	103
Company
At 31 March 2015
Accruals	—	436	—	—	—
At 31 March 2014
Accruals	—	428	—	—	—

1 The amounts include interest payable.

The Company provides corporate guarantees as disclosed in note 34.

ANNUAL REPORT 2015

Notes to the Consolidated Financial Statements

52

3 FINANCIAL RISK MANAGEMENT (continued)

3.1 Financial risk factors (continued)

(c) Liquidity risk (continued)

The following table summarises the maturity analysis of term loans with a repayment on demand clause based on agreed scheduled repayments set out in the loan agreements. The amounts include interest payments computed using contractual rates. As a result, these amounts are greater than the amounts disclosed in the “on demand” time band in the maturity analysis. Taking into account the Group’s financial position, the directors do not consider that it is probable that the bank would exercise its discretion to demand immediate repayment. The directors believe that such term loans will be repaid in accordance with the scheduled repayment dates set out in the loan agreements.

			Less than	Between	Between
			1 year	1 and 2 years	2 and 5 years
			HK$’000	HK$’000	HK$’000
31	March	2015	87,839	—	—
31	March	2014	110,373	1,457	—

3.2 Capital risk management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including current and non-current borrowings as shown in the consolidated balance sheet) less cash, bank balances and restricted deposits. Total capital is calculated as “equity”, as shown in the consolidated balance sheet, plus net debt.

Total borrowings (note 28) Less: Cash, bank balances and restricted deposits Net debt Total equity Total capital Gearing ratio	Group	Group
	2015 HK$’000 2,147,835 (629,270) 1,518,565 2,012,233 3,530,798 43.0%	2014 HK$’000 2,046,457 (493,196)
		1,553,261 1,913,603
		3,466,864
		44.8%

SAMSON PAPER HOLDINGS LIMITED

Notes to the Consolidated Financial Statements

53

3 FINANCIAL RISK MANAGEMENT (continued)

3.3 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).

The following table presents the Group’s assets/(liabilities) that are measured at fair value at 31 March 2015.

Financial assets at fair value through profit or loss — Trading securities Available-for-sale financial assets — Insurance policy — Other investment Derivative financial instruments — Interest rate swap	Level 1 HK$’000 786 — — — — 786	Level 2 HK$’000 — — — — (293) (293)	Level 3 HK$’000 — 4,440 513 4,953 — 4,953	Total HK$’000 786
				4,440 513
				4,953
				(293)
				5,446

ANNUAL REPORT 2015

Notes to the Consolidated Financial Statements

54

3 FINANCIAL RISK MANAGEMENT (continued)

3.3 Fair value estimation (continued)

The following table presents the Group’s assets/(liabilities) that were measured at fair value at 31 March 2014.

Financial assets at fair value through profit or loss — Trading securities Available-for-sale financial assets — Insurance policy — Other investment Derivative financial instruments — Interest rate swap	Level 1 HK$’000 726 — — — — 726	Level 2 HK$’000 — — — — (413) (413)	Level 3 HK$’000 — 4,321 1,169 5,490 — 5,490	Total HK$’000 726
				4,321 1,169
				5,490
				(413)
				5,803

There has been no transfer of financial assets and liabilities between levels 1, 2 and 3 during the year.

The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in level 1.

The fair value of financial instruments that are not traded in an active market 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. If all significant inputs required to fair value as instrument are observable, the instrument is included in level 2.

If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. There is no quoted market price in an active market for certain financial assets and for which the range of other methods of reasonably estimating fair value is significant and the probabilities of the various estimates cannot be reasonably assessed without incurring excessive costs.

SAMSON PAPER HOLDINGS LIMITED

Notes to the Consolidated Financial Statements

55

3 FINANCIAL RISK MANAGEMENT (continued)

3.3 Fair value estimation (continued)

The following table presents the changes in level 3 instruments:

At 1 April Disposal Net changes in fair value transferred to equity (note 30) At 31 March	2015 HK$’000 5,490 — (537) 4,953	2014 HK$’000 5,624 (252) 118
		5,490

The carrying amount of receivables, bank balances, payables and bank borrowings are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purpose is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments.

4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

(a) Current and deferred income taxes

The Group is subject to income taxes in various jurisdictions. Significant judgement is required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

(b) Estimated provision for accounts receivable and other receivables

The Group makes provision for impairment of receivables based on an assessment of the recoverability of accounts receivable and other receivables. Provisions are applied to accounts and other receivables where events or changes in circumstances indicate that the balances may not be collectible. The identification of impaired receivables requires the use of judgement and estimates. Where the expectation is different from the original estimate, such difference will impact the carrying value of accounts and other receivables and impairment expenses in the period in which such estimate has been changed.

ANNUAL REPORT 2015

Notes to the Consolidated Financial Statements

56

4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)

(c) Estimated write-downs of inventories to net realisable value

The Group writes down inventories to net realisable value based on an assessment of the realisability of inventories. Write-downs on inventories are recorded where events or changes in circumstances indicate that the balances may not be realised. The identification of write-downs requires the use of judgement and estimates. Where the expectation is different from the original estimate, such difference will impact the carrying value of inventories and write-downs of inventories in the period in which such estimate has been changed.

(d) Useful lives and residual values of property, plant and equipment and impairment assessment of property, plant and equipment

The Group’s management determines the estimated useful lives, residual values and related depreciation expenses for the Group’s property, plant and equipment. Management will revise the depreciation expenses where useful lives and residual values are different to previously estimated, or it will write off or write down technically obsolete or non-strategic assets that have been abandoned or sold.

Property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. The recoverable amounts have been determined based on value-in-use calculations or market valuations. The calculations require the use of judgements and estimates.

(e) Estimated impairment of goodwill

The Group tests annually whether goodwill has suggested any impairment, in accordance with the accounting policy stated in note 2.6. The recoverable amounts have been determined based on value-in-use calculations. These calculations require the use of estimates (note 17).

(f) Estimated valuation of investment properties

Investment properties are stated at fair value based on the valuation performed by an independent and professionally qualified valuer.

In determining the fair value, the valuer has based on property valuation techniques which involve, inter alia, certain estimates including comparable sales in the relevant market, current market rents for similar properties in the same location and condition, appropriate discount rates and expected future market rents. In relying on the valuation report, management has exercised their judgement and is satisfied that the method of valuation is reflective of the current market condition.

SAMSON PAPER HOLDINGS LIMITED

Notes to the Consolidated Financial Statements

57

5 REVENUE, OTHER GAINS AND INCOME, NET AND SEGMENT INFORMATION

Revenue recognised is as follows:

Revenue Sale of goods Leasing of investment properties Provision of services Fair value gains on investment properties and non-current assets held for sales (notes 16 and 21) Other gains and income, net Interest income Sales of scrap materials Realised and unrealized gains on investments in financial assets at fair value through profit or loss Realised and unrealised gains on derivative financial instrument Gain on disposal of property, plant and equipment Gain on disposal of prepaid premium for land leases Others	Group	Group
	2015 HK$’000 5,192,659 15,123 70,151 5,277,933 121,300 8,880 4,317 60 — 970 2,321 10,872 27,420	2014 HK$’000 (Note 40) 4,886,324 13,300 82,793
		4,982,417
		32,399
		9,134 4,470 51 88 2,662 — 10,590
		26,995

The chief operating decision-maker has been identified as the Executive Directors. The Executive Directors review the Group’s internal reporting in order to assess performance and allocate resources. Management has determined the operating segments based on the reports reviewed by the Executive Directors.

The Executive Directors consider the performance of the Group from the perspective of the business activities. The chief operating decision-maker assesses the performance of the operating segments based on a measure of segment profit/loss without allocation of finance costs which is consistent with that in the financial statements.

In the current year, management revisited the Group’s operating activities and identified leasing of investment properties as a separate business segment of the Group’s principal activities. The Group is organised on a worldwide basis into four main business segments:

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

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

• (3) Property investment; and

• (4) 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 provision of logistic services and retail business.

ANNUAL REPORT 2015

Notes to the Consolidated Financial Statements

58

5 REVENUE, OTHER GAINS AND INCOME, NET AND SEGMENT INFORMATION (continued)

Segment assets consist primarily of property, plant and equipment, prepaid premium for land leases, investment properties, intangible assets, inventories, receivables, financial instruments, non-current assets held for sale and operating cash. They exclude deferred tax assets, taxation recoverable and corporate assets.

Segment liabilities comprise accounts and other payables, financial instruments, borrowings and trust receipt loans. They exclude deferred tax liabilities, taxation payable and corporate liabilities.

Capital expenditure comprise additions to property, plant and equipment (note 14), prepaid premium for land leases (note 15) and intangible assets (note 17).

The segment information for the year ended and as at 31 March 2015 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	Paper trading HK$’000 4,278,526 (93,544) 4,184,982 45,921	Paper manufacturing HK$’000 992,101 (78,338) 913,763 85,109	Property investment HK$’000 17,483 (2,360) 15,123 135,036	Others HK$’000 171,533 (7,468) 164,065 (8,598)	Total HK$’000 5,459,643 (181,710)
					5,277,933
					257,468 (12,168)
					245,300 (92,708)
					152,592 (29,256)
					123,336

SAMSON PAPER HOLDINGS LIMITED

Notes to the Consolidated Financial Statements

59

5 REVENUE, OTHER GAINS AND INCOME, NET AND SEGMENT INFORMATION (continued)

Other items for the year ended 31 March 2015

Interest income Depreciation of property, plant and equipment Amortisation of prepaid premium for land leases Amortisation of intangible assets Fair value gains on investment properties Capital expenditure 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$’000 7,969 11,109 857 847 — 9,833 2,905,710 2,070,963	Paper manufacturing HK$’000 876 48,345 3,597 49 — 108,168 2,329,508 240,349	Property investment HK$’000 — — — — 121,300 — 467,865 2,890	Others HK$’000 35 9,547 74 60 — 12,838 176,048 33,497	Total HK$’000 8,880 69,001 4,528 956 121,300 130,839
					5,879,131 913 3,545 314
					5,883,903
					2,347,699 32,617 95,517 1,395,837
					3,871,670

The segment information for the year ended and as at 31 March 2014 is restated 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	Paper trading HK$’000 4,288,689 (44,042) 4,244,647 90,090	Paper manufacturing HK$’000 767,634 (189,997) 577,637 52,625	Property investment HK$’000 (Note 40) 15,576 (2,276) 13,300 44,588	Others HK$’000 (Note 40) 153,676 (6,843) 146,833 3,088	Total HK$’000 (Note 40) 5,225,575 (243,158)
					4,982,417
					190,391 (10,741)
					179,650 (92,235)
					87,415 (26,916)
					60,499

ANNUAL REPORT 2015

Notes to the Consolidated Financial Statements

60

5 REVENUE, OTHER GAINS AND INCOME, NET AND SEGMENT INFORMATION (continued)

Other items for the year ended 31 March 2014

Interest income Depreciation of property, plant and equipment Amortisation of prepaid premium for land leases Amortisation of intangible assets Fair value gains on non-current assets held for sale Fair value gains on investment properties Capital expenditure 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$’000 8,170 10,626 864 847 — — 18,039 2,747,638 1,847,505	Paper manufacturing HK$’000 947 48,938 3,409 45 — — 87,039 2,328,190 277,142	Property investment HK$’000 (Note 40) — — — — 8,000 24,399 — 344,913 2,178	Others HK$’000 (Note 40) 17 9,100 77 4 — — 8,995 168,279 34,011	Total HK$’000 (Note 40) 9,134 68,664 4,350 896 8,000 24,399 114,073
					5,589,020 3,749 7,120 75
					5,599,964
					2,160,836 26,575 91,519 1,407,431
					3,686,361

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	Group	Group
	Revenue 2015 2014 HK$’000 HK$’000 (Note 40) 943,379 929,284 3,900,855 3,432,939 116,638 135,752 271,776 402,390 41,527 71,432 3,758 10,620 5,277,933 4,982,417	Non-current assets1 2015 2014 HK$’000 HK$’000 570,403 327,658 1,882,127 1,854,979 57,786 62,293 2,539 2,900 12,072 13,825 8 11 2,524,935 2,261,666
			2,261,666

1 Non-current assets excluded deferred tax assets.

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

SAMSON PAPER HOLDINGS LIMITED

Notes to the Consolidated Financial Statements

61

6 OPERATING PROFIT

Operating profit is stated after charging and crediting the following:

Charging Cost of inventories sold (note 22) Depreciation of property, plant and equipment (note 14) Amortisation of prepaid premium for land leases (note 15) Amortisation of intangible assets (note 17) Operating lease rentals in respect of: — land and buildings Transportation costs Provision for impairment on receivables (note 23) Employee benefit expenses (note 12) Auditor’s remuneration Net exchange losses Realised and unrealised loss on derivative financial instrument Crediting Gains on disposal of property, plant and equipment Gain on disposal of prepaid premium for land leases Net exchange gains Realised and unrealised gains on derivative financial instruments Write-back of provision for inventories Write-back of provision for receivables (note 23)	Group	Group
	2015 HK$’000 4,631,225 69,001 4,528 956 29,006 70,915 10,193 128,263 3,320 8,724 153 970 2,321 — — 13,046 1,005	2014 HK$’000 (Note 40) 4,359,390 68,664 4,350 896 15,944 81,177 3,900 110,585 3,206 — —
		2,662 — 2,799 88 10,782 8,717

7 FINANCE COSTS

FINANCE COSTS
Interest on bank borrowings wholly repayable within 5 years Interest on finance lease obligations wholly repayable within 5 years Interest on trade credit facilities Less: amounts capitalised in property, plant and equipment	Group
	2015 HK$’000 78,075 267 17,811 96,153 (3,445) 92,708	2014 HK$’000 72,245 227 23,079
		95,551 (3,316)
		92,235

The weighted average interest rate on the above capitalised borrowings is approximately 6.3% per annum (2014: 6.4% per annum).

ANNUAL REPORT 2015

Notes to the Consolidated Financial Statements

62

8 TAXATION

Hong Kong profits tax has been provided at the rate of 16.5% (2014: 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.

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

Hong Kong profits tax Overseas taxation (Over)/under-provision in previous years Deferred taxation relating to origination and reversal of temporary differences (note 31)	Group	Group
	2015 HK$’000 5,282 16,667 (911) 8,218 29,256	2014 HK$’000 4,937 12,029 66 9,884
		26,916

The taxation on the Group’s profit before taxation differs from the theoretical amount that would arise using the taxation rate of the home country of the Company as follows:

Profit before taxation Calculated at a taxation rate of 16.5% (2014: 16.5%) Effect of different taxation rates in other countries Income not subject to taxation Expenses not deductible for taxation purposes Tax losses not recognised (Over)/under-provision in previous years Recognition of previously unrecognised temporary difference	Group	Group
	2015 HK$’000 152,592 25,178 7,240 (22,884) 14,370 5,725 (911) 538 29,256	2014 HK$’000 87,415
		14,423 4,012 (5,187) 6,348 6,957 66 297
		26,916

According to the New Corporate Income Tax Law, the profits of the PRC subsidiaries of the Group derived since 1 January 2008 will be subject to withholding tax at a rate of 5% upon the distribution of such profits to foreign investors incorporated in Hong Kong, or at rate of 10% for other foreign investors.

Deferred income tax liabilities have not been recognised for withholding tax that would be payable on the distributable retained profits amounting to HK$15,448,000 (2014: HK$11,983,000) of the Company’s subsidiaries in the Mainland China earned after 1 January, 2008. Such amounts are not intended to be distributed in the foreseeable future to the group companies outside of the Mainland China. Deferred income tax assets are recognised for tax losses carrying forwards to the extent that realisation of the related tax benefits through the future taxable profits is probable. As at 31 March 2015, the Group did not recognise deferred income tax assets of HK$23,932,000 (2014: HK$18,207,000) in respect of losses of approximately HK$135,199,000 (2014: HK$104,160,000). Tax losses amounting to approximately HK$14,705,000 (2014: HK$9,510,000) will be expired up to year 2020 (2014: 2019), while the remaining balance can be carried forward indefinitely.

SAMSON PAPER HOLDINGS LIMITED

Notes to the Consolidated Financial Statements

63

8 TAXATION (continued)

Deferred income tax liabilities have not been recognised for withholding tax that would be payable on the distributable retained profits amounting to HK$15,463,000 (2014: HK$11,998,000) of the Company’s subsidiaries in the Mainland China earned after 1 January, 2008. Such amounts are not intended to be distributed in the foreseeable future to the group companies outside of the Mainland China.

The tax credit/(charge) relating to components of other comprehensive income is as follows:

Currency translation differences Revaluation of available-for-sale financial assets Revaluation of land and buildings Reversal of deferred tax on fair value gains upon transfer from property, plant and equipment to investment properties Other comprehensive income		2015	After tax HK$’000 (7,618) (537) — — (8,155)		2014
	Before tax HK$’000 (7,618) (537) — — (8,155)	Deferred tax (charge)/ credit HK$’000 — — — — —		Before tax HK$’000 (12,282) 118 115,835 — 103,671	Deferred tax (charge)/ credit HK$’000 — — (21,625) 5,400 (16,225)	After tax HK$’000 (12,282) 118 94,210 5,400
						87,446

9 PROFIT ATTRIBUTABLE TO OWNERS OF THE COMPANY

The profit attributable to owners of the Company is dealt with in the financial statements of the Company to the extent of HK$37,136,000 (2014: HK$16,774,000) (note 30).

10 DIVIDENDS

DIVIDENDS
Interim — HK$0.004 (2014: HK$0.004) per ordinary share Interim — HK$0.004 (2014: HK$0.004) per preference share Proposed final — HK$0.025 (2014: HK$0.009) per ordinary share Proposed final — HK$0.025 (2014: HK$0.009) per preference share	Groupand Company
	2015 HK$’000 4,564 528 28,527 3,302 36,921	2014 HK$’000 4,564 528 10,270 1,189
		16,551

At a meeting held on 25 June 2015, the directors proposed a final dividend of HK$0.025 per share. This proposed dividend is not reflected as a dividend payable in these financial statements, but will be reflected as an appropriation of retained earnings for the year ending 31 March 2016.

ANNUAL REPORT 2015

Notes to the Consolidated Financial Statements

64

11 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$112,508,000 (2014: HK$55,215,000) by the weighted average number of 1,141,076,000 (2014: 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.

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	Group
	2015 114,225 1,141,076 132,065 1,273,141 HK 9.0 cents	2014 57,196
		1,141,076 132,065
		1,273,141
		HK 4.5 cents

12 EMPLOYEE BENEFIT EXPENSES (INCLUDING DIRECTORS’ REMUNERATION)

Wages, salaries and bonus Contributions to pension schemes	Group	Group
	2015 HK$’000 122,997 5,266 128,263	2014 HK$’000 105,298 5,287
		110,585

SAMSON PAPER HOLDINGS LIMITED

Notes to the Consolidated Financial Statements

65

13 DIRECTORS’ AND SENIOR MANAGEMENT’S EMOLUMENTS

(a) Directors’ emoluments

The remuneration of every director for the year ended 31 March 2015 is set out below:

Executive Directors Sham Kit Ying Lee Seng Jin (Note) Sham Yee Lan, Peggy Chow Wing Yuen Lee Yue Kong, Albert Non-executive Directors Pang Wing Kin, Patrick Lau Wang Yip, Eric Tong Yat Chong Ng Hung Sui, Kenneth	2015 Fee Salary Discretionary bonuses Employer’s contribution to pension scheme Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 — 5,879 — — 5,879 — 6,306 — 162 6,468 — 960 — 51 1,011 — 1,325 — 91 1,416 — 1,140 — 44 1,184 160 — — — 160 160 — — — 160 160 — — — 160 160 — — — 160	2014
		Total HK$’000 5,879 6,718 1,011 1,416 1,184 160 160 160 160

During the year, no emoluments were waived by the directors future emoluments, and no amounts are paid to any of the directors as inducement to join the Group or as compensation for loss of office.

Note: The Company’s executive director represents the Company’s chief executive officer. Accordingly, no separate disclosure in respect of the remuneration of the chief executives is made in the financial statement.

(b) Five highest paid individuals

The five individuals whose emoluments were the highest in the Group for the year include five (2014: five) directors whose emoluments are reflected in the analysis presented above.

ANNUAL REPORT 2015

Notes to the Consolidated Financial Statements

66

14 PROPERTY, PLANT AND EQUIPMENT — GROUP

At 1 April 2013 Cost or valuation Accumulated depreciation Net book amount Year ended 31 March 2014 Opening net book amount Exchange differences Additions Transfer Transfer to investment properties (note 16) Transfer to non-current assets held for sale (note 21) Revaluation surplus Disposals (note 33(c)) Depreciation Closing net book amount At 31 March 2014 Cost or valuation Accumulated depreciation Net book amount Year ended 31 March 2015 Opening net book amount Exchange differences Additions Transfer Disposals (note 33(c)) Depreciation Closing net book amount At 31 March 2015 Cost or valuation Accumulated depreciation Net book amount	Land and buildings HK$’000 215,879 (21,125)	Furniture and fixtures HK$’000 8,218 (7,288)	Machinery and equipment HK$’000 1,247,332 (162,942)	Motor vehicles and vessels HK$’000 50,551 (31,988)	Leasehold improvements HK$’000 35,281 (14,582)	Office and computer equipment HK$’000 27,854 (23,110)	Construction- in-progress HK$’000 371,746 —	Total HK$’000 1,956,861 (261,035)
	194,754	930	1,084,390	18,563	20,699	4,744	371,746	1,695,826
	194,754 (1,690) 23,906 6,329 (38,000) (4,773) 115,835 — (7,169)	930 16 1,268 — — — — — (415)	1,084,390 (1,532) 21,471 5,600 — — — (224) (51,655)	18,563 (72) 6,097 — — — — (183) (6,390)	20,699 (26) 3,332 — — — — (2) (2,048)	4,744 (4) 2,294 — — — — (3) (2,162)	371,746 (550) 55,427 (11,929) — — — — —	1,695,826 (3,858) 113,795 — (38,000) (4,773) 115,835 (412) (69,839)
	289,192	1,799	1,058,050	18,015	21,955	4,869	414,694	1,808,574
	289,192 —	6,712 (4,913)	1,267,334 (209,284)	54,167 (36,152)	35,648 (13,693)	28,616 (23,747)	414,694 —	2,096,363 (287,789)
	289,192	1,799	1,058,050	18,015	21,955	4,869	414,694	1,808,574
	289,192 (1,924) 6,968 — — (10,087)	1,799 (24) 3,066 — — (767)	1,058,050 (2,570) 2,149 62,500 (443) (52,049)	18,015 (300) 10,229 — (901) (6,666)	21,955 (52) 3,349 — — (2,233)	4,869 (38) 1,902 — (6) (2,114)	414,694 (623) 85,704 (62,500) (70) —	1,808,574 (5,531) 113,367 — (1,420) (73,916)
	284,149	4,074	1,067,637	20,377	23,019	4,613	437,205	1,841,074
	294,202 (10,053)	9,692 (5,618)	1,324,257 (256,620)	57,375 (36,998)	38,813 (15,794)	29,583 (24,970)	437,205 —	2,191,127 (350,053)
	284,149	4,074	1,067,637	20,377	23,019	4,613	437,205	1,841,074

SAMSON PAPER HOLDINGS LIMITED

Notes to the Consolidated Financial Statements

67

14 PROPERTY, PLANT AND EQUIPMENT — GROUP (continued)

Land and buildings situated in Hong Kong and major buildings outside Hong Kong were revalued at 31 March 2014 on the basis of open market value carried out by Savills Valuation and Professional Services Limited, an independent firm of chartered surveyors, according to the Group’s policy as set out in note 2.4.

Land and buildings in Hong Kong, held on leases of between 10 and 50 years Valuation Accumulated depreciation Net book amount Buildings outside Hong Kong Valuation Accumulated depreciation Net book amount	Group	Group
	2015 HK$’000 39,000 (1,147) 37,853 255,202 (8,906) 246,296	2014 HK$’000 39,000 —
		39,000
		250,192 —
		250,192

If the land and buildings were stated at historical cost, the amounts would be as follows:

Land and buildings Cost Accumulated depreciation Net book amount	Group	Group
	2015 HK$’000 101,205 (18,819) 82,386	2014 HK$’000 92,889 (13,035)
		79,854

ANNUAL REPORT 2015

Notes to the Consolidated Financial Statements

68

14 PROPERTY, PLANT AND EQUIPMENT — GROUP (continued)

The analysis of the cost or valuation at 31 March 2015 and 2014 of the above assets is as follows:

At cost At valuation As at 31 March 2014 At cost At valuation As at 31 March 2015	Land and buildings HK$’000 — 289,192	Furniture and fixtures HK$’000 6,712 —	Machinery and equipment HK$’000 1,267,334 —	Motor vehicles and vessels HK$’000 54,167 —	Leasehold improvements HK$’000 35,648 —	Office and computer equipment HK$’000 28,616 —	Construction- in-progress HK$’000 414,694 —	Total HK$’000 1,807,171 289,192
	289,192	6,712	1,267,334	54,167	35,648	28,616	414,694	2,096,363
	— 294,202	9,692 —	1,324,257 —	57,375 —	38,813 —	29,583 —	437,205 —	1,896,925 294,202
	294,202	9,692	1,324,257	57,375	38,813	29,583	437,205	2,191,127

At 31 March 2015 and 2014, construction-in-progress represented costs incurred for buildings, machinery and equipment in Shandong and Nantong, the PRC, for the construction of paper mills.

At 31 March 2015, land and buildings with carrying value amounted to approximately HK$49,224,000 (2014: HK$51,908,000) were pledged as securities for bank borrowings made available to the Group (note 36).

At 31 March 2015, the net book amount of motor vehicles held by the Group under finance leases was HK$9,354,000 (2014: HK$3,890,000).

Depreciation expenses of HK$69,001,000 (2014: HK$68,664,000) has been charged in selling and administrative expenses and cost of sales and HK$4,915,000 (2014: HK$1,175,000) has been included in inventories.

15 PREPAID PREMIUM FOR LAND LEASES

The Group’s interests in leasehold land and land use rights represent prepaid operating lease payments outside Hong Kong held on leases of between 10 and 50 years. Their net book values are analysed as follows:

At 1 April Additions Disposal (note 33(c)) Exchange differences Amortisation (note 6) At 31 March	Group	Group
	2015 HK$’000 153,876 17,385 (750) 122 (4,528) 166,105	2014 HK$’000 157,483 970 — (227) (4,350)
		153,876

SAMSON PAPER HOLDINGS LIMITED

Notes to the Consolidated Financial Statements

69

16 INVESTMENT PROPERTIES

INVESTMENT PROPERTIES
At 1 April Transfer from property, plant and equipment (note 14) Transfer from non-current assets held for sale (note 21) Fair value gains (note 5) At 31 March	Group
	2015 HK$’000 226,000 — 118,000 121,300 465,300	2014 HK$’000 163,601 38,000 — 24,399
		226,000

The investment properties were revalued at 31 March 2015 and 2014 by independent, professionally qualified valuers, Savills Valuation and Professional Services Limited. Valuations were based on current prices in an active market for the properties.

The Group’s interests in investment properties, held on leases of between 10 and 50 years, are located in Hong Kong.

At 31 March 2015 and 2014, all of the investment properties were pledged as a security for bank borrowings made available to the Group (note 36).

An independent valuation of the Group’s investment properties was performed by the valuer, Savills Valuation and Professional Services Limited to determine the fair value of the investment properties as at 31 March 2015 and 2014. The following table analyses the investment properties carried at fair value, by valuation method.

Fair value hierarchy

Fair value hierarchy
Description Recurring fair value measurements Investment properties: — Factory buildings — Hong Kong Non-current assets held for sale: — Building — Singapore	Fair value measurements at 31 March 2015 using
	Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) HK$’000 HK$’000 HK$’000 — — 465,300 — — 4,373

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

All the fair values of the Group’s investment properties and non-current assets held for sale are measured at fair value hierarchy level 3 as at 31 March 2015.

ANNUAL REPORT 2015

Notes to the Consolidated Financial Statements

70

16 INVESTMENT PROPERTIES (continued)

Valuation processes of the group

The Group’s investment properties were valued at 31 March 2015 by independent professionally qualified valuers who hold a recognised relevant professional qualification and have recent experience in the locations and segments of the investment properties valued. For all investment properties, their current use equates to the highest and best use.

The Group’s finance department reviews the valuations performed by the independent valuers for financial reporting purposes. The department reports directly to the Chief Financial Officer (CFO). Discussions of valuation processes and results are held between the CFO, the valuation team and valuers at least once every year, in line with the group’s annual reporting date. As at 31 March 2015, the fair values of the properties have been determined by Savills Valuation and Professional Services Limited.

At each financial year end the finance department:

• Verifies all major inputs to the independent valuation report;

• Assess property valuations movements when compared to the prior year valuation report;

• Holds discussions with the independent valuer.

Valuation techniques

For Hong Kong factory buildings, the valuation was determined using the income capitalization approach (term and reversionary method) which largely used observable inputs (e.g. market rent; yield, etc) and taking into account the significant adjustment on term yield to account for the risk upon reversionary and the estimation in vacancy rate after expiry of current lease.

For building in Singapore, the valuation was determined using the sale comparison approach. Sales prices of comparable properties in close proximity are adjusted for differences in key attributes such as property size. The most significant input into this valuation approach is price per square foot.

SAMSON PAPER HOLDINGS LIMITED

Notes to the Consolidated Financial Statements

71

17 INTANGIBLE ASSETS

INTANGIBLE ASSETS
At 1 April 2013 Cost Accumulated amortisation Net book amount Year ended 31 March 2014 Opening net book amount Exchange differences Additions Amortisation (note 6) Closing net book amount At 31 March 2014 Cost Accumulated amortisation Net book amount Year ended 31 March 2015 Opening net book amount Exchange differences Additions Disposal Amortisation (note 6) Closing net book amount At 31 March 2015 Cost Accumulated amortisation Net book amount		Group
	Computer software HK$’000 9,154 (2,531) 6,623 6,623 27 278 (896) 6,032 9,453 (3,421) 6,032 6,032 (1) 87 (286) (956) 4,876 9,253 (4,377) 4,876	Goodwill HK$’000 40,913 — 40,913 40,913 (622) — — 40,291 40,291 — 40,291 40,291 (3,379) — — — 36,912 36,912 — 36,912	Total HK$’000 50,067 (2,531)
			47,536
			47,536 (595) 278 (896)
			46,323
			49,744 (3,421)
			46,323
			46,323 (3,380) 87 (286) (956)
			41,788
			46,165 (4,377)
			41,788

Amortisation of HK$956,000 (2014: HK$896,000) is included in administrative expenses.

The Group completed its annual impairment test for goodwill allocated to the Group’s cash generating unit (“CGU”) by comparing their recoverable amount to their carrying amount as at the balance sheet date. The recoverable amount of a CGU is determined based on value-in-use calculations. These calculations use cash flow projections based on financial budgets approved by management covering a five-year period. Cash flows beyond the five-year period are extrapolated using the estimated growth rates stated below.

ANNUAL REPORT 2015

Notes to the Consolidated Financial Statements

72

17 INTANGIBLE ASSETS (continued)

The key assumptions used for value-in-use calculations are as follows:

Gross margin Growth rate Discount rate	Group
	2015 2014 31% 32% 0% 0% 8% 8%

The goodwill is associated with marine services business in Singapore.

The directors are of the opinion that there was no impairment of goodwill as at 31 March 2015 and 2014.

18 AVAILABLE-FOR-SALE FINANCIAL ASSETS

AVAILABLE-FOR-SALE FINANCIAL ASSETS
At 1 April Disposals Net change in fair value transferred to equity (note 30) At 31 March	Group
	2015 HK$’000 5,490 — (537) 4,953	2014 HK$’000 5,624 (252) 118
		5,490

Available-for-sale financial assets include the following:

Unlisted securities: — Insurance policy — Other investment	Group	Group
	2015 HK$’000 4,440 513 4,953	2014 HK$’000 4,321 1,169
		5,490

As at 31 March 2015 and 2014, the available-for-sale financial assets are denominated in United States dollars (“USD”).

SAMSON PAPER HOLDINGS LIMITED

Notes to the Consolidated Financial Statements

73

19 NON-CURRENT DEPOSITS AND PREPAYMENTS

The balance represents rental deposits paid, prepayments for land use right and purchase of machinery.

20 INTERESTS IN SUBSIDIARIES

INTERESTS IN SUBSIDIARIES
Unlisted shares, at cost (note (a)) Amounts due from subsidiaries (note (b))	Company
	2015 HK$’000 249,897 326,627	2014 HK$’000 249,897
		306,061

Notes:

(a) Particulars of the Company’s principal subsidiaries at 31 March 2015 are set out in note 39 to the consolidated financial statements.

(b) Amounts due from subsidiaries are unsecured, interest free and repayable on demand. The carrying amounts are mainly denominated in HK dollars (2014: same).

21 NON-CURRENT ASSETS HELD FOR SALE

As at 1 April 2014, an investment property located in Hong Kong with a carrying value of HK$118,000,000 were classified as non-current assets held for sale following the approval of the Board of Directors in prior years. In the current year, the Board of Director considered the market condition as well as offers from potential buyers and decided to suspend the disposal plan and reclassify the property back to investment properties.

Pursuant to the Board of Directors’ resolutions dated in 18 October 2013, a building located in Singapore with a carrying value of SGD775,795 (approximately HK$4,373,000) was offered for sale. As a result, the building is classified as non-current asset held for sale as at 31 March 2014. Subsequent to the classification as held for sale, circumstances occur in the year ended 31 March 2015 that had previously been thought unlikely to happen with offers from interested parties being lower than its expected price. Therefore, the asset has not been sold by 31 March 2015.

At 1 April Transfer to investment properties (note 16) Transfer from property, plant and equipment (note 14) Exchange difference Fair value gain (note 5) At 31 March	Group	Group
	2015 HK$’000 122,773 (118,000) — (400) — 4,373	2014 HK$’000 110,000 — 4,773 — 8,000
		122,773

ANNUAL REPORT 2015

Notes to the Consolidated Financial Statements

74

22 INVENTORIES

INVENTORIES
Merchandise and finished goods Raw materials	Group
	2015 HK$’000 532,687 188,744 721,431	2014 HK$’000 585,789 174,866
		760,655

The cost of inventories recognised as expenses and included in cost of sales amounted to HK$4,631,225,000 (2014: HK$4,359,390,000).

As at 31 March 2015, the inventories of the Group are stated after a provision for impairment on inventories of approximately HK$30,065,000 (2014: HK$43,111,000).

23 ACCOUNTS RECEIVABLE, DEPOSITS AND PREPAYMENTS

ACCOUNTS RECEIVABLE, DEPOSITS AND PREPAYMENTS
Accounts receivable — net of provision Other receivables, deposits and prepayments	Group
	2015 HK$’000 1,241,952 756,698 1,998,650	2014 HK$’000 1,226,996 723,083
		1,950,079

The carrying values of the Group’s accounts and other receivables approximate their fair values.

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

The aging analysis of accounts receivable is as follows:

Current to 60 days 61 to 90 days Over 90 days	Group	Group
	2015 HK$’000 861,724 171,153 209,075 1,241,952	2014 HK$’000 905,999 166,828 154,169
		1,226,996

SAMSON PAPER HOLDINGS LIMITED

Notes to the Consolidated Financial Statements

75

23 ACCOUNTS RECEIVABLE, DEPOSITS AND PREPAYMENTS (continued)

Accounts receivable that are less than 90 days past due relate to a large number of diversified customers who have had no recent history of default. Based on past experience, the directors were of the opinion that no provision for impairment is necessary in respect of these balances as there has not been a significant change in credit quality and the balances are considered fully recoverable. As at 31 March 2015, accounts receivable of HK$132,627,000 (2014: HK$111,114,000) were past due but not impaired. These related to a number of independent customers who have had no recent history of default. The aging analysis of these accounts receivable is as follows:

Past due by: 91–120 days Over 120 days	Group	Group
	2015 HK$’000 57,921 74,706 132,627	2014 HK$’000 83,237 27,877
		111,114

As at 31 March 2015, accounts receivable of HK$85,087,000 (2014: HK$77,567,000) were considered impaired. The individual impaired receivables mainly related to customers which are in unexpected difficult economic situations. It was assessed that a portion of the receivables is expected to be recovered. The aging of these accounts receivable is as follows:

The movement of the provision for impairment of accounts receivable is as follows:

At 1 April Exchange differences Bad debt written off against provision Provision for impairment written back (note 6) Provision for the year (note 6) At 31 March	Group	Group
	2015 HK$’000 77,567 (1,668) — (1,005) 10,193 85,087	2014 HK$’000 88,476 (2,354) (3,738) (8,717) 3,900
		77,567

The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable mentioned above. The Group does not hold any collateral as security.

ANNUAL REPORT 2015

Notes to the Consolidated Financial Statements

76

24 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Listed equities outside Hong Kong, at fair value	Group
	2015 HK$’000 786	2014 HK$’000 726

The fair values of listed equity securities are based on their current bid prices in an active market.

Changes in fair values of financial assets at fair value through profit or loss are recorded in “other gains and income, net” in the consolidated profit and loss account.

25 RESTRICTED BANK DEPOSITS

RESTRICTED BANK DEPOSITS
Pledged as securities for bills payables (note 36)	Group
	2015 HK$’000 218,000	2014 HK$’000 205,893

Restricted bank deposits earn interest at a fixed rate of 2.70% per annum (2014: 2.28% per annum).

The restricted bank deposits are denominated in Renminbi.

26 BANK BALANCES AND CASH

BANK BALANCES AND CASH
Cash at bank and on hand Short-term bank deposits	Group 2015 2014 HK$’000 HK$’000 345,114 209,901 66,156 77,402 411,270 287,303	Company
	2015 HK$’000 345,114 66,156 411,270	2015 HK$’000 84 — 84	2014 HK$’000 57 —
			57

The effective interest rate on short-term bank deposits was 2.48% per annum (2014: 1.86% per annum). These deposits had an average maturity of three months or less.

Cash and cash equivalents include the following for the purpose of the consolidated statement of cash flows:

Bank balances and cash Bank overdrafts (note 28)	Group	Group
	2015 HK$’000 411,270 (2,302) 408,968	2014 HK$’000 287,303 —
		287,303

SAMSON PAPER HOLDINGS LIMITED

Notes to the Consolidated Financial Statements

27 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 (note (a))	Group
	2015 HK$’000 1,446,372 149,036 1,595,408 (23,808) 1,571,600	2014 HK$’000 1,217,049 304,348
		1,521,397 (126,702)
		1,394,695

Note:

(a) As at 31 March 2015, accounts payable of HK$21,787,000 (2014: HK$80,387,000) were unsecured, interest-bearing at 4% per annum and repayable twelve months after balance sheet date. The remaining balances of Nil (2014: HK$43,844,000) were unsecured, interest-free and were repayable twelve months after the balance sheet date.

As at 31 March 2015, rental deposit received of HK$2,021,000 (2014: HK$2,471,000) is not repayable within one year.

The carrying values of the accounts payable and other payables approximate their fair values.

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

Current to 60 days 61 to 90 days Over 90 days	77 Group 2015 2014 HK$’000 HK$’000 947,467 733,272 194,865 176,890 304,040 306,887 1,446,372 1,217,049
	2015 HK$’000 947,467 194,865 304,040 1,446,372

ANNUAL REPORT 2015

Notes to the Consolidated Financial Statements

78

28 BORROWINGS

BORROWINGS
Non-current Bank loans — unsecured Bank loans — secured (note 36) Finance lease liabilities Total non-current borrowings Current Trust receipt loans — unsecured Trust receipt loans — secured (note 36) Bank loans — unsecured Bank loans — secured (note 36) Bank overdrafts (note 26) Finance lease liabilities Total current borrowings Total borrowings	Group
	2015 HK$’000 774,398 33,482 5,977 813,857 635,300 117,166 752,466 558,903 17,709 2,302 2,598 581,512 1,333,978 2,147,835	2014 HK$’000 400,000 52,903 3,479
		456,382
		561,703 77,750
		639,453
		910,849 37,617 — 2,156
		950,622
		1,590,075
		2,046,457

The Group’s bank loans, overdrafts and trust receipt loans were repayable as follows:

Within one year In the second year In the third to fifth years inclusive Over 5 years		Group	Group
	Bank overdrafts 2015 2014 HK$’000 HK$’000 2,302 — — — — — — — 2,302 —	Bank 2015 HK$’000 576,612 195,018 606,939 5,923 1,384,492	loans 2014 HK$’000 948,466 410,034 33,410 9,459 1,401,369	Trust receipt loans 2015 2014 HK$’000 HK$’000 752,466 639,453 — — — — — — 752,466 639,453
					639,453

SAMSON PAPER HOLDINGS LIMITED

Notes to the Consolidated Financial Statements

79

28 BORROWINGS (continued)

The carrying amounts of borrowings are denominated in the following currencies:

Hong Kong dollars Renminbi United States dollars Singapore dollars Malaysia Ringgit	Group	Group
	2015 HK$’000 1,737,959 340,407 49,592 11,387 8,490 2,147,835	2014 HK$’000 1,332,097 496,175 200,602 7,309 10,274
		2,046,457

The effective interest rates at the balance sheet date on bank loans, bank overdrafts and trust receipt loans range from 2.2% to 6.9% per annum (2014: 1.6% to 7.2% per annum).

The carrying amounts of bank loans, bank overdrafts and trust receipt loans approximate their fair values.

The Group has undrawn borrowing facilities of HK$1,515,000,000 (2014: HK$1,576,344,000) as at 31 March 2015. All of the Group’s facilities are at floating rates and subject to periodic renewal.

Finance lease liabilities

Finance lease liabilities
Gross finance lease liabilities — minimum lease payments: Not later than 1 year Later than 1 year but not later than 5 years Later than 5 years Future finance charges on finance leases Present value of finance lease liabilities	Group
	2015 HK$’000 2,765 5,842 507 9,114 (539) 8,575	2014 HK$’000 2,274 3,528 103
		5,905 (270)
		5,635

ANNUAL REPORT 2015

Notes to the Consolidated Financial Statements

80

28 BORROWINGS (continued)

Finance lease liabilities (continued)

The present value of finance lease liabilities was as follows: Not later than 1 year Later than 1 year and no later than 5 years Later than 5 years	Group	Group
	2015 HK$’000 2,598 5,491 486 8,575	2014 HK$’000 2,156 3,379 100
		5,635

At the balance sheet date, the carrying amounts of finance lease liabilities approximate their fair values.

The effective interest rates at the balance sheet date ranged from 3.8% to 9.4% per annum (2014: 3.8% to 6.5% per annum).

29 SHARE CAPITAL

SHARE CAPITAL
Authorised: Ordinary shares At beginning and end of the year Convertible non-voting preference shares At beginning and end of the year Total Issued and fully paid: Ordinary shares At beginning and end of the year Convertible non-voting preference shares At beginning and end of the year Total Notes:	Number of shares of HK$0.10 each 2015 2014 HK$’000 HK$’000 1,456,913,987 1,456,913,987 143,086,013 143,086,013 1,600,000,000 1,600,000,000 1,141,075,827 1,141,075,827 132,064,935 132,064,935 1,273,140,762 1,273,140,762	Share capital
	2015 HK$’000 1,456,913,987 143,086,013 1,600,000,000 1,141,075,827 132,064,935 1,273,140,762	2015 HK$’000 145,691 14,309 160,000 114,108 13,207 127,315	2014 HK$’000 145,691 14,309
			160,000
			114,108 13,207
			127,315

On 27 October 2008, 143,086,013 convertible non-voting preference shares (“CP shares”) of HK$0.10 each were issued at HK$0.70 each and a total consideration of HK$100,160,000 was received. The rights, privileges and restrictions of the CP shares are set out below:

Dividend

The holders of CP shares shall have the same right to dividend payment as to the holders of ordinary shares.

SAMSON PAPER HOLDINGS LIMITED

Notes to the Consolidated Financial Statements

81

29 SHARE CAPITAL (continued)

Conversion

Each holder of CP share shall be entitled to convert its shares into fully paid ordinary shares of HK$0.10 each in the capital of the Company on the basis of one ordinary share for every CP share. Unless previously redeemed, cancelled or converted, each holder of CP shares will be entitled to convert in respect of the whole or any part of its CP shares into fully paid ordinary shares on the basis of one ordinary share for every CP share at any time after the date of issue of the CP Shares upon the giving of a Conversion Notice. If the Continuing Notice is served before 31 March 2009, the relevant CP shares will not be subject to mandatory conversion.

At the end of business on 31 March 2009, unless previously redeemed, purchased and cancelled, converted or that a Continuing Notice has been served and delivered to the Company, all CP shares will be mandatorily converted into ordinary shares by the Company. The dividend entitlement attaching to any CP shares will cease to apply with effect from the date of conversion. Ordinary shares arising on conversion shall rank pari passu in all respects with ordinary shares, including the rights to receive any dividends and other distributions declared. So long as the Company remains listed in Hong Kong, those holders of the CP shares will not exercise their right to convert the CP shares into ordinary shares of the Company unless at least 25% of the Company’s total issued share capital that are listed on the Hong Kong Stock Exchange will at all times be held by the public.

Voting rights

The holders of CP shares will be entitled to receive notice of every general meeting of the Company but will not be entitled (i) to vote upon any resolution unless it is a resolution for winding-up the Company or reducing its share capital in any manner or a resolution modifying, varying or abrogating any of the special rights attached to the CP shares or (ii) to attend or speak at any general meeting of the Company unless the business of the meeting includes the consideration of a resolution upon which the holders of CP shares are entitled to vote.

Transferability

None of the CP shares will be assignable or transferable without the prior written approval of the Board of Directors of the Company. The Company will not apply for a listing of any of the CP shares on any stock exchange anywhere in the world.

Redemption

Subject to the provisions of the Companies Act, the Company shall be entitled, at any time after the fifth anniversary of the date of issue of the CP shares by resolution of the directors of the Company to redeem all or any of the CP shares. These shall be paid on each CP share redeemed a sum equal to (i) the subscription price thereof and (ii) all arrears (if any) of the Dividend thereon. As from the Redemption Date such Dividend shall cease to apply.

During the years ended 31 March 2015 and 2014, no convertible non-voting preference shares were converted.

ANNUAL REPORT 2015

Notes to the Consolidated Financial Statements

82

30 RESERVES

Group

At 1 April 2013 Profit for the year Revaluation of land and buildings, net of 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 (note 18) Currency translation differences 2012–2013 final dividend paid 2013–2014 interim dividend paid Transfer to statutory reserve Reserves Proposed 2013–2014 final dividend At 31 March 2014 At 1 April 2014 Profit for the year Revaluation of available-for-sale financial assets (note 18) Currency translation differences 2013–2014 final dividend paid 2014–2015 interim dividend paid Transfer to statutory reserve Reserves Proposed 2014–2015 final dividend At 31 March 2015	Share premium HK$’000 161,262 — — — — — — — —	Asset revaluation reserve HK$’000 190,359 — 94,210 5,400 118 — — — —	Capital reserve (note a) HK$’000 201,994 — — — — — — — —	Exchange reserve HK$’000 191,554 — — — — (12,189) — — —	Statutory reserve (note c) HK$’000 8,266 — — — — — — — 682	Retained earnings HK$’000 737,216 57,196 — — — — (14,005) (5,092) (682)	Total HK$’000 1,490,651 57,196 94,210 5,400 118 (12,189) (14,005) (5,092) —
	161,262 —	290,087 —	201,994 —	179,365 —	8,948 —	763,174 11,459	1,604,830 11,459
	161,262 Share premium HK$’000 161,262 — — — — — —	290,087 Asset revaluation reserve HK$’000 290,087 — (537) — — — —	201,994 Capital reserve (note a) HK$’000 201,994 — — — — — —	179,365 Exchange reserve HK$’000 179,365 — — (7,395) — — —	8,948 Statutory reserve (note c) HK$’000 8,948 — — — — — 746	774,633 Retained earnings HK$’000 774,633 114,225 — — (11,459) (5,092) (746)	1,616,289 Total HK$’000 1,616,289 114,225 (537) (7,395) (11,459) (5,092) —
	161,262 —	289,550 —	201,994 —	171,970 —	9,694 —	839,732 31,829	1,674,202 31,829
	161,262	289,550	201,994	171,970	9,694	871,561	1,706,031

SAMSON PAPER HOLDINGS LIMITED

Notes to the Consolidated Financial Statements

83

30 RESERVES (continued)

Company

At 1 April 2013 Profit for the year (note 9) 2012–2013 final dividend paid 2013–2014 interim dividend paid Reserves Proposed 2013–2014 final dividend At 31 March 2014 At 1 April 2014 Profit for the year (note 9) 2013–2014 final dividend paid 2014–2015 interim dividend paid Reserves Proposed 2014–2015 final dividend At 31 March 2015	Share premium HK$’000 161,262 — — —	Contributed Surplus (note b) HK$’000 249,697 — — —	Retained earnings HK$’000 19,636 16,774 (14,005) (5,092)	Total HK$’000 430,595 16,774 (14,005) (5,092)
	161,262 —	249,697 —	5,854 11,459	416,813 11,459
	161,262 161,262 — — —	249,697 249,697 — — —	17,313 17,313 37,136 (11,459) (5,092)	428,272 428,272 37,136 (11,459) (5,092)
	161,262 —	249,697 —	6,069 31,829	417,028 31,829
	161,262	249,697	37,898	448,857

(a) The capital reserve of the Group includes the difference between the nominal value of the shares issued by Samson Paper (BVI) Limited and the nominal value of the share capital of those companies forming the Group pursuant to a group reorganisation in 1995 amounted to HK$33,311,000. In addition, it also includes the loss from the acquisition of additional interests in subsidiaries of HK$1,977,000 in 2011 and the gain on disposal of 22.3% equity interests in a subsidiary of HK$170,660,000 in 2012.

(b) The contributed surplus of the Company arose when the Company issued shares in exchange for the shares of subsidiaries being acquired, and represents the difference between the nominal value of the Company’s shares issued and the value of net assets of the subsidiaries acquired. Under the Companies Act of 1981 of Bermuda (as amended), the contributed surplus is distributable to the shareholders. At Group level, the contributed surplus is reclassified into its component of reserves of the underlying subsidiaries.

• (c) The amount is determined under the relevant laws and regulations in the PRC.

ANNUAL REPORT 2015

Notes to the Consolidated Financial Statements

84

31 DEFERRED TAXATION

Deferred taxation is calculated in full on temporary differences under the liability method using a principal taxation rate of 16.5% (2014: 16.5%).

The movement of the net deferred tax liabilities account is as follows:

At 1 April Charged to consolidated profit and loss account (note 8) Credited directly to equity Exchange difference At 31 March	Group	Group
	2015 HK$’000 (84,399) (8,218) — 645 (91,972)	2014 HK$’000 (61,518) (9,884) (16,225 ) 3,228
		(84,399)

The movement of deferred tax assets and liabilities (prior to offsetting of balances within the same taxation jurisdiction) during the year is as follows:

Deferred tax assets

Deferred tax assets
At 1 April Charged to consolidated profit and loss account Exchange difference At 31 March		Group
	Provisions 2015 2014 HK$’000 HK$’000 8,002 10,998 (1,476) (3,808) (15) 812 6,511 8,002	Tax losses 2015 2014 HK$’000 HK$’000 13,192 25,968 (9,932) (12,753) (5) (23) 3,255 13,192	Total 2015 2014 HK$’000 HK$’000 21,194 36,966 (11,408) (16,561) (20) 789 9,766 21,194
				21,194

SAMSON PAPER HOLDINGS LIMITED

Notes to the Consolidated Financial Statements

85

31 DEFERRED TAXATION (continued)

Deferred tax liabilities

At 1 April Charged directly to equity (note 8) Credited to consolidated profit and loss account Exchange difference At 31 March		Group	Group
	Accelerated tax depreciation 2015 2014 HK$’000 HK$’000 (49,816 ) (58,932) — — 3,190 6,676 665 2,440 (45,961) (49,816)	Fair value gains 2015 2014 HK$’000 HK$’000 (32,682) (16,457) — (16,225) — — — — (32,682) (32,682)	Others 2015 2014 HK$’000 HK$’000 (23,095) (23,095) — — — — — — (23,095) (23,095)	Total 2015 2014 HK$’000 HK$’000 (105,593) (98,484) — (16,225) 3,190 6,676 665 2,440 (101,738) (105,593)
					(105,593)

The net amounts shown in the balance sheet include the following:

Deferred tax assets to be recovered after more than 12 months Deferred tax liabilities to be settled after more than 12 months	Group	Group
	2015 HK$’000 3,545 (95,517) (91,972)	2014 HK$’000 7,120 (91,519)
		(84,399)

32 DERIVATIVE FINANCIAL INSTRUMENTS

Derivative financial instruments represent an interest rate swap entered into by the Group. The notional principal amount of the outstanding interest rate swap contract as at 31 March 2015 was HK$20,000,000 (2014: HK$20,000,000). As at 31 March 2015, the interest rate under the interest rate swap was 1.73% (2014: 1.73%) per annum.

ANNUAL REPORT 2015

Notes to the Consolidated Financial Statements

86

33 CONSOLIDATED STATEMENT OF CASH FLOWS

(a) Reconciliation of operating profit to net cash generated from operations

Operating profit Depreciation of property, plant and equipment Amortisation of prepaid premium for land leases Amortisation of intangible assets Fair value gains on investment properties Fair value gains on non-current assets held for sale Gains on disposal of property, plant and equipment Gains on disposal of prepaid premium for land leases Loss on disposal of intangible assets Realised and unrealized loss/(gains) on derivative financial instruments Realised and unrealised gains on investments in financial assets at fair value through profit or loss Provision for/(write-back of provision for) receivables, net Write-back of provision for inventories Interest income Operating profit before working capital changes Decrease/(increase) in inventories Increase in accounts receivable, deposits and prepayments Increase in accounts payable and accruals Effect of change in exchange rates Net cash generated from operations	Group	Group
	2015 HK$’000 245,300 69,001 4,528 956 (121,300) — (970) (2,321) 286 153 (60) 9,188 (13,046) (8,880) 182,835 57,185 (57,759) 74,011 3,631 259,903	2014 HK$’000 179,650 68,664 4,350 896 (24,399) (8,000) (2,662) — — (88) (51) (4,817) (10,782) (9,134)
		193,627 (44,162) (176,936) 239,516 (12,536)
		199,509

(b) Analysis of changes in financing during the year

Analysis of changes in financing during the year
At 1 April Exchange differences Bank loans raised Repayment of bank loans At 31 March	Group
	Bank 2015 HK$’000 1,401,369 2,502 1,600,753 (1,620,132) 1,384,492	loans 2014 HK$’000 1,312,627 (2,007) 1,098,228 (1,007,479)
		1,401,369

SAMSON PAPER HOLDINGS LIMITED

Notes to the Consolidated Financial Statements

87

33 CONSOLIDATED STATEMENT OF CASH FLOWS (continued)

(c) In the consolidated statement of cash flows, proceeds from sale of property, plant and equipment comprise:

Net book amount Gains on disposal of property, plant and equipment	Group	Group
	2015 HK$’000 1,420 970 2,390	2014 HK$’000 412 2,662
		3,074

In the consolidated statement of cash flows, proceeds from sale of prepaid premium for land leases comprise:

Net book amount Gains on disposal of prepaid premium for land leases	Group	Group
	2015 HK$’000 750 2,321 3,071	2014 HK$’000 — —
		—

34 BANK GUARANTEES

At 31 March 2015, the Company continues to provide corporate guarantees on the banking facilities granted to the Group’s subsidiaries. The amount of bank borrowings utilised by the subsidiaries as at 31 March 2015 amounted to HK$2,139,260,000 (2014: HK$2,040,822,000).

ANNUAL REPORT 2015

Notes to the Consolidated Financial Statements

88

35 COMMITMENTS

(a) Capital commitments

Capital expenditure committed at the balance sheet date but not yet incurred is as follows:

Contracted but not provided Property, plant and equipment Contracted but not provided for	Group
	2015 2014 HK$’000 HK$’000 156,472 158,080

(b) Operating lease commitments

The Group leases various warehouses under non-cancellable operating lease agreements. The lease terms are mainly between one and four years, and the majority of lease agreements are renewable at the end of the lease period at market rate.

The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

Not later than one year Later than one year and not later than five years Later than five years	Group	Group
	2015 HK$’000 21,415 27,368 2,190 50,973	2014 HK$’000 27,197 17,204 1,920
		46,321

(c) Operating lease receivable

The Group leases out various warehouses under non-cancellable operating lease agreements. The lease terms are between one to five years, and the majority of lease agreements are renewable at the end of the lease period at market rate.

The future minimum lease payments receivable under non-cancellable operating leases are as follows:

Not later than one year Later than one year and not later than five years	Group	Group
	2015 HK$’000 10,613 17,831 28,444	2014 HK$’000 15,245 26,681
		41,926

SAMSON PAPER HOLDINGS LIMITED

Notes to the Consolidated Financial Statements

89

36 CHARGE OF ASSETS

At 31 March 2015, trust receipt loans of HK$117,166,000 (2014: HK$77,750,000) and bank loans of HK$51,191,000 (2014: HK$90,520,000) are secured by legal charges on the Group’s land and buildings, investment properties and non-current asset held for sale with aggregate net book amount of HK$518,897,000 (2014: HK$400,681,000) (notes 14, 16 and 21).

At 31 March 2015, bills payables of HK$711,745,000 (2014: HK$734,927,000) are secured by restricted bank deposits of HK$218,000,000 (2014: HK$205,893,000) (note 25).

37 RELATED PARTY TRANSACTIONS

Related parties refer to entities in which the Group has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions, or directors or officers of the Company and its subsidiaries. A summary of significant related party transactions, which are carried out in the normal course of the Group’s business, are as follows:

(a) Purchase from related party

Purchase of merchandise from an investee company	Group
	2015 2014 HK$’000 HK$’000 388,502 227,486

The above transactions were conducted at negotiated prices between transacting parties.

(b) Year-end balances arising from purchases of goods

Payables to an investee company	Group
	2015 2014 HK$’000 HK$’000 152,974 102,246

Amounts due to an investee company which are included under accounts payable and other payables are unsecured, interest-free and repayable with credit period of 90 days.

The carrying amounts are denominated in RMB (2014: same).

(c) Key management compensation

Details of key management compensation are set out in note 13 to the consolidated financial statements.

38 ULTIMATE HOLDING COMPANY

The directors regard Quinselle Holdings Limited, a company incorporated in the British Virgin Islands, as the ultimate holding company.

ANNUAL REPORT 2015

Notes to the Consolidated Financial Statements

90

39 PARTICULARS OF PRINCIPAL SUBSIDIARIES

			Particulars of issued
		Place(s) of	and fully paid up
		incorporation/	share capital/	Percentage
	Name of subsidiary(ies)	establishment	registered capital	holding(s) (%)	Nature of business
				2015 & 2014
	Shares held directly:
1	Samson Paper (BVI)	British Virgin Islands	110,000 ordinary	100	Investment holding in
	Limited		shares of HK$1		Hong Kong
			each
	Shares held indirectly:
	Burotech Limited	Hong Kong	4,000,000 ordinary	100	Printing and sales of
			shares of HK$1		computer forms
			each		and trading of
					commercial paper
					products in Hong
					Kong
1	Foshan NanHai JiaLing	The PRC	Registered capital	100	Processing and
	Paper Company		HK$81,380,000		trading of paper
	Limited2				products in the
					PRC
	Foundation Paper	Hong Kong	10,000 ordinary	100	Export trading of
	Company Limited		shares of HK$100		paper products to
			each		the PRC
1	Global Century	British Virgin Islands	1 ordinary share of	100	Property holding in
	Investments Limited		US$1		Hong Kong
	High Flyer International	Hong Kong	1,000,000 ordinary	100	Food retail business
	Limited		shares of HK$1		property investment
			each		and logistics
					services in Hong
					Kong
1	Hypex Holdings Limited	British Virgin Islands	2 ordinary shares of	100	Investment holding in
			US$1 each		Singapore
1	Shenzhen High Flyer	The PRC	Registered capital	80.4	Container transport
	International		RMB10,000,000		services in the PRC
	Transportation Co. Ltd.2
	Samson Paper Company	Hong Kong	10 ordinary shares	100	Trading of paper
	Limited		of HK$100 each		products and
					property investment
					in Hong Kong
			28,500 non-voting	100
			shares of HK$100
			each
1	Samson Paper (Beijing)	The PRC	Registered capital	100	Trading of paper
	Company Limited2		HK$46,380,000		products in the
					PRC

SAMSON PAPER HOLDINGS LIMITED

Notes to the Consolidated Financial Statements

91

39 PARTICULARS OF PRINCIPAL SUBSIDIARIES (continued)

			Particulars of issued
		Place(s) of	and fully paid up
		incorporation/	share capital/	Percentage
	Name of subsidiary(ies)	establishment	registered capital	holding(s) (%)	Nature of business
				2015 & 2014
	Shares held indirectly
	(Continued):
	Samson Paper (China)	Hong Kong	1,000 ordinary	100	Investment holding in
	Company Limited		shares of HK$10		Hong Kong
			each
1	Samson Paper (M) Sdn.	Malaysia	7,500,000 ordinary	100	Trading of paper
	Bhd.		shares of RM1		products in
			each		Malaysia
1	Samson Paper (Shanghai)	The PRC	Registered capital	100	Trading of paper
	Company Limited2		RMB61,650,000		products in the
					PRC
1	Samson Paper (Shenzhen)	The PRC	Registered capital	100	Trading of paper
	Company Limited2		HK$48,300,000		products in the
					PRC
	Shun Hing Paper	Hong Kong	7,600 ordinary	100	Trading of paper
	Company Limited		shares of HK$100		products in Hong
			each		Kong
			2,400 non-voting	100
			shares of HK$100
			each
	United Aviation (Singapore)	Singapore	2 ordinary shares of	100	Trading of aeronautical
	Pte. Ltd.		US$1 each		parts in Singapore
1	SJ (China) Company Limited (formerly known	The PRC	Registered capital US$60,000,000	100	Manufacturing & trading of paper
	as “Universal Pulp and				products in the
	Paper (Jiangsu) Co.				PRC
	Ltd.)2
1	Universal Pulp and Paper	The PRC	Registered capital	79.90	Manufacturing &
	(Shandong) Co. Ltd.2		US$51,741,300	(2014: 79.93)	trading of paper
					products in the
					PRC

• 1 The statutory financial statements of these subsidiaries were not audited by PricewaterhouseCoopers.

• 2 Foreign investment enterprises.

All subsidiaries operate in Hong Kong unless otherwise stated. All of the subsidiaries established in the PRC are limited liability companies.

The above table only lists those subsidiaries of the Company which, in the opinion of the directors, materially contribute to the net income of the Group or holds a material portion of the assets or liabilities of the Group.

40 COMPARATIVE FIGURES

Certain comparative figures have been reclassified to conform to the current year’s presentation, of which rental income HK$13,300,000 has been reclassified from “Other gains and income, net” to “Revenue” and corresponding expenses HK$1,111,000 has been reclassified from “Administrative expenses” to “Cost of sales”. The directors consider the reclassification reflects the principal activity on leasing of investment properties. These reclassifications have no impact on the Group’s total equity as at both 31 March 2015 and 31 March 2014, or on the Group’s profit for the year ended 31 March 2015 and 2014.

ANNUAL REPORT 2015

92

Contacts

HEAD OFFICE AND PRINCIPAL PLACE OF BUSINESS IN HONG KONG

3/F, Seapower Industrial Centre 177 Hoi Bun Road, Kwun Tong Kowloon, Hong Kong Customer Service Hotline: (852) 2342 7181 Fax Hotline: (852) 2343 9195 Web-site: www.samsonpaper.com

BUROTECH LIMITED

3/F, Seapower Industrial Centre 177 Hoi Bun Road, Kwun Tong Kowloon, Hong Kong Customer Service Hotline: (852) 2763 1383 Fax Hotline: (852) 2342 8852 Web-site: www.burotech.com

UNITED AVIATION (SINGAPORE) PTE. LTD.

PRINCIPAL PLACE OF BUSINESS IN THE PRC

Room D, 37/F, Block C Electronic S&T Building 2070 Shennan Mid Road Futian District Shenzhen, China Postal Code: 518031 Customer Service Hotline: (86) 755-8328 7925 Fax Hotline: (86) 755-8328 7814

132 Gul Circle, Singapore 629597 Customer Service Hotline: (65) 6863 6067 Fax Hotline: (65) 6863 9197 Web-site: www.uaviation.com

HYPEX ENGINEERING PTE. LIMITED

132 Gul Circle, Singapore 629597 General Line: (65) 6897 7090 Fax Hotline: (65) 6897 7089

SAMSON PAPER COMPANY LIMITED

3/F, Seapower Industrial Centre 177 Hoi Bun Road, Kwun Tong Kowloon, Hong Kong Customer Service Hotline: (852) 2342 7181 Fax Hotline: (852) 2343 9195 Web-site: www.samsonpaper.com

SHUN HING PAPER COMPANY LIMITED

UNIVERSAL PULP AND PAPER (SHANDONG) CO. LTD.

No. 3388 Zaocao Road Xuecheng District, Zaozhuang City Shandong Province, China Customer Service Hotline: (86) 632-440 1820 Fax Hotline: (86) 632-440 1830

3/F, Seapower Industrial Centre 177 Hoi Bun Road, Kwun Tong Kowloon, Hong Kong Customer Service Hotline: (852) 2346 2898 Fax Hotline: (852) 2346 7275

SAMSON PAPER HOLDINGS LIMITED