Dragon Mining Limited — Annual Report 2015

Jun 25, 2015

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

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

(Incorporated in Bermuda with limited liability)

(Stock Code: 731)

ANNOUNCEMENT OF RESULTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2015

The board of directors (the “Board”) of Samson Paper Holdings Limited (the “Company”) is pleased to announce the consolidated results of the Company and its subsidiaries (the “Group”) for the financial year ended 31 March 2015 and consolidated balance sheet as at that date together with comparative figures for the financial year ended 31 March 2014. The annual results have been reviewed by the Company’s audit committee.

CONSOLIDATED PROFIT AND LOSS ACCOUNT

For the year ended 31 March 2015

Note Revenue 2 Cost of sales Gross profit Fair value gain on investment properties and non-current assets held for sale Other gains and income, net Selling expenses Administrative expenses Other operating (expense)/income Operating profit 3 Finance costs Profit before taxation Taxation 4 Profit for the year	2015 2014 HK$’000 HK$’000 (Note 9) 5,277,933 4,982,417 (4,780,503) (4,518,687) 497,430 463,730 121,300 32,399 27,420 26,995 (185,391) (163,824) (207,797) (197,620) (7,662) 17,970 245,300 179,650 (92,708) (92,235) 152,592 87,415 (29,256) (26,916) 123,336 60,499

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Note Attributable to: Owners of the Company Non-controlling interests Earnings per share 5 Basic Diluted Dividends 6	2015 HK$’000 114,225 9,111 123,336 HK9.9 cents HK9.0 cents 36,921	2014 HK$’000 (Note 9) 57,196 3,303
		60,499
		HK4.8 cents
		HK4.5 cents
		16,551

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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 and 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 and 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 2014 HK$’000 HK$’000 123,336 60,499 — 94,210 — 5,400 — 99,610 (7,618) (12,282) (537) 118 (8,155) (12,164) (8,155) 87,446 115,181 147,945 106,293 144,735 8,888 3,210 115,181 147,945

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As at 31 March 2015

CONSOLIDATED BALANCE SHEET

Note Non-current assets Property, plant and equipment Prepaid premium for land leases Investment properties Intangible assets Available-for-sale financial assets Non-current deposits and prepayments Deferred tax assets Current assets Inventories Accounts receivable, deposits and prepayments 7 Financial assets at fair value through profit or loss Taxation recoverable Restricted bank deposits Bank balances and cash Non-current assets held for sale Current liabilities Accounts payable and other payables 8 Trust receipt loans Taxation payable Derivative financial instruments Borrowings Net current assets Total assets less current liabilities	31 March 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

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Note Equity Equity attributable to owners of the Company Share capital Reserves Proposed final dividend Non-controlling interests Total equity Non-current liabilities Accounts payable and other payables 8 Borrowings Deferred tax liabilities	31 March 2015 HK$’000 127,315 1,674,202 31,829 1,706,031 1,833,346 178,887 2,012,233 23,808 813,857 95,517 933,182 2,945,415	31 March 2014 HK$’000 127,315
		1,604,830 11,459
		1,616,289 1,743,604 169,999 1,913,603 126,702 456,382 91,519 674,603 2,588,206

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Notes :

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.

(a) New and amended standards

• (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 and Investment entities 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	1 January 2015
(Amendment)	HKFRS and transactional disclosures
HKFRS 14	Regulatory deferral accounts	1 January 2016
HKFRS 10 and HKAS 28	Sale or contribution of assets between an	1 January 2016
(Amendment)	investor and 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	1 January 2016
(Amendment)	depreciation and 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.

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2. SEGMENT INFORMATION

As at 31 March 2015, 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, the provision of marine services to marine, oil and gas industries, the provision of logistic services and retail business.

The segment information for the year ended and as at 31 March 2015 is as follows:

Paper trading HK$’000 Total segment revenue 4,278,526 Inter-segment revenue (93,544) Revenue from external customers 4,184,982 Reportable segment results 45,921 Corporate expenses Operating profit Finance costs Profit before taxation Taxation Profit for the year Other items for the year ended 31 March 2015 Interest income 7,969 Depreciation of property, plant and equipment 11,109 Amortisation of prepaid premium for land leases 857 Amortisation of intangible assets 847 Fair value gains on investment properties — Capital expenditure 9,833 Reportable segment assets 2,905,710 Taxation recoverable Deferred tax assets Corporate assets Total assets Reportable segment liabilities 2,070,963 Taxation payable Deferred tax liabilities Corporate liabilities Total liabilities	Paper manufacturing HK$’000 992,101 (78,338) 913,763 85,109 876 48,345 3,597 49 — 108,168 2,329,508 240,349	Property investment HK$’000 17,483 (2,360) 15,123 135,036 — — — — 121,300 — 467,865 2,890	Others HK$’000 171,533 (7,468) 164,065 (8,598) 35 9,547 74 60 — 12,838 176,048 33,497	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 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

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The segment information for the year ended and as at 31 March 2014 is restated as follows:

Paper trading HK$’000 Total segment revenue 4,288,689 Inter-segment revenue (44,042) Revenue from external customers 4,244,647 Reportable segment results 90,090 Corporate expenses Operating profit Finance costs Profit before taxation Taxation Profit for the year Other items for the year ended 31 March 2014 Interest income 8,170 Depreciation of property, plant and equipment 10,626 Amortisation of prepaid premium for land leases 864 Amortisation of intangible assets 847 Fair value gains on non-current assets held for sale — Fair value gains on investment properties — Capital expenditure 18,039 Reportable segment assets 2,747,638 Taxation recoverable Deferred tax assets Corporate assets Total assets Reportable segment liabilities 1,847,505 Taxation payable Deferred tax liabilities Corporate liabilities Total liabilities	Paper manufacturing HK$’000 767,634 (189,997) 577,637 52,625 947 48,938 3,409 45 — — 87,039 2,328,190 277,142	Property investment HK$’000 (Note 9) 15,576 (2,276) 13,300 44,588 — — — — 8,000 24,399 — 344,913 2,178	Others HK$’000 (Note 9) 153,676 (6,843) 146,833 3,088 17 9,100 77 4 — — 8,995 168,279 34,011	Total HK$’000 (Note 9) 5,225,575 (243,158) 4,982,417 190,391 (10,741) 179,650 (92,235) 87,415 (26,916) 60,499 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

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

Hong Kong The PRC2 Singapore Korea Malaysia USA	Group Revenue Non-current assets1 2015 2014 2015 2014 HK$’000 HK$’000 HK$’000 HK$’000 (Note 9) 943,379 929,284 570,403 327,658 3,900,855 3,432,939 1,882,127 1,854,979 116,638 135,752 57,786 62,293 271,776 402,390 2,539 2,900 41,527 71,432 12,072 13,825 3,758 10,620 8 11 5,277,933 4,982,417 2,524,935 2,261,666	Group Revenue Non-current assets1 2015 2014 2015 2014 HK$’000 HK$’000 HK$’000 HK$’000 (Note 9) 943,379 929,284 570,403 327,658 3,900,855 3,432,939 1,882,127 1,854,979 116,638 135,752 57,786 62,293 271,776 402,390 2,539 2,900 41,527 71,432 12,072 13,825 3,758 10,620 8 11 5,277,933 4,982,417 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.

3. OPERATING PROFIT

Operating profit is stated after charging and crediting the following:

Charging Cost of inventories sold Depreciation of property, plant and equipment Amortisation of prepaid premium for land leases Amortisation of intangible assets Operating lease rentals in respect of: — land and buildings Transportation costs Provision for impairment on receivables Employee benefit expenses 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	Group 2015 2014 HK$’000 HK$’000 4,631,225 4,359,390 69,001 68,664 4,528 4,350 956 896 29,006 15,944 70,915 81,177 10,193 3,900 128,263 110,585 3,320 3,206 8,724 — 153 — 970 2,662 2,321 — — 2,799 — 88 13,046 10,782 1,005 8,717	Group 2015 2014 HK$’000 HK$’000 4,631,225 4,359,390 69,001 68,664 4,528 4,350 956 896 29,006 15,944 70,915 81,177 10,193 3,900 128,263 110,585 3,320 3,206 8,724 — 153 — 970 2,662 2,321 — — 2,799 — 88 13,046 10,782 1,005 8,717
		2,662 — 2,799 88 10,782 8,717

4. 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.

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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	Group 2015 2014 HK$’000 HK$’000 5,282 4,937 16,667 12,029 (911) 66 8,218 9,884 29,256 26,916	Group 2015 2014 HK$’000 HK$’000 5,282 4,937 16,667 12,029 (911) 66 8,218 9,884 29,256 26,916
		26,916

5. EARNINGS PER SHARE

(a) Basic

Basic earnings per share is calculated by dividing the profit attributable to the owners of the Company less preference dividends of HK$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 2015 2014 114,225 57,196 1,141,076 1,141,076 132,065 132,065 1,273,141 1,273,141 HK$9.0 cents HK$4.5 cents	Group 2015 2014 114,225 57,196 1,141,076 1,141,076 132,065 132,065 1,273,141 1,273,141 HK$9.0 cents HK$4.5 cents
		1,141,076 132,065
		1,273,141
		HK$4.5 cents

6. 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$0.009) per preference share	Group and Company 2015 2014 HK$’000 HK$’000 4,564 4,564 528 528 28,527 10,270 3,302 1,189 36,921 16,551	Group and Company 2015 2014 HK$’000 HK$’000 4,564 4,564 528 528 28,527 10,270 3,302 1,189 36,921 16,551
		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 accounts, but will be reflected as an appropriation of retained earnings for the year ending 31 March 2016.

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7. ACCOUNTS RECEIVABLE, DEPOSITS AND PREPAYMENTS

ACCOUNTS RECEIVABLE, DEPOSITS AND PREPAYMENTS
Accounts receivable — net of provision Other receivables, deposits and prepayments The aging analysis of accounts receivable is as follows: Current to 60 days 61 to 90 days Over 90 days	Group 2015 2014 HK$’000 HK$’000 1,241,952 1,226,996 756,698 723,083 1,998,650 1,950,079 Group 2015 2014 HK$’000 HK$’000 861,724 905,999 171,153 166,828 209,075 154,169 1,241,952 1,226,996
		1,226,996

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

8. ACCOUNTS PAYABLE AND OTHER PAYABLES

ACCOUNTS PAYABLE AND OTHER PAYABLES
Accounts and bills payables Accruals and other payables Less: non-current portions: Accounts payable and other payables The aging analysis of accounts and bills payables is as follows: Current to 60 days 61 to 90 days Over 90 days	Group 2015 2014 HK$’000 HK$’000 1,446,372 1,217,049 149,036 304,348 1,595,408 1,521,397 (23,808) (126,702) 1,571,600 1,394,695 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
		1,217,049

9. COMPARATIVE FIGURES

Certain comparative figures have been reclassified to conform to the current period’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.

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MANAGEMENT DISCUSSION AND ANALYSIS

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, 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).

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.

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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.

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.

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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.

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 consolidate its existing warehouses located in the PRC 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.

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FINAL DIVIDEND

The Board has resolved to recommend a final dividend of HK2.5 cents per share (2014: HK0.9 cent) payable on or around 20 October 2015 to persons who are registered shareholders of the Company on 2 October 2015 subject to the approval of shareholders at the forthcoming annual general meeting. Together with the interim dividend of HK0.4 cent per share (2014: HK0.4 cent), the total dividend for the financial year is HK2.9 cents per share (2014: HK1.3 cents).

CLOSURE OF REGISTER OF MEMBERS

The Register of Members of the Company will be closed from 16 September 2015 to 18 September 2015 (both days inclusive), during which period no transfer of shares will be effected. In order to qualify for the entitlement to attend and vote at the Meeting, all transfer of shares accompanied by the relevant share certificates must be lodged with the Company’s Hong Kong branch share registrar, Boardroom Share Registrars (HK) Limited, at 31/F, 148 Electric Road, North Point, Hong Kong for registration not later than 4:30 p.m. on 15 September 2015.

The Register of Members of the Company will be closed from 5 October 2015 to 6 October 2015 (both days inclusive), during which period no transfer of shares will be effected. In order to qualify for the proposed final dividend, all transfer of shares accompanied by the relevant share certificates must be lodged with the Company’s Hong Kong branch share registrar, Boardroom Share Registrars (HK) Limited, at 31/F, 148 Electric Road, North Point, Hong Kong for registration not later than 4:30 p.m. on 2 October 2015.

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

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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.

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.

PURCHASE, SALE OR REDEMPTION OF SHARES

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

MODEL CODE FOR SECURITIES TRANSACTIONS

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

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

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

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

The 2014/2015 Annual Report of the Company containing all information required by the Listing Rules will be published on the Stock Exchange’s website (www.hkexnews.com.hk) and the Company’s website (www.samsonpaper.com) in due course.

BOARD OF DIRECTORS

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

By Order of the Board SHAM Kit Ying Chairman

Hong Kong, 25 June 2015

• for identification purpose only

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